First Horizon National Corp. (FHN, Financial) followed the bank earnings trend on Friday, beating earnings per share (EPS) estimates and missing on revenue. The company reported third-quarter EPS of 32 cents, beating estimates by 2 cents. Revenue of $322.23 million missed estimates by $17.67 million.
Revenue for the third quarter decreased 2% from the previous quarter and 3% from the comparable quarter. Total revenue for the year is now $957.3 million. Regional banking revenue reported the largest gain from the comparable quarter, increasing 7%. It is also the company’s greatest revenue driver with 83% of total revenue for the year. Fixed income product revenue was down 17% from the comparable quarter, but it led gains from the previous quarter with an increase of 3%.
Adjusted EPS was 32 cents, up from 27 cents in the comparable quarter. Net income of $71.8 million was down 25% from the previous quarter and increased 6% from the comparable quarter. For the year net income is now $225.4 million. Net income from fixed income products increased 34% from the previous quarter and was down 40% from the comparable quarter. Regional banking also reported the greatest portion of net income at 93%. Regional banking net income was up 1% from the previous quarter and 13% from the comparable quarter.
A key factor for the bank in 2018 will be the integration of Capital Bank. The firm’s acquisition deal is expected to close in the fourth quarter. It is expecting significant cost savings and synergies from the deal.
Bank earnings have been a significant valuation driver for investors as they kick off the beginning of third-quarter earnings reports. With rates expected to continue rising, many market experts see now as a good time for investing in the sector overall.
On Tuesday, Goldman Sachs (GS, Financial) and Morgan Stanley (MS, Financial) will report the last of the earnings from the big banks.
First Horizon is currently trading at $18.92. It has 234 million shares outstanding with a market cap of $4.43 billion. Year to date the stock has a return of -5.45% versus a 2.46% gain for the Standard & Poor's Banks Select Industry Index.
Institutional investors own 94% of the outstanding stock. The firm’s top shareholder is Fuller & Thaler Asset Management Inc. with 2.75% of the outstanding shares.
Disclosure: I do not own any stocks included in this article.
