$FHN · FIRST HORIZON CORP

First Horizon reported Q3 2026 GAAP net loss of $(94)M ($(0.20)/share) driven by a $473M pre-tax loss on reclassifying ~$4.5B of lower-yielding consumer mortgages to held for sale. Adjusted EPS was $0.53, down $0.01 sequentially. The mortgage portfolio sale, agreed to in early October, is expected to settle early Q4 2026 and be accretive to forward earnings while providing balance sheet flexibility for loan growth.

Extended-hours trading shows FHN at $21.66, down 4.46% from the $22.67 regular close, indicating the market is reacting negatively to the GAAP loss and capital ratio decline despite the strategic rationale for the mortgage sale.

A $4.5B balance-sheet restructuring that generated a $(94)M GAAP loss and 12bp CET1 decline is a material event for a $10.7B market-cap regional bank, even if the strategic logic is sound.

Regional banks continue repositioning balance sheets amid elevated rates; FHN's $4.5B low-yield mortgage sale mirrors similar moves by peers seeking to free capital and improve NIM, though the one-time GAAP hit is larger than typical.

The $473M pre-tax loss on the mortgage reclassification drove a 12bp CET1 decline to 10.3%. Deposit costs rose 12bp to 2.45%, pressuring NIM which fell 1bp to 3.48%. Net charge-offs of $36M (22bp) ticked up from $33M (20bp) in Q2.