First Horizon Posts $94M Q3 Loss on $4.5B Mortgage Sale, Cuts CET1 Outlook
FHN is trading near its 52-week low of $19.8 (10% above the low) on elevated volume (2.2× avg).
Summary
First Horizon swung to a $94 million Q3 loss on a $473 million pre-tax charge tied to selling ~$4.5 billion of mortgages, but adjusted EPS of $0.53 held steady and management expects the repositioning to add ~4% to 2027 earnings; shares rose 4% on the news, and the bank plans to partially redeploy proceeds into higher-yielding loans in the coming quarters.
Updated with a Reuters report · What changed
Updates
· Reuters — First Horizon shares rose 4% on the mortgage sale news; the deal is expected to close in Q4 and boost 2027 profit by 4% after tax.
- Plans to partially redeploy proceeds from the mortgage sale into higher-yielding loans in the coming quarters
Key Events · Earnings and Guidance · FHN
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Updated · · Reuters
$4.5B Mortgage Portfolio Sale
Agreement entered in early October 2026 to sell ~$4.5 billion of lower-yielding residential mortgages; settlement expected early in Q4 2026, and the deal is expected to close in Q4. The reclassification drove a $473 million pre-tax loss and a $45 million provision reversal. Shares rose 4% on the news, the deal is expected to boost 2027 profit by 4% after tax, and the bank plans to partially redeploy proceeds into higher-yielding loans in the coming quarters.
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Q3 2026 Net Loss of $94 Million
Reported loss per share of $(0.20) versus $0.54 diluted EPS in Q2 2026, driven by $347 million after-tax in notable items.
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Adjusted EPS Holds at $0.53
Excluding notable items, adjusted EPS was $0.53, down $0.01 from Q2 2026 and up $0.02 from Q3 2025; adjusted ROTCE was 14.4%.
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CET1 Falls to 10.3%, Outlook Trimmed
CET1 declined 12 bps to 10.3% on the mortgage reclassification and notable items; 2026 CET1 target lowered to 10.25%-10.5% from ~10.5%.
Analysis · FHN · Finance
First Horizon reported a Q3 2026 net loss of $94 million, or $(0.20) per share, driven by $347 million after-tax in notable items — primarily a $473 million pre-tax loss on reclassifying ~$4.5 billion of lower-yielding residential mortgages to held for sale. The bank entered an agreement in early October to sell those loans, with settlement expected early in Q4 2026; the deal is expected to close in Q4 and boost 2027 profit by 4% after tax, and shares rose 4% on the news. Excluding the noise, adjusted EPS was $0.53, down a penny from Q2 but up two cents year-over-year, and adjusted ROTCE held at 14.4%. The real story is the balance-sheet repositioning: the sale cuts the loan-to-deposit ratio by ~700 bps to ~88%, frees capital, and management projects ~4% (+$45 million after tax) 2027 earnings accretion and ~150 bps ROTCE improvement, with plans to partially redeploy proceeds into higher-yielding loans in the coming quarters. The cost is near-term capital: CET1 fell to 10.3% from 10.5%, and the 2026 CET1 target was trimmed to 10.25%-10.5% from ~10.5%. Revenue guidance was also nudged to the low end of the 3%-7% range on softer countercyclical revenue and rate timing. For a $10.7 billion regional bank, a $4.5 billion portfolio sale is a material strategic pivot — it trades near-term book value ($13.84 TBVPS, down $0.69) for a cleaner, higher-yielding balance sheet.
How filings like this one have moved
In the 30 days to Oct 31, 2026, 39.9% of the 977 measured filings Wiseek scored 8 moved their stock by 5% or more by the next session's close. The median move was -0.59%. These are measured outcomes after filings of this importance, not a forecast for this one.
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At the time of this filing, FHN was trading at $21.87 on NYSE in the Finance sector, with a market capitalization of approximately $10.7B. The 52-week trading range was $19.80 to $26.56. This filing was assessed with neutral market sentiment and an importance score of 8 out of 10.