First Horizon Q3 Earnings Top Estimates on Y/Y NII & Fee Income Growth

First Horizon Corporation’s FHN third-quarter 2025 adjusted earnings per share (excluding notable items) of 51 cents surpassed the Zacks Consensus Estimate of 45 cents. This compares favorably with 42 cents in the year-ago quarter.

Results benefited from a rise in net interest income (NII) and non-interest income, along with provision benefits. However, a decline in loan and deposit balances acted as a headwind.

Net income available to its common shareholders (GAAP basis) was $254 million, up 19.2% year over year.

FHN’s Revenues & Expenses Rise

Total quarterly revenues were $889 million, which rose 7.4% year over year. Also, the top line surpassed the Zacks Consensus Estimate by 5.1%.

NII increased nearly 7.5% year over year to $674 million. Additionally, the net interest margin increased 24 basis points from the prior-year quarter to 3.55%.

Non-interest income was $215 million, up 7.5% from the year-ago level.

Non-interest expenses increased 7.8% year over year to $551 million. The increase was due to a rise in almost all cost components, except for amortization of intangible assets.

The efficiency ratio was 61.92%, up from the year-ago period’s 61.89%. An increase in the efficiency ratio indicates a deterioration in profitability.

FHN’s Loans & Deposits Balances Decrease

Total period-end loans and leases, net of unearned income, were $63.05 billion, which decreased slightly from the end of the previous quarter. Total period-end deposits of $65.52 billion also declined moderately.

FHN’s Credit Quality: Mixed Bag

Non-performing loans and leases of $605 million increased 4.7% from the prior-year period.

As of Sept. 30, 2025, the ratio of total allowance for loans and lease losses to loans and leases was 1.23%, down from 1.32% in the prior-year quarter. The allowance for loan and lease losses of $777 million fell 5.6% from the year-ago period.

First Horizon witnessed net charge-offs of $26 million, which increased 8.3% on a year-over-year basis. Moreover, the company recorded provision benefits of $5 million in the third quarter, against a provision for credit losses of $35 million in the prior-year quarter.

FHN’s Capital Ratios Deteriorate

As of Sept. 30, 2025, the Common Equity Tier 1 ratio was 11%, down from 11.2% reported at the end of the year-ago quarter.

The total capital ratio was 13.8%, down from the year-ago quarter’s 14.2%. The tier 1 leverage ratio was 10.5%, also down from 10.6% in the year-ago quarter.

Our Viewpoint on FHN

First Horizon benefited from higher NII and non-interest income, as well as provision benefits. However, the slight declines in loan and deposit balances pose some concern.

First Horizon Corporation Price, Consensus and EPS Surprise

First Horizon Corporation price-consensus-eps-surprise-chart | First Horizon Corporation Quote

FHN currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earnings Dates & Expectations of Bank Stocks

Fifth Third Bancorp FITB is scheduled to release third-quarter 2025 earnings on Oct. 17.

The consensus estimate for FITB’s quarterly earnings has been revised downward to 87 cents per share over the past seven days.

Huntington Bancshares Inc. HBAN is also slated to report third-quarter 2025 results on Oct. 17.

Over the past seven days, the Zacks Consensus Estimate for HBAN’s quarterly earnings has been unchanged at 38 cents per share.

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This article originally published on Zacks Investment Research (zacks.com).

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