Executive Summary

FHN delivered a clean beat: revenue of $889M vs S&P Global consensus ~$848.0M*, and GAAP EPS of $0.50 vs ~$0.445*, with adjusted EPS of $0.51; NIM expanded 15 bps q/q to 3.55% on loan yield gains and one-time Main Street Lending Program (MSLP) accretion .
Fee income outperformed on a 40% jump in fixed income ADR (to $771k), and mortgage banking benefited from a $4.7M MSR sale; offset was higher opex from a $20M foundation contribution and tech/risk project spend .
Credit trends were solid: provision credit of $5M, NCOs fell to $26M (0.17%), ACL/loans down to 1.38%, CET1 stable at 11.0%; FHN repurchased ~$190M of stock in the quarter .
Guidance was maintained (FY25 revenue flat–up 4%, expense flat–up 2%, NCOs 15–25 bps, tax 21–23%); near‑term CET1 target updated to 10.75% from 11.0%. Post-quarter, Board approved a new $1.2B buyback program, reinforcing capital return capacity .
Stock reaction catalyst: management’s comments that they could integrate a well-structured in-footprint merger in 2026+ sparked investor debate on buy vs. sell optionality; management reiterated no change in near-term priorities (operate/optimize first) .

What Went Well and What Went Wrong

What Went Well
- Margin and NII: NII rose $33M q/q to $678M and NIM expanded 15 bps to 3.55%, driven by higher loan yields and ~$12M of MSLP accretion; funding costs decreased 2 bps .
- Fee strength: Fixed income revenue +$15M q/q as ADR rose 40% to $771k; mortgage banking +$6M on a $4.7M MSR gain; “counter‑cyclical” engine worked as intended .
- Credit resilience: Provision credit of $5M (vs $30M expense in 2Q), NCOs fell to $26M (0.17%), ACL/loans declined to 1.38% on mix/grade improvements; CET1 steady at 11.0% .
- Quote – CEO: “We are pleased to report another strong quarter… Our ongoing focus on safety and soundness, profitability, and growth enables us to meet our clients’ evolving needs” .
What Went Wrong
- Expense pressure: Noninterest expense rose $59M q/q (adjusted +$47M), including a $20M Foundation contribution and $8M higher outside services for tech/risk projects; efficiency ratio worsened to 61.9% .
- Core deposit scrutiny: Analysts questioned core franchise softness; management emphasized 97% retention on repriced promos and growth in noninterest-bearing balances q/q, but competitive pressure remains .
- One-time NIM uplift: CFO flagged the MSLP accretion’s concentration in 3Q; go-forward “high 330s/low 340s” underlying margin context tempers extrapolation .

Financial Results

Key metrics vs prior periods

Metric	Q3 2024	Q2 2025	Q3 2025
Total revenue ($M)	828	830	889
Diluted EPS ($)	0.40	0.45	0.50
Adjusted EPS ($)	0.42	0.45	0.51
Net interest margin (%)	3.31	3.40	3.55
Efficiency ratio (%)	61.89	59.20	61.92

Actual vs S&P Global consensus (Q3 2025)

Metric	Consensus	Actual	Surprise
Revenue ($M)	848.0*	889	+$41.0M / +4.8%
Primary EPS ($)	0.4452*	0.50	+$0.055

Adjusted EPS of $0.51 also exceeded the consensus EPS base; consensus is for Primary EPS (GAAP) comparison .
Values with asterisk (*) are retrieved from S&P Global.

Segment performance (revenue and net income)

Segment	Revenue Q2 2025 ($M)	Revenue Q3 2025 ($M)	Net Income Q2 2025 ($M)	Net Income Q3 2025 ($M)
Commercial, Consumer & Wealth	747	777	289	312
Wholesale	111	134	22	39
Corporate	(28)	(22)	(67)	(85)

Operating and balance sheet KPIs

KPI	Q2 2025	Q3 2025
NII (FTE) ($M)	645	678
Loan yield (%)	5.92	6.06
Interest-bearing deposit cost (%)	2.76	2.78
Total funding cost (%)	2.28	2.26
Provision for credit losses ($M)	30	(5)
Net charge-offs ($M) / NCO (%)	34 / 0.22	26 / 0.17
NPL ratio (%)	0.94	0.96
ACL / loans (%)	1.42	1.38
CET1 (%)	11.0	11.0
Average loans ($B)	62.6	62.8
Average deposits ($B)	64.7	65.9
Period-end deposits ($B)	65.6	65.5
Loans / deposits (period-end, %)	96.47	96.23

Notable items (Q3): $10M Visa derivative valuation expense, $2M FDIC special assessment credit; $3M deemed preferred dividend tied to Series B redemption (effective 8/1) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Adjusted revenue (ex deferred comp)	FY 2025	Flat – Up 4% (Q2 view)	Flat – Up 4% (maintained)	Maintained
Adjusted expense (ex deferred comp)	FY 2025	Flat – Up 2% (lowered from 2–4% in Q2)	Flat – Up 2% (expect to finish top-end)	Maintained (top-end bias)
Net charge-offs	FY 2025	0.15% – 0.25%	0.15% – 0.25%	Maintained
Effective tax rate	FY 2025	21% – 23%	21% – 23%	Maintained
CET1 target (near-term)	Near-term	11.0%	10.75% target (progress toward long-term 10.0–10.5%)	Lowered target
Common dividend	Quarterly	$0.15/sh	$0.15/sh	Maintained
Share repurchases	Program	~$300M+ remaining authorization as of Q3 call	New $1.2B authorization (10/27/25) replacing prior; expires 1/31/27	Increased capacity

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2)	Current Period (Q3)	Trend
M&A optionality	Focus on organic growth; optionality intact; regulatory tailwinds emerging (thresholds, approvals) .	CEO: could integrate an in‑footprint, well‑structured merger in 2026+; near‑term focus unchanged; stock reacted to “buyer” framing; clarified optionality unchanged .	Increasing openness; optionality reiterated.
NIM drivers & MSLP	Q1/Q2: Asset‑sensitive base, deposit repricing discipline; NII buoyed by seasonal loan growth; margin stable to slightly compressing .	NIM +15 bps q/q, aided by ~$12M MSLP accretion; CFO cautioned underlying run‑rate high‑330s/low‑340s .	One-time uplift; core stable.
Deposits & pricing	Q1/Q2: Competitive landscape; campaigns and 95%+ retention; noninterest-bearing growth targeted .	Retained ~97% of ~$29B repricing balances; NIB up $131M q/q; competition persists; CFO clarified promo/base optics .	Solid retention; competition elevated.
Counter‑cyclical fees	Q1: ADR volatility; Q2: softer ADR; revenue mix hedge described .	Fixed income ADR +40% to $771k; mortgage banking +$6M on MSR sale; September strength eased in early Q4 .	Improving in Q3; volatile q/q.
CRE dynamics	Q1/Q2: Payoffs of stabilized projects; construction-heavy mix; pipelines sensitive to rates/material costs .	CRE balances -$261M q/q as expected; pipelines improving as rates fall; expect a few quarters of paydowns before equilibrium .	Constructive into 2026.
NDFI exposure	Monitoring; diversified C&I (no industry >12%) .	CCO: consumer financing ~2% of C&I (~1% total); elevated NPLs but controlled; deep field exam capability .	Active oversight; manageable.
Capital & buybacks	Q1/Q2: CET1 near-term ~11%, long-term 10–10.5%; buybacks flex with loan growth .	CET1 11.0%; targeting 10.75% near-term; $190M repurchases in Q3; new $1.2B buyback post-quarter .	Normalization; enhanced return.

Management Commentary

Strategy and positioning (CEO): “Our ongoing focus on safety and soundness, profitability, and growth enables us to meet our clients’ evolving needs with tailored solutions that create meaningful value” .
Growth and macro (CEO): “We’re starting to see activity pick up… lower rates… are an important opportunity… to capitalize on profitable loan growth” .
NIM/NII (CFO): “$33 million of net interest income growth and… 15 bps expansion of net interest margin… benefited from… increased accretion related to the Main Street lending program… primarily concentrated in the third quarter” .
Deposits (CFO): “Retained approximately 97% of the $29 billion in balances… while continuing to reduce our costs… average rate paid on interest-bearing deposits increased to 2.78%” .
Expenses (CFO): “Adjusted expenses excluding deferred compensation increased $45 million… $20 million contribution to the First Horizon Foundation… outside services increased… project expenses in technology and risk” .

Q&A Highlights

M&A posture and stock reaction: CEO emphasized unchanged near-term priorities, optionality intact, and focus on in‑footprint, deposit-rich targets; investors initially reacted to the “buyer” emphasis, but management clarified stance has not changed .
Margin durability: CFO indicated underlying margin is high‑330s/low‑340s ex MSLP; deposit beta repricing lags Fed moves .
Core deposits: Analysts questioned core DDA/base trends; management highlighted strong retention and NIB growth, and explained promo-to-base migration .
NDFI exposure: CCO sized consumer financing exposure (~2% of C&I); described robust field exam oversight and manageable risk .
Fixed income ADR sustainability: Strength began pre‑cut; early Q4 slowed amid shutdown noise; continued rate cuts/curve shape supportive .
CRE pipelines: Improving as rates decline; expect another quarter or two of paydowns before stabilization .

Estimates Context

Q3 2025 beats: Revenue $889M vs ~$848.0M*, GAAP EPS $0.50 vs ~$0.445*; adjusted EPS of $0.51 also exceeded consensus base .
Forward looks: Consensus revenue ~$859.4M* and EPS ~$0.455* for Q4 2025; ~$844.1M* and ~$0.447* for Q1 2026, consistent with a stable core margin backdrop and fee variability.
Implications: Positive estimate revisions likely for both revenue and EPS given clean beats and constructive fee commentary, tempered by guidance of expenses finishing near top-end and underlying margin normalization .

Values with asterisk (*) are retrieved from S&P Global.

Key Takeaways for Investors

Quality beat with broad-based drivers: NII strength (MSLP accretion + core yield) and fee outperformance (fixed income, mortgage) offset planned opex increases; credit remains benign .
Core margin normalization ahead: Expect NIM to drift back toward high‑330s/low‑340s excluding one-time accretion; fee engines (FHN Financial, mortgage) hedge downside in a falling-rate regime .
Credit still a differentiator: Low NCOs, lower ACL ratio on improved grades and mix; provision credit this quarter supports earnings quality .
Capital deployment accelerating: CET1 steady at 11.0% with a path to 10.75%; $190M buybacks in Q3 and a new $1.2B authorization post‑quarter expand return capacity .
Deposit franchise resilient amid competition: 97% retention across repricings and NIB growth q/q, but investors should expect continued pricing competition near term .
M&A optionality clarified: In‑footprint, deposit‑rich “fill‑in” deals are possible from 2026+, but near-term focus is organic growth and executing $100M+ PPNR initiatives; optionality (including as a seller) remains unchanged .
Setup: With beats delivered and guidance intact, estimate drift skewed positive; trading hinges on fee momentum durability, expense trajectory (top-end), and clarity around M&A timing/intent.

Appendix: Additional Data Points

Share repurchases: ~$190M in Q3; ~8.6M shares repurchased; post-quarter $1.2B authorization replaced prior program .
Deposit mix: Period-end deposits $65.5B; brokered CDs down $652M q/q; NIB +$131M; interest-bearing spot ~2.68% at quarter-end .
Loans: Period-end loans $63.1B; C&I ex-LMC +$174M q/q; CRE -$261M; LMC seasonally -$132M; loan yield +14 bps to 6.06% .
Notable items EPS impact: ~$0.01 in Q3 (net) .

FIRST HORIZON CORP (FHN)·Q3 2025 Earnings Summary