First Horizon National Corporation: A Hold Rating Amidst Decelerating Revenue and Emerging Credit Risks

Wells Fargo analyst Timur Braziler maintained a Hold rating on First Horizon (FHN – Research Report) yesterday and set a price target of $16.00.

Timur Braziler has given his Hold rating due to a combination of factors impacting First Horizon National Corporation (FHN). Braziler acknowledges FHN’s strong performance in early 2024, driven by effective repricing of higher cost funding, which led to net interest income (NII) expansion. However, he anticipates a deceleration in revenue growth as the potential for further reductions in funding costs diminishes, and fee income is expected to decrease. Additionally, while near-term NII momentum is favorable compared to peers, there is an increased risk associated with expenses and credit quality.

Braziler also points to the normalization of credit conditions, with a moderate increase in non-performing loans and criticized balances, which could signal emerging credit risks. Asset repricing provides a temporary boost as lower-yielding loans and securities mature and are replaced with higher-yielding assets, but this trend is not expected to sustain long-term NII growth. Moreover, management’s strategies on liquidity coverage and total loss-absorbing capacity (TLAC) indicate potential areas of deficiency that need to be addressed. Despite an active capital return via share buybacks, Braziler suggests a more cautious approach as FHN navigates through these challenges, justifying his Hold recommendation.

In another report released on April 4, J.P. Morgan also maintained a Hold rating on the stock with a $17.50 price target.

FHN’s price has also changed moderately for the past six months – from $10.870 to $14.170, which is a 30.36% increase.

TipRanks tracks over 100,000 company insiders, identifying the select few who excel in timing their transactions. By upgrading to TipRanks Premium, you will gain access to this exclusive data and discover crucial insights to guide your investment decisions. Begin your TipRanks Premium journey today.

First Horizon (FHN) Company Description:

First Horizon National Corp. operates as a financial holding company, which offers checking accounts, savings products, mortgage banking, lending, and financing to individuals and businesses. It operates the business through four segments: Regional Banking, Fixed Income, Corporate, and Non-strategic. The Regional Banking segment offers financial products and services, including traditional lending and deposit taking, to retail and commercial customers. The Fixed Income segment provides financial services for depository and non depository institutions through the sale and distribution of fixed income securities, loan sales, portfolio advisory services, and derivative sales. The Corporate segment consists of unallocated corporate expenses, expense on subordinated debt issuances, bank owned life insurance, unallocated interest income associated with excess equity, net impact of raising incremental capital, revenue and expense associated with deferred compensation plans, funds management, tax credit investment activities, gains on the extinguishment of debt, acquisition-related costs, and various charges related to restructuring and repositioning. The Non-strategic segment includes wind down national consumer lending activities, loan portfolios, service lines and other discontinued products. The company was founded by Frank S. Davis in 1864 and is headquartered in Memphis, TN.