First Horizon Corporation's Net Income Available to Common Shareholders Soars 27% in Q2 2025

First Horizon Corporation (NYSE: FHN) announced strong financial results for Q2 2025, with net income available to common shareholders reaching $233 million, or $0.45 per diluted share. This represents a 27% year-over-year increase in net income available to common shareholders from $184 million in Q2 2024. Revenue for the quarter stood at $830 million, marking a 2% increase from $815 million in the same period last year. The reported diluted EPS of $0.45 exceeded analyst estimates of $0.41, while the reported revenue of $830 million missed analyst estimates of $833.68 million for the quarter.

Key Business Drivers

Net interest income (FTE) increased by $10 million to $645 million, primarily driven by loan portfolio growth. Average loan and lease balances saw a $906 million increase compared to the prior quarter, reaching $62.6 billion. Loans to mortgage companies (LMC) contributed significantly with $689 million in period-end growth, attributed to typical seasonal increases and market share gains, while other C&I balances increased by $316 million. Loan yields rose by 3 basis points to 5.92%, driven by the elevated LMC portfolio.

Noninterest Income and Expense Dynamics

Noninterest income for Q2 2025 increased by $7 million to $189 million. This rise was supported by a $10 million increase in deferred compensation income and a $3 million increase in service charges and fees due to higher client transaction volume. Mortgage banking fees also increased by $1 million, reflecting a slight pickup in home purchase seasonality. Conversely, fixed income declined by $7 million, with average daily revenue decreasing by 6%. Total noninterest expense rose by $3 million from the prior quarter to $491 million. Adjusted noninterest expense increased by $14 million, including $9 million in higher deferred compensation. Personnel expense, excluding deferred compensation, saw a $3 million decline due to lower incentives, partially offset by higher salaries and benefits. Outside services increased by $7 million, primarily due to seasonal advertising spend.

Balance Sheet and Capital Strength

Average deposits increased by $0.2 billion from Q1 2025 to $64.7 billion, with period-end deposits growing by $1.4 billion, largely due to a $1.6 billion increase in brokered deposits used to fund increased LMC balances. The interest-bearing deposit cost increased by 4 basis points to 2.76%. Asset quality improved, with provision expense decreasing by $10 million from the previous quarter to $30 million. Nonperforming loans decreased by $17 million to $593 million, although net charge-offs increased to $34 million. The Allowance for Credit Losses (ACL) to loans ratio decreased to 1.42%, reflecting higher LMC balances, positive net risk grade migration, and lower nonperforming loans. The CET1 ratio improved by 7 basis points to 11.0%, despite deploying the majority of excess capital into loan growth.