Fed Rate Hike Seen Lifting First Horizon Net Interest Income

Zacks Investment Research··US·Read original
2▲3 ▼0Impact / 5
Summary · why it matters

The Federal Reserve's latest 25-basis-point rate hike to a target of 3.75-4% could provide another tailwind to First Horizon Corporation's net interest income, or NII, as the bank enters a favorable asset-repricing cycle. First Horizon appears well-positioned for higher rates, with 58% of loans variable rate and another 12% in adjustable-rate mortgages as of June 2026, while about $5 billion of fixed-rate loans and $1 billion of lower-yielding securities are set to mature or generate cash flows over the next year. The company estimates that a 100-basis-point rate increase would boost NII by 2.9% over 12 months, suggesting the latest 25-basis-point hike should be modestly positive, though the benefit will depend on deposit pricing and balance-sheet trends. In the second quarter of 2026, First Horizon's NII increased 5% year over year to $679 million, while its net interest margin expanded 9 basis points to 3.49%, though its interest-bearing deposit rate rose to 2.33% as brokered deposits increased. Among peers, Bank of America's NII is estimated to rise by $1 billion over 12 months from a 100-basis-point parallel rate increase, and Citigroup's by $1.2 billion, though higher deposit costs and potential securities losses could temper those benefits.

Impact on assets 5

Financials▲ · 2 stocks
First Horizon Corporation
FHN
▲ PositiveMonetaryrelevance

Fed's 25bp hike to 3.75-4% should modestly lift First Horizon's NII given 58% variable-rate loans and a favorable asset-repricing cycle.

Bank of America Corp
BAC
± MixedMonetaryrelevance

Mentioned only as a peer: BofA's NII estimated to rise $1B from a 100bp rate hike, but higher deposit costs and securities losses could temper the benefit.

Digital Finance & Tokenization▲ · 1 stocks
Citigroup Inc.
C
± MixedMonetaryrelevance

Mentioned only as a peer: Citigroup's NII estimated to rise $1.2B from a 100bp rate hike, though higher deposit costs and potential securities losses could offset.

Others▲ · 2 stocks
© 2026 MarketIVNews