3Q26
Filed Oct 15, 2026First Horizon reported a third-quarter net loss available to common shareholders of $(94) million, or $(0.20) per diluted share, driven by the pending sale of select consumer mortgages; adjusted diluted EPS was $0.53.
The reported loss reflected a $473 million loss on the pending sale of mortgage loans, while adjusted diluted EPS of $0.53 was $0.02 above 3Q25 but $0.01 below 2Q26. Net interest income increased, deposits grew on an average basis, and asset-quality metrics improved, but margin compression, higher deposit costs, a lower CET1 ratio, and the substantial period-end loan reduction remain central considerations.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Total revenueGAAP | $407M | $(480) million (54)% | $(482) million (54)% |
| Total revenue - FTEnon-GAAP | $410M | – | – |
| Adjusted total revenue - FTEnon-GAAP | $883M | $(7) million (1)% | $(10) million (1)% |
| Net interest incomeGAAP | $683M | $7 million 1% | $9 million 1% |
| Net interest income - taxable equivalentnon-GAAP | $686M | $7 million 1% | $8 million 1% |
| Total noninterest incomeGAAP | −$276M | $(487) million NM | $(491) million NM |
| Adjusted total noninterest incomenon-GAAP | $197M | $(14) million (7)% | $(18) million (9)% |
| Loss on pending sale of mortgage loansGAAP | −$473M | $(473) million NM | $(473) million NM |
| Noninterest expenseGAAP | $529M | $(2) million —% | $(22) million (4)% |
| Adjusted total noninterest expensenon-GAAP | $521M | $(5) million (1)% | $(22) million (4)% |
| Pre-provision net revenuenon-GAAP | −$122M | $(478) million (134)% | $(461) million (136)% |
| Adjusted pre-provision net revenue - taxable equivalentnon-GAAP | $362M | $(2) million (1)% | $12 million 3% |
| Provision (benefit) for credit lossesGAAP | −$25M | $(40) million NM | $(20) million NM |
| Adjusted provision for credit lossesnon-GAAP | $20M | $5 million 33% | $25 million NM |
| Income/(loss) before income taxesGAAP | −$97M | $(438) million (128)% | $(441) million (128)% |
| Income tax expense (benefit)GAAP | −$18M | $(84) million (127)% | $(96) million (123)% |
| Net income/(loss)GAAP | −$79M | $(354) million (129)% | $(345) million (130)% |
| Net income/(loss) available to common shareholdersGAAP | −$94M | $(354) million (136)% | $(348) million (137)% |
| Adjusted net income/(loss) available to common shareholdersnon-GAAP | $253M | $(9) million (4)% | $(10) million (4)% |
| Diluted EPSGAAP | $(0.20) | $(0.74) (137)% | $(0.70) (140)% |
| Adjusted diluted EPSnon-GAAP | $0.53 | $(0.01) (2)% | $0.02 4% |
| Net interest marginnon-GAAP | 3.48% | (1) bp | (7) bp |
| Adjusted efficiency rationon-GAAP | 58.91% | (20) bp | (185) bp |
| Return on average assetsGAAP | (0.37)% | (168) bp | (166) bp |
| Adjusted return on average assetsnon-GAAP | 1.25% | (8) bp | (7) bp |
| Return on average common equityGAAP | (4.34)% | (1,667) bp | (1,608) bp |
| Adjusted ROTCEnon-GAAP | 14.36% | (93) bp | (64) bp |
| Average loans and leases, net of unearned incomeGAAP | $64.49B | $(206) million —% | $1,701 million 3% |
| Average depositsGAAP | $68.55B | $1,771 million 3% | $2,629 million 4% |
| Total net charge-offsGAAP | $36M | $3 million 9% | $9 million 34% |
| Total net charge-off rateGAAP | 0.22% | – | – |
| Total nonperforming loans and leasesGAAP | $482M | $(49) million (9)% | $(124) million (20)% |
| Allowance for loan and lease losses to loans and leasesGAAP | 1.08% | (1) bp | (15) bp |
| Allowance for credit losses to loans and leasesnon-GAAP | 1.25% | 1 bp | (13) bp |
| CET1 capital ratioother | 10.3% | (12) bp | (62) bp |
| Total assetsGAAP | $84.32B | $(120) million —% | $1,125 million 1% |
| Loans and leases, net of unearned incomeGAAP | $59.81B | $(5,522) million (8)% | $(3,249) million (5)% |
| Loans held for saleGAAP | $4.37B | $3,867 million NM | $3,867 million NM |
| Total depositsGAAP | $67.70B | $(372) million (1)% | $2,176 million 3% |
| Total shareholders' equityGAAP | $9.13B | $(338) million (4)% | $(119) million (1)% |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Commercial, Consumer, and WealthNet interest income was $667 million, up $13 million 2% from 2Q26, while noninterest income was $125 million, up $2 million 2% from 2Q26. | $792M | $15 million 2% | $5 million 1% |
| WholesaleNoninterest income was $59 million, including fixed income product average daily revenue of $629 thousand, up $35 thousand 6% from 2Q26 and down $142 thousand (18)% from 3Q25. | $127M | $2 million 2% | $(7) million (6)% |
| CorporateCorporate noninterest income was $(461) million and included the impacts associated with the pending mortgage portfolio sale. | −$512M | $(496) million NM | $(480) million NM |
Capital returns
- Cash dividends declared per common share were $0.17, compared with $0.17 in 2Q26 and $0.15 in 3Q25.
- Period-end shares outstanding were 474 million, compared with 474 million in 2Q26 and 500 million in 3Q25.
- The filing states that share count for all periods shown was impacted by share repurchases.
What drove it
- Net interest income - taxable equivalent increased $7 million to $686 million, primarily due to a higher average loan yield of 5.73%, which increased 6 basis points in the quarter.
- Net interest margin was 3.48%, down 1 basis point, driven by interest-bearing deposit costs of 2.45%, up 12 basis points, associated with higher average brokered deposits and higher customer deposit costs.
- The $473 million loss on pending sale of mortgage loans drove total noninterest income to $(276) million; adjusted noninterest income was $197 million, down $14 million, driven by decreased deferred compensation, partially offset by increases in fixed income, service charges and fees, brokerage, trust, and insurance, and card and digital banking fees.
- Average client deposit balances increased $1.3 billion in the quarter, while average brokered deposit balances were up $500 million.
- The provision benefit of $25 million included a $45 million provision reversal related to the classification change of targeted mortgage loans to held for sale.
Concerns
- The pending mortgage portfolio sale produced a pre-tax loss of $473 million, reported within noninterest income, and resulted in a reported net loss available to common shareholders of $(94) million.
- Period-end loans and leases fell $(5,522) million (8)% sequentially, including a $(4,632) million sequential decline in consumer real estate loans and an $(891) million decline in loans to mortgage companies.
- CET1 capital ratio was 10.3%, down 12 basis points from 2Q26; the company attributed the decline primarily to reclassification of certain mortgage loans to held for sale.
- Total net charge-offs were $36 million, up $3 million 9% sequentially, and the net charge-off rate increased to 0.22% from 0.20%.
- Adjusted diluted EPS of $0.53 declined $(0.01) (2)% from 2Q26, while adjusted ROTCE declined to 14.36% from 15.29%.
What to watch
- Settlement and earnings accretion from the sale of approximately $4.5 billion of select lower yielding consumer mortgages. The release states the transaction was expected to settle early in the fourth quarter, while a footnote states it closed early in 4Q26.
- The trajectory of client deposits, brokered deposits, deposit costs, loan yields, and net interest margin.
- Loan growth following the reclassification of consumer mortgages to held for sale, including commercial, consumer real estate, and loans to mortgage companies balances.
- Capital rebuilding following the CET1 ratio decline to 10.3%.
- Credit trends, including commercial C&I net charge-offs, which were $30 million, up $3 million 10% from 2Q26.
Balance sheet and cash flow
- Total assets were $84,318 million at September 30, 2026.
- Cash and due from banks were $930 million at September 30, 2026.
- Interest-bearing deposits with banks were $1,798 million at September 30, 2026.
- Loans and leases, net of unearned income were $59,808 million, down $(5,522) million (8)% from 2Q26.
- Loans held for sale were $4,368 million, up $3,867 million from 2Q26.
- Total deposits were $67,701 million, down $(372) million (1)% from 2Q26.
- Term borrowings were $1,319 million, compared with $1,321 million in 2Q26.
- Total shareholders' equity was $9,125 million, down $(338) million (4)% from 2Q26.
- No operating cash flow, investing cash flow, financing cash flow, or free cash flow was reported.
Analysis
First Horizon's reported third-quarter result was dominated by the strategic reclassification and planned sale of select consumer mortgages. The company recorded a $473 million loss on pending sale of mortgage loans in noninterest income and a related $45 million provision reversal. These items contributed to a net loss available to common shareholders of $(94) million and diluted EPS of $(0.20). Excluding notable items, adjusted net income available to common shareholders was $253 million and adjusted diluted EPS was $0.53, up $0.02 from 3Q25 but down $0.01 from 2Q26.
Core spread income improved modestly. Net interest income on a taxable-equivalent basis increased $7 million sequentially and $8 million year over year to $686 million. Average loan yield rose 6 basis points sequentially to 5.73%, but interest-bearing deposit costs increased 12 basis points to 2.45%, causing net interest margin to decline 1 basis point sequentially to 3.48%. Average deposits increased $1,771 million sequentially to $68,553 million, with average client deposit balances up $1.3 billion and average brokered deposit balances up $500 million.
The mortgage transaction materially changed period-end balance sheet composition. Loans and leases, net of unearned income, declined $(5,522) million sequentially to $59,808 million, while loans held for sale increased $3,867 million to $4,368 million. Consumer real estate loans declined $(4,632) million sequentially and loans to mortgage companies declined $(891) million. Management said the transaction will be accretive to earnings on a go-forward basis and provide balance sheet flexibility for future loan growth. The document says it was expected to settle early in the fourth quarter, while a footnote says it closed early in 4Q26.
Underlying expense performance improved. Adjusted total noninterest expense was $521 million, down $(5) million sequentially and $(22) million year over year, and the adjusted efficiency ratio improved to 58.91% from 59.11% in 2Q26 and 60.76% in 3Q25. Adjusted PPNR on a taxable-equivalent basis was $362 million, down $(2) million sequentially but up $12 million year over year. Segment trends were mixed: Commercial, Consumer, and Wealth revenue rose 2% sequentially to $792 million, Wholesale revenue rose 2% to $127 million, and Corporate revenue was $(512) million because of the mortgage sale impacts.
Credit metrics presented an offsetting picture. Nonperforming loans and leases declined $(49) million sequentially to $482 million, and total nonperforming loans and leases to loans and leases remained 0.81%. However, net charge-offs increased to $36 million from $33 million, and the annualized net charge-off rate increased to 0.22% from 0.20%. Capital declined with the transaction: CET1 fell to 10.3% from 10.5%, tangible common equity to tangible assets declined to 7.93% from 8.31%, and tangible book value per common share declined to $13.84 from $14.53. The company maintained its $0.17 per common share declared dividend.
Management, verbatim
This quarter’s results are a testament to our disciplined approach and clear strategic priorities. Average client deposit balances increased $1.3 billion in the quarter, and we continue to focus on growing and maintaining full client relationships and deploying capital where it best serves long-term value creation. Looking ahead, we remain committed to executing our strategy and delivering sustainable growth and value for our clients, associates, and shareholders.
Bryan Jordan, Chairman, President and CEO of First Horizon Corporation
Not in the filing
stated, not guessed- Forward financial guidance for revenue, net interest income, net interest margin, expenses, tax rate, credit costs, loans, deposits, capital, or earnings per share was not provided.
- Prior-period outlook was not provided; therefore, no comparison of actual results with prior guidance is available.
- Gross margin is not reported.
- Operating cash flow, investing cash flow, financing cash flow, and free cash flow are not reported.
- A dollar amount of common share repurchases during 3Q26 is not reported.
- A consolidated total debt figure is not reported.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.