A month has gone by since the last earnings report for First Horizon National (FHN). Shares have lost about 1.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is First Horizon due for a breakout? Well, first let's take a quick look at the latest earnings report in order to get a better handle on the recent drivers for First Horizon Corporation before we dive into how investors and analysts have reacted as of late.
First Horizon Q1 Earnings Beat Estimates on Higher NII & Fee Income
First Horizon posted first-quarter 2026 earnings per share of 53 cents, surpassing the Zacks Consensus Estimate of 49 cents. This compares favorably with 42 cents in the year-ago quarter.
Results benefited from higher net interest income (NII) and a rise in non-interest income, along with improved credit quality. However, the rise in expenses remains a headwind.
Net income available to its common shareholders was $257 million, up 21% year over year.
Revenues & Expenses Rise
Total quarterly revenues were $862 million, which increased 6% year over year. The top line missed the Zacks Consensus Estimate of $866 million.
NII increased 6% year over year to $667 million. Additionally, the net interest margin expanded 10 basis points from the prior-year quarter to 3.52%.
Non-interest income was $195 million, rising 7% year over year. Growth was driven by higher service charges and fees, mortgage banking revenues, brokerage, trust and insurance income, and fixed income revenues.
Non-interest expenses increased 4% year over year to $505 million. The rise was mainly due to higher salaries and benefits, occupancy and equipment costs, and outside services expenses.
The efficiency ratio was 58.54%, down from 60.06% in the same quarter last year. A decline in the efficiency ratio indicates improved profitability.
Loans & Deposits Balances Increase
Average loans and leases were $63.2 billion, rising 3% year over year.
Average deposits were $66.2 billion, which increased 3% year over year.
Credit Quality: Mixed Bag
Non-performing loans and leases totaled roughly $606 million, slightly lower than the prior-year quarter.
The allowance for credit losses to loans and leases ratio was 1.28%, down from 1.45% in the year-ago quarter.
Net charge-offs were $29 million, relatively stable year over year. Provision for credit losses was $15 million compared with $40 million in the year-ago quarter.
Capital Ratios Deteriorate
The common equity tier 1 (CET1) ratio was 10.5%, down from 10.9% in the year-ago quarter.
The total capital ratio was 13.7%, down from 14.1% a year ago. The tier 1 leverage ratio improved slightly to 10.6% from 10.5% in the prior-year quarter.
Notably, the company repurchased $233 million worth of shares during the quarter.
2026 Outlook
Adjusted revenues are expected to rise 3-7% from the $3.42 billion reported in 2025.
Adjusted non-interest expenses are expected to remain flat compared with the $2.05 billion reported in 2024.
The net charge-off ratio is anticipated to be 0.15-0.25% bps compared with the 2025 reported figure of 0.19%, reflecting continued strong credit performance.
The CET1 ratio is now expected to remain around the 10.5% level, compared with its prior expectation of a 10.5–10.75% range.
The effective tax rate is forecast to be 21-23%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a flat trend in estimates review.
VGM Scores
Currently, First Horizon has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. However, the stock has a grade of B on the value side, putting it in the second quintile 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
First Horizon has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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This article originally published on Zacks Investment Research (zacks.com).