First Horizon Shares Gain as Q4 Earnings Beat on Y/Y NII Growth

Shares of First Horizon Corporation FHN rose 1.6% in yesterday’s trading session after reporting better-than-expected results. The company posted fourth-quarter 2025 adjusted earnings per share of 52 cents surpassed the Zacks Consensus Estimate of 47 cents. This compares favorably with 43 cents in the year-ago quarter.

Results benefited from higher net interest income (NII) and a significant rise in non-interest income, along with the absence of provision for credit losses. However, the rise in expenses remains a headwind.

Results exclude after-tax reduction of 2 cents per share of notable items. After considering this, net income available to its common shareholders (GAAP basis) was $257 million, surging 63% year over year.

For 2025, adjusted earnings per share of $1.89 surpasses the Zacks Consensus Estimate of $1.84 per share. The metric rose 22% from the year-ago period. Net income available to its common shareholders (GAAP basis) was $956 million, up 29% year over year.

FHN’s Revenues & Expenses Rise

Total quarterly revenues were $888 million, which rose 22% year over year. The metric topped the Zacks Consensus Estimate by 2.9%.

For 2025, total revenues were $3.42 billion, which grew 7% year over year. The metric topped the Zacks Consensus Estimate of $3.39 billion.

NII increased 7% year over year to $676 million. Additionally, the net interest margin increased 18 basis points from the prior-year quarter to 3.51%.

Non-interest income was $212 million, more than double from the year-ago level, primarily driven by the absence of securities portfolio restructuring losses recorded in the fourth quarter of 2024.

Non-interest expenses increased 7% year over year to $545 million. The increase was due to higher personnel expenses, occupancy and equipment costs, and outside services, partially offset by lower amortization of intangible assets and other non-interest expenses.

The efficiency ratio was 61.33%, down from 61.98% in the same quarter last year. A decline in the efficiency ratio indicates an improvement in profitability.

FHN’s Loans & Deposits Balances Increase

Total period-end loans and leases, net of unearned income, were $64.16 billion, increasing 3% from the year-ago quarter. Total period-end deposits of $67.47 billion rose 3% year over year.

FHN’s Credit Quality: Mixed Bag

Non-performing loans and leases totaled $604 million, up slightly from the year-ago period.

The ratio of allowance for credit losses to loans and leases was 1.31%, down from 1.43% in the prior-year quarter. 

Net charge-offs were $30 million, up from $13 million in the year-ago quarter. Notably, FHN recorded no provision for credit losses in the fourth quarter against a provision of $10 million in the prior-year quarter.

FHN’s Capital Ratios Deteriorate

As of Dec. 31, 2025, the common equity tier 1 ratio was 10.6%, down from 11.2% reported at the end of the year-ago quarter.

The total capital ratio was 13.4%, down from 14.2% in the year-ago quarter. The tier 1 leverage ratio declined to 10.2% from 10.6% a year ago.

Our Viewpoint on FHN

First Horizon benefited from solid revenue growth, higher net interest income, strong year-over-year non-interest income growth and stable credit performance. However, lower capital ratios, rising expenses and net charge-offs remain areas to watch going forward.

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 fourth-quarter 2025 earnings on Jan. 20. The consensus estimate for FITB’s quarterly earnings has been unchanged at $1.01 per share over the past seven days.

Huntington Bancshares Inc. HBAN is also slated to report fourth-quarter 2025 results on Jan. 22. Over the past seven days, the Zacks Consensus Estimate for HBAN’s quarterly earnings has been unchanged at 39 cents per share.

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

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