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First Horizon (FHN) Q1 Earnings Beat Estimates, Stock Rises
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First Horizon Corporation’s (FHN - Free Report) first-quarter 2024 adjusted earnings per share (excluding notable items) of 35 cents surpassed the Zacks Consensus Estimate by a penny. However, the figure declined 22.2% year over year.
Investors have been bullish on the stock, as the share price gained 1.9% in yesterday’s trading session on higher fee income. However, a fall in net interest income (NII) and loan balances, coupled with a rise in operating expenses, was an undermining factor.
Net income available to common shareholders was $184 million, down 24.3% year over year.
Revenues Fall and Expenses Rise
Total revenues were $819 million, down 4.7% year over year. However, the top line surpassed the Zacks Consensus Estimate of $807.9 million.
NII declined 9.2% year over year to $625 million. Also, the net interest margin shrunk 51 basis points to 3.37%.
Non-interest income totaled $194 million, which increased 13.5% from the year-ago level.
Non-interest expenses rose 7.7% year over year to $515 million.
The efficiency ratio was 62.92%, up from the year-ago period’s 55.67%. A rise in the efficiency ratio indicates a fall in profitability.
Total period-end loans and leases, net of unearned income, were $61.75 billion, which declined nearly 1% from the end of the previous quarter. Total period-end deposits of $65.74 billion declined marginally.
Credit Quality Worsens
Non-performing loans and leases of $505 million increased 19.1% from the prior-year period. First Horizon witnessed net charge-offs of $40 million, which rose significantly from the year-ago quarter’s $16 million.
Moreover, the provision for credit losses was $50 million, which remained flat from the year-earlier quarter. As of Mar 31, 2024, the ratio of total allowance for loan and lease losses to loans and leases was 1.27%, up from 1.21% reported in the prior-year quarter.
The allowance for loan and lease losses of $787 million declined 10.1% from the year-ago period.
Capital Ratios Improve
As of Mar 31, 2024, the Common Equity Tier 1 ratio was 11.3%, up from 10.4% at the end of the year-ago quarter.
The total capital ratio was 13.9%, up from the year-ago quarter’s 13.6%. The tier 1 leverage ratio was 10.8%, up from 10.7% in the year-ago quarter.
Our Viewpoint
First Horizon has expanded its footprint in the targeted markets. Also, it has been consistent in improving its capital ratios over the past few quarters. However, elevated expenses, lower NII and weak credit quality are near-term concerns. Further, any deterioration in the balance sheet may affect its financials.
Comerica Incorporated Price, Consensus and EPS Surprise
Citigroup Inc.’s (C - Free Report) first-quarter 2024 net income from continuing operations per share of $1.58 surpassed the Zacks Consensus Estimate of $1.13. However, the metric declined 28% from the year-ago quarter.
Citigroup witnessed declines in total loans and deposits in the quarter. Also, a decline in revenues and deteriorating credit quality are near-term woes.
Wells Fargo & Company’s (WFC - Free Report) first-quarter 2024 adjusted earnings per share of $1.26 surpassed the Zacks Consensus Estimate of $1.10. The adjusted figure excludes the impacts of expenses from the FDIC special assessment. In the prior-year quarter, the company reported earnings per share of $1.23.
WFC’s results benefited from higher non-interest income. An improvement in capital ratios and a decline in provisions were other positives. However, the decrease in net interest income and loan balances and an increase in expenses were the undermining factors.
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First Horizon (FHN) Q1 Earnings Beat Estimates, Stock Rises
First Horizon Corporation’s (FHN - Free Report) first-quarter 2024 adjusted earnings per share (excluding notable items) of 35 cents surpassed the Zacks Consensus Estimate by a penny. However, the figure declined 22.2% year over year.
Investors have been bullish on the stock, as the share price gained 1.9% in yesterday’s trading session on higher fee income. However, a fall in net interest income (NII) and loan balances, coupled with a rise in operating expenses, was an undermining factor.
Net income available to common shareholders was $184 million, down 24.3% year over year.
Revenues Fall and Expenses Rise
Total revenues were $819 million, down 4.7% year over year. However, the top line surpassed the Zacks Consensus Estimate of $807.9 million.
NII declined 9.2% year over year to $625 million. Also, the net interest margin shrunk 51 basis points to 3.37%.
Non-interest income totaled $194 million, which increased 13.5% from the year-ago level.
Non-interest expenses rose 7.7% year over year to $515 million.
The efficiency ratio was 62.92%, up from the year-ago period’s 55.67%. A rise in the efficiency ratio indicates a fall in profitability.
Total period-end loans and leases, net of unearned income, were $61.75 billion, which declined nearly 1% from the end of the previous quarter. Total period-end deposits of $65.74 billion declined marginally.
Credit Quality Worsens
Non-performing loans and leases of $505 million increased 19.1% from the prior-year period. First Horizon witnessed net charge-offs of $40 million, which rose significantly from the year-ago quarter’s $16 million.
Moreover, the provision for credit losses was $50 million, which remained flat from the year-earlier quarter. As of Mar 31, 2024, the ratio of total allowance for loan and lease losses to loans and leases was 1.27%, up from 1.21% reported in the prior-year quarter.
The allowance for loan and lease losses of $787 million declined 10.1% from the year-ago period.
Capital Ratios Improve
As of Mar 31, 2024, the Common Equity Tier 1 ratio was 11.3%, up from 10.4% at the end of the year-ago quarter.
The total capital ratio was 13.9%, up from the year-ago quarter’s 13.6%. The tier 1 leverage ratio was 10.8%, up from 10.7% in the year-ago quarter.
Our Viewpoint
First Horizon has expanded its footprint in the targeted markets. Also, it has been consistent in improving its capital ratios over the past few quarters. However, elevated expenses, lower NII and weak credit quality are near-term concerns. Further, any deterioration in the balance sheet may affect its financials.
Comerica Incorporated Price, Consensus and EPS Surprise
Comerica Incorporated price-consensus-eps-surprise-chart | Comerica Incorporated Quote
First Horizon currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
Citigroup Inc.’s (C - Free Report) first-quarter 2024 net income from continuing operations per share of $1.58 surpassed the Zacks Consensus Estimate of $1.13. However, the metric declined 28% from the year-ago quarter.
Citigroup witnessed declines in total loans and deposits in the quarter. Also, a decline in revenues and deteriorating credit quality are near-term woes.
Wells Fargo & Company’s (WFC - Free Report) first-quarter 2024 adjusted earnings per share of $1.26 surpassed the Zacks Consensus Estimate of $1.10. The adjusted figure excludes the impacts of expenses from the FDIC special assessment. In the prior-year quarter, the company reported earnings per share of $1.23.
WFC’s results benefited from higher non-interest income. An improvement in capital ratios and a decline in provisions were other positives. However, the decrease in net interest income and loan balances and an increase in expenses were the undermining factors.