First Horizon Corporation (FHN.N): 2Q26 Review - Deposit Trends Drive A Modestly Lower NIM Reset

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First Horizon Corporation (FHN.N): 2Q26 Review - Deposit Trends Drive A Modestly Lower NIM Reset

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16 Jul 2026 00:25:34 ET │ 12 pages

First Horizon Corporation (FHN.N)

2Q26 Review - Deposit Trends Drive A Modestly Lower NIM Reset

CITI'S TAKE

Buy While the outlook for core loan growth (ex LMC) sounded modestly better

than our past modeling, we believe funding deposits (and maintaining Price (15 Jul 26 16:00) US$24.94

NIM) might pose a material challenge given the seasonal funding mix Target price US$28.50

headwind and 2H26 promotional trends; we have NIM at 3.40% by 1Q27, Expected share price return 14.3%

but stable thereafter. While this change produced a modestly softer Expected dividend yield 2.7%

revenue outlook, our net change on PPNR was minor. Credit continues to Expected total return 17.0%

perform well, and we see a limited LLP expense need. Additionally, the

Market Cap US$11,837M share repurchase trend is likely limited until 4Q given seasonal balance

sheet growth needs. Overall, we continue to see upside in the franchise as

buybacks likely ramp again this fall with a modestly higher (and stable)

ROTCE outlook. Benjamin GerlingerAC

+1-212-816-3538

Estimate Changes — We are refreshing our model following 2Q results. Our benjamin.gerlinger@citi.com

2026/27E EPS compression was driven by a softer NII (due to NIM trends; deposit Kaili Wang, CFA

pricing), which was partially mitigated by our limited expense growth outlook. We do +1-716-730-7408

believe fee income improvement could drive a modestly higher comp expense base kaili.wang@citi.com

in 2026 vs 2025, but would likely be market volatility driven. We lowered our LLP

expense modestly, largely to account for the healthy credit trends and limited LLP Mikhail Mrotchek

expense in 1H26.