First Horizon to sell $4.5B in mortgages, sees 4% EPS lift
What's the deal? First Horizon plans to sell about $4.5 billion in residential mortgage loans, a move it expects to raise 2027 earnings per share by roughly 4%. The bank reached an agreement in October and expects the deal to settle early in the fourth quarter.
Why now? The sale follows a difficult quarter: First Horizon reported a third-quarter net loss of $79 million, or a loss of 20 cents per share available to common shareholders. That included $347 million in after-tax notable items, mostly tied to reclassifying the targeted mortgage loans as held for sale.
What's the endgame? The bank is reshaping its balance sheet. It projects about a 150-basis-point improvement in 2027 return on tangible common equity, and expects the sale to lift its loan-to-deposit ratio by about 700 basis points to roughly 88%.
That ratio was already 88% at quarter-end, down 763 basis points from the prior quarter after the loans were reclassified. The projected earnings gain excludes any further benefit from redeploying sale proceeds into higher-yielding loans, which First Horizon expects to do in coming quarters.
On underlying performance, the bank posted adjusted diluted EPS of 53 cents and a net interest margin of 3.48%, down one basis point from the prior quarter.
The signal: The move shows how regional banks are trimming lower-yielding assets to shore up returns and funding ratios, trading a short-term loss for a cleaner balance sheet and stronger future earnings.
Read more: tokenpost.com
Image credit: MarkMoz1980
