EarningsQ3 2026 Earnings Report
DE:FT2 Q3 2026 EPS Results
Actual EPS€0.47
Consensus EPS€0.47
Beat/MissBeat by +<€0.01
One Year Ago EPS€0.45
DE:FT2 Q3 2026 Revenue Results
Actual Revenue€693.52M
Expected Revenue€792.63M
Beat/MissMissed by -€99.11M
YoY Revenue Growth-39.74%
Earnings Announcement Details
QuarterQ3 2026
Date10/15/2026
TimeBefore Open
Conference CallThursday, October 15, 2026
DE:FT2 Upcoming Earnings
First Horizon's next earnings date is estimated for January 21, 2027, based on past reporting schedules.
Q3 2026 Earnings Call Audio
DE:FT2 Q3 2026 Earnings Call
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Q3 2026 Earnings Slide Deck
Q3 2026 Earnings Call Summary
Earnings Call Sentiment|Positive
The call was broadly positive. Management emphasized the strategic benefits of selling lower-yielding, nonrelationship mortgage assets, including approximately 4% expected 2027 EPS accretion, a roughly 150-basis-point ROTCE improvement, an approximately 88% loan-to-deposit ratio, continued deposit growth, and additional capacity for higher-yielding lending. The company also highlighted strong credit performance, capital flexibility, share repurchase capacity, and expectations for positive operating leverage. Offsetting concerns included lower quarterly fee income, higher expenses and deposit costs, lower period-end loans, higher net charge-offs, reduced tangible book value, mortgage-market pressure, and a softer revenue outlook comparison. Overall, the stated strategic and financial benefits significantly outweighed the challenges.Company Guidance
Adjusted EPS Growth
Adjusted EPS was $0.53, which Brian Jordan said represented a 4% increase year over year.
Commercial Loan Portfolio Expansion
The commercial loan portfolio grew by nearly $2 billion over the last year, consistent with the strategy of growing the balance sheet to generate sustainable returns and provide value to clients.
Strategic Mortgage Portfolio Sale
First Horizon agreed to sell approximately $4.5 billion of targeted residential mortgage loans, concentrated in the lowest-yielding portion of the portfolio, with minimal associated deposits of approximately $200 million and a weighted average coupon rate of 3.85%. The transaction was expected to settle early in the fourth quarter at an approximately 10% discount all in.
Expected Earnings and ROTCE Benefits
The mortgage transaction is expected to provide approximately 4% accretion to 2027 earnings per share and improve ROTCE by approximately 150 basis points, excluding further upside from redeploying proceeds into higher-yielding loans.
Improved Liquidity and Balance Sheet Flexibility
The transaction is expected to reduce the loan-to-deposit ratio to approximately 88%, improve liquidity, provide additional balance sheet capacity, and allow First Horizon to maintain its current share repurchase program.
Deposit Growth and Relationship Banking Momentum
Client deposits increased by more than $1 billion during the quarter. New client deposits grew approximately $1.5 billion, while customer deposit growth replaced broker deposits over the course of the quarter.
Net Interest Income and Margin Outlook
Net interest income increased by $7 million in the quarter, reflecting higher loan yields and customer deposit growth. Net interest margin was 3.48%, remained in line with expectations, and management expects NIM to improve into the 3.50s.
Fixed Income Revenue Growth
Fixed income revenue increased 6% quarter over quarter, with average daily revenue reaching $629 thousand. Higher average daily revenues were driven primarily by favorable restructuring activity during the quarter.
Credit Quality and Resolution Activity
Nonperforming loans remained flat at 81 basis points, while non-accrual balances declined by $49 million due to strong resolutions during the quarter. The allowance for credit losses to loans increased 1 basis point to 1.25%.
Commercial Real Estate Credit Performance
Commercial real estate net charge-offs averaged 17 basis points since the start of 2023, including during a period of peak interest rates. Management said refinancing activity remained solid, property values held up relatively well, and updated appraisals in higher-decline cases showed decreases of about 20%, which remained absorbable because the portfolio was underwritten to approximately 40% equity and 60% loan-to-cost.
Mortgage Warehouse Credit Characteristics
Management said mortgage warehouse lending has historically produced approximately 1 basis point of annual charge-offs. The business holds the underlying notes at closing, with loans typically remaining on the balance sheet for 19 days, allowing lines to be reduced quickly if concerns arise.
PPNR Opportunity and Operating Leverage
First Horizon said it was approximately 40% of the way through the previously identified $100 million-plus pretax, pre-provision revenue opportunity. The $45 million of benefits associated with the balance sheet repositioning were described as incremental to that $100 million opportunity. Management expects positive operating leverage in 2027 and plans to remain inflationary from the current expense run rate thereafter.
Continued Strategic Investment
Management plans to continue investing in refreshing and building banking centers, hiring, technology, and AI. It also cited continued opportunities in treasury management, wealth management, and deeper relationships with commercial clients.
Capital Strength and Share Repurchases
CET1 ended the quarter at 10.3%, and management said it was comfortable operating in a 10.25% to 10.5% range. Share repurchases were expected to resume in the fourth quarter, with a little over $660 million of repurchase capacity remaining.
Future Loan Redeployment Opportunity
Management's working assumption was that over the next 2 to 3 years it could deploy approximately half of the $4.5 billion mortgage-sale proceeds, or a little over $2 billion, into incremental loan growth, subject to economic conditions, interest rates, and inflation.
Deposit Retention and Growth Capability
Management said it retains more than 90% of clients each quarter in the depository space and believes it can continue growing both noninterest-bearing and interest-bearing deposits through long-term relationship banking.
DE:FT2 Earnings History
The table shows recent earnings report dates and whether the forecast was beat or missed. See the change in forecast and EPS from the previous year.
Beat
Missed