Yahoo Finance First Horizon (FHN) Q1 Earnings Meet Estimates, NII Rises
First Horizon National Corporation’s FHN first-quarter 2023 earnings per share (excluding notable items) of 46 cents were in line with the Zacks Consensus Estimate. The figure also improved 21% year over year.
Results benefited from higher net interest income (NII), a fall in expenses and an improving loan balance. However, a decline in deposits, higher provisions and lower non-interest income were the undermining factors.
Net income available to common shareholders was $243 million, up 29.9% year over year.
Revenues Rise, Expenses & Deposits Fall
Total revenues were $859 million, up 21.5% year over year. However, the top line missed the Zacks Consensus Estimate of $864 million.
NII increased 43.6% year over year to $688 million. Also, the net interest margin expanded 150 basis points to 3.87%.
Non-interest income was $171 million, declining 25.3% from the year-ago level.
Non-interest expenses decreased 3% year over year to $478 million.
The efficiency ratio was 55.65%, down from the year-ago period’s 69.66%. A fall in the efficiency ratio indicates an increase in profitability.
Total period-end loans and leases, net of unearned income, were $59 billion, up 1.6% from the prior quarter’s end. Total period-end deposits of $61.4 billion decreased 3.2%.
Credit Quality Worsens
Non-performing loans and leases of $424 million increased 27.7% from the prior-year period's level. The first quarter witnessed net charge-offs of $16 million, an increase from the prior-year quarter’s $10 million. Moreover, the provision for credit losses was $50 million against a benefit of $40 million in the prior-year quarter.
The allowance for loan and lease losses of $715 million increased around 15% from the year-ago period. As of Mar 31, 2023, the ratio of total allowance for loans and lease losses to loans and leases was 1.21%, up from 1.13% in the prior-year quarter.
Capital Ratios Improves
As of Mar 31, 2023, the Common Equity Tier 1 ratio was 10.4%, up from 10% at the end of the year-ago quarter.
The total capital ratio was 13.6%, up from the previous-year quarter’s 13.2%. Tier 1 leverage ratio was 10.7%, up from 8.8% in the prior year.
Our Viewpoint
First Horizon has expanded its footprint in the targeted markets. The company’s inorganic expansion efforts will also support its financials. FHN is being acquired by the Toronto-Dominion Bank TD for $13.4 billion. However, TD doesn't expect that the regulatory approvals will be received in time to complete the pending transaction by May 27th, 2023.
First Horizon Corporation Price, Consensus and EPS Surprise
First Horizon Corporation price-consensus-eps-surprise-chart | First Horizon Corporation Quote
First Horizon currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Earnings Dates of Other Banks
Truist Financial TFC is scheduled to release its first-quarter 2023 numbers on Apr 20.
Over the past 30 days, the Zacks Consensus Estimate for Truist Financial’s quarterly earnings has moved 2.6% down to $1.13 lower than prior-year quarter’s $1.23.
Webster Financial WBS is scheduled to release its first-quarter 2023 numbers on Apr 20.
Over the past 30 days, the Zacks Consensus Estimate for WBS’s quarterly earnings has moved 4.3% down to $1.56. This is above the prior-year quarter’s number of $1.24.
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