FIRST HORIZON CORP (FHN)
SIC breadcrumb: Finance, Insurance, And Real Estate > Depository Institutions > SIC 6021 National Commercial Banks
SEC company page: https://www.sec.gov/edgar/browse/?CIK=36966. Latest filing source: 0000036966-26-000051.
Selected Fundamentals
| Metric | Value | Unit | FY | Filed |
|---|---|---|---|---|
| Revenue | 3,419,000,000 | USD | 2025 | 2026-02-26 |
| Net income | 982,000,000 | USD | 2025 | 2026-02-26 |
| Assets | 83,876,000,000 | USD | 2025 | 2026-02-26 |
Financials
Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-26. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000036966.json. Derived margins are computed from the extracted annual SEC facts.
| Metric | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | 1,150,762,000 | 1,162,045,000 | 1,270,525,000 | 1,332,533,000 | 1,936,105,000 | 1,817,267,000 | 3,207,000,000 | 3,467,000,000 | 3,190,000,000 | 3,419,000,000 | ||
| Net income | 227,046,000 | 165,515,000 | 545,000,000 | 441,000,000 | 845,000,000 | 999,000,000 | 900,000,000 | 897,000,000 | 775,000,000 | 982,000,000 | ||
| Diluted EPS | 0.94 | 0.65 | 1.65 | 1.38 | 1.89 | 1.74 | 1.53 | 1.54 | 1.36 | 1.87 | ||
| Assets | 28,555,231,000 | 41,423,388,000 | 40,832,258,000 | 43,311,000,000 | 84,209,000,000 | 89,092,000,000 | 78,953,000,000 | 81,661,000,000 | 82,152,000,000 | 83,876,000,000 | ||
| Liabilities | 25,850,147,000 | 36,842,900,000 | 36,046,878,000 | 38,235,000,000 | 75,902,000,000 | 80,598,000,000 | 70,406,000,000 | 72,370,000,000 | 73,041,000,000 | 74,734,000,000 | ||
| Stockholders' equity | 2,409,653,000 | 4,285,057,000 | 4,489,949,000 | 4,781,000,000 | 8,012,000,000 | 8,199,000,000 | 8,252,000,000 | 8,996,000,000 | 8,816,000,000 | 8,847,000,000 | ||
| Net margin | 17.87% | 12.42% | 28.15% | 24.27% | 28.06% | 25.87% | 24.29% | 28.72% |
Financial Charts
Quarterly
Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-07. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000036966.json.
| Quarter | End Date | Revenue | Net Income | Diluted EPS | Method |
|---|---|---|---|---|---|
| 2018-Q2 | 2018-06-30 | 438,457,000 | reported discrete quarter | ||
| 2018-Q3 | 2018-09-30 | 652,672,000 | reported discrete quarter | ||
| 2018-Q4 | 2018-12-31 | 406,786,000 | derived Q4 = FY annual - nine-month YTD | ||
| 2019-Q1 | 2019-03-31 | 426,553,000 | reported discrete quarter | ||
| 2019-Q2 | 2019-06-30 | 448,603,000 | reported discrete quarter | ||
| 2019-Q3 | 2019-09-30 | 457,411,000 | reported discrete quarter | ||
| 2019-Q4 | 2019-12-31 | 484,700,000 | derived Q4 = FY annual - nine-month YTD | ||
| 2022-Q2 | 2022-06-30 | 0.29 | reported discrete quarter | ||
| 2022-Q3 | 2022-09-30 | 0.45 | reported discrete quarter | ||
| 2023-Q1 | 2023-03-31 | 0.43 | reported discrete quarter | ||
| 2023-Q2 | 2023-06-30 | 325,000,000 | 0.56 | reported discrete quarter | |
| 2023-Q3 | 2023-09-30 | 137,000,000 | 0.23 | reported discrete quarter | |
| 2023-Q4 | 2023-12-31 | 184,000,000 | derived Q4 = FY annual - nine-month YTD | ||
| 2024-Q1 | 2024-03-31 | 192,000,000 | 0.33 | reported discrete quarter | |
| 2024-Q2 | 2024-06-30 | 199,000,000 | 0.34 | reported discrete quarter | |
| 2024-Q3 | 2024-09-30 | 218,000,000 | 0.40 | reported discrete quarter | |
| 2024-Q4 | 2024-12-31 | 166,000,000 | derived Q4 = FY annual - nine-month YTD | ||
| 2025-Q1 | 2025-03-31 | 812,000,000 | 218,000,000 | 0.41 | reported discrete quarter |
| 2025-Q2 | 2025-06-30 | 830,000,000 | 241,000,000 | 0.45 | reported discrete quarter |
| 2025-Q3 | 2025-09-30 | 889,000,000 | 262,000,000 | 0.50 | reported discrete quarter |
| 2025-Q4 | 2025-12-31 | 888,000,000 | 262,000,000 | derived Q4 = FY annual - nine-month YTD | |
| 2026-Q1 | 2026-03-31 | 862,000,000 | 262,000,000 | 0.53 | reported discrete quarter |
Quarterly Charts
Macro Cross-References
- CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
- UNRATE - Unemployment Rate
- FEDFUNDS - Federal Funds Effective Rate
- CES0500000003 - Average Hourly Earnings of All Employees, Total Private
- DFEDTARU - Federal Funds Target Range - Upper Limit
- DFEDTARL - Federal Funds Target Range - Lower Limit
- DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
- DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
- DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
- DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
- T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
- CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
- CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
- CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
- CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
- PCEPI - Personal Consumption Expenditures: Chain-type Price Index
- PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
- PPIACO - Producer Price Index by Commodity: All Commodities
- T10YIE - 10-Year Breakeven Inflation Rate
- U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
- PAYEMS - All Employees, Total Nonfarm
- CIVPART - Labor Force Participation Rate
- EMRATIO - Employment-Population Ratio
- UNEMPLOY - Unemployed
- CE16OV - Employment Level
- ICSA - Initial Claims
- JTSJOL - Job Openings: Total Nonfarm
- JTSQUR - Quits: Total Nonfarm
- GDPC1 - Real Gross Domestic Product
- A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
- INDPRO - Industrial Production: Total Index
- TCU - Capacity Utilization: Total Index
- HOUST - New Privately-Owned Housing Units Started: Total Units
- PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
- RSAFS - Advance Retail Sales: Retail Trade
- PCE - Personal Consumption Expenditures
- DSPIC96 - Real Disposable Personal Income
- PSAVERT - Personal Saving Rate
- M2SL - M2
- BOPGSTB - U.S. International Trade in Goods and Services: Balance
- MSPUS - Median Sales Price of Houses Sold for the United States
- HSN1F - New One Family Houses Sold: United States
- RHORUSQ156N - Homeownership Rate in the United States
- TTLCONS - Total Construction Spending: Total Construction in the United States
- RRVRUSQ156N - Rental Vacancy Rate in the United States
- TOTALSL - Total Consumer Credit Owned and Securitized
- REVOLSL - Revolving Consumer Credit Owned and Securitized
- DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
- GDP - Gross Domestic Product
- GPDI - Gross Private Domestic Investment
- GCE - Government Consumption Expenditures and Gross Investment
- PCEC - Personal Consumption Expenditures
- NETEXP - Net Exports of Goods and Services
- GFDEBTN - Federal Debt: Total Public Debt
- GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
- FYFSD - Federal Surplus or Deficit
- FGRECPT - Federal Government Current Receipts
- FGEXPND - Federal Government: Current Expenditures
- MANEMP - All Employees, Manufacturing
- USCONS - All Employees, Construction
- USTRADE - All Employees, Retail Trade
- USFIRE - All Employees, Financial Activities
- USGOVT - All Employees, Government
- AWHAETP - Average Weekly Hours of All Employees, Total Private
- DGORDER - Manufacturers' New Orders: Durable Goods
- NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
- BUSINV - Total Business Inventories
- EXPGS - Exports of Goods and Services
- IMPGS - Imports of Goods and Services
- IR - Import Price Index (End Use): All Commodities
- PPIFIS - Producer Price Index by Commodity: Final Demand
Latest quarter (10-Q)
Latest 10-Q source: 0000036966-26-000112.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations TABLE OF ITEM 2 TOPICS Introduction 65 Executive Overview 65 Results of Operations 66 Analysis of Financial Condition 71 Capital 82 Risk Management 85 Market Uncertainties and Prospective Trends 89 Critical Accounting Policies and Estimates 93 Accounting Changes 93 Non-GAAP Information 95 64 1Q26 FORM 10-Q REPORT PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A) Table of Contents Introduction First Horizon Corporation (NYSE common stock trading symbol “FHN”) is a financial holding company headquartered in Memphis, Tennessee. FHN’s principal subsidiary, and only banking subsidiary, is First Horizon Bank. Through the Bank and other subsidiaries, FHN offers commercial, private banking, consumer, small business, wealth and trust management, retail brokerage, capital markets, fixed income, and mortgage banking services. At March 31, 2026, FHN had over 450 business locations in 23 states, including over 400 banking centers in 12 states, and employed approximately 7,400 associates. This MD&A should be read in conjunction with the accompanying unaudited Consolidated Financial Statements and Notes to Consolidated Financial Statements in Part I, Item 1, as well as other information contained in this document and FHN's 2025 Annual Report on Form 10-K. Executive Overview Significant Events and Transactions On March 12, 2026, FHN issued 4,000 shares of Series H Preferred Stock with an aggregate liquidation preference of $400 million. Dividends on the Series H Preferred Stock, if declared, accrue and are payable quarterly, in arrears, at a rate of 6.75% per annum. For the issuance, FHN issued depositary shares, each of which represents a fractional ownership interest in a share of FHN's preferred stock. The Series H Preferred Stock qualifies as Tier 1 capital. For more information, see Note 7 — Preferred Stock in the Consolidated Financial Statements in Part I, Item 1 of this report. On May 1, 2026, FHN redeemed all outstanding shares of its Series C Preferred Stock with a carrying value of $59 million. Prior to the redemption, the Series C Preferred Stock qualified as Tier 1 capital. For more information, see Note 17 — Subsequent Events in the Consolidated Financial Statements in Part I, Item 1 of this report. Financial Performance Summary Table I.2.1 SELECTED FINANCIAL DATA As of or for the three months ended (Dollars in millions, except per share data) March 31, 2026 March 31, 2025 Pre-provision net revenue (a) $ 357 $ 325 Diluted earnings per common share $ 0.53 $ 0.41 Return on average assets (b) 1.30 % 1.11 % Return on average common equity (c) 12.26 % 10.30 % Return on average tangible common equity (a) (d) 15.12 % 12.81 % Net interest margin (e) 3.52 % 3.42 % Noninterest income to total revenue (f) 22.63 % 22.29 % Efficiency ratio (g) 58.54 % 60.06 % Allowance for loan and lease losses to total loans and leases 1.13 % 1.32 % Net charge-offs (recoveries) to average loans and leases (annualized) 0.18 % 0.19 % Total period-end equity to period-end assets 11.25 % 11.10 % Tangible common equity to tangible assets (a) 8.27 % 8.37 % Cash dividends declared per common share $ 0.17 $ 0.15 Book value per common share $ 17.72 $ 16.40 Tangible book value per common share (a) $ 14.34 $ 13.17 Common Equity Tier 1 10.53 % 10.93 % Market capitalization $ 10,827 $ 9,852 (a) Represents a non-GAAP measure which is reconciled in the non-GAAP to GAAP reconciliation in Table I.2.25. 65 1Q26 FORM 10-Q REPORT PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A) Table of Contents (b) Calculated using annualized net income divided by average assets. (c) Calculated using annualized net income available to common shareholders divided by average common equity. (d) Calculated using annualized net income available to common shareholders divided by average tangible common equity. (e) Net interest margin is computed using total net interest income adjusted to an FTE basis assuming a statutory federal income tax rate of 21% and, where applicable, state income taxes. (f) Ratio is noninterest income excluding securities gains (losses) to total revenue excluding securities gains (losses). (g) Ratio is noninterest expense to total revenue excluding securities gains (losses). First Quarter 2026 Financial Performance Review FHN reported first quarter 2026 net income available to common shareholders of $257 million, or $0.53 per diluted share, compared to $213 million, or $0.41 per diluted share, in first quarter 2025. Net interest income increased $36 million compared to first quarter 2025, largely driven by lower interest-bearing deposit costs, partially offset by lower loan yields. Provision for credit losses was $15 million for first quarter 2026 compared to $40 million for first quarter 2025. Net charge-offs were $28 million, or 18 basis points, compared to $29 million, or 19 basis points, in first quarter 2025. Noninterest income of $195 million for first quarter 2026 increased $14 million compared to first quarter 2025, largely driven by higher fixed income revenues of $4 million and higher other service charges and fees of $4 million, along with increases of $3 million in brokerage, management fees and commissions and $3 million in deposit transactions and cash management fees. Compared with first quarter 2025, noninterest expense of $505 million increased $18 million, largely driven by a $10 million increase in personnel expenses, tied to higher salaries and benefits expense from increased associate headcount, along with higher incentive-based compensation which was offset by lower equity based compensation. Additionally, computer software expense increased $6 million compared to first quarter 2025. Period-end loans and leases of $64.4 billion increased $221 million from December 31, 2025. Commercial loans increased $419 million, driven by an increase of $562 million in the C&I portfolio, partially offset by a $143 million decline in the CRE portfolio. Consumer loans contracted by $198 million for the year-to-date period. Period-end deposits were $66.5 billion compared to $67.5 billion as of December 31, 2025, as interest-bearing deposits decreased $1.1 billion and noninterest-bearing deposits increased $87 million. The Common Equity Tier 1 ratio decreased 10 basis points to 10.53% at March 31, 2026 compared to 10.63% at December 31, 2025, as capital was deployed into loan growth and share repurchases. The Tier 1 risk-based capital and total risk-based capital ratios increased to 11.94% and 13.74% at March 31, 2026, respectively, compared to 11.51% and 13.35% at December 31, 2025, respectively, driven by the $400 million Series H Preferred Stock issuance in March 2026. The following portions of this MD&A focus in more detail on the results of operations for the three months ended March 31, 2026 and March 31, 2025, and on information about FHN's financial condition, loan and lease portfolio, liquidity, funding sources, capital, and other matters. Results of Operations Net Interest Income Net interest income is FHN's largest source of revenue and is the difference between the interest earned on interest-earning assets (generally loans, leases and investment securities) and the interest expense incurred in connection with interest-bearing liabilities (generally deposits and borrowed funds). The level of net interest income is primarily a function of the difference between the effective yield on average interest-earning assets and the effective cost of interest-bearing liabilities. These factors are influenced by the pricing and mix of interest-earning assets and interest-bearing liabilities which, in turn, are impacted by external factors such as economic conditions, competition for loans and deposits, the monetary policy of the FRB and market interest rates. 66 1Q26 FORM 10-Q REPORT PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A) Table of Contents Table I.2.2 The following table presents the major components of net interest income and net interest margin. QUARTER-TO-DATE AVERAGE BALANCES, NET INTEREST INCOME & YIELDS/RATES Three Months Ended March 31, 2026 March 31, 2025 (Dollars in millions) Average Balance Interest Income/Expense Yield/Rate Average Balance Interest Income/Expense Yield/Rate Assets: Loans and leases: Commercial loans and leases $ 48,625 $ 706 5.89 % $ 46,951 $ 715 6.18 % Consumer loans 14,567 182 4.99 14,694 182 4.96 Total loans and leases 63,192 888 5.68 61,645 897 5.89 Loans held for sale 479 7 6.26 519 9 7.09 Investment securities 9,454 71 3.02 9,209 70 3.02 Trading securities 1,796 23 5.25 1,442 20 5.57 Federal funds sold 7 — 4.09 7 — 4.91 Securities purchased under agreements to resell 749 7 3.54 706 7 4.24 Interest-bearing deposits with banks 1,233 11 3.69 1,265 14 4.44 Total earning assets / Total interest income $ 76,910 $ 1,007 5.29 % $ 74,793 $ 1,017 5.50 % Cash and due from banks 936 886 Goodwill and other intangible assets, net 1,611 1,648 Premises and equipment, net 543 570 Allowance for loan and lease losses (750) (827) Other assets 3,795 3,895 Total assets $ 83,045 $ 80,965 Liabilities and Shareholders' Equity: Interest-bearing deposits: Savings $ 26,148 $ 138 2.14 % $ 26,544 $ 175 2.67 % Other interest-bearing deposits 17,679 89 2.04 16,096 92 2.31 Time deposits 6,755 57 3.39 6,329 62 4.00 Total interest-bearing deposits 50,582 284 2.28 48,969 329 2.72 Federal funds purchased 1,043 10 3.70 565 6 4.47 Securities sold under agreements to repurchase 1,606 10 2.52 1,914 15 3.18 Trading liabilities 729 7 3.81 693 7 4.29 Other short-term borrowings 894 8 3.78 681 8 4.40 Term borrowings 1,319 18 5.65 1,332 18 5.41 Total interest-bearing liabilities / Total interest expense $ 56,173 $ 337 2.43 % $ 54,154 $ 383 2.87 % Noninterest-bearing liabilities: Noninterest-bearing deposits 15,628 15,535 Other liabilities 1,999 2,165 Total liabilities 73,800 71,854 Shareholders' equity 8,950 8,816 Noncontrolling interest 295 295 Total shareholders' equity 9,245 9,111 Total liabilities and shareholders' equity $ 83,045 $ 80,965 Net earning assets / Net interest income (TE) / Net interest spread $ 20,737 $ 670 2.86 % $ 20,639 $ 634 2.63 % Taxable equivalent adjustment (3) 0.66 (3) 0.79 Net interest income / Net interest margin (a) $ 667 3.52 % $ 631 3.42 % (a) Calculated using total net interest income adjusted for FTE assuming a statutory federal income tax rate of 21% and, where applicable, state income taxes. 67 1Q26 FORM 10-Q REPORT PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A) Table of Contents Net interest income increased $36 million from first quarter 2025 and net interest margin increased 10 basis points to 3.52% in first quarter 2026. Net interest income and net interest margin primarily benefited from lower interest-bearing deposit costs, which decreased 44 basis points from first quarter 2025. This benefit was partially offset by the impact of lower yields on earning assets, which decreased 21 basis points compared to the same period of 2025. Average earning assets increased $2.1 billion from first quarter 2025, driven by increases of $1.5 billion in average loans and leases, $354 million in trading securities, and $245 million in investment securities. Average interest-bearing liabilities increased $2.0 billion, driven by increases of $1.6 b [Excerpt truncated for page length; source filing is linked above.]
Latest 10-K MD&A
ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
Table of Contents
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
TABLE OF ITEM 7 TOPICS
Introduction
41
Financial Performance Summary
41
Results of Operations
42
Analysis of Financial Condition
48
Capital
63
Risk Management
67
Market Uncertainties and Prospective Trends
77
Critical Accounting Policies and Estimates
80
Accounting Changes
82
Non-GAAP Information
82
40
2025 FORM 10-K ANNUAL REPORT
ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
Table of Contents
Introduction
First Horizon Corporation (NYSE common stock trading symbol “FHN”) is a financial holding company headquartered in Memphis, Tennessee. FHN’s principal subsidiary, and only banking subsidiary, is First Horizon Bank. Through the Bank and other subsidiaries, FHN offers commercial, private banking, consumer, small business, wealth and trust management, retail brokerage, capital markets, fixed income, and mortgage banking services. At December 31, 2025, FHN had over 450 business locations
in 23 states, including over 400 banking centers in 12 states, and employed approximately 7,400 associates.
This MD&A should be read in conjunction with the accompanying audited Consolidated Financial Statements and Notes to the Consolidated Financial Statements in Part II, Item 8 of this Form 10-K, as well as with the other information contained in this report.
Financial Performance Summary
Table 7.1
SELECTED FINANCIAL DATA
For the years ended December 31,
(Dollars in millions, except per share data)
2025
2024
2023
Pre-provision net revenue (a)
$
1,345
$
1,155
$
1,388
Diluted earnings per common share
$
1.87
$
1.36
$
1.54
Return on average assets (b)
1.22
%
0.97
%
1.12
%
Return on average common equity (c)
11.30
%
8.80
%
11.01
%
Return on average tangible common equity (a) (d)
14.01
%
10.99
%
14.10
%
Net interest margin (e)
3.47
%
3.35
%
3.42
%
Noninterest income to total revenue (f)
23.30
%
23.44
%
26.83
%
Efficiency ratio (g)
60.66
%
62.06
%
59.91
%
Allowance for loan and lease losses to total loans and leases
1.15
%
1.30
%
1.26
%
Net charge-offs (recoveries) to average loans and leases
0.19
%
0.18
%
0.28
%
Total period-end equity to period-end assets
10.90
%
11.09
%
11.38
%
Tangible common equity to tangible assets (a)
8.37
%
8.37
%
8.48
%
Cash dividends declared per common share
$
0.60
$
0.60
$
0.60
Book value per common share
$
17.53
$
16.00
$
15.17
Tangible book value per common share (a)
$
14.20
$
12.85
$
12.13
Common equity Tier 1
10.63
%
11.20
%
11.40
%
Market capitalization
$
11,587
$
10,559
$
7,913
(a)Represents a non-GAAP measure which is reconciled in the non-GAAP to GAAP reconciliation in Table 7.33.
(b)Calculated using net income divided by average assets.
(c)Calculated using net income available to common shareholders divided by average common equity.
(d)Calculated using net income available to common shareholders divided by average tangible common equity.
(e)Net interest margin is computed using total net interest income adjusted to an FTE basis assuming a statutory federal income tax rate of 21% and, where applicable, state income taxes.
(f)Ratio is noninterest income excluding securities gains (losses) to total revenue excluding securities gains (losses).
(g)Ratio is noninterest expense to total revenue excluding securities gains (losses).
2025 Financial Performance Review
FHN reported net income available to common shareholders of $956 million, or $1.87 per diluted share, for the year ended December 31, 2025, an increase of $218 million compared to $738 million, or $1.36 per diluted share, for the same period of 2024.
Net interest income of $2.6 billion increased $111 million compared to 2024, largely driven by lower deposit pricing
and higher loan balances, specifically in high-yielding loans to mortgage companies. The net interest margin increased 12 basis points to 3.47% compared to 3.35% in 2024.
Provision for credit losses decreased to $65 million compared to $150 million in 2024, largely reflecting declines in criticized and classified loans and a more favorable portfolio mix. Net charge-offs were $120 million,
41
2025 FORM 10-K ANNUAL REPORT
ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
Table of Contents
or 19 basis points, compared to $112 million, or 18 basis points in 2024. The ACL to loans ratio decreased to 1.31% from 1.43% in 2024, reflecting criticized and classified loan resolutions throughout the year as well as a favorable portfolio mix shift.
Noninterest income of $797 million increased $118 million, or 17%, from 2024, largely driven by the prior year impact of $91 million in net securities losses from a restructuring of the securities portfolio. In addition, the countercyclical businesses improved during 2025 as fixed income increased $19 million and mortgage banking income increased $8 million.
Noninterest expense of $2.1 billion increased $39 million, or 2%, from 2024, largely attributable to higher personnel expense from talent additions and increases in occupancy, software, and legal and professional fees, partially offset by lower deposit insurance expense.
Period-end loans and leases of $64.2 billion increased $1.6 billion from December 31, 2024, largely driven by commercial loan growth, as loans to mortgage companies and other C&I loans each grew $1.2 billion, offset by a decline in CRE loans of $858 million.
Period-end deposits of $67.5 billion increased $1.9 billion from December 31, 2024, as interest-bearing deposits increased $2.1 billion and noninterest-bearing deposits decreased $198 million.
Tier 1 risk-based capital and total risk-based capital ratios at December 31, 2025 were 11.51% and 13.35%, respectively, compared to 12.22% and 14.25% at December 31, 2024. The CET1 ratio was 10.63% at December 31, 2025 compared to 11.20% at December 31, 2024.
Results of Operations—2025 compared to 2024
Following is a discussion of FHN's results of operations for 2025 compared to 2024. For a description of FHN's results of operations for 2024, see Results of Operations - 2024 compared to 2023 in Item 7 in the 2024 Form 10-K which is incorporated herein by reference.
Net Interest Income
Net interest income is FHN's largest source of revenue and is the difference between the interest earned on interest-earning assets (generally loans, leases and investment securities) and the interest expense incurred in connection with interest-bearing liabilities (generally deposits and borrowed funds). The level of net interest income is primarily a function of the difference between the effective yield on average interest-earning assets and the effective cost of interest-bearing liabilities. These factors are influenced by the pricing and mix of interest-earning assets and interest-bearing liabilities which, in turn, are impacted by external factors such as local economic conditions, competition for loans and deposits, the monetary policy of the FRB, and market interest rates.
Net interest income of $2.6 billion in 2025 increased $111 million, or 4%, from 2024. The increase was largely attributable to lower deposit pricing, partially offset by lower loan yields. Interest income decreased $166 million, largely driven by lower interest on loans and leases of $176 million. Interest expense decreased $277 million, largely due to lower interest expense on deposits of $281 million.
FHN's net interest margin increased 12 basis points to 3.47% in 2025 compared to 2024 and the net interest spread increased 31 basis points to 2.69% over the same period. The increase in the margin was attributable to a 57 basis point decrease in the cost of interest-bearing liabilities, partially offset by a 26 basis point decrease in earning asset yields.
Total average earning assets increased $469 million in 2025, largely driven by average loan growth of $605 million and a $220 million increase in average trading securities, partially offset by lower average interest-bearing deposits with banks of $351 million. Total average interest-bearing liabilities increased $937 million, largely driven by an increase of $514 million in federal funds purchased and securities sold under agreements to repurchase, $206 million in term borrowings, and average interest-bearing deposit growth of $224 million.
The following table presents the major components of net interest income and net interest margin.
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2025 FORM 10-K ANNUAL REPORT
ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
Table of Contents
Table 7.2
AVERAGE BALANCES, NET INTEREST INCOME AND YIELDS/RATES
(Dollars in millions)
2025
2024
2023
Assets:
Average Balance
Interest Income/Expense
Yield/Rate
Average Balance
Interest Income/Expense
Yield/Rate
Average Balance
Interest Income/Expense
Yield/Rate
Loans and leases:
Commercial loans and leases
$
47,762
$
2,964
6.21
%
$
47,429
$
3,166
6.68
%
$
46,175
$
2,958
6.41
%
Consumer loans
14,848
745
5.01
14,576
720
4.93
13,994
630
4.48
Total loans and leases
62,610
3,709
5.92
62,005
3,886
6.27
60,169
3,588
5.96
Loans held for sale
497
34
6.79
472
36
7.61
664
51
7.71
Investment securities
9,295
284
3.06
9,386
244
2.60
9,912
250
2.52
Trading securities
1,619
92
5.66
1,399
85
6.12
1,179
78
6.62
Federal funds sold
8
—
4.73
39
2
5.61
61
4
5.56
Securities purchased under agreements to resell
658
27
4.12
566
29
5.01
318
15
4.81
Interest-bearing deposits with banks
1,254
54
4.32
1,605
85
5.29
2,504
130
5.20
Total earning assets / Total interest income
$
75,941
$
4,200
5.53
%
$
75,472
$
4,367
5.79
%
$
74,807
$
4,116
5.50
%
Cash and due from banks
878
917
1,012
Goodwill and other intangible assets, net
1,633
1,674
1,720
Premises and equipment, net
560
580
596
Allowance for loan and lease losses
(809)
(812)
(740)
Other assets
3,816
3,991
4,288
Total assets
$
82,019
$
81,822
$
81,683
Liabilities and shareholders' equity:
Interest-bearing deposits:
Savings
$
26,366
$
704
2.67
%
$
25,941
$
848
3.27
%
$
23,547
$
679
2.88
%
Other interest-bearing deposits
16,729
389
2.32
16,215
449
2.77
15,300
351
2.30
Time deposits
6,509
246
3.77
7,224
323
4.47
6,095
236
3.87
Total interest-bearing deposits
49,604
1,339
2.70
49,380
1,620
3.28
44,942
1,266
2.82
Federal funds purchased
801
34
4.32
420
22
5.34
349
18
5.12
Securities sold under agreements to repurchase
1,853
57
3.07
1,720
66
3.83
1,426
52
3.66
Trading liabilities
644
26
4.01
555
24
4.22
301
12
4.16
Other short-term borrowings
685
30
4.37
781
42
5.38
2,688
140
5.19
Term borrowings
1,386
78
5.65
1,180
67
5.63
1,335
72
5.39
Total interest-bearing liabilities / Total interest expense
$
54,973
$
1,564
2.84
%
$
54,036
$
1,841
3.41
%
$
51,041
$
1,560
3.06
%
Noninterest-bearing deposits
15,831
16,297
19,341
Other liabilities
2,073
2,353
2,396
Total liabilities
72,877
72,686
72,778
Shareholders' equity
8,847
8,841
8,610
Noncontrolling interest
295
295
295
Total shareholders' equity
9,142
9,136
8,905
Total liabilities and shareholders' equity
$
82,019
$
81,822
$
81,683
Net earning assets / Net interest income (TE) / Net interest spread
$
20,968
$
2,636
2.69
%
$
21,436
$
2,526
2.38
%
$
23,766
$
2,556
2.44
%
Taxable equivalent adjustment
(14)
0.78
(15)
0.97
(16)
0.98
Net interest income / Net interest margin (a)
$
2,622
3.47
%
$
2,511
3.35
%
$
2,540
3.42
%
(a) Calculated using total net interest income adjusted for FTE assuming a statutory federal income tax rate of 21% and, where applicable, state income taxes.
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The following table presents the changes in interest income and interest expense due to changes in both average rate and average volume.
Table 7.3
ANALYSIS OF CHANGES IN NET INTEREST INCOME
2025 Compared to 2024
2024 Compared to 2023
Increase (Decrease) Due to (a)
Increase (Decrease) Due to (a)
(Dollars in millions)
Rate (b)
Volume (b)
Total
Rate (b)
Volume (b)
Total
Interest income:
Loans and leases (c)
$
(213)
$
36
$
(177)
$
183
$
115
$
298
Loans held for sale
(4)
2
(2)
(1)
(14)
(15)
Investment securities (c)
43
(3)
40
7
(13)
(6)
Trading securities
(6)
13
7
(6)
13
7
Other earning assets:
Federal funds sold
—
(2)
(2)
—
(2)
(2)
Securities purchased under agreements to resell
(6)
4
(2)
1
13
14
Interest-bearing deposits with banks
(14)
(17)
(31)
2
(47)
(45)
Total other earning assets
(20)
(15)
(35)
3
(36)
(33)
Total change in interest income - earning assets
$
(200)
$
33
$
(167)
$
186
$
65
$
251
Interest expense:
Interest-bearing deposits:
Savings
$
(158)
$
14
$
(144)
$
96
$
73
$
169
Other interest-bearing deposits
(74)
14
(60)
75
23
98
Time deposits
(47)
(30)
(77)
39
48
87
Total interest-bearing deposits
(279)
(2)
(281)
210
144
354
Federal funds purchased
(5)
17
12
1
3
4
Securities sold under agreements to repurchase
(14)
5
(9)
2
12
14
Trading liabilities
(1)
3
2
—
12
12
Other short-term borrowings
(7)
(5)
(12)
4
(102)
(98)
Term borrowings
—
11
11
3
(8)
(5)
Total change in interest expense - interest-bearing liabilities
(306)
29
(277)
220
61
281
Net interest income, taxable equivalent
$
106
$
4
$
110
$
(34)
$
4
$
(30)
(a) The changes in interest due to both rate and volume have been allocated to change due to rate and change due to volume in proportion to the absolute amounts of the changes in each.
(b) Variances are computed on a line-by-line basis and are non-additive.
(c) Reflects taxable-equivalent adjustments, using the statutory federal income tax rate of 21% and, where applicable, state income taxes.
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Provision for Credit Losses
Provision for credit losses includes the provision for loan and lease losses and the provision for unfunded lending commitments. The provision for credit losses is the expense necessary to maintain the ALLL and the accrual for unfunded lending commitments at levels appropriate to absorb management’s estimate of credit losses expected over the life of the loan and lease portfolio and the portfolio of unfunded loan commitments.
Provision for credit losses decreased to $65 million in 2025, compared to $150 million in 2024, largely reflecting declines in criticized and classified loans and a more favorable portfolio mix. Net charge-offs were $120 million in 2025 compared to $112 million in 2024.
For additional information about general asset quality trends, refer to the Allowance for Credit Losses and the Asset Quality sections in this MD&A.
Noninterest Income
The following table presents the significant components of noninterest income for each of the periods presented.
Table 7.4
NONINTEREST INCOME
2025 vs. 2024
2024 vs. 2023
(Dollars in millions)
2025
2024
2023
$ Change
% Change
$ Change
% Change
Noninterest income
Fixed income
$
206
$
187
$
133
$
19
10
%
$
54
41
%
Deposit transactions and cash management
169
176
179
(7)
(4)
(3)
(2)
Brokerage, management fees and commissions
105
101
90
4
4
11
12
Card and digital banking fees
74
77
77
(3)
(4)
—
—
Other service charges and fees
60
51
54
9
18
(3)
(6)
Trust services and investment management
51
48
47
3
6
1
2
Mortgage banking income
43
35
23
8
23
12
52
Gain on merger termination
—
—
225
—
—
(225)
(100)
Securities gains (losses), net
1
(89)
(4)
90
NM
(85)
NM
Other income
88
93
103
(5)
(5)
(10)
(10)
Total noninterest income
$
797
$
679
$
927
$
118
17
%
$
(248)
(27)
%
NM – Not meaningful
Noninterest income of $797 million increased $118 million from $679 million in 2024, largely driven by prior year securities losses of $91 million from a restructuring of the AFS portfolio, as well as increases in fixed income and mortgage banking income. Noninterest income represented 23% and 21% of total revenue for 2025 and 2024, respectively.
Fixed income improved $19 million, or 10%, for 2025 compared to 2024. Fixed income product revenue increased $13 million, largely driven by more favorable market conditions. Revenue from other products increased $6 million, largely driven by increases in revenues from loan sales.
Deposit transactions and cash management fees decreased $7 million, largely attributable to lower overdraft fees.
Other service charges and fees increased $9 million, largely driven by elevated income related to the equipment finance lease business.
Mortgage banking income of $43 million increased $8 million from $35 million in 2024, largely driven by a $5 million gain from a sale of mortgage servicing rights.
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Noninterest Expense
The following table presents the significant components of noninterest expense for each of the periods presented.
Table 7.5
NONINTEREST EXPENSE
2025 vs. 2024
2024 vs. 2023
(Dollars in millions)
2025
2024
2023
$ Change
% Change
$ Change
% Change
Noninterest expense
Personnel expense
$
1,159
$
1,137
$
1,100
$
22
2
%
$
37
3
%
Net occupancy expense
139
130
123
9
7
7
6
Computer software
138
121
111
17
14
10
9
Operations services
96
94
87
2
2
7
8
Legal and professional fees
86
64
49
22
34
15
31
Advertising and public relations
54
48
71
6
13
(23)
(32)
Deposit insurance expense
42
64
122
(22)
(34)
(58)
(48)
Contract employment and outsourcing
38
51
49
(13)
(25)
2
4
Amortization of intangible assets
38
44
47
(6)
(14)
(3)
(6)
Contributions
26
18
61
8
44
(43)
(70)
Other expense
258
264
259
(6)
(2)
5
2
Total noninterest expense
$
2,074
$
2,035
$
2,079
$
39
2
%
$
(44)
(2)
%
Noninterest expense of $2.1 billion increased $39 million, or 2%, compared to 2024.
Personnel expense of $1.2 billion increased $22 million compared to 2024, reflecting talent additions throughout the year, partially offset by a decline in deferred compensation expense.
Net occupancy expense increased $9 million, computer software expense increased $17 million and legal and professional fees increased $22 million in 2025, largely attributable to strategic investments in various technology, risk and product initiatives.
Deposit insurance expense declined $22 million, largely attributable to a $9 million special assessment expense credit in 2025, compared to $9 million in special assessment expense in 2024.
Contract employment and outsourcing decreased $13 million compared to 2024, as expenses related to recent technology projects were completed.
Contributions expense increased $8 million, largely driven by a $20 million contribution to the First Horizon Foundation in 2025, compared to a $10 million contribution in 2024.
Other expense included $25 million in Visa derivative valuation expense in 2025 compared to $15 million in 2024, offset by declines in other miscellaneous losses when comparing the periods.
Income Taxes
FHN recorded income tax expense of $282 million in 2025 compared to $211 million in 2024, resulting in an effective tax rate of 22.1% and 21.0%, respectively.
FHN’s effective tax rate is favorably affected by recurring items such as tax credits and other tax benefits from tax credit investments, tax-exempt income, and bank-owned life insurance. The effective rate is unfavorably affected by the non-deductible portions of FDIC premium and executive compensation. FHN's effective tax rate also may be affected by items that may occur in any given period but are not consistent from period to period, such as changes in unrecognized tax benefits. The rate also may
be affected by items resulting from business combinations.
A deferred tax asset ("DTA") or deferred tax liability ("DTL") is recognized for the tax consequences of temporary differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. The tax consequence is calculated by applying current enacted statutory tax rates to these temporary differences in future years. As of December 31, 2025, FHN’s gross DTA after valuation allowance and gross DTL were $672 million and $580 million, respectively, resulting in a net DTA of $92 million at December 31, 2025,
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compared with a net DTA of $227 million at December 31, 2024.
As of December 31, 2025, FHN had DTA balances related to federal and state income tax carryforwards of $36 million and $4 million, respectively, which will expire at various dates. Refer to Note 14 - Income Taxes for additional information.
Based on current analysis, FHN believes that its ability to realize the net DTA is more likely than not. FHN monitors its net DTA and the need for a valuation allowance on a quarterly basis. A significant adverse change in FHN’s taxable earnings outlook could result in the need for a valuation allowance.
FHN and its eligible subsidiaries are included in a consolidated federal income tax return. FHN files separate returns for subsidiaries that are not eligible to be included in a consolidated federal income tax return. Based on the laws of the applicable states where it conducts business operations, FHN either files consolidated, combined, or separate returns. The statute of limitations for FHN’s consolidated federal income tax returns remains open for tax years 2022 through 2024. Additionally, 2019-2021 could be subject to limited review related to refund claims and amended returns filed. With few exceptions, the statute of limitations for FHN's state income tax returns remains open for tax years 2021 through 2024. Most states have a three to four year limitation for assessments. On occasion, as federal or state auditors examine the tax returns of FHN and its subsidiaries, FHN
may extend the statute of limitations for a reasonable period. Otherwise, the statutes of limitations remain open only for tax years in accordance with federal and state statutes. The earliest year under state audit is 2016. See Note 14 - Income Taxes to the Consolidated Financial Statements in Part II, Item 8 of this Report for additional information.
Federal Tax Legislation
On July 4, 2025, federal legislation commonly referred to as the “One Big Beautiful Bill Act” was enacted, resulting in changes to U.S. federal income tax law. The legislation includes several provisions that may impact the timing and magnitude of certain tax deductions and tax credits. The accelerated federal tax deductions for bonus depreciation and research or experimental expenditures will reduce FHN's federal tax liability starting in 2025. Since these provisions solely reflect differences in timing for tax deductions, they do not affect the recorded amounts of income tax expense. FHN does not expect a significant impact from provisions that sunset certain Section 48E Clean Electricity Tax Credits on its future financial results. FHN applies the deferral method to all Section 48E credits, resulting in offset of the credit amount against the related loan/lease and amortization of the credit to interest income over the life of the loan/lease, which typically have long durations. Provisions limiting the deductibility of annual corporate charitable deductions to amounts in excess of 1% of taxable income may affect the timing and amount of charitable donations.
Business Segment Results
FHN's reportable segments include Commercial, Consumer & Wealth, Wholesale, and Corporate. See Note 19 - Business Segment Information to the Consolidated Financial Statements in Part II, Item 8 of this Report for additional disclosures related to FHN's segments.
Commercial, Consumer & Wealth
The Commercial, Consumer & Wealth segment generated pre-tax income of $1.5 billion in 2025 compared to $1.4 billion in 2024, an increase of $123 million.
Net interest income of $2.6 billion increased $38 million, reflecting lower deposit pricing, partially offset by the impact of lower loan yields.
Provision for credit losses decreased $108 million, largely reflecting the impact of reductions in criticized and classified loans and a more favorable portfolio mix.
Noninterest income increased $3 million, as increases in other service charges and fees and brokerage, management fees and commissions were offset by declines in deposit transactions and cash management income and insurance commissions.
Noninterest expense increased $26 million, largely driven by higher technology-related expenses and operations
expenses allocated to the segment in the current year, partially offset by a decline in other expenses.
Wholesale
Pre-tax income of $157 million in the Wholesale segment increased $35 million compared to 2024, largely reflecting a $65 million increase in revenue, partially offset by a $21 million increase in noninterest expense.
Net interest income increased $39 million, primarily attributable to higher income from growth in loans to mortgage companies. Fixed income of $206 million increased $19 million, largely driven by more favorable market conditions. Mortgage banking income of $41 million increased $8 million, largely reflecting a $5 million gain on mortgage servicing rights sold during 2025.
Noninterest expense of $320 million increased $21 million, largely due to an increase in incentive-based compensation expense tied to the improvement in fixed income and mortgage banking income.
Corporate
Pre-tax loss for the Corporate segment was $417 million for 2025 compared to $534 million for 2024.
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Net interest income (expense) improved $34 million compared to 2024, primarily driven by higher yields on investment securities and the impact of the funds transfer pricing methodology.
Noninterest income increased $89 million, largely attributable to $91 million in net securities losses in 2024 tied to an opportunistic restructuring of a portion of the AFS securities portfolio.
Noninterest expense of $311 million for 2025 decreased $8 million compared to 2024, as lower FDIC special assessment expense and contract employment and outsourcing expense were partially offset by increases in computer software, legal and professional fees, and Visa derivative valuation expense. Restructuring expenses were immaterial in 2025 and totaled $14 million in 2024.
Analysis of Financial Condition
Investment Securities
The following table presents the carrying value of securities by category as of December 31 for the years indicated.
Table 7.6
COMPOSITION OF SECURITIES PORTFOLIO
2025
2024
(Dollars in millions)
Balance
Mix
Balance
Mix
Securities available for sale at fair value:
Government agency issued MBS and CMO (a)
$
6,510
69
%
$
6,469
70
%
Other U.S. government agencies (a)
1,317
14
1,073
12
States and municipalities
338
4
354
4
Total securities available for sale
$
8,165
87
%
$
7,896
86
%
Securities held to maturity at amortized cost:
Government agency issued MBS and CMO (a)
$
1,216
13
%
$
1,270
14
%
Total investment securities
$
9,381
100
%
$
9,166
100
%
(a) Includes securities issued by government sponsored entities which are not backed by the full faith and credit of the U.S. Government.
FHN’s investment securities portfolio consists principally of debt securities available for sale. FHN maintains a securities portfolio consisting primarily of bank-eligible GSE and GNMA issued mortgage-backed securities and collateralized mortgage obligations. The securities portfolio provides a source of income and liquidity and is an important tool used to balance the interest rate risk of the loan and deposit portfolios. The securities portfolio is periodically evaluated in light of established ALM objectives, changing market conditions that could affect the profitability of the portfolio, the regulatory environment, and the level of interest rate risk to which FHN is exposed. These evaluations may result in steps taken to adjust the overall balance sheet positioning.
Investment securities were $9.4 billion and $9.2 billion on December 31, 2025 and 2024, representing 11% of total
assets for both periods. During 2024, as part of an opportunistic restructuring of a portion of the securities portfolio, FHN sold $1.2 billion of AFS securities, which resulted in realized losses of $91 million for the year ended December 31, 2024. See Note 2 - Investment Securities to the Consolidated Financial Statements in Part II, Item 8 of this Report for more information about the securities portfolio.
The following table presents an analysis of the amortized cost, remaining contractual maturities, and weighted-average yields by contractual maturity for the debt securities portfolio.
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Table 7.7
CONTRACTUAL MATURITIES OF INVESTMENT SECURITIES
As of December 31, 2025
After 1 year
After 5 years
Within 1 year
Within 5 years
Within 10 years
After 10 years
Total
(Dollars in millions)
Amount
Yield (b)
Amount
Yield (b)
Amount
Yield (b)
Amount
Yield (b)
Amount
Yield (b)
Securities available for sale:
Government agency issued MBS and CMO (a)
$
188
2.21
%
$
1,446
3.33
%
$
665
3.44
%
$
4,757
2.60
%
$
7,056
3.06
%
Other U.S. government agencies
1
1.39
101
1.37
351
4.07
971
2.99
1,424
3.20
States and municipalities
10
1.39
23
1.29
177
2.50
151
3.24
361
3.31
Total securities available for sale
$
199
2.16
%
$
1,570
3.17
%
$
1,193
3.49
%
$
5,879
2.68
%
$
8,841
3.09
%
Securities held to maturity:
Government agency issued MBS and CMO (a)
$
—
—
%
$
265
3.46
%
$
54
3.70
%
$
897
2.57
%
$
1,216
2.82
%
Total securities held to maturity
$
—
—
%
$
265
3.46
%
$
54
3.70
%
$
897
2.57
%
$
1,216
2.82
%
(a) Represents government agency-issued mortgage-backed securities and collateralized mortgage obligations which, when adjusted for early paydowns, have an estimated average life of 4.5 years.
(b) Weighted average yields were calculated using amortized cost on a fully taxable equivalent basis, assuming a 24.5% tax rate where applicable.
Loans and Leases
Period-end loans and leases increased $1.6 billion, or 3%, to $64.2 billion as of December 31, 2025. Commercial loans and leases increased $1.6 billion, primarily from growth in loans to mortgage companies and other C&I loans, partially offset by a decline in CRE loans. Consumer loans decreased $28 million, primarily due to declines in consumer construction loans, other consumer loans, and real estate installment loans, partially offset by growth in
HELOCs. Average loans and leases increased to $62.6 billion in 2025 compared to $62.0 billion in 2024, primarily driven by a $333 million increase in commercial loans and a $272 million increase in consumer loans.
The following table provides detail regarding FHN's period-end loans and leases.
Table 7.8
LOANS AND LEASES
(Dollars in millions)
2025
Percent of total
2025 Growth Rate
2024
Percent of total
2024 Growth Rate
2023
Percent of total
2023 Growth Rate
Commercial:
Commercial, financial, and industrial (a)
$
35,905
56
%
7
%
$
33,428
53
%
2
%
$
32,633
53
%
3
%
Commercial real estate
13,563
21
(6)
14,421
23
1
14,216
23
7
Total commercial
49,468
77
3
47,849
76
2
46,849
76
4
Consumer:
Consumer real estate
14,108
22
—
14,047
23
3
13,650
23
11
Credit card and other
580
1
(13)
669
1
(16)
793
1
(6)
Total consumer
14,688
23
—
14,716
24
2
14,443
24
10
Total loans and leases
$
64,156
100
%
3
%
$
62,565
100
%
2
%
$
61,292
100
%
5
%
(a) Includes equipment financing loans and leases.
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The following table provides detail of the contractual maturities of loans and leases at December 31, 2025.
Table 7.9
CONTRACTUAL MATURITIES OF LOANS AND LEASES
(Dollars in millions)
Within 1 Year
After 1 Year
Within 5 Years
After 5 Years Within 15 Years
After 15 Years
Total
Commercial, financial, and industrial
$
9,478
$
19,225
$
6,484
$
718
$
35,905
Commercial real estate
3,879
7,862
1,777
45
13,563
Consumer real estate
32
146
1,002
12,928
14,108
Credit card and other
214
266
61
39
580
Total loans and leases
$
13,603
$
27,499
$
9,324
$
13,730
$
64,156
For maturities over one year at fixed interest rates:
Commercial, financial, and industrial
$
5,462
$
4,461
$
676
$
10,599
Commercial real estate
2,363
736
40
3,139
Consumer real estate
119
869
3,101
4,089
Credit card and other
55
23
27
105
Total loans and leases at fixed interest rates
$
7,999
$
6,089
$
3,844
$
17,932
For maturities over one year at floating interest rates:
Commercial, financial, and industrial
$
13,763
$
2,023
$
42
$
15,828
Commercial real estate
5,499
1,041
5
6,545
Consumer real estate
27
133
9,827
9,987
Credit card and other
211
38
12
261
Total loans and leases at floating interest rates
$
19,500
$
3,235
$
9,886
$
32,621
Total maturities over one year
$
27,499
$
9,324
$
13,730
$
50,553
Because of various factors, the contractual maturities of consumer loans are not indicative of the actual lives of such loans. A significant component of FHN’s loan portfolio consists of consumer real estate loans, a majority of which are home equity lines of credit and home equity installment loans. These loans have an initial period where the borrower is only required to pay the periodic interest. After the interest-only period, the loan will require the payment of both principal and interest over the remaining term. Numerous factors can contribute to the actual life of a home equity line or installment loan. As a result, the actual average life of home equity lines and loans is difficult to predict, and changes in any of these factors could result in changes in projections of average lives.
Loans Held for Sale
Loans held for sale primarily consists of government guaranteed loans under SBA and USDA lending programs.
Smaller amounts of other consumer and home equity loans are also included in loans HFS. Additionally, FHN's mortgage banking operations include origination and servicing of residential first lien mortgages that conform to standards established by GSEs that are major investors in U.S. home mortgages but can also consist of junior lien and jumbo loans secured by residential property. These non-conforming loans are primarily sold to private companies that are unaffiliated with the GSEs on a servicing-released basis. For further detail, see Note 7 - Mortgage Banking Activity to the Consolidated Financial Statements in Part II, Item 8 of this Report.
On December 31, 2025 and 2024, loans HFS were $406 million and $551 million, respectively. Held-for-sale consumer mortgage loans secured by residential real estate in process of foreclosure totaled $1 million for both December 31, 2025 and 2024.
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Asset Quality
Loan and Lease Portfolio Composition
FHN groups its loans into portfolio segments based on internal classifications reflecting the manner in which the ALLL is established and how credit risk is measured, monitored, and reported. From time to time, and if conditions are such that certain subsegments are uniquely affected by economic or market conditions or are experiencing greater deterioration than other components of the loan portfolio, management may
determine the ALLL at a more granular level. Commercial loans are comprised of C&I loans and leases and CRE loans. Consumer loans are comprised of consumer real estate loans and credit card and other loans. FHN had a concentration of residential real estate loans of 22% and 23% of total loans as of December 31, 2025 and 2024, respectively. Industry concentrations are discussed under the C&I heading below.
Underwriting Policies and Procedures
The following sections describe each portfolio as well as general underwriting procedures for each. As economic and real estate conditions develop, enhancements to underwriting and credit policies and procedures may be necessary or desirable. Loan policies and procedures for all portfolios are reviewed by credit risk working groups and management risk committees comprised of business line managers and credit administration professionals, as well as by various other reviewing bodies within FHN. Policies and procedures are approved by key executives and/or senior managers leading the applicable credit risk working groups, as well as by management risk committees.
The credit risk working groups and management risk committees strive to ensure that the approved policies and procedures address the associated risks and establish reasonable underwriting criteria that appropriately mitigate risk. Policies and procedures are reviewed, revised, and re-issued periodically at established review dates or earlier if changes in the economic environment, portfolio performance, size of portfolio or industry concentrations, or regulatory guidance warrant an earlier review.
Commercial Loan and Lease Portfolios
FHN’s commercial loan approval process grants lending authority based upon job description, experience, and performance. The lending authority is delegated to Line of Business Leaders, Relationship Managers ("RMs"), Portfolio Managers ("PMs"), and Credit Officers. While individual limits vary, the predominant amount of approval authority is vested with the Credit function. Portfolio, industry, and borrower concentration limits for the various portfolios are established by executive management and approved by the Risk Committee of the Board.
FHN’s commercial lending process incorporates an RM and a PM for most commercial credits. The RM is primarily responsible for communications with the borrower and maintaining the relationship, while the PM is responsible for assessing the credit quality of the borrower, beginning with the initial underwriting and continuing through the servicing period. Other specialists and the assigned RM/PM are organized into units called relationship teams. Relationship teams are constructed with specific job attributes that facilitate FHN’s ability to identify, mitigate, document, and manage ongoing risk. PMs and credit analysts provide enhanced analytical support during loan origination and servicing, including monitoring of the financial condition of the borrower and tracking compliance with loan agreements. Loan closing officers and the construction loan management unit specialize in
loan documentation and the management of the construction lending process. FHN strives to identify problem assets early through comprehensive policies and guidelines, targeted portfolio reviews, more frequent servicing on lower rated borrowers, and an emphasis on frequent grading. For smaller commercial credits, generally $5 million or less, and income-producing CRE credits greater than $10 million to non-professional real estate developers and smaller professional real estate investors/developers, FHN utilizes two underwriting units in order to originate and grade these credits more efficiently and consistently. Decisioning of income-producing CRE loans is managed within Centralized Commercial Lending ($5 million or less in CRE exposure) or the CRE Credit unit (greater than $5 million in CRE exposure).
C&I
C&I loans are the largest component of the loan and lease portfolio, comprising 56% and 53% of total loans and leases as of December 31, 2025 and 2024, respectively. The C&I portfolio is comprised of loans used for general business purposes. Products offered in the C&I portfolio include term loan financing of owner-occupied real estate and fixed assets, direct financing and sales-type leases, working capital lines of credit, and trade credit enhancement through letters of credit.
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Income-producing C&I loans are underwritten in accordance with a well-defined credit origination process. This process includes applying minimum underwriting standards, as well as separation of origination and credit approval roles on transaction sizes over PM authorization limits. Underwriting typically includes due diligence of the borrower and the applicable industry of the borrower, analysis of the borrower’s available financial information, identification and analysis of the various sources of repayment, and identification of the primary risk attributes. Stress testing the borrower’s financial capacity, adherence to loan documentation requirements, and assigning credit risk grades using internally developed scorecards are also used to help quantify the risk when appropriate. Underwriting parameters also include loan-to-value ratios which vary depending on collateral type, use of guaranties, loan agreement requirements, and other recommended terms such as equity requirements, amortization, and maturity. Approval decisions also consider various financial ratios and performance measures of the borrowers, such as cash flow and balance sheet leverage, liquidity, coverage of fixed charges, and working capital. Additionally, approval decisions consider
the capital structure of the borrower, sponsorship, and quality/value of collateral. Generally, guideline and policy exceptions are identified and mitigated during the approval process. Pricing of C&I loans is based upon tenor and the determined credit risk specific to the individual borrower. Historically, the majority of these loans typically have variable rates tied to SOFR or Prime Rate of interest plus or minus the appropriate margin.
The largest geographical concentrations of C&I balances as of December 31, 2025 were in Tennessee (20%), Florida (12%), Texas (10%), California (7%), North Carolina (6%), and Louisiana (6%), with no other state representing more than 5% of the portfolio. This mix was generally consistent with December 31, 2024.
The following table provides the composition of the C&I portfolio by industry as of December 31, 2025 and 2024. For purposes of this disclosure, industries are determined based on the North American Industry Classification System ("NAICS") industry codes used by Federal statistical agencies in classifying business establishments for the collection, analysis, and publication of statistical data related to the U.S. business economy.
Table 7.10
C&I PORTFOLIO BY INDUSTRY
December 31, 2025
December 31, 2024
(Dollars in millions)
Amount
Percent
Amount
Percent
Industry:
Loans to mortgage companies
$
4,703
13
%
$
3,471
10
%
Finance and insurance
4,117
12
3,666
11
Real estate and rental and leasing (a)
3,965
11
3,888
12
Wholesale trade
2,645
7
2,433
7
Health care and social assistance
2,564
7
2,576
8
Accommodation and food service
2,322
7
2,198
7
Manufacturing
2,305
6
2,312
7
Retail trade
1,802
5
1,756
5
Transportation and warehousing
1,740
5
1,616
5
Other (construction, professional, energy, etc.) (b)
9,742
27
9,512
28
Total C&I loan portfolio
$
35,905
100
%
$
33,428
100
%
(a)Leasing, rental of real estate, equipment, and goods.
(b)Industries in this category each comprise less than 5%.
Industry Concentrations
Loan concentrations are considered to exist for a financial institution when there are loans to numerous borrowers engaged in similar activities that would cause them to be similarly impacted by economic or other conditions. Loans to mortgage companies and borrowers in the finance and insurance industry were 25% and 21% of FHN’s C&I loan portfolio as of December 31, 2025 and 2024, respectively, and as a result could be affected by items that uniquely impact the financial services industry. Loans to borrowers in the real estate and rental and leasing industry were
11% and 12% of FHN's C&I portfolio as of December 31, 2025 and 2024, respectively. As of December 31, 2025, FHN did not have any other concentrations of C&I loans in any single industry of 10% or more of total loans.
Loans to Mortgage Companies
Loans to mortgage companies were 13% and 10% of the C&I portfolio as of December 31, 2025 and 2024, respectively. This portfolio includes commercial lines of credit to qualified mortgage companies primarily for the temporary warehousing of eligible mortgage loans prior to
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the borrower's sale of those mortgage loans to third party investors. The high quality of the collateral and prudent risk management practices have resulted in low credit losses historically, including a net charge-off rate of 0% as of both December 31, 2025 and 2024. Balances in this portfolio generally fluctuate with mortgage rates and seasonal factors. Generally, new loan originations to mortgage lenders increase when there is a decline in mortgage rates and decrease when rates rise. In periods of economic uncertainty, this trend may not occur even if interest rates are declining. In 2025, approximately 73% of the loan originations were home purchases and 27% were refinance transactions.
Finance and Insurance
The finance and insurance component represented 12% and 11% of the C&I portfolio as of December 31, 2025 and 2024, respectively, and includes TRUPs (i.e., long-term unsecured loans to bank and insurance-related businesses), loans to bank holding companies, and asset-based lending to consumer finance companies. As of December 31, 2025, asset-based lending to consumer finance companies represents approximately $1.7 billion of the finance and insurance component.
Real Estate and Rental and Leasing
Loans to borrowers in the real estate and rental and leasing industry were 11% and 12% of the C&I portfolio as of December 31, 2025 and 2024, respectively. This portfolio primarily consists of equipment financing loans and leases to clients across FHN's footprint in a broad range of industries and asset types. This portfolio also includes a smaller balance of loans and leases for solar and wind generating facilities.
Commercial Real Estate
The CRE portfolio totaled $13.6 billion as of December 31, 2025, an $858 million, or 6%, decrease compared to December 31, 2024, largely attributable to paydowns as stabilized projects moved to permanent markets. The CRE portfolio includes financings for both commercial construction and non-construction loans. This portfolio contains loans, draws on credit lines, and letters of credit to commercial real estate developers for the construction and mini-permanent financing of income-producing real estate.
Residential CRE loans include loans to residential builders and developers for the purpose of constructing single-family homes, condominiums, and town homes, and on a limited basis, for developing residential subdivisions. The residential CRE class is not currently an area of growth for the bank.
Commercial real estate collateral valuations are performed in accordance with applicable regulatory requirements. In most cases, evaluations are outsourced to third party appraisers. Appraisals and evaluations are ordered and reviewed prior to making a final credit
decision. FHN follows policies and procedures which outline when a new appraisal or evaluation is required, considering any decline in market conditions and/or credit weakness, or when there is an event, such as a loan modification, renewal, or subsequent transaction.
Income-producing CRE loans
Income-producing CRE loans are underwritten in accordance with credit policies and underwriting guidelines that are formally reviewed at a minimum of once every three years and revised as necessary based on market conditions. Loans are underwritten based upon project type, size, location, sponsorship, and other market-specific data. Generally, minimum requirements for equity, debt service coverage ratios, and level of pre-leasing activity are established based on perceived risk in each subcategory. Loan-to-value limits are set below regulatory prescribed ceilings and generally range between 50% and 80% depending on the underlying property type. Term and amortization requirements are set based on prudent standards for real estate lending. Equity requirements are established based on the quality and liquidity of the primary source of repayment. For example, more equity would be required for a speculative construction project or land loan than for a property fully leased to a credit tenant or a roster of tenants. Typically, a borrower must have at least 15% of cost invested in a project before FHN will provide loan funding. Income properties are generally required to achieve a debt service coverage ratio greater than or equal to 1.25x at inception or stabilization of the project based on loan amortization and a minimum underwriting interest rate. Some product types that possess a greater risk profile require a higher level of equity, as well as a higher debt service coverage ratio threshold. A proprietary minimum underwriting interest rate is used to calculate compliance with underwriting standards. Generally, specific levels of pre-leasing must be met for construction loans on income properties, where applicable. A global cash flow analysis is typically performed at the sponsor level.
The credit administration and ongoing monitoring consists of multiple internal control processes. Construction loans are closed by a centralized control unit and construction loan management is administered centrally for loans $3 million and over. Underwriters and credit approval personnel stress the borrower’s/project’s financial capacity utilizing numerous attributes such as interest rates, vacancy, capitalization rates, and debt service coverage ratios under various scenarios. Key information is captured from the various portfolios and then stressed at the aggregate level. Results are utilized to assist with the assessment of the adequacy of the ALLL and to steer portfolio management strategies.
The largest geographical concentrations of CRE balances as of December 31, 2025 were in Florida (26%), Texas (13%), North Carolina (12%), Tennessee (8%), Georgia
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(8%), and Louisiana (8%), with no other state representing more than 5% of the portfolio. The mix was generally consistent with December 31, 2024.
The following table represents subcategories of CRE loans by property type.
Table 7.11
CRE PORTFOLIO BY PROPERTY TYPE
December 31, 2025
December 31, 2024
Amount
Percent
Amount
Percent
Property Type:
Multi-family
$
4,452
33
%
$
5,122
36
%
Office
2,694
20
2,785
19
Retail
2,354
17
2,167
15
Industrial
2,075
15
2,130
15
Hospitality
1,154
9
1,332
9
Other CRE (a)
834
6
885
6
Total CRE loan portfolio
$
13,563
100
%
$
14,421
100
%
(a) Property types in this category each comprise less than 5%.
Consumer Loan Portfolios
Consumer Real Estate
The consumer real estate portfolio is primarily comprised of home equity lines and installment loans. This portfolio totaled $14.1 billion and $14.0 billion as of December 31, 2025 and 2024, respectively. The largest geographical concentrations of balances in the consumer real estate portfolio as of December 31, 2025 were in Florida (29%), Tennessee (22%), Texas (12%), Louisiana (8%), North Carolina (6%), and Georgia (6%), with no other state representing 5% or more of the portfolio. The mix was generally consistent with December 31, 2024.
As of December 31, 2025, approximately 89% of the consumer real estate portfolio was in a first lien position. At origination, the weighted average FICO score of this portfolio was 760 and the refreshed FICO scores averaged 779 as of December 31, 2025, compared to FICO scores of 759 and 756, respectively, as of December 31, 2024. Generally, performance of this portfolio is affected by life events that affect borrowers’ finances, the level of unemployment, and home prices.
As of December 31, 2025 and 2024, FHN had held-to-maturity consumer mortgage loans secured by real estate totaling $27 million and $26 million, respectively, that were in the process of foreclosure.
HELOCs comprised $2.2 billion and $2.1 billion of the consumer real estate portfolio as of December 31, 2025
and 2024, respectively. FHN’s HELOCs typically have a 5- or 10- year draw period followed by a 10- or 20- year repayment period, respectively. During the draw period, a borrower is able to draw on the line and is only required to make interest payments. The line is restricted if a borrower becomes past due on payments. Once the draw period has ended, the line is closed, and the borrower is required to make both principal and interest payments monthly until the loan matures. The principal payment generally is fully amortizing, but payment amounts will adjust when variable rates reset to reflect changes in the Prime Rate.
As of both December 31, 2025 and 2024, approximately 95% of FHN's HELOCs were in the draw period. It is expected that $612 million, or 30%, of HELOCs currently in the draw period will enter the repayment period during the next 60 months, based on current terms. Generally, delinquencies for HELOCs that have entered the repayment period are initially higher than HELOCs still in the draw period because of the increased minimum payment requirement. However, over time, performance of these loans usually begins to stabilize. HELOCs nearing the end of the draw period are closely monitored.
The following table presents HELOCs currently in the draw period, broken down by months remaining in the draw period.
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Table 7.12
HELOC DRAW TO REPAYMENT SCHEDULE
December 31, 2025
December 31, 2024
(Dollars in millions)
Repayment
Amount
Percent
Repayment
Amount
Percent
Months remaining in draw period:
0-12
$
80
4
%
$
79
4
%
13-24
117
6
90
5
25-36
126
6
134
7
37-48
130
6
147
7
49-60
159
8
148
7
60
1,449
70
1,404
70
Total
$
2,061
100
%
$
2,002
100
%
Underwriting
For loans in this portfolio, underwriting decisions are made through a centralized loan underwriting center. To obtain a consumer real estate loan, the loan applicant(s) must first meet a minimum qualifying FICO score. Management establishes minimum FICO score requirements, as well as maximum loan amounts, loan-to-value ratios, and debt-to-income ratios for each consumer real estate product. Applicants must have the financial capacity (or available income) to service the debt by not exceeding a calculated debt-to-income ratio. The amount of the loan is limited to a percentage of the lesser of the current appraised value or sales price of the collateral. Identified guideline and policy exceptions require established mitigating factors that have been approved for use by Credit.
HELOC interest rates are variable and adjust with movements in the index rate stated in the loan agreement. Such loans can have elevated risk of default, particularly in a rising interest rate environment, potentially stressing borrower capacity to repay the loan at the higher interest rate. FHN’s current underwriting practice requires HELOC borrowers to qualify based on a sensitized interest rate (above the current note rate), fully amortized payment methodology. FHN’s underwriting guidelines require borrowers to qualify at an interest rate
that is 200 basis points above the note rate. This mitigates risk to FHN in the event of a sharp rise in interest rates over a relatively short time horizon.
HELOC Portfolio Risk Management
FHN performs continuous HELOC account reviews to identify higher-risk home equity lines and initiate preventative and corrective actions. The reviews consider a number of account activity patterns and characteristics, such as the number of times delinquent within recent periods, changes in credit bureau score since origination, score degradation, performance of the first lien, where applicable, and account utilization. In accordance with FHN’s interpretation of regulatory guidance, FHN may block future draws on accounts in order to mitigate risk of loss to FHN.
Credit Card and Other
The credit card and other consumer loan portfolio totaled $580 million as of December 31, 2025 and $669 million as of December 31, 2024. This portfolio primarily consists of consumer-related credits, including home equity and other personal consumer loans, credit card receivables, and automobile loans. The $89 million decrease was driven by net repayments.
Allowance for Credit Losses
The ACL is maintained at a level sufficient to provide appropriate reserves to absorb estimated future credit losses in accordance with GAAP. For additional information regarding the ACL, see Notes 1 and 4 to the Consolidated Financial Statements in Part II, Item 8 of this Report.
The ALLL decreased to $738 million as of December 31, 2025, or 1.15% of total loans and leases, compared to
$815 million, or 1.30% of total loans and leases, at the end of 2024. The ACL to total loans and leases ratio decreased to 1.31% as of December 31, 2025 from 1.43% as of December 31, 2024, reflecting a reduction in criticized and classified loans as well as a favorable portfolio mix shift.
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Consolidated Net Charge-offs
Net charge-offs were $120 million in 2025 compared to $112 million in 2024. As a percentage of average total loans and leases, net charge-offs were 0.19%, compared to 0.18% in 2024. Net charge-offs in 2023 were elevated primarily as the result of a $72 million idiosyncratic charge-off related to one client relationship.
See Note 1 — Significant Accounting Policies to the Consolidated Financial Statements in Part II, Item 8 of this Report for FHN's charge-off policies.
Table 7.13
ANALYSIS OF ALLOWANCE FOR CREDIT LOSSES AND CHARGE-OFFS
December 31,
(Dollars in millions)
2025
2024
2023
Allowance for loan and lease losses
C&I
$
335
$
345
$
339
CRE
177
227
172
Consumer real estate
206
221
233
Credit card and other
20
22
29
Total allowance for loan and lease losses
$
738
$
815
$
773
Reserve for remaining unfunded commitments
C&I
$
81
$
57
$
49
CRE
11
11
22
Consumer real estate
9
11
12
Total reserve for remaining unfunded commitments
$
101
$
79
$
83
Allowance for credit losses
C&I
$
416
$
402
$
388
CRE
188
238
194
Consumer real estate
215
232
245
Credit card and other
20
22
29
Total allowance for credit losses
$
839
$
894
$
856
Period-end loans and leases
C&I
$
35,905
$
33,428
$
32,633
CRE
13,563
14,421
14,216
Consumer real estate
14,108
14,047
13,650
Credit card and other
580
669
793
Total period-end loans and leases
$
64,156
$
62,565
$
61,292
ALLL / loans and leases %
C&I
0.93
%
1.03
%
1.04
%
CRE
1.30
1.57
1.21
Consumer real estate
1.46
1.57
1.71
Credit card and other
3.40
3.28
3.63
Total ALLL / loans and leases %
1.15
%
1.30
%
1.26
%
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ACL / loans and leases %
C&I
1.16
%
1.20
%
1.19
%
CRE
1.38
1.65
1.36
Consumer real estate
1.53
1.65
1.79
Credit card and other
3.40
3.28
3.63
Total ACL / loans and leases %
1.31
%
1.43
%
1.40
%
Net charge-offs (recoveries)
C&I
$
94
$
47
$
142
CRE
12
55
15
Consumer real estate
(1)
(6)
(5)
Credit card and other
15
16
18
Total net charge-offs
$
120
$
112
$
170
Average loans and leases
C&I
$
33,831
$
32,871
$
32,390
CRE
13,931
14,558
13,785
Consumer real estate
14,235
13,836
13,179
Credit card and other
613
740
815
Total average loans and leases
$
62,610
$
62,005
$
60,169
Charge-off %
C&I
0.28
%
0.14
%
0.44
%
CRE
0.09
0.38
0.10
Consumer real estate
(0.01)
(0.04)
(0.04)
Credit card and other
2.51
2.11
2.18
Total charge-off %
0.19
%
0.18
%
0.28
%
ALLL / net charge-offs
C&I
359
%
738
%
239
%
CRE
1,487
411
1,097
Consumer real estate
NM
NM
NM
Credit card and other
128
141
162
Total ALLL / net charge-offs
616
%
731
%
455
%
NM - not meaningful
Nonperforming Assets
Nonperforming loans are loans placed on nonaccrual if it becomes evident that full collection of principal and interest is at risk, if impairment has been recognized as a partial charge-off of principal balance due to insufficient collateral value and past due status, or (on a case-by-case basis) if FHN continues to receive payments but there are other borrower-specific issues. Included in nonaccrual are loans for which FHN continues to receive payments, including residential real estate loans where the borrower has been discharged of personal obligation through bankruptcy. NPAs consist of nonperforming loans and leases, nonperforming loans held for sale, and OREO.
Total NPAs were $617 million as of December 31, 2025, compared to $608 million as of December 31, 2024. Nonperforming loans and leases increased $2 million, largely driven by an increase in nonaccrual C&I loans, partially offset by a decline in nonaccrual CRE loans. The increase in nonaccrual C&I loans was largely driven by loans in the wholesale trade, finance and insurance and manufacturing industries, partially offset by loans in the construction industry. These portfolios continue to maintain strong underwriting and client selection. The vast majority of NPAs have individual impairment reviews with no specific reserve required. The nonperforming loans and leases ratio decreased 2 basis points to 0.94% as of December 31, 2025.
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Table 7.14
NONPERFORMING ASSETS
December 31,
(Dollars in millions)
2025
2024
2023
Nonperforming loans and leases
C&I
$
224
$
173
$
184
CRE
239
294
136
Consumer real estate
140
133
140
Credit card and other
1
2
2
Total nonperforming loans and leases (a) (c)
$
604
$
602
$
462
Nonperforming loans held for sale (a)
$
10
$
3
$
3
Foreclosed real estate and other assets
3
3
4
Total nonperforming assets (a)
$
617
$
608
$
469
Nonperforming loans and leases to total loans and leases (b)
C&I
0.62
%
0.52
%
0.57
%
CRE
1.76
2.04
0.96
Consumer real estate
0.99
0.95
1.02
Credit card and other
0.16
0.23
0.30
Total NPL %
0.94
%
0.96
%
0.75
%
ALLL / NPLs (b)
C&I
150
%
199
%
184
%
CRE
74
77
126
Consumer real estate
147
167
167
Credit card and other
2,096
1,438
1,202
Total ALLL / NPLs
122
%
136
%
167
%
(a) Excludes loans and leases that are 90 or more days past due and still accruing interest.
(b) Excludes loans classified as held for sale.
(c) Under the original terms of the loans, estimated interest income would have been approximately $41 million, $43 million, and $35 million during 2025, 2024, and 2023, respectively.
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The following table provides nonperforming assets by business segment.
Table 7.15
NONPERFORMING ASSETS BY SEGMENT
December 31,
(Dollars in millions)
2025
2024
2023
Nonperforming loans and leases (a) (b)
Commercial, Consumer & Wealth
$
587
$
572
$
401
Wholesale
8
12
38
Corporate
9
18
23
Consolidated
$
604
$
602
$
462
Foreclosed real estate
Commercial, Consumer & Wealth
$
—
$
1
$
1
Wholesale
2
1
2
Corporate
1
1
1
Consolidated
$
3
$
3
$
4
Nonperforming Assets (a) (b)
Commercial, Consumer & Wealth
$
587
$
573
$
402
Wholesale
10
13
40
Corporate
10
19
24
Consolidated
$
607
$
605
$
466
Nonperforming loans and leases to total loans and leases (b)
Commercial, Consumer & Wealth
1.04
%
1.01
%
0.71
%
Wholesale
0.11
0.20
0.87
Corporate
1.84
5.46
4.68
Consolidated
0.94
%
0.96
%
0.75
%
NPA % (b) (c)
Commercial, Consumer & Wealth
1.04
%
1.02
%
0.71
%
Wholesale
0.14
0.23
0.93
Corporate
1.98
5.65
4.81
Consolidated
0.95
%
0.97
%
0.76
%
(a)Excludes loans and leases that are 90 or more days past due and still accruing interest.
(b)Excludes loans classified as held for sale.
(c)Ratio is non-performing assets to total loans and leases plus foreclosed real estate.
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Past Due Loans and Potential Problem Assets
Past due loans are loans contractually past due as to interest or principal payments, but which have not yet been put on nonaccrual status.
Loans 90 days or more past due and still accruing were $8 million as of December 31, 2025, compared to $21 million
as of December 31, 2024. Loans 30 to 89 days past due and still accruing were $83 million as of December 31, 2025 compared to $89 million as of December 31, 2024, largely reflecting lower past due consumer real estate loan balances, partially offset by higher past due C&I loan balances.
Table 7.16
ACCRUING DELINQUENCIES & OTHER CREDIT DISCLOSURES
December 31,
(Dollars in millions)
2025
2024
2023
Accruing loans and leases 30+ days past due (a)
C&I
$
35
$
33
$
33
CRE
3
3
8
Consumer real estate
47
69
57
Credit card and other
6
5
8
Total accruing loans and leases 30+ days past due
$
91
$
110
$
106
Accruing loans and leases 30+ days past due % (a)
C&I
0.10
%
0.10
%
0.10
%
CRE
0.02
0.02
0.06
Consumer real estate
0.33
0.50
0.42
Credit card and other
1.05
0.79
1.03
Total accruing loans and leases 30+ days past due %
0.14
%
0.18
%
0.17
%
Accruing loans and leases 90+ days past due (a) (b) (c)
C&I
$
1
$
1
$
1
Consumer real estate
6
19
17
Credit card and other
1
1
3
Total accruing loans and leases 90+ days past due
$
8
$
21
$
21
Loans held for sale
30 to 89 days past due (b)
$
3
$
8
$
12
30 to 89 days past due - guaranteed portion (b) (d)
—
6
8
90+ days past due (b)
—
7
9
90+ days past due - guaranteed portion (b) (d)
—
4
4
(a)Excludes loans classified as held for sale.
(b)Amounts are not included in nonperforming/nonaccrual loans.
(c)Amounts are also included in accruing loans and leases 30+ days past due.
(d)Guaranteed loans include FHA, VA, and GNMA loans repurchased through the GNMA buyout program.
Potential problem assets represent those assets where information about possible credit problems of borrowers has caused management to have serious doubts about the borrower’s ability to comply with present repayment terms and includes loans past due 90 days or more and still accruing. This definition is believed to be substantially consistent with the standards established by the Federal banking regulators for loans classified as substandard. Potential problem assets in the loan portfolio totaled $1.7 billion as of December 31, 2025, compared to $1.9 billion as of December 31, 2024. The current expectation of
losses from potential problem assets has been included in management’s analysis for assessing the adequacy of the allowance for loan and lease losses.
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Modifications to Borrowers Experiencing Financial Difficulty
As part of FHN’s ongoing risk management practices, FHN attempts to work with borrowers when appropriate to extend or modify loan terms to better align with their current ability to repay. Modifications to loans are made in accordance with internal policies and guidelines which conform to regulatory guidance. Each occurrence is unique to the borrower and is evaluated separately. See Note 1 - Significant Accounting Policies, Note 3 - Loans and Leases and Note 4 - Allowance for Credit Losses to the Consolidated Financial Statements in Part II, Item 8 of this Report for further discussion regarding troubled loan modifications.
Commercial Loan Modifications
As part of FHN’s credit risk management governance processes, the Special Assets Department ("SAD") is responsible for managing most commercial relationships with borrowers whose financial condition has deteriorated to such an extent that the credits are individually reviewed for expected credit losses, classified as substandard or worse, placed on nonaccrual status, foreclosed or in process of foreclosure, or in active or contemplated litigation. SAD has the authority and responsibility to enter into workout and/or rehabilitation agreements with troubled commercial borrowers in order to mitigate and/or minimize the amount of credit losses recognized from these problem assets. While every circumstance is different, SAD will generally use forbearance agreements (generally 6-12 months) as an element of commercial loan workouts, which might include reduced interest rates, reduced payments, release of a guarantor, term extensions or entering into short sale agreements. Principal forgiveness may be granted in specific workout circumstances.
The individual expected credit loss assessments completed on commercial loans may be used in evaluating
the appropriateness of qualitative adjustments to quantitatively modeled loss expectations for loans that are not considered collateral dependent. If a loan is considered collateral dependent, it is individually evaluated based on data specific to the borrower and related collateral, if any. Such estimates may be based on current loss forecasts, an evaluation of the fair value of the collateral, or, in certain circumstances, the present value of expected cash flows discounted at the loan’s effective interest rate.
The fair value of collateral is generally based on appraisals periodically updated, recent sales of foreclosed properties and/or relevant property specific market information, less estimated costs to sell, if applicable. Commercial loans are typically secured by real estate, business equipment, inventories, and other types of collateral. Each assessment considers any modified terms and is comprehensive to ensure appropriate assessment of expected credit losses.
Consumer Loan Modifications
FHN does not currently participate in any of the loan modification programs sponsored by the U.S. government for its portfolio loans, but does generally structure modified consumer loans using the parameters of the former Home Affordable Modification Program.
Within the HELOC and permanent mortgage installment loans in the consumer portfolio segment, troubled loans are typically modified by reducing the interest rate (in increments of 25 basis points to a minimum of 3%) and a possible maturity date extension of up to 30 years to reach an affordable housing expense-to-income ratio.
Within the credit card class of the consumer portfolio segment, troubled loans are typically modified through either a short-term credit card hardship program or a longer-term credit card workout program. In the credit card hardship program, borrowers may be granted rate and payment reductions for 6 months to 1 year. In the credit card workout program, clients are granted a rate reduction to 0% and term extensions for up to 5 years to pay off the remaining balance.
Consumer loans may also be modified through court-imposed principal reductions in bankruptcy proceedings, which FHN is required to honor unless a borrower reaffirms the related debt.
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Deposits
Total deposits of $67.5 billion as of December 31, 2025 increased $1.9 billion compared to December 31, 2024, as interest-bearing deposits increased $2.1 billion and noninterest-bearing deposits decreased $198 million.
FHN continues to maintain a well-diversified and stable funding mix across its footprint and specialty lines of business. At December 31, 2025, commercial deposits were $39.4 billion, or 58% of total deposits, and consumer deposits were $28.1 billion, or 42% of total deposits. At December 31, 2024, commercial deposits were $36.2 billion, or 55% of total deposits, and consumer deposits were $29.4 billion, or 45% of total deposits.
At December 31, 2025, 34% of deposits were associated with Tennessee, 16% with Florida, 12% with North Carolina, and 12% with Louisiana, with no other state above 10%. This mix remained relatively consistent with the previous year-end.
Total estimated uninsured deposits were $28.1 billion, or 42% of total deposits, and $26.7 billion, or 41% of total deposits, as of December 31, 2025 and 2024, respectively. Of the uninsured deposits as of December 31, 2025, $5.2 billion, or 8% of total deposits, were collateralized. As of December 31, 2024, collateralized deposits were $4.7 billion, or 7% of total deposits.
The following tables present the major components of FHN's total deposits for 2025 and 2024, FHN's total estimated uninsured deposits for the years ended December 31, 2025 and 2024, and the maturities of FHN's uninsured time deposits as of December 31, 2025 and 2024. See Table 7.2 - Average Balances, Net Interest Income and Yields/Rates in this Report for information on average deposits, including average rates paid.
Table 7.17
DEPOSITS
(Dollars in millions)
2025
Percent of Total
2024
Percent of Total
Change
Percent
Savings
$
26,010
39
%
$
26,695
41
%
$
(685)
(3)
%
Time deposits
6,485
10
6,613
10
(128)
(2)
Other interest-bearing deposits
19,158
28
16,252
25
2,906
18
Total interest-bearing deposits
51,653
77
49,560
76
2,093
4
Noninterest-bearing deposits
15,823
23
16,021
24
(198)
(1)
Total deposits
$
67,476
100
%
$
65,581
100
%
$
1,895
3
%
Table 7.18
ESTIMATED UNINSURED DEPOSITS
For the Year Ended December 31,
(Dollars in millions)
2025
2024
Uninsured deposits
$
28,054
$
26,679
Table 7.19
UNINSURED TIME DEPOSITS BY MATURITY
(Dollars in millions)
December 31, 2025
December 31, 2024
Portion of U.S. time deposits in excess of insurance limit
$
1,162
$
1,068
Remaining maturity:
3 months or less
280
328
Over 3 months through 6 months
318
379
Over 6 months through 12 months
319
332
Over 12 months
245
29
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Short-Term Borrowings
Short-term borrowings include federal funds purchased, securities sold under agreements to repurchase, trading liabilities, and other short-term borrowings. Total short-term borrowings were $3.9 billion and $4.0 billion as of December 31, 2025 and 2024, respectively. Other short-term borrowings decreased $804 million, largely reflecting a $550 million decrease in FHLB borrowings. This decrease was partly offset by a $658 million increase in federal funds purchased and securities sold under agreements to repurchase and a $57 million increase in trading liabilities.
Short-term borrowings balances fluctuate largely based on the level of FHLB borrowing as a result of loan demand,
deposit levels and balance sheet funding strategies. Trading liabilities fluctuate based on various factors, including levels of trading securities and hedging strategies. The amount of federal funds purchased fluctuates depending on the amount of excess funding of FHN's correspondent bank customers. Balances of securities sold under agreements to repurchase fluctuate based on cost attractiveness relative to FHLB borrowing levels and the ability to pledge securities toward such transactions. See Note 9 - Short-Term Borrowings to the Consolidated Financial Statements in Part II, Item 8 of this Report for additional information.
Term Borrowings
Term borrowings include senior and subordinated borrowings with original maturities greater than one year. Total term borrowings were $1.3 billion and $1.2 billion as of December 31, 2025 and 2024, respectively. This increase primarily reflects the issuance of $500 million of
senior notes during first quarter 2025, partially offset by the retirement of $350 million in senior notes during second quarter 2025. See Note 10 - Term Borrowings to the Consolidated Financial Statements in Part II, Item 8 of this Report for additional information.
Capital
Management’s objectives are to provide capital sufficient to cover the risks inherent in FHN’s businesses, to maintain excess capital to well-capitalized standards, and to ensure ready access to the capital markets.
Total equity of $9.1 billion increased $31 million compared to December 31, 2024. Significant changes included net income of $998 million and an increase of $318 million in AOCI, offset by $918 million in common stock repurchases, $330 million in common and preferred
dividends, and $80 million from the Series B Preferred Stock redemption.
The following tables provide a reconciliation of shareholders’ equity from the Consolidated Balance Sheets to Common Equity Tier 1, Tier 1, and Total Regulatory Capital, as well as certain selected capital ratios.
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Table 7.20
REGULATORY CAPITAL DATA
(Dollars in millions)
December 31, 2025
December 31, 2024
FHN shareholders’ equity
$
8,847
$
8,816
Modified CECL transitional amount (a)
—
28
FHN non-cumulative perpetual preferred
(349)
(426)
Common equity tier 1 before regulatory adjustments
$
8,498
$
8,418
Regulatory adjustments:
Disallowed goodwill and other intangibles
$
(1,548)
$
(1,578)
Net unrealized (gains) losses on securities available for sale
512
782
Net unrealized (gains) losses on pension and other postretirement plans
256
252
Net unrealized (gains) losses on cash flow hedges
42
94
Disallowed deferred tax assets
—
(1)
Common equity tier 1
$
7,760
$
7,967
FHN non-cumulative perpetual preferred
349
426
Qualifying noncontrolling interest—First Horizon Bank preferred stock
295
295
Tier 1 capital
$
8,404
$
8,688
Tier 2 capital
1,344
1,442
Total regulatory capital
$
9,748
$
10,130
Risk-Weighted Assets
First Horizon Corporation
$
73,036
$
71,108
First Horizon Bank
72,283
70,418
Average Assets for Leverage
First Horizon Corporation
$
82,492
$
81,645
First Horizon Bank
81,560
80,791
Table 7.21
REGULATORY RATIOS & AMOUNTS
December 31, 2025
December 31, 2024
(Dollars in millions)
Ratio
Amount
Ratio
Amount
Common Equity Tier 1
First Horizon Corporation
10.63
%
$
7,760
11.20
%
$
7,967
First Horizon Bank
10.98
7,934
11.12
7,834
Tier 1
First Horizon Corporation
11.51
8,404
12.22
8,688
First Horizon Bank
11.38
8,229
11.54
8,129
Total
First Horizon Corporation
13.35
9,748
14.25
10,130
First Horizon Bank
13.04
9,425
13.38
9,424
Tier 1 Leverage
First Horizon Corporation
10.19
8,404
10.64
8,688
First Horizon Bank
10.09
8,229
10.06
8,129
Other Capital Ratios
Total period-end equity to period-end assets
10.90
11.09
Tangible common equity to tangible assets (b)
8.37
8.37
(a) The modified CECL transitional amount includes the impact to retained earnings from the initial adoption of CECL plus 25% of the change in the adjusted allowance for credit losses since FHN’s initial adoption of CECL through December 31, 2021. For December 31, 2024, 25% of the full amount was phased out and not included in Common Equity Tier 1 capital.
(b) Tangible common equity to tangible assets is a non-GAAP measure and is reconciled to total equity to total assets (GAAP) in the Non-GAAP to GAAP Reconciliation - Table 7.33.
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Banking regulators define minimum capital ratios for bank holding companies and their bank subsidiaries. Based on the capital rules and definitions prescribed by the banking regulators, should any depository institution’s capital ratios decline below predetermined levels, it would become subject to a series of increasingly restrictive regulatory actions.
The system categorizes a depository institution’s capital position into one of five categories ranging from well-capitalized to critically under-capitalized. For an institution to qualify as well-capitalized, Common Equity Tier 1, Tier 1 Capital, Total Capital, and Leverage capital ratios must be at least 6.50%, 8.00%, 10.00%, and 5.00%, respectively. Furthermore, a capital conservation buffer of 50 basis points above these levels must be maintained on the Common Equity Tier 1, Tier 1 Capital, and Total Capital ratios to avoid restrictions on dividends, share repurchases, and certain discretionary bonuses.
As of December 31, 2025, both FHN and First Horizon Bank had sufficient capital to qualify as well-capitalized institutions and to meet the capital conservation buffer
requirement. For December 31, 2024, capital ratios for both FHN and First Horizon Bank were calculated under the final rule issued by the banking regulators in 2020 to delay the effects of CECL on regulatory capital for two years, followed by a three-year transition period.
For FHN, the risk-based regulatory capital and Tier 1 leverage ratios decreased in 2025, relative to year-end 2024, primarily from the impact of common share repurchases, the Series B Preferred Stock redemption, and an increase in risk-weighted assets (or average assets in the case of the Tier 1 leverage ratio), partially offset by net income less dividends. For First Horizon Bank, the risk-based regulatory capital ratios decreased from year-end 2024, largely from an increase in risk-weighted assets, partially offset by the impact of net income less dividends. The Tier 1 leverage ratio for First Horizon Bank increased from year-end 2024, largely from the impact of net income less dividends.
During 2026, capital ratios are expected to remain above well-capitalized standards plus the required capital conservation buffer.
Stress Testing
The Economic Growth, Regulatory Relief, and Consumer Protection Act, along with an interagency regulatory statement effectively exempted both FHN and First Horizon Bank from Dodd-Frank Act stress testing requirements starting in 2018.
For 2025, FHN and First Horizon Bank completed a company run stress test using the Dodd-Frank Act Stress Test ("DFAST") scenarios published in February 2025. Results of these tests indicate that both FHN and First Horizon Bank would be able to maintain capital well in excess of Basel III Adequately Capitalized standards under the hypothetical severe global recession of the 2025 DFAST Severely Adverse scenario. A summary of FHN's results was posted in the “Fixed Income - Stress Test
Results” section on FHN’s investor relations website on July 30, 2025. Neither FHN’s stress test posting, nor any other material found on FHN’s website generally, is part of this report or incorporated herein.
FHN anticipates that it will continue performing an annual enterprise-wide stress test as part of its capital and risk management process. Results of this test will be presented to executive management and the Board.
The disclosures in this “Stress Testing” section include forward-looking statements. Please refer to “Forward-Looking Statements” for additional information concerning the characteristics and limitations of statements of that type.
Common Stock Purchase Programs
FHN may purchase shares of its common stock from time to time, subject to legal and regulatory restrictions. FHN's Board has authorized the common stock purchase programs described below. FHN’s Board has not authorized a preferred stock purchase program.
October 2024 General Purchase Program
On October 29, 2024, FHN announced that its Board of Directors had approved a $1.0 billion common share purchase program to replace the $650 million January 2024 program. The October 2024 program was scheduled to expire on January 31, 2026. Purchases under the program could be made in the open market or through privately negotiated transactions, including under Rule 10b5-1 plans as well as accelerated share repurchase and other structured transactions. The timing and exact
amount of common share repurchases were at the discretion of senior management and were subject to various factors, including FHN's capital position, financial performance, expected capital impacts of strategic initiatives, market conditions, business conditions, and regulatory considerations.
As of December 31, 2025, $820 million in purchases had been made life-to-date under the October 2024 program at an average price per share of $20.80, or $20.78 excluding commissions. Program purchases made during the quarter ended December 31, 2025 are summarized in the following table. The program was terminated effective the close of business on October 27, 2025 with $180 million in authorization unused.
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Table 7.22
COMMON STOCK PURCHASES—OCTOBER 2024 PROGRAM (a)
(Dollar values and volume in thousands, except per share data)
Total number of shares purchased
Average price paid per share (b)
Total number of shares purchased as part of publicly announced programs
Maximum approximate dollar value that may yet be purchased under the programs
2025
October 1 to October 31
6,400
$
20.62
6,400
N/A
November 1 to November 30
N/A
N/A
N/A
N/A
December 1 to December 31
N/A
N/A
N/A
N/A
Total
6,400
$
20.62
6,400
(a)This table is limited to purchases made under the October 2024 program which was terminated effective the close of business on October 27, 2025.
(b)Represents total costs including commissions paid. Average price paid does not reflect the one percent excise tax charged on public company share repurchases.
October 2025 General Purchase Program
On October 27, 2025, FHN announced that its Board of Directors had approved a new $1.2 billion common share purchase program to replace the $1.0 billion October 2024 program discussed above. The new October 2025 program is scheduled to expire on January 31, 2027. Purchases under the new program may be made in the open market or through privately negotiated transactions, including under Rule 10b5-1 plans, as well as accelerated share repurchase and other structured transactions. The timing and exact amount of common share repurchases are at the discretion of senior management and are subject to
various factors, including FHN's capital position, financial performance, expected capital impacts of strategic initiatives, market conditions, business conditions, and regulatory considerations.
As of December 31, 2025, $203 million in purchases had been made life-to-date under the October 2025 program at an average price per share of $21.80, or $21.78 excluding commissions. Program purchases made during the quarter ended December 31, 2025 are summarized in the following table.
Table 7.23
COMMON STOCK PURCHASES—OCTOBER 2025 PROGRAM (a)
(Dollar values and volume in thousands, except per share data)
Total number of shares purchased
Average price paid per share (b)
Total number of shares purchased as part of publicly announced programs
Maximum approximate dollar value that may yet be purchased under the programs
2025
October 1 to October 31
1,600
$
21.06
1,600
$
1,166,310
November 1 to November 30
5,850
21.46
5,850
1,040,751
December 1 to December 31
1,850
23.52
1,850
997,234
Total
9,300
$
21.80
9,300
(a)This table is limited to purchases made under the October 2025 program which was effective beginning October 28, 2025.
(b)Represents total costs including commissions paid. Average price paid does not reflect the one percent excise tax charged on public company share repurchases.
Tax Withholding for Stock Awards
As authorized by the Board's Compensation Committee, FHN makes automatic stock purchases by withholding stock-based award shares to cover tax obligations associated with those awards. Those limited, off-market purchases are not associated with an announced purchase
program and are made any time an associated tax obligation arises, whether or not a blackout period is in effect. Tax withholding purchases made during the quarter ended December 31, 2025 are summarized in the following table.
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Table 7.24
COMMON STOCK PURCHASES—TAX WITHHOLDING FOR STOCK AWARDS
(Dollar values and volume in thousands, except per share data)
Total number
of shares
purchased
Average price
paid per share
Total number of
shares purchased
as part of publicly
announced programs
Maximum number
of shares that may
yet be purchased
under the programs
2025
October 1 to October 31
16
$
21.37
N/A
N/A
November 1 to November 30
7
21.51
N/A
N/A
December 1 to December 31
3
22.76
N/A
N/A
Total
26
$
21.58
Risk Management
FHN derives revenue from providing services and, in many cases, assuming and managing risk for profit, which exposes FHN to strategic, liquidity, market, capital adequacy, operational, compliance, and credit risks that require ongoing oversight and management. FHN has an enterprise-wide approach to risk governance, measurement, management, and reporting, including an economic capital allocation process that is tied to risk profiles used to measure risk-adjusted returns. Through an enterprise-wide risk governance structure and a Risk Appetite Statement approved by the Board, management continually evaluates the balance of risk/return and earnings volatility with shareholder value.
FHN’s enterprise-wide risk governance structure begins with the Board. The Board, working with the Risk Committee of the Board, establishes FHN’s risk appetite by approving policies and limits that provide standards for the nature and the level of risk FHN is willing to assume. The Board regularly receives reports on management’s performance against FHN’s risk appetite primarily through the Board’s Risk and Audit Committees.
To further support the risk governance provided by the Board, FHN has established accountabilities, control processes, procedures, and a management governance structure designed to align risk management with risk-taking throughout FHN. The control procedures are aligned with FHN’s four components of risk governance: (1) Specific Risk Committees; (2) the Risk Management Organization; (3) Business Unit Risk Management; and (4) Independent Assurance Functions.
1.Specific Risk Committees: The Board has delegated authority to the Chief Executive Officer to manage Strategic Risk and the general business affairs of FHN under the Board’s oversight. The CEO utilizes the executive management team to carry out these duties in conjunction with the Risk governance structure. The Management Risk Committee is chaired by the Chief Risk Officer and is comprised of the CEO and certain officers that oversee all risk areas and analyzes both
existing and emerging risks. The Management Risk Committee is supported by a set of specific risk committees focused on unique risk types (e.g., liquidity, credit, operational, etc.). These risk committees provide a mechanism that assembles the necessary expertise and perspectives of the management team to discuss emerging risk issues, monitor FHN’s risk-taking activities, and evaluate specific transactions and exposures. These committees also monitor the direction and trend of risks relative to business strategies and market conditions and direct management to respond to risk issues.
2.The Risk Management Organization: FHN’s risk management organization, led by the Chief Risk Officer and Chief Credit Officer, provides objective oversight of risk-taking activities. The risk management organization translates FHN’s overall risk appetite into approved limits and formal policies and is supported by corporate staff functions, including the Corporate Secretary, Legal, Finance, Human Resources Operations, and Technology. Risk management works with business units and functional experts to establish appropriate operating standards and monitor business practices in relation to those standards. Additionally, risk management proactively works with business units and senior management to focus management on key risks in FHN and emerging trends that may change FHN’s risk profile. The Chief Risk Officer has overall responsibility and accountability for enterprise risk management and aggregate risk reporting.
3.Business Unit Risk Management: FHN’s business units are responsible for identifying, acknowledging, quantifying, mitigating, and managing all risks arising within their respective units. They determine and execute their business strategies, which puts them closest to the changing nature of risks, and they are best able to take the needed actions to manage and mitigate those risks. The business units are supported by the risk management organization that helps identify and consider risks when making business
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decisions. Management processes, structure, and policies are designed to help ensure compliance with laws and regulations as well as provide organizational clarity for authority, decision-making, and accountability. Business units have designated control processes to help mitigate their identified risks, and business units attest to the effectiveness of those controls. The risk governance structure supports and promotes the escalation of material items to executive management and the Board.
4.Independent Assurance Functions: Internal Audit, Credit Assurance Services ("CAS"), Compliance Testing, and Model Validation provide an independent and objective assessment of the design and execution of FHN’s internal control system, including management processes, risk governance, and policies and procedures. These groups’ activities are designed to provide reasonable assurance that risks are appropriately identified and communicated; resources are safeguarded; significant financial, managerial, and
operating information is complete, accurate, and reliable; and associate actions are in compliance with FHN’s policies and applicable laws and regulations. Internal Audit and CAS are independent third line functions within FHN for the purpose of providing unfettered objective assurance. The Internal Audit function reports to the Chief Audit Executive, who is appointed by and reports functionally to the Audit Committee of the Board and administratively to the CEO. The CAS function reports to the CAS Director, who is appointed by and reports functionally to the Risk Committee of the Board and administratively to the Chief Audit Executive. Internal Audit provides quarterly reports to the Audit Committee of the Board, while CAS provides quarterly reports to the Risk Committee of the Board. Compliance Testing and Model Validation report to the Chief Risk Officer and provide annual reports to the Audit Committee of the Board.
Market Risk Management
Market risk is the risk that changes in market conditions will adversely impact the value of assets or liabilities, or otherwise negatively impact FHN’s earnings. Market risk is inherent in the financial instruments associated with FHN’s operations, primarily trading activities within FHN Financial, but also through non-trading activities which are primarily affected by interest rate risk that is managed by the ALCO within FHN.
FHN is exposed to market risk related to the trading securities inventory and loans held for sale maintained by FHN Financial in connection with its fixed income distribution activities. Various types of securities inventory positions are procured for distribution to clients by the sales staff. When these securities settle on a delayed basis, they are considered forward contracts. Refer to the "Determination of Fair Value - Trading securities and trading liabilities" section of Note 23 - Fair Value of Assets and Liabilities, which section is incorporated into this MD&A by this reference.
FHN’s market risk appetite is approved by the Risk Committee of the Board of Directors and executed through management policies and procedures of ALCO and the FHN Financial Risk Committee. These policies contain various market risk limits including, for example,
VaR limits for the trading securities inventory, and individual position limits and sector limits for products with credit risk, among others. Risk measures are computed and reviewed on a daily basis to ensure compliance with market risk management policies.
Value-at-Risk ("VaR") and Stress Testing ("SVaR")
VaR is a statistical risk measure used to estimate the potential loss in value from adverse market movements over an assumed fixed holding period within a stated confidence level. FHN employs a model to compute daily VaR measures for its trading securities inventory. FHN computes VaR using historical simulation with a 1-year lookback period at a 99% confidence level with 1-day and 10-day time horizons. Additionally, FHN computes a Stressed VaR measure. The SVaR computation uses the same model but with model inputs reflecting historical data from a continuous 12-month period that reflects a period of significant financial stress appropriate for our trading securities portfolio.
A summary of FHN's VaR and SVaR measures for 1-day and 10-day time horizons is presented in the following table.
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Table 7.25
VaR & SVaR MEASURES
Year Ended December 31, 2025
As of
December 31, 2025
(Dollars in millions)
Mean
High
Low
1-day
VaR
$
2
$
3
$
1
$
2
SVaR
7
9
6
7
10-day
VaR
6
8
3
7
SVaR
37
47
28
37
Year Ended December 31, 2024
As of
December 31, 2024
(Dollars in millions)
Mean
High
Low
1-day
VaR
$
3
$
4
$
2
$
2
SVaR
7
9
4
6
10-day
VaR
8
12
4
4
SVaR
32
43
21
31
FHN’s overall VaR measure includes both interest rate risk and credit spread risk. Separate measures of these component risks are as follows.
Table 7.26
SCHEDULE OF RISKS INCLUDED IN VaR
As of December 31, 2025
As of December 31, 2024
(Dollars in millions)
1-day
10-day
1-day
10-day
Interest rate risk
$
1
$
2
$
1
$
2
Credit spread risk
—
1
—
1
The potential risk of loss reflected by FHN’s VaR measures assumes the trading securities inventory is static. Because FHN Financial procures fixed income securities for purposes of distribution to clients, its trading securities inventory turns over regularly. Additionally, FHNF traders actively manage the trading securities inventory continuously throughout each trading day. Accordingly, FHNF’s trading securities inventory is highly dynamic, rather than static. As a result, it would be rare for FHNF to incur a negative revenue day in its fixed income activities at the levels indicated by its VaR measures.
In addition to being used in FHN’s daily market risk management process, the VaR and SVaR measures are used by FHN in computing its regulatory market risk capital requirements in accordance with the market risk capital rules. For additional information regarding FHN's capital adequacy refer to the Capital section of this MD&A.
FHN also performs stress tests on its trading securities portfolio to calculate the potential loss under various
assumed market scenarios. Key assumed stresses used in those tests are:
Down 25 bps - assumes an instantaneous downward move in interest rates of 25 basis points at all points on the interest rate yield curve.
Up 25 bps - assumes an instantaneous upward move in interest rates of 25 basis points at all points on the interest rate yield curve.
Curve flattening - assumes an instantaneous flattening of the interest rate yield curve through an increase in short-term rates and a decrease in long-term rates. The 2-year point on the Treasury yield curve is assumed to increase 15 basis points and the 10-year point on the Treasury yield curve is assumed to decrease 15 basis points. Shifts in other points on the yield curve are predicted based on their correlation to the 2-year and 10-year points.
Curve steepening - assumes an instantaneous steepening of the interest rate yield curve through a decrease in short-term rates and an increase in long-
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term rates. The 2-year point on the Treasury yield curve is assumed to decrease 15 basis points and the 10-year point on the Treasury yield curve is assumed to increase 15 basis points. Shifts in other points on the yield curve are predicted based on their correlation to the 2-year and 10-year points.
Credit spread widening - assumes an instantaneous increase in credit spreads (the difference between yields on Treasury securities and non-Treasury securities) of 25 basis points.
Model Validation
Trading risk management personnel within FHN have primary responsibility for model risk management with respect to the model used by FHN to compute its VaR
measures and perform stress testing on the trading inventory. Among other procedures, these personnel monitor model results and perform periodic backtesting as part of an ongoing process of validating the accuracy of the model. Backtesting compares the previous day’s VaR measurement to a regulatory-prescribed calculation of daily trading profit/loss in the trading inventory. During the years ended December 31, 2025 and 2024, there were no days in which the regulatory-prescribed calculation reflected a loss in the trading inventory that exceeded the corresponding daily VaR measurement, resulting in zero backtesting exceptions. Model risk management activities are subject to annual review by FHN’s Model Validation Group, an independent assurance group charged with oversight responsibility for FHN’s model risk management.
Interest Rate Risk Management
Interest rate risk is the risk to earnings or capital arising from movement in interest rates. ALCO is responsible for overseeing the management of existing and emerging interest rate risk for the company within risk tolerances established by the Board. FHN primarily manages interest rate risk by structuring the balance sheet to maintain a desired level of associated earnings and to protect the economic value of FHN’s capital.
Net interest income and the value of equity are affected by changes in the level of market interest rates because of the differing repricing characteristics of assets and liabilities, the exercise of prepayment options held by loan clients, the early withdrawal options held by deposit clients, and changes in the basis between and changing shapes of the various yield curves used to price assets and liabilities. To isolate the repricing, basis, option, and yield curve components of overall interest rate risk, FHN employs Gap, Net Interest Income at Risk, and Economic Value of Equity analyses generated by a balance sheet simulation model.
Net Interest Income Simulation Analysis
The information provided in this section, including the discussion regarding the outcomes of simulation analysis and rate shock analysis, is forward-looking. Actual results, if the assumed scenarios were to occur, could differ because of interest rate movements, the ability of management to execute its business plans, and other factors, including those presented in the Forward-Looking Statements section of this Report.
Management uses a simulation model to measure interest rate risk and to formulate strategies to improve balance sheet positioning, earnings, or both, within FHN’s interest rate risk, liquidity, and capital guidelines. Interest rate exposure is measured by forecasting 12 months of NII under various interest rate scenarios and comparing the percentage change in NII for each scenario to a base case scenario where interest rates remain unchanged. Assumptions are made regarding future balance sheet
composition, interest rate movements, and loan and deposit pricing. In addition, assumptions are made about the magnitude of asset prepayments and earlier than anticipated deposit withdrawals. The results of these scenarios help FHN develop strategies for managing exposure to interest rate risk. While management believes the assumptions used and scenarios selected in its simulations are reasonable, simulation modeling provides only an estimate, not a precise calculation, of exposure to any given change in interest rates.
Based on a static balance sheet as of December 31, 2025, NII exposures over the next 12 months, assuming rate shocks of plus/minus 25 basis points, plus/minus 50 basis points, plus/minus 100 basis points, and plus/minus 200 basis points are estimated to have variances as shown in the table below.
Table 7.27
INTEREST RATE SENSITIVITY
Shifts in Interest Rates
(in bps)
% Change in Projected
Net Interest Income
-200
(4.5)%
-100
(2.3)%
-50
(1.0)%
-25
(0.5)%
+25
0.5%
+50
0.9%
+100
1.6%
+200
2.6%
A steepening yield curve scenario, where long-term rates increase by 50 basis points and short-term rates are static, results in a favorable NII variance of 0.3%. A flattening yield curve scenario, where long-term rates decrease by 50 basis points and short-term rates are static, results in an unfavorable NII variance of 0.3%. These hypothetical scenarios are used to create a risk measurement
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framework, and do not necessarily represent management’s current view of future interest rates or market developments.
Fair Value Shock Analysis
Interest rate risk and the slope of the yield curve also affect the fair value of FHN's trading inventory that is reflected in noninterest income.
Generally, low or declining interest rates with a positively sloped yield curve tend to increase income through higher demand for fixed income products. Additionally, the fair value of FHN's trading inventory can fluctuate as a result of differences between current interest rates and the interest rates of fixed income securities in the trading inventory.
Use of Derivatives to Manage Interest Rate Risk
In the normal course of business, FHN utilizes various financial instruments (including derivative contracts and credit-related agreements) to manage the risk of loss arising from adverse changes in the fair value of certain financial instruments generally caused by changes in interest rates, including FHN's securities inventory, certain term borrowings, and certain loans. Additionally, FHN may
enter into derivative contracts in order to meet clients' needs. However, such derivative contracts are typically offset with a derivative contract entered into with an upstream counterparty in order to mitigate risk associated with changes in interest rates.
The simulation models and related hedging strategies discussed above exclude the dynamics related to how fee income and noninterest expense may be affected by actual changes in interest rates or expectations of changes. See Note 21 - Derivatives to the Consolidated Financial Statements in Part II, Item 8 of this Report for additional discussion of these instruments.
FHN engages in balance sheet hedging activity, principally for asset and liability management purposes. Cash flow hedges are executed to modify interest rate characteristics of designated commercial loans in order to reduce the impact of changes in future cash flows due to market interest rate changes. The following table presents all swap and floor positions that are utilized for purposes of managing exposures to the variability of interest rates.
Table 7.28
INTEREST RATE DERIVATIVES DESIGNATED AS CASH FLOW HEDGES
December 31, 2025
(Dollars in millions)
Notional Value
Fair Value
Weighted-Average Maturity (in years)
Weighted Average Fixed Rate (swaps)/Strike Rate (floors)
Receive fixed SOFR swaps - Loans
$
2,000
$
(29)
2.5
2.78
%
Floors
3,000
15
2.4
1.88
%
Total
$
5,000
$
(14)
December 31, 2024
(Dollars in millions)
Notional Value
Fair Value
Weighted-Average Maturity (in years)
Weighted Average Fixed Rate (swaps)/Strike Rate (floors)
Receive fixed SOFR swaps - Loans
$
2,000
$
(85)
3.5
2.78
%
Floors
3,000
18
3.4
1.88
%
Total
$
5,000
$
(67)
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Capital Risk Management & Adequacy
The capital management objectives of FHN are to provide capital sufficient to cover the risks inherent in FHN’s businesses, to maintain excess capital to well-capitalized standards and Board policy, and to ensure ready access to the capital markets. The Capital & Stress Testing Committee, chaired by the Corporate Treasurer, reports to ALCO and is responsible for capital management oversight and provides a forum for addressing management issues related to capital adequacy. This
committee reviews sources and uses of capital, key capital ratios, and segment economic capital allocation methodologies; coordinates the annual enterprise-wide stress testing process; and considers other factors in monitoring and managing current capital levels, as well as potential future sources and uses of capital. The Capital & Stress Testing Committee also recommends capital management policies, which are submitted for approval to ALCO and the Risk Committee of the Board as necessary.
Operational Risk Management
Operational risk is the risk of loss from inadequate or failed internal processes, people, or systems or from external events including data or network security breaches of FHN or of third parties affecting FHN or its clients. Categories of operational risk typically include the following:
•Business Resilience Risk
•Business Process Risk
•Fraud Risk
•Physical Security Risk
•Financial Reporting and Recording Risk
•Technology Risk
•Cybersecurity Risk
•Model Risk
•Third Party Risk
Management, measurement, and reporting of operational risks are overseen by the Operational Risk Committee which includes key representatives from the business segments and support functions. Operational risk is assessed and aggregated across the enterprise quarterly and reported to the Risk Committee.
Cybersecurity Risk Management
Overview
Cybersecurity risk includes the risks from cyber fraud, cyber theft, cyber vandalism, cyber ransom, data and system security, and other unauthorized incursions into FHN's IT systems. Additional information on this topic is presented in Cybersecurity Risks within Item 1A beginning on page 24.
Key Cybersecurity Risk Management Goals
Cybersecurity risk management has two primary goals: defend FHN and its clients from fraudulent and other unauthorized incursions; and, when an incursion happens, detect and respond as soon as practical. The optimal cybersecurity program will defend as much as is practical while also detecting rapidly those incursions that get through.
Management Structure & Key Processes
Operational risk, including cybersecurity risk, is overseen by FHN's Operational Risk Committee. Members of the Operational Risk Committee include senior-level representatives from across FHN. The Operational Risk Committee reports to FHN's Management Risk Committee, which is headed by FHN's Chief Risk Officer.
The IT & Information Security Working Group meets quarterly to discuss emerging cyber risks, regulatory changes, vendor risk, audits, and outstanding-issue resolution. The Group also provides updates to the
Operational Risk Committee on cybersecurity aspects of compliance, policies, and security standards.
The key leaders for these committees, groups, and processes at FHN are the Chief Information Officer and Chief Information Security Officer. The Chief Information Officer has substantial banking, IT, and related experience: has held roles at FHN since 2009 related to IT and data systems, culminating in CIO in 2020; prior to joining FHN, had roles at a large regional bank, including technology leader of the bank's electronic payments platform related to treasury management and enterprise IT architect; and, earned an MS in computer science as well as an MBA. The Chief Information Security Officer who held that position during 2025 had over twenty years of banking, IT, and related experience: oversaw information security and many related systems and processes; established risk-based security programs to meet regulatory requirements and align with business needs; and implemented numerous data protection, data access, and identity management systems. In 2026, FHN appointed a new Chief Information Security Officer who: prior to joining FHN, had roles at two large U.S. banks and a financial services firm; has over twenty-five years of leadership experience in information security, risk management, and technology; directed complex programs in technology strategy, program and project management, business development, application development, and large-scale system implementations; and led the execution of a multi-year enterprise-wide cyber strategy.
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FHN has a written Computer Security Incident Response Plan ("CSIRP") outlining FHN's incident response and communication processes. FHN's Chief Information Security Officer or certain other managers have the authority to initiate the execution of the CSIRP if an incident occurs. A working group called the Computer Security Incident Response Team has primary responsibility to implement or coordinate many of the CSIRP actions, along with FHN's IT & Information Security Working Group. Key goals of the CSIRP are to: contain, remediate, and recover; mitigate impact on FHN and clients; report findings to Operational Risk and other senior management; and manage external communications. FHN periodically conducts response readiness exercises, including simulated cyber-attack scenarios, to test the effectiveness of the CSIRP and ensure resources are prepared to execute response actions in real time.
FHN engages third-party vendors to conduct several periodic cybersecurity reviews: Network Penetration testing; Cyber Security Maturity Assessment; Red Team (simulated cyber-attack) testing; SOX (financial reporting controls and data integrity) testing; and, PCI-DSS (proprietary data security standard for payment systems) attestation of compliance and SOC 1 Type II reports (attesting to the design and operation of cybersecurity systems) for lockbox and electronic bill pay. The frequency of these reviews ranges from several times per year to every three years. FHN also has a cybersecurity incident specialty firm on retainer for incident response, as needed.
FHN has a dedicated Third-Party Risk Management ("TPRM") department which oversees third party vendors and reports up through the Chief Risk Officer. Among other responsibilities, TPRM engages the IT Risk and Control Team to perform cybersecurity assessments for new vendors during onboarding, re-assessments of existing vendors on a risk-based cadence, and continuous monitoring of critical third parties.
Board Oversight
The Board's Risk Committee oversees all risk management functions for the enterprise, including operational risk,
which encompasses cybersecurity risk. The Risk Committee, as well as the full Board, each quarter receives a risk management update from FHN's Chief Risk Officer. Each update includes a written presentation covering all major operational risk areas, including cybersecurity risk.
Tactical, Operational & Other Impacts
FHN conducts mandatory cybersecurity training for associates and offers best practices and training programs for clients to enhance awareness and effectively combat cyber threats. FHN also actively engages in partnerships with leading cybersecurity firms and participates in industry groups to enhance security measures and intelligence sharing.
FHN invests in technological capabilities that improve speed and efficiency in combating cyber risks and implements advanced detection tools and software for early identification and mitigation of threats.
The measures FHN takes to manage cybersecurity risk affect how associates and clients use FHN's platforms and systems. For every safeguard considered or implemented, FHN must weigh potential and actual inconveniences against security concerns. Practical realities make it impossible to maximize security and ignore resulting restrictions on the ability of associates and clients to conduct banking and financial business. Primarily for that reason, cybersecurity risks are and will be a major risk management concern, and losses from incursions will be impossible to avoid. As mentioned above, FHN's goals are to prevent what can be prevented, and detect and respond to incursions that get through as quickly as possible.
For those incursions that are not blocked, FHN's processes are designed to detect them quickly enough so that the financial and operational impact on FHN is zero or modest. But the risk of a major incursion occurring cannot be reduced to zero. A major incursion could have a material financial impact on FHN's business operations and earnings.
Compliance Risk Management
Compliance risk is the risk of legal or regulatory sanctions, material financial or other loss that the Company may suffer as a result of its failure to operate in a safe and sound manner, failure to comply with laws, regulations, rules, related self-regulatory organization standards, and codes of conduct applicable to its financial services
activities. Management, measurement, and reporting of compliance risk are overseen by the Compliance Risk Committee and other key Corporate Governance Committees. Summary reports of Committee activities and decisions are provided to the appropriate Board governance committees.
Credit Risk Management
Credit risk is the risk of loss due to adverse changes in a borrower’s or counterparty’s ability or willingness to meet
its financial obligations under agreed upon terms. FHN is subject to credit risk in lending, trading, investing,
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liquidity/funding, and asset management activities although lending activities have the most exposure to credit risk. The nature and amount of credit risk depends on the types of transactions, the structure of those transactions, collateral received, the use of guarantors and the parties involved.
FHN assesses and manages credit risk through a series of policies, processes, measurement systems, and controls. The Credit Risk Management Committee ("CRMC") is responsible for overseeing the management of existing and emerging credit risks in the company within the broad risk tolerances established by the Board. The CRMC reports through the Management Risk Committee. The Credit Risk Management function, which is shared by the Chief Credit Officer and Chief Risk Officer, provides strategic and tactical credit leadership by maintaining policies, overseeing credit approval, assessing new credit products, strategies and processes, and managing portfolio composition and performance.
While the Credit Risk function oversees FHN’s credit risk management, there is significant coordination between the business lines and the Credit Risk function in order to manage FHN’s credit risk and maintain strong asset quality. The Credit Risk function recommends portfolio industry/sector and individual country limits to the Risk Committee of the Board for approval. Adherence to these approved limits is vigorously monitored by Credit Risk which provides recommendations to slow or cease lending to the business lines as commitments near established lending limits. Credit Risk also ensures subject matter experts are providing oversight, support and credit
approvals, particularly in the specialty and wholesale lending areas where industry-specific knowledge is required. Management emphasizes general portfolio servicing such that emerging risks are able to be spotted early enough to correct potential deficiencies, prevent further credit deterioration, and mitigate credit losses.
The Credit Risk Management function assesses the asset quality trends and results, as well as lending processes, adherence to underwriting guidelines (portfolio-specific underwriting guidelines are discussed further in the Asset Quality Trends section), and utilizes this information to inform management regarding the current state of credit quality and as a factor in the estimation process for determining the allowance for credit losses. The CRMC reviews on a periodic basis various reports issued by assurance functions which provide an independent assessment of the adequacy of loan servicing, grading accuracy, and other key functions. Additionally, CRMC is presented with and discusses various portfolios, lending activity and lending-related projects.
All of the above activities are subject to independent review by FHN’s Credit Assurance Services Group ("CAS"). CAS reports to the CAS Director who is appointed by and reports functionally to the Risk Committee of the Board (and administratively to the Chief Audit Executive) and provides quarterly reports to that Committee. CAS is charged with providing the Risk Committee of the Board and executive management with independent, objective, and timely assessments of FHN’s portfolio quality, credit policies, and credit risk management processes.
Liquidity Risk Management
Among other things, ALCO is responsible for liquidity management: the funding of assets with liabilities of appropriate duration, while mitigating the risk of unexpected cash needs. ALCO and the Board of Directors have adopted a Liquidity Policy with the objective of ensuring that FHN meets its cash and collateral obligations promptly, in a cost-effective manner, and with the highest degree of reliability. The maintenance of adequate levels of asset and liability liquidity should provide FHN with the ability to meet both expected and unexpected cash and collateral needs. Key liquidity ratios, asset liquidity levels, and the amount available from funding sources are reported to ALCO on a regular basis. FHN’s Liquidity Policy establishes liquidity limits that are deemed appropriate for FHN’s risk profile.
In accordance with the Liquidity Policy, ALCO manages FHN’s exposure to liquidity risk through forecasts of its liquidity position and funding needs. Base liquidity forecasts are reviewed by ALCO and are updated as financial conditions dictate. In addition to the baseline liquidity reports, stress testing of assumptions and funds availability is periodically conducted. FHN maintains a
contingency funding plan that may be executed should unexpected difficulties arise in accessing funding that affects FHN, the industry, or both. As of December 31, 2025, available liquidity sources included cash, incremental borrowing capacity at the FHLB, access to Federal Reserve Bank borrowings through the discount window, and unencumbered securities. Additional sources of liquidity included dealer and commercial customer repurchase agreements, access to Federal Funds markets, brokered deposits, loan sales, and syndications. The table below details FHN’s sources of available liquidity as of December 31, 2025.
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Table 7.29
AVAILABLE LIQUIDITY
as of December 31, 2025
(Dollars in millions)
Total
Capacity
Outstanding Borrowings
Available Liquidity
Cash on deposit with FRB (a)
$
1,035
$
—
$
1,035
FHLB
9,356
50
9,306
Discount Window
21,169
—
21,169
Unencumbered securities (b)
1,069
—
1,069
Total available liquidity
$
32,579
(a)Included in interest-bearing deposits with banks on the Consolidated Balance Sheets.
(b)Subject to market haircuts on collateral.
Generally, a primary source of funding for a bank is core deposits from the bank's client base. The period-end loans-to-deposits ratio was 95% as of both December 31, 2025 and 2024.
FHN may also use unsecured short-term borrowings as a source of liquidity. Federal funds purchased from correspondent bank clients are considered to be substantially more stable than funds purchased in the national broker markets for federal funds due to the long, historical, and reciprocal nature of banking services provided by FHN to these correspondent banks. The remainder of FHN’s wholesale short-term borrowings consists of securities sold under agreements to repurchase transactions accounted for as secured borrowings with business clients or broker-dealer counterparties.
Both FHN and First Horizon Bank have the ability to generate liquidity by issuing senior or subordinated unsecured debt, preferred equity, and common equity, subject to market conditions and compliance with applicable regulatory requirements. During first quarter 2025, FHN issued $500 million of Fixed Rate/Floating Rate Senior Notes. FHN retired $350 million in senior notes during second quarter 2025. As of December 31, 2025, FHN had outstanding $946 million in senior and subordinated unsecured debt and $349 million in non-cumulative perpetual preferred stock. FHN redeemed all outstanding shares of its Series B Non-Cumulative Perpetual Preferred Stock during third quarter 2025. Refer to Note 11 - Preferred Stock to the Consolidated Financial Statements in Part II, Item 8 of this Report for additional information. As of December 31, 2025, First Horizon Bank and subsidiaries had outstanding preferred shares of $295 million, which are reflected as noncontrolling interest on the Consolidated Balance Sheets.
Parent company liquidity is primarily provided by cash flows stemming from dividends and interest payments collected from subsidiaries. These sources of cash represent the primary sources of funds to pay cash
dividends to shareholders and principal and interest to debt holders of FHN. The amount paid to the parent company through First Horizon Bank common dividends is managed as part of FHN’s overall cash management process, subject to applicable regulatory restrictions. Certain regulatory restrictions exist regarding the ability of First Horizon Bank to transfer funds to FHN in the form of cash, common dividends, loans, or advances. At any given time, the pertinent portions of those regulatory restrictions allow First Horizon Bank to declare preferred or common dividends without prior regulatory approval in an aggregate amount equal to First Horizon Bank’s retained net income for the two most recently completed years plus the current year-to-date period. For any period, First Horizon Bank’s "retained net income" generally is equal to First Horizon Bank’s regulatory net income reduced by the preferred and common dividends declared by First Horizon Bank. Applying the dividend restrictions imposed under applicable federal and state rules as outlined above, the Bank’s total amount available for dividends was $88 million as of January 1, 2026. Consequently, on that date the Bank could pay common dividends up to that amount to its sole common shareholder, FHN, or to its preferred shareholders without prior regulatory approval. Additionally, a capital conservation buffer must be maintained (as described in the Capital section of this Report) to avoid restrictions on dividends.
First Horizon Bank declared and paid common dividends to the parent company in the amount of $1.0 billion in 2025 and $1.1 billion in 2024. In January 2026, First Horizon Bank declared and paid a common dividend to the parent company in the amount of $50 million. First Horizon Bank declared and paid preferred dividends in each quarter of 2025 and 2024. Additionally, First Horizon Bank declared preferred dividends in first quarter 2026, payable in April 2026.
Payment of a dividend to shareholders of FHN is dependent on several factors which are considered by the Board. These factors include FHN’s current and prospective capital, liquidity, and other needs, applicable regulatory restrictions (including capital conservation buffer requirements) and availability of funds to FHN through a dividend from First Horizon Bank. Additionally, banking regulators generally require insured banks and bank holding companies to pay cash dividends only out of current operating earnings. Consequently, the decision of whether FHN will pay future dividends and the amount of dividends will be affected by current operating results.
FHN paid a cash dividend of $0.15 per common share on January 2, 2026. FHN paid cash dividends of $1,625 per Series E preferred share and $1,175 per Series F preferred share on January 12, 2026 and $165 per Series C preferred share on February 2, 2026. In addition, in January 2026, the Board approved cash dividends per share in the following amounts:
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Table 7.30
CASH DIVIDENDS APPROVED BUT NOT PAID
Dividend/Share
Record Date
Payment Date
Common Stock
$
0.17
3/13/2026
4/1/2026
Preferred Stock
Series C
$
165.00
4/16/2026
5/1/2026
Series E
$
1,625.00
3/26/2026
4/10/2026
Series F
$
1,175.00
3/26/2026
4/10/2026
Off-Balance Sheet Arrangements
In the normal course of business, FHN is a party to a number of activities that contain credit, market and operational risk that are not reflected in whole or in part in the consolidated financial statements. Such activities include traditional off-balance sheet credit-related financial instruments. FHN enters into commitments to extend credit to borrowers, including loan commitments, lines of credit, standby letters of credit, and commercial letters of credit. Many of the commitments are expected
to expire unused or be only partially used; therefore, the total amount of commitments does not necessarily represent future cash requirements and are not included in the table below. Based on its available liquidity and available borrowing capacity, FHN anticipates it will continue to have sufficient funds to meet its current commitments. See Note 16 - Contingencies and Other Disclosures to the Consolidated Financial Statements in Part II, Item 8 of this Report for more information.
Contractual Obligations
The following table sets forth contractual obligations representing required and potential cash outflows as of December 31, 2025. Purchase obligations represent obligations under agreements to purchase goods or services that are enforceable and legally binding on FHN and that specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum, or variable price provisions; and the approximate timing of the transaction.
Table 7.31
CONTRACTUAL OBLIGATIONS
as of December 31, 2025
Payments due by period (a)
Less than
1 year -
3 years -
After 5
(Dollars in millions)
1 year
3 years
5 years
years
Total
Contractual obligations:
Time deposit maturities (b) (c)
$
6,037
$
397
$
45
$
6
$
6,485
Short-term borrowings (b) (d)
3,861
—
—
—
3,861
Term borrowings (b) (e)
—
—
450
889
1,339
Annual rental commitments under noncancelable leases (b) (f)
45
94
79
243
461
Purchase obligations
261
266
61
21
609
Total contractual obligations
$
10,204
$
757
$
635
$
1,159
$
12,755
(a)Excludes a $12 million liability for unrecognized tax benefits as the timing of payment cannot be reasonably estimated.
(b)Amounts do not include interest.
(c)See Note 8 - Deposits for further details.
(d)See Note 9 - Short-Term Borrowings for further details.
(e)See Note 10 - Term Borrowings for further details.
(f)See Note 5 - Premises, Equipment, and Leases for further details.
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Credit Ratings
FHN is currently able to fund a majority of the balance sheet through core deposits, which are generally not directly tied to FHN’s credit ratings as are other types of funding. However, maintaining adequate credit ratings on debt issuances and preferred stock is critical to liquidity should FHN need to access funding from other sources, including from long-term debt issuances and certain brokered deposits, at an attractive rate. The availability and cost of funds other than core deposits is also dependent upon marketplace perceptions of the financial soundness of FHN, which include such factors as capital levels, asset quality, and reputation. The availability of
core deposit funding is stabilized by federal deposit insurance, which can be removed only in extraordinary circumstances, but may also be influenced to some extent by the same factors that affect other funding sources. FHN’s credit ratings are also referenced in various respects in agreements with certain derivative counterparties as discussed in Note 21 - Derivatives to the Consolidated Financial Statements in Part II, Item 8 of this Report.
The following table provides FHN’s most recent credit ratings.
Table 7.32
CREDIT RATINGS
Moody's (a)
Fitch (b)
First Horizon Corporation
Overall credit rating: Long-term/Short-term/Outlook
Baa3/--/Positive
BBB+/F2/Stable
Long-term senior debt
Baa3
BBB+
Subordinated debt (c)
Baa3
BBB+
Junior subordinated debt (c)
Ba1
BB
Preferred stock
Ba2
BB
First Horizon Bank
Overall credit rating: Long-term/Short-term/Outlook
Baa3/P-2/Positive
BBB+/F2/Stable
Long-term/short-term deposits
A3/P-2
A-/F2
Long-term/short-term senior debt (c)
Baa3/P-2
BBB+/F2
Subordinated debt
Baa3
BBB
Preferred stock
Ba2
BB
FT Real Estate Securities Company, Inc.
Preferred stock
Ba1
A rating is not a recommendation to buy, sell, or hold securities and is subject to revision or withdrawal at any time and should be evaluated independently of any other rating.
(a) Last change in ratings was on May 14, 2015. Outlook changed to positive ("Positive") on June 11, 2025.
(b) Last change in ratings was on October 3, 2024. Outlook changed to stable ("Stable") on May 5, 2023.
(c) Ratings are preliminary/implied.
Market Uncertainties and Prospective Trends
FHN’s future results could be affected both positively and negatively by several known trends. Key among those are changes in the U.S. and global economy and outlook, government actions affecting interest rates, and government actions and proposals which could have positive or negative impacts on the economy at large or on certain businesses, industries, or sectors, including changes in fiscal policy and changes in trade policy, such as the imposition of tariffs and related retaliatory responses. Additional risks relate to political uncertainty,
changes in federal policies (including those publicly discussed, formally proposed, or recently implemented) and the potential impacts of those changes on our businesses and clients, and whether FHN’s strategic initiatives will succeed.
In addition to trends and events noted elsewhere in this MD&A, FHN believes the following trends and events are noteworthy at this time.
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Federal Reserve Policy, the Yield Curve, Recession, Fiscal & Trade Policy, Other Events
Federal Reserve and Rates
The Federal Reserve raised short-term rates several times in 2022 and 2023 to contain strong inflation which began in 2021 and peaked in 2022. The rise in short-term interest rates by the Federal Reserve in 2022 was both rapid and substantial, taking the overnight Fed Funds rate from 0.20% in March 2022 to 5.33% by the fall of 2023. As a result of Federal Reserve rate cuts of 50 basis points in September 2024 and cuts of 25 basis points in both November and December of that year, the overnight Fed Funds fell back to 4.33% by the end of 2024. But despite the Federal Reserve's rapid and vigorous tightening of monetary policy in 2022 and 2023 and limited rate cuts in 2024, measures of inflation still generally remain higher than the Federal Reserve's stated goal of 2%.
In each of September, October, and December of 2025, the Federal Reserve announced 25 basis point cuts in the Fed Funds rate, lowering the target range to 3.50% to 3.75%, but in January 2026 the Federal Reserve decided to hold the target range steady. In its statement announcing its January decision to maintain the target range, the Federal Reserve noted that economic activity had been expanding at a solid pace and the unemployment rate showed signs of stabilization, but inflation remained somewhat elevated. Looking ahead to 2026, market consensus points to the possibility of two additional 25 basis point cuts, contingent on inflation trends and broader economic conditions.
FHN continues to closely monitor economic developments and assess potential exposures. FHN cannot predict when or how much short-term rates will be changed, how market-driven long-term rates will behave, or how those actions may affect economic or business conditions or financial markets.
Yield Curve
Historically, the yield curve is usually upward sloping (higher rates for longer terms and lower rates for shorter terms). However, the yield curve can be relatively flat or inverted (downward sloping). Inversion normally is rare but has happened several times in the past, including most recently, from the summer of 2022 until September 2024. Since the fall of 2024, the yield curve has continued to modestly steepen.
Yield curve flattening and inversion generally reduce the profit FHN can make from lending by compressing FHN's net interest margin ("NIM"), and also generally reduce FHN's revenues from its fixed income bond trading. Both of those impacts occurred from 2022 through 2024, with fluctuations. During each quarter of 2025, net interest margin consistently exceeded the level of the comparable quarter in 2024, as the yield curve maintained its more typical upward slope, while fixed income bond trading revenues fluctuated during the year due to changing
market conditions with revenue from bond trading and related activities showing improvement in the first, third and fourth quarters, but declining in the second quarter due to less favorable market conditions. While NIM for 2025 as a whole expanded as compared with 2024, quarterly results for 2025 varied with strong quarter-to-quarter expansions of NIM in the first and third quarters and small quarter-to-quarter declines in the second and fourth quarters.
FHN cannot predict whether these trends will continue.
Other Impacts on FHN of Rate Actions
Rate increases pushed home mortgage rates in the U.S. much higher in 2022 and 2023, reducing demand. FHN's direct mortgage lending and lending to mortgage companies saw business decline significantly in 2022 and 2023. Mortgage rates have modestly abated since 2023 and FHN's mortgage business has seen improvement, but rates have remained elevated. However, the negative impacts of these higher rates have been offset by gains in market share. Changes in interest rates and interest rate policy could have a material impact on our business and financial results.
Recession
The U.S. economy contracted (experienced negative growth) during the first two quarters of 2022, in both cases modestly. Although the occurrence of two consecutive quarters of contraction often coincides with recession, in 2022, it did not. The economy has expanded in each quarter since then, except for a slight decline in the first quarter of 2025 before expansion resumed in the second quarter of 2025. The expansion rate has varied without a sustained trend. Recession expectations have moderated significantly since 2023, but recession still remains possible.
2023 Banking Crisis
In 2023, three large regional U.S. banks failed after sudden large deposit outflows. In the aftermath of these failures, bank investors and clients across the U.S. became more focused on deposit mix, funding risk management, and other safety-soundness concerns. Most U.S. banks saw abrupt net outflows of deposits in the spring of 2023 following the failures. Most have since recouped those deposits, mainly by offering higher interest rates. In 2024, competition for deposits was quite intense. Increased competition for deposits has continued in 2025 and could continue throughout the remainder of 2026.
Fiscal Policy
Fiscal policy (spending and taxation) directly affects U.S. government annual deficits or surpluses, along with the size and trajectory of the national debt. Fiscal policy often has a significant impact on the U.S. economy. The changes
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in the executive and legislative branches of government in 2025 have resulted in significant changes in U.S. fiscal policy, including through the enactment on July 4, 2025 of federal legislation commonly referred to as the "One Big Beautiful Bill Act." The legislation includes several provisions that may impact the timing and magnitude of certain tax deductions and tax credits. The accelerated federal tax deductions for bonus depreciation and research or experimental expenditures will reduce FHN's federal tax liability starting in 2025. FHN does not expect a significant impact from provisions that sunset certain Section 48E Clean Electricity Tax Credits on its future financial results. Provisions limiting the deductibility of annual corporate charitable deductions to amounts in excess of 1% of taxable income may affect the timing and amount of charitable donations. Refer to the Income Taxes section of this MD&A for additional information regarding the impact of this legislation on FHN.
Trade Policy
In 2025, the U.S. government announced new tariffs on a variety of goods and services. As of early February 2026, the timing, scope and duration of tariffs, as well as the timing, scope and duration of any retaliatory measures by
foreign governments, remain uncertain, as does the impact of tariffs on economic growth, inflation rates, and employment rates. Any significant change in economic conditions related to tariffs could materially affect our financial condition and results of operations.
Other Regulatory Proposals
In 2023, the Board of Governors of the Federal Reserve and other regulators proposed regulatory changes that would, if implemented, significantly increase regulatory constraints and costs on all U.S. banks with assets over $100 billion, but those regulations appear unlikely to be adopted in the form originally proposed. A few new requirements would apply to banks, like FHN, with assets over $50 billion, but by far the main impacts would fall on banks greater than $100 billion in assets.
The proposals touch upon many regulatory requirements, including debt and equity capital requirements, credit risk standards, and asset risk-weighting. The increased requirements also would entail additional compliance costs.
Greenhouse Gas (GHG) Reporting Regimes
Regulatory Proposals
Several states have enacted or proposed statutes or regulations addressing climate-related issues. For example, in 2023, California enacted two laws which, taken together, will require most larger companies doing business in California to report annually their greenhouse gas (GHG) emissions and to report biennially their climate-related financial risks and risk-mitigation measures. The California laws have been challenged in court and certain of those challenges remain pending.
In addition, in March 2024, the SEC adopted final rules which would require all U.S. companies with publicly-traded securities to report annually their Scope 1 and 2 GHG emissions and related risk-management processes, and would include a related financial statement and audit requirement, among other things. There is considerable uncertainty as to whether these rules will be implemented as adopted, both because the SEC has suspended effectiveness of those rules while legal challenges are pending and because shifts in executive and legislative
branches of government could lead the SEC to withdraw or significantly alter those rules.
In March 2025, the SEC voted to end its defense of its climate disclosure rules in the pending legal action, but the SEC has not withdrawn or modified those rules nor has the legal challenge to those rules been dismissed. On September 12, 2025, the U.S. Court of Appeals for the Eighth Circuit ordered the litigation to be held in abeyance until the SEC reconsiders its rules through formal notice-and-comment rulemaking or renews its defense of the rules.
Potential Business Impacts
Direct compliance costs related to the SEC's and California's GHG reporting regimes, if implemented, will include creating systems to measure or estimate and capture relevant data, staffing, and engagement of vendors, including a firm to provide required assurances (somewhat analogous to a financial statement auditor).
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Market Growth and Weather Events
FHN's principal markets are in the southern and southeastern United States, including most of the major gulf coast markets and several markets on the southern Atlantic seacoast. Many of FHN's markets, both coastal and non-coastal, have experienced significant population growth over at least the past twenty years, outpacing the growth rate for the U.S. as a whole. That population growth generally has been accompanied by economic growth.
Many of FHN's fastest growing markets, including most significantly those in Florida, can be impacted significantly by hurricanes and other severe coastal weather events. As those markets grow, FHN's economic commitment to them grows, as does FHN's financial exposure to those events.
Especially since 2022, it has been widely reported that the economic costs of hurricane and other severe weather events in the southeastern U.S. have been rising significantly.
This reported increase in casualty risks and costs is being reflected in property insurance practices which currently
are in significant flux. The insurance industry and insurance regulators are being forced to revise their risk assessment and premium pricing policies in coastal and other impacted areas as loss experience has deviated from earlier predictions, sometimes substantially. In Florida, for example, some smaller carriers failed, some larger carriers left markets, and other carriers significantly increased the premiums of hurricane-related insurance, narrowed coverage, or both, resulting in numerous proposals for legislative and regulatory reform.
The availability, reliability, and cost of adequate property insurance is a significant concern for FHN as well as FHN's clients in affected markets. Instability in property insurance has made, and continues to make, FHN's business decisions more difficult. That instability increases FHN's risks of loan loss and business downturn.
More fundamentally, elevated insurance and casualty costs blunt a key factor driving growth in many of these high-growth markets: lower costs of living. If market growth slows, FHN's business could be impacted.
Critical Accounting Policies and Estimates
Allowance for Loan and Lease Losses
Management’s policy is to maintain the ALLL at a level sufficient to absorb expected credit losses in the loan and lease portfolio. Management performs periodic and systematic detailed reviews of its loan and lease portfolio to identify trends and to assess the overall collectability of the portfolio. Management believes the accounting estimate related to the ALLL is a “critical accounting estimate” as: (1) changes in it can materially affect the provision for loan and lease losses and net income; (2) it requires management to predict borrowers’ likelihood or capacity to repay, including evaluation of inherently uncertain future economic conditions; (3) prepayment activity must be projected to estimate the life of loans that often are shorter than contractual terms; (4) it requires estimation of a reasonable and supportable forecast period for credit losses for loan portfolio segments before reversion to historical loss levels over the remaining life of a loan; and (5) expected future recoveries of amounts previously charged off must be estimated. Accordingly, this is a highly subjective process and requires significant judgment since it is difficult to evaluate current and future economic conditions in relation to an overall credit cycle and estimate the timing and extent of loss events that are expected to occur prior to the end of a loan’s or lease's estimated life.
FHN believes that the principal assumptions underlying the accounting estimates made by management include:
(1) the commercial loan portfolio has been properly risk graded based on information about borrowers in specific industries and specific issues with respect to single borrowers; (2) borrower-specific information made available to FHN is current and accurate; (3) the loan portfolio has been segmented properly and individual loans have similar credit risk characteristics and will behave similarly; (4) the lives for loan portfolio pools have been estimated properly, including consideration of expected prepayments; (5) the economic forecasts utilized and associated weighting selected by management in the modeling of expected credit losses are reflective of future economic conditions; (6) entity-specific historical loss information has been properly assessed for all loan portfolio segments as the initial basis for estimating expected credit losses; (7) the reasonable and supportable periods for loan portfolio segments have been properly determined; (8) the reversion methodologies and timeframes for migration from the reasonable and supportable period to the use of historical loss rates are reasonable; (9) expected recoveries of prior charge-off amounts have been properly estimated; and (10) qualitative adjustments to modeled loss results reasonably reflect expected future credit losses as of the date of the financial statements.
While management uses the best information available to establish the ALLL, future adjustments to the ALLL and
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methodology may be necessary if economic or other conditions differ substantially from the assumptions used in making the estimates. Such adjustments to prior estimates, as necessary, are made in the period in which these factors and other relevant considerations indicate that loss levels vary from previous estimates.
Selection and weighting of macroeconomic forecasts are the most significant inputs in quantitative ALLL calculations. Due to the sensitivity of the ALLL determination to macroeconomic forecasts, changes in those forecasts can result in materially different results between reporting periods. In the determination of the ALLL as of December 31, 2025, FHN utilized Moody's Baseline, S1 (upside) and S3 (adverse) scenarios for the calculation of the ALLL. FHN placed the most weight on the Moody's Baseline scenario but included the S1 and S3 scenarios to reflect the uncertainty of macroeconomic forecasts related to ongoing economic conditions.
Due to the dynamic relationship of macroeconomic inputs in modeling calculations, quantifying the effects of
changing individual inputs is highly challenging. Additionally, management applies judgment in developing qualitative adjustments that are considered necessary to appropriately reflect elements of credit risk that are not captured in the quantitative model results. To provide some hypothetical sensitivity analysis, FHN prepared two alternate quantitative calculations, applying 100% weighting to Moody's Baseline and S3 (adverse) scenarios. These hypothetical calculations resulted in a 7% reduction and 31% increase, respectively, in ALLL in comparison to the ALLL recorded as of December 31, 2025, inclusive of qualitative adjustments that are affected by the weighting of forecast scenarios.
See Note 1 - Significant Accounting Policies and Note 4 - Allowance for Credit Losses to the Consolidated Financial Statements in Part II, Item 8 of this Report for detail regarding FHN’s processes, models, and methodology for determining the ALLL.
Income Taxes
FHN is subject to the income tax laws of the U.S. and the states and jurisdictions in which it operates. FHN accounts for income taxes in accordance with ASC 740, "Income Taxes." Significant judgments and estimates are required in the determination of the consolidated income tax expense. FHN's income tax expense, deferred tax assets and liabilities, and liabilities for unrecognized tax benefits reflect management’s best estimates of current and future taxes to be paid.
Income tax expense consists of both current and deferred taxes. Current income tax expense is an estimate of taxes to be paid or refunded for the current period and includes income tax expense related to uncertain tax positions. A DTA or a DTL is recognized for the tax consequences of temporary differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. Deferred taxes can be affected by changes in tax rates applicable to future years, either as a result of statutory changes or the alteration of business activities in jurisdictions in which FHN is or may become subject to taxation. Additionally, DTAs are subject to a “more likely than not” test to determine whether the full amount of the DTAs should be realized in the financial statements. FHN evaluates the likelihood of realization of the DTA based on both positive and negative evidence available at the time, including (as appropriate) scheduled reversals of DTLs, projected future taxable income, tax planning strategies, and recent financial performance. Realization is dependent on generating sufficient taxable income prior to the expiration of the carryforwards attributable to or generated with respect to the DTA. In projecting future taxable income, FHN incorporates assumptions including the amount of future state and federal pre-tax operating
income, the reversal of temporary differences, and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates used to manage the underlying business. If the “more likely than not” test is not met, a valuation allowance must be established against the DTA.
The income tax laws of the jurisdictions in which FHN operates are complex and subject to different interpretations by the taxpayer and the relevant government taxing authorities. In determining if a tax position should be recognized and in establishing a provision for income tax expense, FHN must make judgments and interpretations about the application of these inherently complex tax laws. Interpretations may be subjected to review during examination by taxing authorities and disputes may arise over the respective tax positions. FHN attempts to resolve disputes that may arise during the tax examination and audit process. However, certain disputes may ultimately be resolved through the federal and state court systems.
FHN monitors relevant tax authorities and revises estimates of accrued income taxes on a quarterly basis. Changes in estimates may occur due to changes in income tax laws and their interpretation by the courts and regulatory authorities. Revisions of estimates may also result from income tax planning and from the resolution of income tax controversies. Revisions in estimates may be material to operating results for any given period.
See Note 14 - Income Taxes to the Consolidated Financial Statements in Part II, Item 8 of this Report for additional
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information including discussion of valuation allowances related to deferred tax assets and the potential impact of unrecognized tax benefits on future earnings.
Contingent Liabilities
A liability is contingent if the amount or outcome is not presently known but may become known in the future as a result of the occurrence of some uncertain future event. FHN estimates its contingent liabilities based on management’s ability to reasonably estimate the loss or range of loss related to probable loss outcomes and management's estimates of reasonably possible loss associated with less-than-probable, but more-than-remote, loss outcomes. Accounting standards require that a liability be recorded if management determines that it is probable that a loss has occurred and the loss can be reasonably estimated. In addition, it must be probable that the loss will be confirmed by some future event. As part of the estimation process, management is required to make assumptions about matters that are, by their nature, highly uncertain and difficult to estimate.
The assessment of contingent liabilities, including legal contingencies, involves the use of critical estimates, assumptions, and judgments. Management’s estimates
are based on its belief that future events will validate the current assumptions regarding the ultimate outcome of these exposures. However, there can be no assurance that future events, such as court decisions or decisions of arbitrators, will not differ from management’s assessments. Whenever practicable, management consults with third-party experts (e.g., attorneys, accountants, claims administrators, etc.) to assist with the gathering and evaluation of information related to contingent liabilities. Based on internally and/or externally prepared evaluations, management makes a determination whether the potential exposure requires accrual in the financial statements.
See Note 16 - Contingencies and Other Disclosures to the Consolidated Financial Statements in Part II, Item 8 of this Report for additional information regarding FHN's existing material contingent liabilities, including those with and without loss accruals, and discussion of reasonably possible loss amounts for pending litigation matters.
Accounting Changes
Refer to Note 1 – Significant Accounting Policies to the Consolidated Financial Statements in Part II, Item 8 of this Report for a summary of accounting changes and
accounting changes issued but not currently effective, which section is incorporated into this MD&A by this reference.
Non-GAAP Information
Certain measures included in this report are “non-GAAP,” meaning they are not presented in accordance with U.S. GAAP and also are not codified in U.S. banking regulations currently applicable to FHN. Although other entities may use calculation methods that differ from those used by FHN for non-GAAP measures, FHN’s management believes such measures are relevant to understanding the financial condition, capital position, and financial results of FHN and its business segments. Non-GAAP measures are reported to FHN’s management and Board of Directors through various internal reports.
The non-GAAP measures presented in this report are pre-provision net revenue, return on average tangible common equity, tangible common equity to tangible assets, and tangible book value per common share. Table 7.33 provides a reconciliation of non-GAAP items presented in this report to the most comparable GAAP presentation.
Presentation of regulatory measures, even those which are not GAAP, provides a meaningful basis for comparability to other financial institutions subject to the
same regulations as FHN, as demonstrated by their use by banking regulators in reviewing capital adequacy of financial institutions. Although not GAAP terms, these regulatory measures are not considered “non-GAAP” under U.S. financial reporting rules as long as their presentation conforms to regulatory standards. Regulatory measures used in this MD&A include: common equity tier 1 capital, generally defined as common equity less goodwill, other intangibles, and certain other required regulatory deductions; tier 1 capital, generally defined as the sum of core capital (including common equity and instruments that cannot be redeemed at the option of the holder) adjusted for certain items under risk based capital regulations; and risk-weighted assets, which is a measure of total on- and off-balance sheet assets adjusted for credit and market risk, used to determine regulatory capital ratios.
The following table provides a reconciliation of non-GAAP items presented in this MD&A to the most comparable GAAP presentation.
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Table 7.33
NON-GAAP TO GAAP RECONCILIATION
(Dollars in millions; shares in thousands)
2025
2024
2023
Pre-provision Net Revenue (Non-GAAP)
Net interest income (GAAP)
$
2,622
$
2,511
$
2,540
Plus: Noninterest income (GAAP)
797
679
927
Total revenues (GAAP)
3,419
3,190
3,467
Less: Noninterest expense (GAAP)
2,074
2,035
2,079
Pre-provision net revenue (Non-GAAP)
$
1,345
$
1,155
$
1,388
Tangible Common Equity (Non-GAAP)
(A) Total equity (GAAP)
$
9,142
$
9,111
$
9,291
Less: Noncontrolling interest (a)
295
295
295
Less: Preferred stock (a)
349
426
520
(B) Total common equity
8,498
8,390
8,476
Less: Goodwill and other intangible assets (GAAP) (b)
1,615
1,653
1,696
(C) Tangible common equity (Non-GAAP)
$
6,883
$
6,737
$
6,780
Tangible Assets (Non-GAAP)
(D) Total assets (GAAP)
$
83,876
$
82,152
$
81,661
Less: Goodwill and other intangible assets (GAAP) (b)
1,615
1,653
1,696
(E) Tangible assets (Non-GAAP)
$
82,261
$
80,499
$
79,965
Average Tangible Common Equity (Non-GAAP)
Average total equity (GAAP)
$
9,142
$
9,136
$
8,905
Less: Average noncontrolling interest (a)
295
295
295
Less: Average preferred stock (a)
388
450
758
(F) Total average common equity
8,459
8,391
7,852
Less: Average goodwill and other intangible assets (GAAP) (b)
1,633
1,674
1,720
(G) Average tangible common equity (Non-GAAP)
$
6,826
$
6,717
$
6,132
Net Income Available to Common Shareholders
(H) Net income available to common shareholders (GAAP)
$
956
$
738
$
865
Period-end shares outstanding
(I) Period-end shares outstanding
484,825
524,280
558,839
Ratios
(A)/(D) Total period-end equity to period-end assets (GAAP)
10.90
%
11.09
%
11.38
%
(C)/(E) Tangible common equity to tangible assets (Non-GAAP)
8.37
8.37
8.48
(H)/(F) Return on average common equity (GAAP)
11.30
8.80
11.01
(H)/(G) Return on average tangible common equity (Non-GAAP)
14.01
10.99
14.10
(B)/(I) Book value per common share (GAAP)
$
17.53
$
16.00
$
15.17
(C)/(I) Tangible book value per common share (Non-GAAP)
$
14.20
$
12.85
$
12.13
(a)Included in total equity on the Consolidated Balance Sheets.
(b)Includes goodwill and other intangible assets, net of amortization.
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