Why Is First Horizon (FHN) Up 7.4% Since Last Earnings Report?

Core Viewpoint - First Horizon National's recent earnings report shows strong performance in adjusted earnings per share and revenue growth, despite challenges in loan and deposit balances and mixed credit quality indicators [2][4][6]. Financial Performance - Adjusted earnings per share for Q3 2025 were 51 cents, exceeding the Zacks Consensus Estimate of 45 cents and up from 42 cents in the previous year [2]. - Net income available to common shareholders was $254 million, reflecting a 19.2% year-over-year increase [3]. - Total quarterly revenues reached $889 million, a 7.4% increase year-over-year, surpassing the Zacks Consensus Estimate by 5.1% [4]. Income Sources - Net interest income (NII) rose nearly 7.5% year-over-year to $674 million, with the net interest margin increasing by 24 basis points to 3.55% [4]. - Non-interest income was $215 million, also up 7.5% from the previous year [4]. Expense Management - Non-interest expenses increased by 7.8% year-over-year to $551 million, driven by rising costs across most components [5]. - The efficiency ratio was 61.92%, slightly up from 61.89% in the prior year, indicating a slight deterioration in profitability [5]. Loan and Deposit Trends - Total loans and leases were $63.05 billion, showing a slight decrease from the previous quarter, while total deposits were $65.52 billion, also declining moderately [6]. Credit Quality - Non-performing loans and leases increased by 4.7% year-over-year to $605 million [7]. - The allowance for loan and lease losses decreased by 5.6% year-over-year to $777 million, with the ratio of total allowance to loans and leases at 1.23%, down from 1.32% [7]. Capital Ratios - The Common Equity Tier 1 ratio was 11%, down from 11.2% year-over-year, and the total capital ratio decreased to 13.8% from 14.2% [9]. Future Outlook - Adjusted revenues are expected to remain flat to rise by 4% from $3.28 billion reported in 2024, while adjusted non-interest expenses are anticipated to remain flat or increase by 2% [10]. - The net charge-off ratio is projected to be between 0.15-0.25%, reflecting continued credit normalization [11]. - The CET 1 ratio is expected to be between 10.5-11%, indicating modest loan growth and capital deployment [11]. Market Sentiment - Recent estimates for First Horizon have trended upward, leading to a Zacks Rank of 2 (Buy), suggesting an expectation of above-average returns in the coming months [12][14].