Memphis, TN – October 27, 2025 – First Horizon Corporation (NYSE: FHN) today announced a significant move to enhance shareholder value, declaring its regular quarterly cash dividend on common stock and authorizing a robust new $1.2 billion common stock repurchase program. These strategic capital allocation decisions underscore the regional bank's strong financial health and commitment to returning capital to its investors, signaling confidence amidst evolving market conditions.
The dual announcement, made as the closing bell rang, immediately positions First Horizon as a proactive player in managing its capital structure. For shareholders, the dividend provides consistent income, while the substantial share repurchase program is expected to support the stock price and potentially boost earnings per share by reducing the number of outstanding shares. This aggressive capital deployment strategy comes at a pivotal time for regional banks, as they navigate interest rate uncertainties and a dynamic economic landscape.
Detailed Coverage: A Clear Signal of Financial Strength
First Horizon Corporation's board of directors authorized a new common stock repurchase program totaling $1.2 billion. This program became effective immediately, replacing a previous authorization with approximately $180 million remaining, and is slated to expire on January 31, 2027. The timing and execution of these repurchases will be at the discretion of senior management, considering factors such as the company's capital position, financial performance, market conditions, and regulatory requirements. This move highlights management's belief in the intrinsic value of FHN stock and its commitment to optimizing shareholder returns.
In tandem with the buyback, the company declared a quarterly cash dividend of $0.15 per share on its common stock. This dividend is payable on January 2, 2026, to shareholders of record as of December 12, 2025. This consistent dividend payout, which translates to an annualized yield of approximately 2.9% and a payout ratio of 36.36%, reinforces First Horizon's appeal to income-focused investors. Furthermore, cash dividends were also declared on the company's Series C, Series E, and Series F Preferred Stock, as well as on First Horizon Bank's Class A Non-Cumulative Perpetual Preferred Stock, catering to a broader base of investors.
Bryan Jordan, Chairman, President, and Chief Executive Officer of First Horizon, emphasized that the company's "strong capital position and capital generation support our ability to grow our balance sheet and return excess capital to our shareholders." This sentiment resonates with InvestingPro data, which has consistently noted management's aggressive approach to share buybacks as a sign of confidence in the company's valuation. While specific immediate market reactions to this precise announcement were not isolated, First Horizon's stock had shown some positive movement recently, with FHN trading up 1.6% at $20.88 on October 24, 2025. This broader positive sentiment in the market, partly fueled by anticipation of Federal Reserve interest rate cuts, could provide a favorable backdrop for the execution of the repurchase program.
Implications for Shareholders and First Horizon's Financial Health
The declared dividend and the substantial share repurchase program carry significant implications for both First Horizon Corporation (NYSE: FHN) and its shareholders. For investors, the consistent quarterly dividend provides a reliable income stream, appealing particularly to those seeking stable returns. The $0.15 per share dividend, with a healthy yield, reinforces the company's commitment to rewarding its long-term investors.
The $1.2 billion share repurchase program, however, is the more impactful announcement for the company's valuation and shareholder wealth. By reducing the number of outstanding shares, the program can lead to an increase in earnings per share (EPS), even if net income remains constant. This can make the stock more attractive to investors and potentially drive up its market price. Simply Wall St, in analyses around the announcement date, estimated First Horizon's fair value at $24.32, suggesting the stock was undervalued by approximately 14-17% at its current trading levels. An active buyback program can help bridge this perceived valuation gap.
From a financial health perspective, initiating such a large buyback program signals management's confidence in the company's future earnings and capital generation capabilities. It indicates that First Horizon believes its stock is a good investment at current prices and that it has sufficient capital beyond what's needed for growth and regulatory requirements. While a share repurchase reduces the company's cash reserves, it also optimizes its capital structure, potentially improving return on equity (ROE) and other profitability metrics. However, the success of the buyback will depend on its execution and the prevailing market conditions, ensuring that shares are bought back at opportune times to maximize shareholder value.
Wider Significance: Capital Allocation Trends in Regional Banking
First Horizon's substantial capital allocation moves resonate within broader industry trends, particularly among regional banks. In an environment characterized by fluctuating interest rates and heightened regulatory scrutiny, many financial institutions are carefully managing their capital. Share repurchases and consistent dividends are common strategies employed by well-capitalized banks to return excess capital to shareholders, especially when organic growth opportunities might be constrained or when management believes the stock is undervalued.
This action by First Horizon (NYSE: FHN) could set a precedent or at least contribute to a trend among its peers. Other regional banks with strong capital positions might be encouraged to follow suit, signaling confidence in their own financial stability and a commitment to shareholder returns. Potential ripple effects could include increased investor focus on capital return strategies across the regional banking sector, differentiating banks based on their ability to generate and deploy capital effectively. Competitors like Truist Financial (NYSE: TFC) or Regions Financial (NYSE: RF) will likely observe First Horizon's performance and market reaction closely.
Regulatory bodies, such as the Federal Reserve, closely monitor bank capital levels and capital distribution plans. The approval of such a large repurchase program suggests that First Horizon meets or exceeds regulatory capital requirements, providing a layer of assurance regarding its stability. Historically, periods of economic uncertainty often see banks conserve capital, but a move like this in late 2025 suggests a more optimistic outlook on the economic horizon or at least a strong internal assessment of resilience. This contrasts with earlier periods where banks faced pressure to suspend buybacks during crises, underscoring the current strength of the banking system.
What Comes Next: Navigating the Future Landscape
In the short term, investors will closely monitor the execution of First Horizon's (NYSE: FHN) $1.2 billion share repurchase program. The pace and price at which shares are bought back will be crucial in determining the immediate impact on the stock price and EPS. Given the program's expiration on January 31, 2027, management has flexibility, allowing them to be opportunistic in their purchases. The consistent dividend payment will also continue to provide a stable return for income-seeking investors.
Looking further ahead, the successful deployment of this capital management strategy could free up additional resources or enhance the company's ability to pursue other strategic initiatives. CEO Bryan Jordan's previous comments about potential small acquisitions starting in 2026, though initially met with mixed investor reactions, suggest that capital allocation is a multi-faceted strategy for First Horizon. A strong capital base, bolstered by prudent repurchases, could provide the necessary flexibility for such inorganic growth opportunities, should they align with the company's long-term vision.
Market opportunities or challenges will largely depend on the broader economic environment, particularly interest rate movements and regional economic health. If the Federal Reserve indeed begins to cut interest rates, as anticipated by some, it could impact net interest margins for banks, including First Horizon. However, a stable economic environment and effective capital deployment could allow First Horizon to outperform its peers. Potential scenarios range from a steady appreciation in stock value due to reduced share count and improved EPS, to strategic acquisitions that further expand the bank's footprint and capabilities. Investors should watch for updates on the repurchase program's progress and any further announcements regarding strategic growth.
Comprehensive Wrap-Up: A Confident Stance in a Dynamic Market
First Horizon Corporation's (NYSE: FHN) announcement of a $1.2 billion share repurchase program and a consistent quarterly dividend declaration marks a significant moment for the regional banking sector. The key takeaway is the company's strong commitment to shareholder returns, underpinned by a robust capital position. This dual strategy serves to reward existing investors with a steady income stream and enhance per-share metrics through a reduced share count, signaling management's confidence in the company's intrinsic value and future prospects.
Moving forward, the market will assess First Horizon's ability to execute its repurchase program efficiently and effectively, maximizing value for shareholders. The company's actions fit within a broader trend of well-capitalized banks actively managing their capital, but the scale of this repurchase program sets First Horizon apart. It suggests a proactive approach to optimizing its capital structure and potentially leveraging what it perceives as an undervalued stock.
Investors should closely monitor several factors in the coming months: the progress of the share repurchase program, any further commentary from management regarding capital allocation and potential acquisitions, and the broader economic and interest rate environment. These elements will collectively shape First Horizon's performance and the lasting impact of today's significant announcements. The company has clearly articulated its strategy, and now the focus shifts to execution and the market's continued reaction to a regional bank taking a confident stance on capital deployment.
This content is intended for informational purposes only and is not financial advice
