First Horizon's $473 Million Mortgage Sale Loss Turns A $0.53 Adjusted Quarter Into A $0.20 Loss
The bank's adjusted earnings per share held near last quarter's level, but a pending $4.5 billion mortgage sale pushed reported results negative.
First Horizon posted a third-quarter net loss of $94 million to common shareholders, or $0.20 a share, after booking a $473 million pre-tax loss on a pending sale of about $4.5 billion of mortgages. Excluding notable items, adjusted earnings were $0.53 a share, according to the earnings release furnished with an 8-K filed Thursday.
The reported loss versus the adjusted profit
The reported loss compares with earnings of $0.50 a share in the third quarter of 2025. Adjusted earnings of $0.53 were down $0.01 from the second quarter and up $0.02 from a year earlier.
Notable items totaled $0.73 a share, or $347 million after tax, mainly from moving targeted mortgage loans to held for sale. The company said it began weighing a sale of the roughly $4.5 billion of lower-yielding consumer mortgages during the quarter and entered into an agreement to sell them in early October.
The loss hit noninterest income, which fell to a loss of $276 million. Total revenue was $407 million, against $887 million in the second quarter, and the efficiency ratio (expenses as a share of revenue) was 129.6%. On an adjusted basis it was 58.9%.
Capital, loans and deposits
The common equity tier 1 ratio, a core measure of bank capital strength, fell to 10.3% from 10.5% in the second quarter. The release says notable items tied to the mortgage reclassification drove the decline. The slides put the effect at about 45 basis points, or roughly 0.45 percentage points.
Period-end loans were $59.8 billion, down $5.5 billion from the second quarter, with consumer real estate down $4.6 billion. The period-end loan-to-deposit ratio dropped to about 88%, which the slides describe as a 700-basis-point improvement.
Chairman, President and CEO Bryan Jordan said average client deposit balances rose $1.3 billion in the quarter. Net interest income on a taxable-equivalent basis rose $7 million to $686 million, while the net interest margin slipped 1 basis point to 3.48%.
What the slides say comes next
The slides say the sale should add about 4%, or $45 million after tax, to 2027 earnings, and lift 2027 return on tangible common equity by about 150 basis points. Those figures are measured against a consensus forecast as of October 2, 2026, and exclude benefits from redeploying part of the proceeds into higher-yielding loans, which the company expects in coming quarters.
The transaction is expected to settle early in the fourth quarter. The slides show 2026 guidance for the CET1 ratio at 10.25% to 10.5%, against about 10.5% before.
The next marker is settlement of the mortgage sale, which the company expects early in the fourth quarter.
Sources
- 8-K Filing — FIRST HORIZON CORP (FHN) — SEC EDGAR
- Exhibit a3q2026earningsrelease.htm — FIRST HORIZON CORP 8-K exhibit — SEC EDGAR
- Exhibit a3q26earningsslides-fina.htm — FIRST HORIZON CORP 8-K exhibit — SEC EDGAR
- First Horizon Corporation Reports Third Quarter 2026 Results and Announces Strategic Balance Sheet Changes to Support Earnings and Growth — prnewswire.com
