First Horizon posts third-quarter loss on $473 million mortgage sale charge

First Horizon Corporation (FHN) said Thursday it posted a third-quarter net loss to common shareholders of $(94) million, or $(0.20) per diluted share, after recording a $473 million loss tied to a pending mortgage portfolio sale. The figures are in the company's 8-K and earnings release.

Excluding notable items, adjusted earnings per share were $0.53. That was down $0.01 from the second quarter and up $0.02 from a year earlier, the company said.

Here's how the company did:

• Diluted earnings per share: $(0.20) vs. $0.50 a year earlier
• Adjusted diluted EPS: $0.53 vs. $0.51 a year earlier
• Total revenue: $407 million vs. $889 million a year earlier
• Adjusted revenue, fully taxable equivalent: $883 million vs. $893 million a year earlier
• Net income available to common shareholders: $(94) million vs. $254 million a year earlier

Notable items totaled $0.73 per share, or $347 million after tax. The main driver was the reclassification of targeted mortgage loans to held for sale in relation to the pending portfolio sale.

In early October, the company entered into an agreement to sell about $4.5 billion of select lower-yielding consumer mortgages. It had begun evaluating a sale during the quarter.

The company said the transaction will be accretive to earnings on a go-forward basis. It will also provide balance sheet flexibility to support future loan growth. The sale is expected to settle early in the fourth quarter.

Chairman, President and CEO Bryan Jordan said, "This quarter's results are a testament to our disciplined approach and clear strategic priorities."

Net interest income and deposits

Net interest income on a fully taxable equivalent basis rose $7 million from the second quarter to $686 million. The net interest margin was 3.48%, down 1 basis point.

Interest-bearing deposit costs rose 12 basis points to 2.45%. The company tied that to higher average brokered deposits and higher customer deposit costs.

Average deposits were $68.6 billion, up $1.8 billion from the second quarter. Average client deposit balances rose $1.3 billion. Period-end deposits of $67.7 billion fell $372 million, driven mainly by a decrease in brokered CDs.

Loans and credit

Period-end loans were $59.8 billion, down $5.5 billion from the second quarter. The company attributed most of the decline to the reclassification of certain mortgage loans to held for sale.

The provision for credit losses was a benefit of $25 million, compared with expense of $15 million in the second quarter. Excluding the pending mortgage transaction, provision expense was $20 million.

Net charge-offs were $36 million, or 22 basis points of loans, up from $33 million, or 20 basis points. Nonperforming loans fell $49 million to $482 million.

Expenses and headcount

Noninterest expense was $529 million, down $2 million from the second quarter. Lower deferred compensation expense was partly offset by higher occupancy and equipment costs and other expense tied to new account promotions.

The company had 7,375 full-time equivalent associates at quarter end, down from 7,422 in the second quarter and up from 7,341 a year earlier.

Capital and shareholder returns

The CET1 ratio was 10.3%, down from 10.5% in the second quarter. Tangible book value per share fell $0.69 to $13.84, reflecting $0.73 of notable items partly offset by $0.53 of adjusted earnings.

Cash dividends declared were $0.17 per common share, unchanged from the second quarter and up from $0.15 a year earlier. The company had $661 million of authorization remaining under a repurchase program approved in the fourth quarter of 2025.

Adjusted return on average tangible common equity was 14.4%, down from 15.3% in the second quarter.

Segments

Here's how other First Horizon segments did during the quarter:

• Commercial, Consumer and Wealth: net income of $300 million, vs. $319 million a year earlier
• Wholesale: net income of $31 million, vs. $40 million a year earlier
• Corporate: net loss of $(410) million, vs. $(93) million a year earlier

Wholesale fixed income average daily revenue was $629 thousand, up from $594 thousand in the second quarter but down from $771 thousand a year earlier. The company said the quarter's increase was driven primarily by client portfolio restructuring activity.

Outlook

In its investor presentation, the company updated its 2026 outlook. It now expects adjusted revenue excluding deferred compensation to grow at the low end of a 3% to 7% range, the same range as before. It expects adjusted expenses excluding deferred compensation to be roughly flat.

The company's 2026 net charge-off range is 0.15% to 0.25% of loans, against 0.19% in 2025. The tax rate range is 21% to 23%. The CET1 target range is now 10.25% to 10.5%, versus a prior target of about 10.5%.

A slide in the presentation estimates the mortgage sale will add about $45 million after tax, or 4%, to 2027 earnings, and about 150 basis points to 2027 return on tangible common equity.