2Q‘26 Earnings: Higher Deposit Costs & Softer Fees Could Weigh on Outlook

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2Q‘26 Earnings: Higher Deposit Costs & Softer Fees Could Weigh on Outlook

growth guidance of roughly flat ex. bonuses and commissions Source: Visible Alpha

tied to counter-cyclical revenue. NIM is guided to be in the mid-to-high 3.40s range, within a few

basis points of the current 3.49% NIM. Deposit costs are guided to drift modestly higher in 3Q-4Q

absent additional rate cuts, driven by seasonal promotional activity and a more competitive pricing

environment, which is already reflected in guidance. Management expects to reprice deposits lower

as promotions roll off, consistent with historical behavior. Total balance sheet growth guidance

was reiterated at mid-single digits, with loan growth supported by strong C&I pipelines and CRE

backlogs. ADR's for 2H'26 were indicated to be modestly weaker than 2H'25 which averaged

$768,000 per day. NCO guidance was reaffirmed at 15-25 bp. CET1 target in the near term

was reiterated at 10.5% (2Q was 10.5%), with an intermediate-term target of 10.0%-10.5% as the

company remains opportunistic on buybacks. Management expects PPNR growth and positive

operating leverage in 2026 and believes it has reached a sustained 15%+ adjusted ROTCE over the

cycle (2Q was 15.3%), though quarterly results may fluctuate modestly below this level.

Estimate changes and recommendation. We are lowering our 2026/2027 core EPS estimates to

$2.10/$2.25 from $2.15/$2.35 owing to lower NIM assumptions. We maintain our BUY rating, as

we believe FHN's rate-neutral PPNR business model, stable credit outlook, and Southeast market

David Chiaverini, CFA * | Equity Analyst

presence warrants a premium valuation. +1 (212) 778-8554 | dchiaverini@jefferies.com

Brian Violino, CFA * | Equity Analyst

+1 (212) 444-4139 | bviolino@jefferies.com