First Horizon Q3 2026 Earnings: Mortgage Reclassification Drives $94 Million Loss

First Horizon Corporation (NYSE: FHN) reported a Q3 2026 net loss available to common shareholders of $94 million, or a diluted loss of $0.20 per share, for the quarter ended September 30, 2026. Adjusted diluted EPS was $0.53, up $0.02 year over year but down $0.01 from Q2, as mortgage-related notable items created a wide gap between GAAP and adjusted results. Average client deposit balances increased $1.3 billion during the quarter.

Core Earnings Data

The quarter’s central issue was the effect of strategic balance-sheet actions on reported earnings. FHN recorded $347 million of after-tax notable items, equivalent to $0.73 per diluted share, primarily from reclassifying selected consumer mortgages as held for sale.

Adjusted results are non-GAAP, and all EPS figures are based on diluted shares.

The Mortgage Reclassification Explains the Earnings Gap

During the quarter, First Horizon began evaluating the sale of approximately $4.5 billion of selected lower-yielding consumer mortgages. The loans were reclassified as held for sale, producing most of the notable-item impact that pushed reported EPS below zero. The $0.73 per-share impact directly bridges the difference between the $0.20 GAAP loss and adjusted EPS of $0.53.

First Horizon entered into an agreement to sell the mortgages in early October and expects the transaction to settle early in Q4 2026. Management said the sale should be accretive to future earnings and provide balance-sheet flexibility for loan growth, although it did not quantify the expected earnings benefit.

The $1.3 billion increase in average client deposits also expanded the company’s funding base during the quarter. Management characterized deposit growth and the planned redeployment of balance-sheet capacity as parts of its effort to focus capital on higher-priority client relationships and growth opportunities.

Recent Insider Transactions

The supplied insider data classified 365,172 shares across 18 transactions as purchases during the past six months, compared with 18,313 shares sold in one transaction. That produced net purchases of 346,859 shares, equal to 8.20% of reported total insider holdings of 4.57 million shares.

The most substantive recent entries involved officer Elizabeth A. Ardoin. These transactions should be viewed as factual disclosures rather than evidence of management’s outlook.

The other eight entries among the ten most recent transactions were zero-price stock awards granted to directors on May 5, 2026.

Risks Investors Need to Watch

• Mortgage sale execution: The planned transaction had not settled when the results were released. A delay or change in terms could postpone the expected earnings and balance-sheet benefits.
• Unquantified earnings benefit: Management expects the sale to be accretive, but it did not provide a numerical estimate. Investors will need to monitor whether the resulting flexibility translates into loan growth and improved earnings.
• Large GAAP-to-adjusted gap: Notable items reduced diluted EPS by $0.73 this quarter. Additional restructuring or balance-sheet actions could continue to make reported results differ materially from adjusted performance.

Summary

First Horizon’s Q3 2026 GAAP loss primarily reflected the reclassification of approximately $4.5 billion of lower-yielding consumer mortgages ahead of a planned sale, while adjusted EPS remained slightly above the prior-year level. The next key developments are the expected early-Q4 settlement, the size of the resulting earnings benefit, and whether the additional balance-sheet capacity supports future loan growth without requiring further material adjustments.