First Horizon Posts Steady Earnings for Q3 2025 Amid Mixed Market Reaction

Introduction: A Modest Earnings Performance in a Challenging Banking Environment

First Horizon (FHN) released its Q3 2025 earnings report on October 15, 2025, under a backdrop of cautious investor sentiment toward the banking sector. With rising interest rates and elevated credit risk concerns, many regional banks have seen muted performance. First Horizon, however, reported a stable set of results, with earnings per share and revenue figures in line with industry trends. The report period also marked a key earnings beat, which has historically shown varied but positive returns for the stock and the broader banking sector.

Earnings Overview & Context

First Horizon delivered a net income of $401 million in Q3 2025, translating to $0.67 per diluted share, in line with its total basic and diluted earnings per share. Total revenue came in at $1.634 billion, driven by $1.253 billion in net interest income and $381 million in noninterest income. This reflects the company’s balanced approach to income generation, with a strong presence in services such as service charges and credit card income.

Notably, the firm’s provision for credit losses was $105 million, a key metric for assessing risk exposure in a rising rate environment. This figure suggests a measured approach to credit management, with no sharp spikes in provisions that could signal deteriorating asset quality.

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Backtest Analyses

Stock Backtest

The performance of FHN following earnings beats suggests a moderate but favorable trend over the medium term. Historical data shows that First Horizon has a 54.55% win rate within three days and a stronger 72.73% win rate over 30 days following positive earnings surprises. The average return of 3.89% after 30 days highlights the potential for long-term capital appreciation.

However, the stock tends to experience slight negative returns around the 10-day mark, indicating short-term volatility or profit-taking behavior. These results suggest that investors who hold FHN post-earnings beat for up to one month can capitalize on favorable price trends, making it a strategic consideration for those with a medium-term outlook.

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Industry Backtest

In the broader banking sector, the pattern of returns following earnings beats is similarly encouraging. On average, banks that beat earnings expectations yield a positive return of 1.06%, typically realized around 27 days after the event. This points to a consistent, if modest, return potential for investors who align their positions with positive earnings surprises in the sector.

Comparing First Horizon’s performance with the broader industry, its 3.89% average return after 30 days is above the sector average, underscoring its stronger relative performance post-earnings beat.

Driver Analysis & Implications

First Horizon’s performance in Q3 was supported by its strong interest income base, with loans and leases totaling $19.44 billion. This, combined with a stable deposit base of $7.97 billion, has positioned the bank to benefit from the broader rate environment. However, the firm’s $580 million in salaries and employee benefits and $38 million in tech and equipment costs highlight ongoing cost pressures that could impact future margins.

From a macroeconomic perspective, the banking sector’s ability to capitalize on positive earnings surprises aligns with broader market expectations of economic resilience and reduced credit risk. With interest rates likely to remain elevated for the foreseeable future, First Horizon’s asset mix and cost discipline will be key to sustaining its performance.

Investment Strategies & Recommendations

Given the data, investors might adopt the following strategies:

• Short-term investors should be mindful of the initial volatility around the 10-day mark and avoid reacting impulsively to short-term swings.
• Medium-term investors are encouraged to hold FHN for up to 30 days post-earnings beat to benefit from the reported 72.73% win rate and 3.89% average return.
• Sector-focused investors can take comfort in the broader banking industry’s positive returns post-earnings beat and use First Horizon as a potential bellwether for sector-wide trends.

Conclusion & Outlook

First Horizon’s Q3 2025 earnings reflect a steady, if modest, performance in a challenging economic environment. While the stock’s short-term reaction to earnings news may be volatile, the data supports a positive long-term outlook for FHN following earnings surprises. The next key catalyst for the company will be its guidance for Q4 2025, which could provide further insight into its ability to navigate the evolving rate and credit landscape. Investors should closely monitor this guidance and any additional market-moving announcements ahead of the next earnings report.