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First Horizon Misses Q3 Revenue Estimates but Shares Rise on $4.5B Mortgage Sale

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FHN$22.86 0.84%

First Horizon Corporation (NYSE:FHN) reported third-quarter 2026 revenue of $883 million, falling 1.1% from the prior year and missing analyst expectations. Adjusted earnings came in at $0.53 per share, meeting consensus estimates. Despite the top-line miss, shares moved higher as investors evaluated the bank's strategic balance sheet moves.

The regional bank completed the sale of $4.5 billion in lower-yielding residential mortgage loans during the quarter. The divestment is intended to reallocate capital toward higher-margin commercial and consumer lending while lowering exposure to non-relationship assets. The transaction lowered the loan-to-deposit ratio to 88% while client deposits grew by over $1 billion. Management expects the restructuring to yield approximately 4% non-GAAP earnings per share accretion by 2027.

Looking ahead, First Horizon plans to redeploy proceeds from the mortgage sale into higher-yielding loans over the next two to three years. Key factors to watch in coming quarters include the rate of loan redeployment, management of deposit costs in a competitive rate environment, and the planned resumption of share buybacks in the fourth quarter.

Key points

  • First Horizon Corporation reported third-quarter revenue of $883 million, down 1.1% year-over-year and slightly below analyst expectations.
  • Adjusted earnings per share reached $0.53, matching Wall Street estimates for the quarter.
  • The bank sold $4.5 billion in residential mortgages to clear capital for higher-yielding lending, bringing its loan-to-deposit ratio to 88%.
  • Management expects the mortgage business restructuring to generate roughly 4% non-GAAP EPS accretion by 2027.
  • First Horizon intends to resume stock buybacks in the fourth quarter of 2026 while deploying capital into higher-return loans.

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Questions and answers

Did First Horizon meet revenue expectations in Q3 2026?

No, First Horizon generated $883 million in revenue, which fell 1.1% year-over-year and missed analyst projections of $891.4 million. However, adjusted earnings per share of $0.53 met expectations.

Why did First Horizon sell its mortgage portfolio?

First Horizon sold $4.5 billion in lower-yielding residential mortgages to clear balance sheet space for higher-return commercial and consumer lending, aiming to improve overall profitability and net interest margins.

When does First Horizon plan to resume share repurchases?

First Horizon plans to resume stock repurchases in the fourth quarter of 2026, balancing capital return to shareholders with funding future loan growth.