First Horizon Raises $400M Through Series H Preferred Stock Issuance

Why It Matters

The results demonstrate First Horizon’s ability to boost profitability and capital strength while navigating rate volatility, reinforcing investor confidence and supporting its growth outlook.

Key Takeaways

• Adjusted ROTCE reaches 15.1%, third straight >15% quarter
• Net interest income rises 6% YoY, outpacing loan growth
• C&I portfolio adds $624M, driving revenue expansion
• CET1 hits 10.53% after $400M preferred issuance
• Share repurchases total $230M, maintaining capital return

Pulse Analysis

First Horizon’s Q1 performance underscores a disciplined profit engine anchored by a 200‑basis‑point lift in adjusted ROTCE. The bank leveraged a favorable deposit‑cost curve, reducing average deposit rates to 2.28% and preserving a net interest margin in the high‑3.40% range. This margin discipline, combined with a 6% rise in net interest income that outpaced loan growth, highlights the effectiveness of its pricing strategy and the strength of its commercial‑and‑industrial (C&I) franchise. Investors see these metrics as a clear signal that the bank can generate earnings even as loan balances remain modest.

Capital management emerged as a focal point, with CET1 climbing to 10.53% after issuing $400 million of Series H preferred stock, which lifted the Tier 1 ratio by 44 basis points. The move, alongside $230 million of share repurchases, reflects a proactive approach to return capital while staying above the newly set 10.5% CET1 target. From a regulatory perspective, the enhanced capital buffer and the issuance of preferred securities provide flexibility for future growth initiatives and potential market‑rate fluctuations, reassuring both analysts and rating agencies.

Looking ahead, First Horizon’s outlook hinges on its robust C&I pipeline, described as "very, very good," and a resurgence in commercial‑real‑estate (CRE) activity that could offset seasonal loan‑to‑mortgage company declines. Management’s flat‑expense guidance, coupled with targeted technology and talent investments, aims to sustain margin stability without eroding profitability. In a competitive banking landscape marked by rate volatility and macro‑economic uncertainty, the bank’s blend of relationship‑driven growth, disciplined expense control, and strategic capital allocation positions it to capture the reaffirmed 3‑7% revenue growth target for the year.

Deal Summary

First Horizon (FHN) completed a $400 million issuance of Series H preferred stock in Q1 2026, boosting its Tier 1 capital ratio by 44 basis points to 11.95%. The capital raise supports the bank's capital management strategy and provides additional liquidity for growth initiatives. The issuance was disclosed in the company's Q1 earnings call on April 15, 2026.