First Horizon offers a resilient Southeastern banking franchise and 10.95% base-case annualized five-year return, but funding costs and the $100 billion regulatory hurdle constrain near-term upside.
Overview
First Horizon Corporation (FHN) is a Memphis-based regional bank with roots dating to 1864, approximately $84.4 billion of assets, $64.7 billion of average loans, $66.8 billion of average deposits, and more than 450 banking centers across 12 Southern and Southeastern states. Its “big bank balance sheet with a community bank touch” combines localized commercial underwriting with national-scale treasury, wealth, and fixed-income capabilities. **The key differentiator is FHN Financial, whose capital-markets fees make noninterest income more than 30% of revenue and cushion margin or loan-cycle volatility.** Q2 2026 net income rose 12% year over year to $260 million, diluted EPS increased 20% to $0.54, and revenue grew 7% to $887 million, beating consensus. However, NIM fell 3 basis points sequentially to 3.49% as interest-bearing deposit costs rose to 2.33% and brokered CDs increased by $2 billion. Shares declined 3.85% to $24.73 after earnings, despite constructive targets of $26.00, $27.00, and $28.50 from Wells Fargo, Evercore ISI, and J.P. Morgan. The five-year probability-weighted target is $38.28, supported by 15.3% ROTCE, planned loan repricing, buybacks, and Southeastern growth, but near-term upside depends on funding-cost control and successful execution of the $100 million-plus PPNR program.