First Horizon (FHN) Could Be 17% Undervalued On Its $4.5b Mortgage Reset

First Horizon (FHN) has just posted a third quarter loss tied to the sale and reclassification of about $4.5b in lower yielding mortgages. The move represents a reset that puts balance sheet strategy under investor scrutiny.

First Horizon’s recent reset has landed in a tricky tape for the stock, with the share price down 10.17% over the past 90 days and 4.43% over the past month. This comes even as 1-year total shareholder return sits at 15.99% and the 3-year total shareholder return is approximately 2.4x. Investors are weighing the third quarter loss, higher net charge-offs of US$36 million and an active buyback that has retired 4.7% of shares since late 2025 against management’s plan to recycle US$4.5b of lower yielding mortgages into higher returning assets at a last close of US$22.88.

Compare First Horizon’s reset with other potential breakouts by scanning a curated list of banks and financials that screen well on value and balance sheet strength using the 33 high quality undervalued stocks.

First Horizon has just taken a visible hit to tidy up its mortgage book. Is this quarter’s loss a clean up that supports today’s valuation, or a warning that sentiment has run ahead of the business reset?

Most Popular Narrative: 17% Undervalued

Against a last close of $22.88, the most followed narrative pegs First Horizon’s fair value materially higher, with that gap tied directly to execution on earnings capacity and capital deployment rather than a simple sentiment swing.

First Horizon is still targeting a multi year, $100m plus pre tax pre provision revenue uplift from deeper commercial relationships, with management now indicating progress of roughly 30% to 50% toward that goal, which can continue to support revenue and PPNR.

See why 7 investors see First Horizon as 17% undervalued.

Result: Fair Value of $27.45 (UNDERVALUED)

Still, rising deposit costs that are approaching wholesale levels, along with a softer fixed income backdrop, could quickly challenge the First Horizon upside story that investors are leaning on.

Find out about the key risks to this First Horizon narrative.

Next Steps

Feeling that the First Horizon story could tilt either way from here. Act quickly and review the underlying metrics yourself, then weigh those against the 3 key rewards.

Looking for more First Horizon style ideas?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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