Breaking Down First Horizon Corporation (FHN) Financial Health: Key Insights for Investors

You're watching regional bank stocks closely right now, and you need to know if First Horizon Corporation (FHN) is truly a safe harbor or just a temporary bounce. Honestly, the third quarter of 2025 results give us a clear signal. The company delivered an adjusted earnings per share (EPS) of $0.51, a solid beat that shows their diversified business model is working, but what matters is the underlying health. With total assets holding steady at $83.2 billion as of September 30, 2025, and an impressive adjusted return on tangible common equity (ROTCE) hitting 15%, the balance sheet looks defintely solid. The real opportunity here is their commitment to capital return, highlighted by the recent announcement of a $1.2 billion share repurchase program; that's a clear action for shareholders. Still, the challenge for any regional bank is maintaining that net interest margin (NIM) in a volatile rate environment, and that's exactly where we need to focus our analysis to see if this performance is sustainable.

Revenue Analysis

You want to know where First Horizon Corporation (FHN) is actually making its money, and the Q3 2025 results give us a very clear picture: the revenue engine is firing on both cylinders-lending and fee income-and showing solid growth. The core takeaway is that the company's diversified model is working, with total revenue hitting $889 million in Q3 2025, a strong beat against analyst expectations.

The Dominance of Net Interest Income (NII)

As with any regional bank, First Horizon's primary revenue source is net interest income (NII), which is the money earned from loans and investments minus the interest paid on deposits. For Q3 2025, NII stood at $674 million, representing about 75.8% of the total revenue. This is the heartbeat of the bank. To be fair, NII growth has been impressive, climbing 7.5% year-over-year from Q3 2024, which is a testament to stronger loan yields despite the competitive deposit environment.

Here's the quick math on where that NII growth came from: higher average loan balances were the main driver, specifically in the high-yielding mortgage warehouse segment. That business line is a major component of the Commercial segment and its performance is key to maintaining the net interest margin (NIM), which expanded by 15 basis points to 3.55% in the quarter.

Fee Income: A Crucial Diversifier

The remaining portion of the revenue comes from non-interest income (or fee income), which is a crucial diversifier, especially as the interest rate environment shifts. In Q3 2025, non-interest income was $215 million, making up the other 24.2% of total revenue.

This fee-based revenue also saw a year-over-year increase of 7.5%, matching the NII growth. This segment includes services like wealth management, mortgage banking, and capital markets (FHN Financial). The jump was largely due to improved business conditions, notably a surge in fixed income activity at FHN Financial. This counter-cyclical fee income is defintely important, as management expects it to help offset any asset sensitivity if the Federal Reserve starts easing rates.

The revenue streams break down like this:

• Net Interest Income: $674 million (75.8% of total revenue).
• Non-Interest Income: $215 million (24.2% of total revenue).

Segment Contribution and Growth Trajectory

First Horizon Corporation reorganized into four main segments-Commercial, Consumer & Wealth, Wholesale, and Corporate-and the Q3 results show that the Commercial and Wholesale segments are the primary growth drivers. The Commercial segment, which includes the strong mortgage warehouse business, is fueling the Net Interest Income. Meanwhile, the Wholesale segment, housing FHN Financial, is driving the fee income beat. The company's full-year 2025 guidance for adjusted revenue is to land somewhere between flat to +4%, which is a realistic view given the economic headwinds still out there.

Understanding the Mission Statement, Vision, & Core Values of First Horizon Corporation (FHN) helps frame this performance; their focus on commercial and private banking is clearly paying off in these core revenue lines. Your next step should be to look at the expense side-specifically, how that $551 million in non-interest expense in Q3 2025 is being managed against this revenue growth.

Profitability Metrics

You're looking for a clear signal on whether First Horizon Corporation (FHN) is turning its revenue into real profit, and the Q3 2025 results give us a mixed but mostly positive picture. The key takeaway is that their profitability is trending up in 2025, driven by strong net interest income (NII) growth, but you must watch their rising operating costs defintely.

For a bank, the closest thing to a 'Gross Profit Margin' is the Net Interest Margin (NIM)-the spread they earn on loans versus what they pay on deposits. FHN's NIM expanded by a strong 15 basis points in the third quarter of 2025, reaching 3.55%. That expansion is a direct result of higher asset yields, meaning they're getting more for their loans than they're paying for their funding. That's a solid, core-business performance indicator.

Moving to operating profit, the adjusted operating income for Q3 2025 hit $356 million on total revenue of $889 million. Here's the quick math: that translates to an adjusted operating margin of approximately 40%. This is a strong margin, and the trend is positive, but the real story is in the efficiency ratio (non-interest expense as a percentage of revenue), which is the bank-specific measure of operational efficiency (cost management).

• Q2 2025 Efficiency Ratio: 59.2%.
• Q3 2025 Noninterest Expense: $551 million, up from $491 million in Q2 2025.

Rising expenses are the near-term risk. Management is targeting flat expenses over the next year, but the Q3 jump is a flag. You want to see that efficiency ratio stay below 60%; any sustained move higher will quickly erode those expanding margins.

The net profit margin-what's left after all expenses and taxes-shows clear momentum in 2025. The Trailing Twelve Months (TTM) Net Profit Margin as of September 30, 2025, was 17.53%, a healthy increase from 15.47% at the end of Q1 2025. Looking just at the quarter, Q3 2025 GAAP net income available to common shareholders was $254 million, or $0.50 per share. The full-year 2025 revenue is projected to reach $3.38 billion, with an average EPS estimate of $1.69. That's a strong earnings beat for Q3, which shows their diversified business model is working. The adjusted net income was even higher at $263 million. That's a good beat.

When you compare FHN to the industry, their operational strength stands out. A key metric is Pre-Provision Net Revenue (PPNR) as a percentage of total assets, which is essentially operating income before loan loss provisions. In the 2025 stress test, FHN's PPNR ratio of 4.7% significantly exceeded the peer median of 2.3%. This indicates superior underlying earning power compared to their regional bank peers. Also, while the regional bank industry generated an 11% Return on Equity (ROE) in Q3 2024, FHN's focus on capital management and buybacks supports a strong return profile. If you want to dive deeper into the full financial picture, check out the full post: Breaking Down First Horizon Corporation (FHN) Financial Health: Key Insights for Investors.

Here is a quick look at the core profitability figures:

Debt vs. Equity Structure

You're looking at First Horizon Corporation (FHN) and asking the right question: how is this bank financing its growth? The short answer is that First Horizon Corporation is running a conservative, well-capitalized balance sheet, leaning more on equity than debt when you look at the leverage ratio (Debt-to-Equity). That's a good sign for stability, especially in the volatile regional banking sector.

As of the third quarter of 2025, First Horizon Corporation's debt-to-equity (D/E) ratio stood at just 0.33. This means for every dollar of shareholder equity, the company has only 33 cents of debt. This is defintely a low-leverage position, particularly when you compare it to the 'Banks - Regional' industry average, which is closer to 0.5 as of November 2025. A lower D/E ratio generally translates to lower financial risk, which is what you want to see from a bank.

Here's the quick math on the debt composition as of September 2025, showing the mix between short-term and long-term obligations:

• Short-Term Debt & Capital Lease Obligation: $1,596 million
• Long-Term Debt & Capital Lease Obligation: $1,328 million
• Total Debt: $2,924 million (approx.)
• Total Stockholders Equity: $8,949 million

The total debt of approximately $2.924 billion is comfortably covered by the nearly $9 billion in shareholder equity. The balance is healthy, with a slightly higher reliance on short-term funding, which is common in banking, but the overall leverage is modest.

To fund its operations and growth initiatives, First Horizon Corporation is actively managing its capital structure. In the first quarter of 2025, for example, the company issued $500 million in Fixed Rate/Floating Rate Senior Notes. This debt issuance helps maintain liquidity and fund growth, but the company also relies heavily on its substantial deposit base-a core funding source for any bank-and retained earnings (equity) to fuel its business. The net issuance of debt for the trailing twelve months leading up to September 2025 was substantial, totaling $1,808 million, indicating a clear strategy to use debt financing to support asset growth and general corporate purposes.

In terms of credit quality, First Horizon Corporation's unsecured senior debt is rated as investment grade by key rating agencies like Moody's and Fitch. This is crucial because it keeps the cost of borrowing (interest expense) lower, which directly helps the net interest margin (NIM)-the profit a bank makes from lending. Maintaining this investment grade rating is a top priority, and the low D/E ratio helps secure that rating. It's a virtuous cycle: lower risk means cheaper debt, which boosts profitability. If you want to dig deeper into the ownership structure and who is driving these capital decisions, you should check out Exploring First Horizon Corporation (FHN) Investor Profile: Who's Buying and Why?

Liquidity and Solvency

You're looking at First Horizon Corporation (FHN)'s short-term health, and the traditional liquidity ratios-Current and Quick-will defintely throw you off. For a bank, those ratios are largely irrelevant because their primary assets (loans) are long-term, and their liabilities (deposits) are technically current, so you'll often see the Current Ratio reported as 0 or - in data feeds. We need to look at bank-specific metrics, which tell the real story.

The key to understanding FHN's liquidity is the Loan-to-Deposit Ratio (LDR) and the stability of its funding base. The LDR is the true acid test here.

• Loan-to-Deposit Ratio (LDR): FHN's average loans of $62.8 billion against average deposits of $65.9 billion in Q3 2025 puts the LDR at approximately 95.3%. That's high; it means nearly every dollar of deposits is loaned out, which management has acknowledged and is working to improve.
• Deposit Growth: The funding base is still solid. Average deposits grew by $1.2 billion from Q2 to Q3 2025, reaching $65.9 billion. This growth, even amid fierce deposit competition, is a clear strength.

Here's the quick math on their funding trends:

The working capital trend, in the banking sense, is an ongoing battle for core deposits, but FHN is holding its own. They retained about 97% of repriced client balances in Q3 2025, which shows strong client stickiness despite the high-rate environment.

Cash Flow Statements Overview

A look at the Cash Flow Statement for Q3 2025 shows some volatility, which is not uncommon for a bank navigating a shifting interest rate cycle.

The most notable figure is that Net Cash from Continuing Operating Activities was actually negative, around -$200 million in Q3 2025. This is a metric that demands attention, as it suggests that the cash generated from core banking operations-even with net income of $254 million-was insufficient to cover all operating needs and changes in working capital components during the quarter. One quarter doesn't make a trend, but it's a yellow flag.

On the financing side, there were expected outflows. FHN completed a strategic move by redeeming all outstanding shares of Series B Preferred Stock on August 1, 2025, which was a capital structure streamlining event valued at $77 million. This, plus the regular common stock dividends, contributed to the financing cash outflow. Investing cash flow showed modest outflows, mostly tied to managing the investment portfolio and loan growth. Exploring First Horizon Corporation (FHN) Investor Profile: Who's Buying and Why?

Near-Term Liquidity Concerns and Strengths

The primary liquidity strength for First Horizon Corporation (FHN) is its robust capital position, not just its cash on hand. The company's 2025 stress test showed a projected stressed Common Equity Tier 1 (CET1) Capital ratio of 9.7%, which is well above the regulatory minimum of 4.5%. That's a huge buffer. The main concern, though, is the high LDR of 95.3% coupled with the negative operating cash flow in Q3 2025. This combination means FHN has less room to maneuver if deposit costs rise unexpectedly or if loan demand spikes. Still, the deposit base is growing, which is the immediate fix for that high LDR.

Valuation Analysis

You want to know if First Horizon Corporation (FHN) is a buy, a hold, or a sell right now. The quick answer is that the stock looks like a Moderate Buy based on analyst consensus, but the valuation metrics suggest it's trading at a slight premium to its tangible assets, which is something to watch.

When you look at the core valuation multiples, you get a mixed picture. The trailing price-to-earnings (P/E) ratio is sitting around 13.16x to 13.21x as of November 2025. Here's the quick math: that's a bit higher than the US Banks industry median, which often hovers closer to 11x, meaning the market is willing to pay a little more for FHN's earnings than its average peer. Still, the forward P/E, which is based on future earnings estimates, drops to about 11.62x to 13.01x, suggesting analysts expect earnings to grow and bring the multiple down.

For a bank, the price-to-book (P/B) ratio is defintely the most critical metric. It tells you how the market values the company's equity (book value) relative to its stock price. FHN's P/B ratio is around 1.25x based on the June 2025 book value per share of $16.78. A P/B over 1.0x means the market values the bank above its liquidation value. For a regional bank with a solid franchise, this premium is expected, but you don't want to see it get too stretched. The Enterprise Value-to-EBITDA (EV/EBITDA) ratio, while less common for banks, is reported at approximately 8.64, which is a reasonable figure.

The stock price trend over the last 12 months shows resilience. The 52-week low was $15.19, and the 52-week high was $23.70. [cite: 10 (from first search)] Trading around $21.02 to $21.72 in mid-November 2025, First Horizon Corporation has delivered a total shareholder return of 10.5% for the year. [cite: 13 (from first search)] It's been a steady climb, not a parabolic spike, which is healthier.

Here's what the street is saying and what you get for holding the stock:

• Analyst Consensus: Of the 17 to 20 analysts covering FHN, the consensus is a Moderate Buy or Buy. [cite: 2 (from first search), 12 (from first search), 14 (from first search)]
• Price Target: The average 12-month price target is set between $24.05 and $24.50, which suggests a potential upside of 10.73% to 15.02% from the current price. [cite: 12 (from first search), 14 (from first search)]
• Dividend: The annual dividend is a stable $0.60 per share, giving you a dividend yield of about 2.74% to 2.84%. [cite: 6 (from first search), 7 (from first search)] The payout ratio is a very comfortable 35.9% to 36.26%, meaning the dividend is well-covered by earnings and is sustainable. [cite: 6 (from first search), 8 (from first search)]

The analyst price targets point to a clear upside, but the P/B ratio over 1.0x means you are paying for future growth and a quality franchise, not a deep discount. The stock is not wildly overvalued, but it's not a screaming bargain either. The dividend is safe, plus the company announced a $1.20 billion share buyback, which covers up to 11.3% of outstanding shares, providing another layer of support for the stock price. [cite: 2 (from first search)]

For a deeper dive into the company's operational strength, check out the full post: Breaking Down First Horizon Corporation (FHN) Financial Health: Key Insights for Investors.

Risk Factors

You're looking at First Horizon Corporation (FHN) and seeing a stock that's shown renewed life, but you need to know what could defintely derail that momentum. The core risks for a regional bank like FHN in late 2025 are a mix of external macroeconomic pressures and the internal challenge of maintaining margin in a competitive environment. The biggest near-term risks are credit quality deterioration driven by a slowing economy and the ongoing fight for deposits.

Honesty, the macroeconomic uncertainty is the primary external risk. While the US economy in the second half of 2025 has been relatively stable, as FHN's management noted in their Q2 2025 earnings call, persistent inflation and the lingering effects of the 2023 banking crisis still pose a challenge. This uncertainty directly impacts their credit risk, which is why the provision for credit losses jumped to $40 million in Q1 2025, reflecting management's concern about potential credit quality deterioration.

The financial risks are clear on the balance sheet. In Q1 2025, the bank saw total deposits decrease by $1.4 billion, largely due to the pay-off of brokered certificates of deposit (CDs). This deposit decline signals a need to aggressively reassess deposit acquisition strategies in a market where competition for funding is fierce. Plus, net interest income (NII) is still being impacted by lower loan yields and volume, even as total revenue reached $830 million in Q2 2025.

FHN's strategic and operational risks center on execution. Can they maintain their expense management discipline while also investing in the technology and talent needed to compete? The good news is they are focused on achieving pre-provision net revenue (PPNR) growth, which is a clear goal for the full 2025 fiscal year.

Mitigation Strategies and Capital Strength

The good news is that First Horizon Corporation (FHN) is not just sitting on its hands; they have concrete mitigation strategies, especially concerning capital. Their 2025 company-run stress test results show exceptional resilience, which is a huge comfort to any investor.

Here's the quick math on their capital cushion:

• Maintain a minimum Common Equity Tier 1 (CET1) Capital ratio of 9.7% under a severely adverse economic scenario.
• This minimum is significantly above the required regulatory minimum of 4.5%.
• This cushion provides approximately $4 billion of additional pre-tax loss absorption capacity.

Their risk discipline is strong. The loan portfolio stressed loss rate came in at only 2.3%, which is much lower than the Federal Reserve-published median DFAST result of 6.1%. This is due to their diversified business model, which includes counter-cyclical businesses like fixed income and mortgage operations, and a loan portfolio mix that favors lower-risk loans to mortgage companies. Also, 77% of their commercial loan portfolio is concentrated in the attractive southeastern U.S. footprint, which helps mitigate geographic risk.

The following table summarizes FHN's capital resilience under the 2025 stress test scenario:

The capital position is a major strength. If you want to dig deeper into the shareholder base that trusts this resilience, you can read Exploring First Horizon Corporation (FHN) Investor Profile: Who's Buying and Why?

Growth Opportunities

You're looking past the current quarter's results and want to know where First Horizon Corporation (FHN) is going next. The direct takeaway is this: the company is pivoting from large, complex mergers to a focused strategy of organic growth, technology investment, and wealth management expansion, which should stabilize and grow earnings.

We've seen FHN's strategic focus shift to internal strength after the failed TD Bank acquisition in 2023. Their growth plan for the near-term isn't about buying up the competition; it's about getting better at what they already do. They are prioritizing organic growth, which means expanding their market presence and customer base naturally, especially within their strong Southeast footprint. This is a smart, less-risky path, and it's defintely paying off in efficiency.

Future Revenue and Earnings Outlook

The numbers for the 2025 fiscal year show a clear path forward, even with macroeconomic uncertainty. Analysts project First Horizon Corporation (FHN)'s total revenue to reach approximately $3.38 billion for the full year. That's based on the company's guidance for adjusted revenue to be flat to up 4% for the full year 2025.

Here's the quick math on profitability: The consensus earnings per share (EPS) estimate for 2025 is an average of $1.69, with the range running from $1.55 to $1.74. This confidence is driven by strong third-quarter 2025 performance, where adjusted EPS hit $0.51, beating expectations. The company is also targeting a sustained adjusted Return on Tangible Common Equity (ROTCE) of 15% or more, which is a key metric for shareholder value.

Strategic Initiatives and Competitive Edge

The real engine for future growth is a two-pronged strategy: technology and wealth management. First Horizon Corporation (FHN) completed a three-year, $100 million investment in technology upgrades, including using Artificial Intelligence (AI) to streamline their new consumer digital platform. That focus on digital capabilities is essential for keeping up with larger national banks.

Also, the company's strategic partnership with LPL Financial in 2025 is a big deal for non-interest income. This transition of 110 financial advisors is expected to boost their wealth management services and create cross-selling opportunities across their client base. They are also actively returning capital, with a $1.2 billion share buyback authorization over the next 12 months, though they are prioritizing loan growth over buybacks for capital deployment.

Their competitive advantage is rooted in their risk discipline, which is critical in the current environment. They maintain best-in-class credit quality, with charge-offs typically ranking in the bottom quartile of their peer group. What this estimate hides is the resilience of their loan portfolio; their loan portfolio stressed loss rate of 2.3% is significantly lower than the Federal Reserve-published median DFAST result of 6.1%. That means they can weather a downturn better than many competitors.

• Invest $100 million in technology for digital advantage.
• Expand wealth management via LPL Financial partnership.
• Maintain a diversified business model with counter-cyclical revenue streams.
• Sustain best-in-class credit quality and low charge-offs.

For a deeper dive into the company's balance sheet and valuation, you can read the full analysis at Breaking Down First Horizon Corporation (FHN) Financial Health: Key Insights for Investors. Your next step should be to model the impact of a 4% revenue growth scenario on your valuation model by the end of the week.