First Horizon Corp. (FHN) shares fell in intraday trading Wednesday after the regional bank’s second-quarter results came in below analysts’ expectations, primarily due to lower net interest income (NII).
The parent company of First Horizon Bank reported NII of $629 million, slightly down from $631 million last year and below the $636 million projected by analysts according to Visible Alpha. This shortfall contributed to lower-than-expected revenue, which dropped to $815 million from $1.03 billion the previous year.
Net income also declined, falling to $204 million from last year’s $329 million, missing the analysts’ forecast of $212 million. On a per-share basis, First Horizon reported earnings of $0.34, just shy of the $0.36 estimate.
As of 2:15 p.m. ET Wednesday, First Horizon shares were down nearly 6%, trading at $16.44, while the KBW Nasdaq Regional Banking Index (KRX) showed gains.
Broader Trends in Banking Sector Impact NII
The decline in NII reported by First Horizon aligns with a broader trend observed among both national and regional banks. Rising deposit costs have offset the benefits of higher interest rates on loans, leading to lower NII in recent earnings reports. Analysts predict that anticipated interest rate cuts later this year could further pressure banks’ NII.
First Horizon has revised its full-year NII outlook, now expecting a range of a 2% decline to flat compared with fiscal 2023’s $2.56 billion, down from previous projections of a 1% to 4% increase. Analysts expect NII to remain roughly unchanged from last year.
In related news, Citizens Financial Group (CFG) also reported lower NII, dropping to $1.41 billion from $1.59 billion a year ago. Other regional banks, including M&T Bank (MTB) and Fifth Third Bancorp (FITB), are set to report their earnings this week.
