On its third quarter of 2026 earnings call, held on Oct. 15, 2026, First Horizon (NYSE:FHN) announced an agreement to sell approximately $4.5 billion of low-yielding residential mortgage loans as part of a balance sheet repositioning. The transaction frees up balance sheet capacity by removing non-relationship assets. This move allows the bank to reinvest capital into higher-yielding commercial client lending. Three key takeaways from management explain how this operational shift creates shareholder value. First Horizon is shedding lower-yielding single-product residential loans that carry minimal customer deposits. Replacing these assets creates balance sheet capacity for profitable commercial client relationships. Management expects the portfolio sale to boost earnings per share (EPS) by around 4% in 2027. The company is maintaining its common equity tier 1 (CET1) ratio, a key measure of capital strength, enabling it to resume buying back shares.
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