A month has gone by since the last earnings report for First Horizon National (FHN). Shares have added about 7.4% in that time frame, outperforming the S&P 500.
But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is First Horizon due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
First Horizon Q3 Earnings Top Estimates on Y/Y NII & Fee Income Growth
First Horizon's 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 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.
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.
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.
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.
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.
2025 Outlook
Adjusted revenues are expected to be flat to rise 4% from the $3.28 billion reported in 2024.
Adjusted non-interest expenses are expected to remain flat or rise 2% from the $1.98 billion reported in 2024, due to strong expense management in the first quarter and lower commissions in countercyclical fee businesses.
The net charge-off ratio is anticipated to be 0.15-0.25% bps compared with the 2024 reported figure of 0.18%, reflecting continued credit normalization and the benefit of declining rates.
The CET 1 ratio is envisioned to be 10.5-11%, reflecting expectations for modest loan growth in addition to opportunistic deployment of excess capital.
The effective tax rate is forecast to be 21-23%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
At this time, First Horizon has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for value investors.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise First Horizon has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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First Horizon Corporation (FHN): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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