First Horizon's Third Quarter Results Show Steady Growth and Strategic Repositioning

First Horizon, a leading financial institution, has reported its third-quarter 2026 results, showcasing steady growth and strategic repositioning. The company's adjusted earnings per share (EPS) stood at $0.53, representing a 4% increase year-over-year.

In line with their strategy of growing the balance sheet to generate sustainable returns and drive value for clients, First Horizon has grown its commercial loan portfolio by nearly $2 billion over the past year. The company has also initiated the sale of approximately $4.5 billion of targeted residential mortgage loans as part of a broader realignment of the mortgage business.

This transaction, expected to settle early in the fourth quarter, aligns with First Horizon's strategy of prioritizing full client relationships, enhancing profitability, and driving improved earnings through the cycle. The repositioning offers several strategic advantages, including utilizing balance sheet capacity to profitably serve clients and immediately enhancing top-tier financial returns.

First Horizon continues to see steady demand for commercial and commercial real estate loans across its geographic footprint from both current and new customers. The transaction will reduce the loan-to-deposit ratio to roughly 88%, while maintaining strong capital ratios in line with stated targets, allowing the company to maintain its current share repurchase program.

The financial impact of this transaction is expected to produce an approximately 4% EPS accretion in 2027 without considering the upside impact of deploying proceeds into incremental lending. First Horizon has conviction that this liquidity will support further growth in new core client relationships lending, meaningfully enhancing returns going forward.

Despite a decline in adjusted EPS to $0.53 due to lower fee income and slightly higher provision expense, First Horizon remains optimistic about its performance. The company continues to see momentum with strategic focus on relationship banking, with client deposits up more than $1 billion this quarter and net interest margin (NIM) remaining in line with expectations at 3.48%.

First Horizon's Chief Financial Officer, Hope Dmuchowski, highlighted the notable items in the quarter, including the impact of reclassifying loans associated with the mortgage portfolio sale and costs associated with reorganizing parts of the business to align mortgage production more closely with core clients. The company recognized these costs to ensure its balance sheet is aligned with strategic focus on delivering relationship-oriented banking and focusing on safety, soundness, profitability, and growth.

The expected mortgage portfolio sale further ensures First Horizon's balance sheet is aligned with its strategic focus, ensuring the company remains committed to delivering top-tier financial returns. The sale of $4.5 billion in targeted residential mortgage loans will serve as a catalyst for driving improved earnings and returns through the cycle.