First Horizon’s latest earnings report isn’t just a blip—it’s shaking up the whole financial sector. Are we at the edge of a major shift? Let’s dive into the details and see what this means for savvy investors like you.
First Horizon reported an earnings miss, causing shares to plummet by 5.79% by the close of trading on July 17, 2024. CEO Bryan Jordan took to CNBC’s airwaves to talk with Jim Cramer about the ferocious competition eating into their profits.
Jordan highlighted an intense rivalry in money market and CD deposit rates. Matching these rates to keep customers is costing the bank more than ever. And this aggressive competition? It’s here to stay.
“The competition is very aggressive, especially in money market and CD deposit rates. We are facing a very competitive challenge, and we will continue to match rates and keep our pricing competitive.”
Bryan Jordan
One glance at the First Horizon’s financial metrics paints a vivid picture:
| Metric | Value | Comparison |
|---|---|---|
| Revenue | $815 million | -21% YoY, missed Zacks Consensus Estimate by -0.59%. |
| EPS | $0.36 | -2.70% EPS surprise against $0.37 Zacks Consensus Estimate. |
| Efficiency Ratio | 61.4% | Slightly higher than the 59.6% average estimate. |
| Net Interest Margin | 3.4% | Hit the average estimate. |
| Average Balance | $75.24 billion | Exceeded the $74.66 billion estimate. |
| Net Charge-offs | 0.2% | Better than the 0.3% average estimate. |
| Nonperforming Loans | $574 million | Higher than the average estimate of $530.13 million. |
| Net Interest Income | $629 million | Slightly missed the $633.67 million estimate. |
| Non-Interest Income | $186 million | Matched the $186.23 million estimate. |
| Service Charges | $58 million | Slightly above the $56.71 million estimate. |
| Dividend Increase | Plans to raise dividends | Strategic move to enhance shareholder value. |
| Share Performance | 20.8% increase over the past month | Outperformed the Zacks S&P 500 composite (+4.4%). |
| Zacks Rank | Hold (3) | Indicates potential to perform in line with the broader market. |
| Competitive Landscape | Aggressive competition in deposit rates | Intense rivalry noted by CEO Bryan Jordan. |
Investors are pivoting from tech to small-cap and value stocks. The Russell 2000 is surging, reaching its highest since January 2022—testament to the strong faith in small-cap opportunities.
Chad Morganlander, a portfolio manager with a keen eye for market shifts, is enthusiastically bullish on small-cap stocks. He identifies numerous sectors loaded with potential.
“I’m very bullish on small-cap names in the current market. There are specific sectors and stock plays that present great opportunities.”
Chad Morganlander
On a broader scale, expect the regional and community banking landscape to undergo “healthy consolidation” in the next 2-4 years. Bob Diamond from Atlas Merchant Capital sees this as a prime time for strategic mergers and partnerships.
“Expecting a period of healthy consolidation among regional and community banks.”
Bob Diamond
Let’s not forget the broader market movements. TSLA leads the pack with a staggering 6.054% uptick. MRK, AAPL, BA, and GS also saw significant gains, while NCLH, CCL, CZR, WBD, and AZO experienced declines.
And in global news:
- UK Politics: The UK Labor party is anticipated to secure a substantial victory.
- Japanese Airlines: Taking a firm stand against unruly passengers.
- China’s Youth: “Revenge saving” is trending among younger generations, who are hoarding cash instead of spending, contrasting with the global rise in debt among Gen Z.
Stay tuned to Market Monitors for more updates, insights, and actionable investment ideas. We’re here to help you navigate these turbulent times and spot the opportunities hidden within. Keep your portfolios diverse and your eyes sharp—we’ve got your back.