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First Horizon (FHN) Q2 Earnings Lag Estimates, Stock Down 5.8%
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Shares of First Horizon Corporation (FHN - Free Report) lost 5.8% following the release of its lower-than-expected second-quarter 2024 results. Adjusted earnings per share (excluding notable items) of 36 cents lagged the Zacks Consensus Estimate by a penny. Moreover, the figure declined 7.7% year over year.
Results were adversely impacted by a fall in net interest income (NII) and non-interest income. Also, lower deposits and higher provisions were other negatives. Nonetheless, lower expenses and an increase in loan balances offered some relief.
Net income available to its common shareholders was $184 million, down 42% year over year.
Revenues Fall and Expenses Decline
Total revenues were $815 million, which was down 21% year over year. The top line lagged the Zacks Consensus Estimate of $819.8 million.
NII declined marginally year over year to $629 million. However, the net interest margin remained stable at 3.37%.
Non-interest income was $186 million, which decreased 53.5% from the year-ago level.
Non-interest expenses fell 9.9% year over year to $500 million.
The efficiency ratio was 61.44%, up from the year-ago period’s 53.89%. A rise in the efficiency ratio indicates a fall in profitability.
Total period-end loans and leases, net of unearned income, were $62.78 billion, which increased 1.7% from the end of the previous quarter. Total period-end deposits of $64.79 billion declined 1.4%.
Credit Quality Worsens
Non-performing loans and leases of $574 million increased 42.8% from the prior-year period. First Horizon witnessed net charge-offs of $34 million, which rose significantly from the year-ago quarter’s $23 million.
Moreover, the provision for credit losses was $55 million, which increased 10% from the year-earlier quarter. As of Jun 30, 2024, the ratio of total allowance for loan and lease losses to loans and leases was 1.32%, up from 1.20% reported in the prior-year quarter.
The allowance for loan and lease losses of $821 million rose 11.4% from the year-ago period.
Capital Ratios Improve
As of Jun 30, 2024, the Common Equity Tier 1 ratio was 11%, which was down from 11.1% at the end of the year-ago quarter.
The total capital ratio was 13.7%, which was up from the year-ago quarter’s 13.6%. The tier 1 leverage ratio was 10.6%, up from 10.5% in the year-ago quarter.
Our Viewpoint
First Horizon’s strong business mix of regional and specialty banking franchises is expected to drive organic growth. Strategic buyouts have helped the bank to expand its footprint into key markets. However, a mounting expense base and commercial loan portfolio concentration remain headwinds.
First Horizon Corporation Price, Consensus and EPS Surprise
WaFd, Inc.’s (WAFD - Free Report) third-quarter fiscal 2024 (ended Jun 30) adjusted earnings of 76 cents per share handily surpassed the Zacks Consensus Estimate of 59 cents. Also, the bottom line rose 4.1% sequentially.
The quarter marked the first full quarter after the completion of the acquisition of Luther Burbank Corporation.
WAFD’s results reflected a rise in NII and other income, which aided the top line. Also, higher loan balances and lower provisions were other positives. However, a rise in expenses and a slight decline in the deposit balance acted as spoilsports.
Hancock Whitney Corp.’s (HWC - Free Report) second-quarter 2024 earnings per share of $1.31 beat the Zacks Consensus Estimate of $1.19. However, the bottom line compared unfavorably with $1.35 per share registered in the year-ago quarter.
HWC’s results were aided by an increase in non-interest income. However, a decline in NII and higher expenses and provisions were the undermining factors.
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First Horizon (FHN) Q2 Earnings Lag Estimates, Stock Down 5.8%
Shares of First Horizon Corporation (FHN - Free Report) lost 5.8% following the release of its lower-than-expected second-quarter 2024 results. Adjusted earnings per share (excluding notable items) of 36 cents lagged the Zacks Consensus Estimate by a penny. Moreover, the figure declined 7.7% year over year.
Results were adversely impacted by a fall in net interest income (NII) and non-interest income. Also, lower deposits and higher provisions were other negatives. Nonetheless, lower expenses and an increase in loan balances offered some relief.
Net income available to its common shareholders was $184 million, down 42% year over year.
Revenues Fall and Expenses Decline
Total revenues were $815 million, which was down 21% year over year. The top line lagged the Zacks Consensus Estimate of $819.8 million.
NII declined marginally year over year to $629 million. However, the net interest margin remained stable at 3.37%.
Non-interest income was $186 million, which decreased 53.5% from the year-ago level.
Non-interest expenses fell 9.9% year over year to $500 million.
The efficiency ratio was 61.44%, up from the year-ago period’s 53.89%. A rise in the efficiency ratio indicates a fall in profitability.
Total period-end loans and leases, net of unearned income, were $62.78 billion, which increased 1.7% from the end of the previous quarter. Total period-end deposits of $64.79 billion declined 1.4%.
Credit Quality Worsens
Non-performing loans and leases of $574 million increased 42.8% from the prior-year period. First Horizon witnessed net charge-offs of $34 million, which rose significantly from the year-ago quarter’s $23 million.
Moreover, the provision for credit losses was $55 million, which increased 10% from the year-earlier quarter. As of Jun 30, 2024, the ratio of total allowance for loan and lease losses to loans and leases was 1.32%, up from 1.20% reported in the prior-year quarter.
The allowance for loan and lease losses of $821 million rose 11.4% from the year-ago period.
Capital Ratios Improve
As of Jun 30, 2024, the Common Equity Tier 1 ratio was 11%, which was down from 11.1% at the end of the year-ago quarter.
The total capital ratio was 13.7%, which was up from the year-ago quarter’s 13.6%. The tier 1 leverage ratio was 10.6%, up from 10.5% in the year-ago quarter.
Our Viewpoint
First Horizon’s strong business mix of regional and specialty banking franchises is expected to drive organic growth. Strategic buyouts have helped the bank to expand its footprint into key markets. However, a mounting expense base and commercial loan portfolio concentration remain headwinds.
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 #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
WaFd, Inc.’s (WAFD - Free Report) third-quarter fiscal 2024 (ended Jun 30) adjusted earnings of 76 cents per share handily surpassed the Zacks Consensus Estimate of 59 cents. Also, the bottom line rose 4.1% sequentially.
The quarter marked the first full quarter after the completion of the acquisition of Luther Burbank Corporation.
WAFD’s results reflected a rise in NII and other income, which aided the top line. Also, higher loan balances and lower provisions were other positives. However, a rise in expenses and a slight decline in the deposit balance acted as spoilsports.
Hancock Whitney Corp.’s (HWC - Free Report) second-quarter 2024 earnings per share of $1.31 beat the Zacks Consensus Estimate of $1.19. However, the bottom line compared unfavorably with $1.35 per share registered in the year-ago quarter.
HWC’s results were aided by an increase in non-interest income. However, a decline in NII and higher expenses and provisions were the undermining factors.