First Horizon Plans About $4.5 Billion Loan Sale, Targets 4% EPS Gain

First Horizon plans to sell about $4.5 billion in residential mortgage loans, a balance-sheet change the bank expects to lift 2027 earnings per share by about 4%.

The bank reached an agreement in October and expects the transaction to settle early in the fourth quarter. It also projects about a 150-basis-point improvement in 2027 return on tangible common equity.

First Horizon projected the sale would improve its loan-to-deposit ratio by about 700 basis points to roughly 88%. At third-quarter end, the ratio was already 88%, down 763 basis points from the previous quarter after the targeted loans were reclassified as held for sale.

The bank’s third-quarter net interest margin was 3.48%, down one basis point from the prior quarter. Adjusted diluted earnings per share was 53 cents.

The projected 2027 earnings gain does not include any additional benefit from using some of the sale proceeds for higher-yielding loans, which First Horizon expects to do in coming quarters.

First Horizon reported a third-quarter net loss of $79 million and a loss available to common shareholders of $94 million, or 20 cents per share. The results included $347 million in after-tax notable items, primarily related to reclassifying the targeted mortgage loans as held for sale.