First Horizon Q1 Earnings Beat, Expenses & Provisions Decline Y/Y

First Horizon Corporation’s FHN first-quarter 2025 adjusted earnings per share (excluding notable items) of 42 cents surpassed the Zacks Consensus Estimate of 40 cents. This compares favorably with 35 cents reported in the year-ago quarter.

Results benefited from a marginal rise in net interest income (NII) and a decline in expenses. Also, lower provisions were another positive. However, a fall in fee income and a deteriorating capital position were major headwinds.

Net income available to its common shareholders (GAAP basis) was $213 million, up 15.8% year over year.

FHN’s Revenues and Expenses Decline

Total quarterly revenues were $812 million, which decreased marginally year over year. Also, the top line missed the Zacks Consensus Estimate of $818.3 million.

NII increased nearly 1% year over year to $631 million. Additionally, the net interest margin increased 5 basis points from the prior-year quarter to 3.42%.

Non-interest income was $181 million, which declined 6.7% from the year-ago level. The fall was primarily due to a decline in almost all non-interest income components except brokerage, trust, and insurance income and other non-interest income.

Non-interest expenses decreased 5.2% year over year to $488 million. The fall was due to a decline in almost all the cost components except occupancy and equipment costs.

The efficiency ratio was 60.06%, down from the year-ago period’s 62.92%. A fall in the efficiency ratio indicates a rise in profitability.

FHN’s Loans and Deposits Balances Decline

Total period-end loans and leases, net of unearned income, were $62.22 billion, which decreased marginally from the end of the previous quarter. Total period-end deposits of $64.21 billion decreased 2.1%.

FHN’s Credit Quality: Mixed Bag

Non-performing loans and leases of $609 million increased 20.6% from the prior-year period.

As of March 31, 2025, the ratio of total allowance for loans and lease losses to loans and leases was 1.32%, up from 1.06% reported in the prior-year quarter. The allowance for loan and lease losses of $822 million rose 4.4% from the year-ago period.

First Horizon witnessed net charge-offs of $29 million, which decreased 27.5% year over year. Moreover, the provision for credit losses was $40 million, which plunged 20% from the year-earlier quarter.

FHN’s Capital Ratios Deteriorate

As of March 31, 2025, the Common Equity Tier 1 ratio was 10.9%, down from 11.3% reported at the end of the year-ago quarter.

The total capital ratio was 13.7%, down from the year-ago quarter’s 13.9%. The tier 1 leverage ratio was 10.5%, down from 10.8% in the year-ago quarter.

FHN’s Share Repurchase Update

In the reported quarter, the company repurchased $360 million shares of common stock.

Our Viewpoint on FHN

First Horizon benefited from an increase in NII and reduced expenses. However, a decline in loan and deposit balances could pose long-term challenges to its financial performance.

First Horizon Corporation Price, Consensus and EPS Surprise

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

First Horizon currently carries a Zacks Rank #3 (Hold).

Earnings Dates & Expectations of Bank Stocks

Prosperity Bancshares, Inc. PB is scheduled to release first-quarter 2025 earnings on April 23. The company carries a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for PB’s quarterly earnings has remained unchanged at $1.35 per share over the past month.

Cullen/Frost Bankers, Inc. CFR is scheduled to release first-quarter 2025 earnings on May 1. The company carries a Zacks Rank #3 at present. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

The Zacks Consensus Estimate for CFR’s quarterly earnings has increased 1.4% to $2.16 per share over the past month.

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

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