FIRST HORIZON CORP (FHN) Risk Factors

Item 1A.    Risk Factors

This Item highlights risks that could impact us in material ways. In this Item we have outlined risks that we believe are important to us at the present time. However, other risks may prove to be important in the future, and new risks may emerge at any time. We cannot predict all potential developments that could materially affect our

financial performance or condition. Before making an investment decision, you should carefully consider the risks and uncertainties together with all of the other information included or incorporated by reference in this report.

Traditional Competition Risks

We are subject to intense competition for clients, and the nature of that competition is changing. Our competitors include national, state, and non-US banks, savings and loan associations, credit unions, consumer finance companies, trust companies, investment counseling firms, money market and other mutual funds, insurance companies and agencies, securities firms, mortgage banking companies, hedge funds, and other financial services companies that serve in our markets. The emergence of non-traditional, disruptive service providers (see Industry Disruption within this Item 1A beginning on page 22) has intensified the competitive environment.

Some competitors are traditional banks, subject to the same regulatory framework as we are, while others are not banks and in many cases experience a significantly different or reduced degree of regulation.

We compete for talent. Our most significant competitors for clients also tend to be our most significant competitors for top talent. See Operational Risks below within this Item 1A for additional information concerning this risk.

We compete to raise capital in the equity and debt markets. See Liquidity and Funding Risks beginning on page 30 of this Item 1A for additional information concerning this risk.

Traditional Strategic Risks

We may be unable to successfully implement our strategies to organically grow our businesses. We believe that the successful execution of organic growth depends upon a number of key elements, including:

•attracting and retaining clients in our commercial and consumer banking market areas and in our specialty banking markets;

•achieving and maintaining growth in our earnings while pursuing new business opportunities;

•maintaining a high level of client service while optimizing our operational infrastructures effectively and efficiently;

•managing the liquidity and capital requirements associated with growth; and

•managing effectively and efficiently the changes and adaptations necessitated by a complex and evolving regulatory environment.

We have in place strategies designed to achieve those elements that we believe are significant to us at present. Our challenge is to execute those strategies and adjust them, or adopt new strategies, as conditions change.

We may fail to achieve one or more key elements needed for successful business acquisitions. Our strategy for growth also includes consideration of acquisitions or strategic transactions if appropriate opportunities present themselves. To the extent we engage in such transactions,

we face various additional risks relating to our ability to: realize planned strategic and tactical objectives; correctly identify, analyze, and assess the risks in the transaction; integrate the acquired business quickly and cost-effectively; and retain core clients and key associates.

We may be unable to successfully implement a disposition or wind-down of businesses or units which no longer fit our strategic plans. We consider possible closures and divestitures as we continue to adapt to a changing business and regulatory environment. Actions of this sort typically are elevated in the first few years after a significant merger. We face various risks associated with exiting a business. We may be unable to: price a sale transaction appropriately and otherwise negotiate acceptable terms; identify and implement key client, personnel, technology systems, and other transition actions to avoid or minimize negative effects on retained businesses; mitigate the loss of any pre-tax income that the exited business produced; assess and manage any loss of synergies that the exited business had with our retained businesses; or manage capital, liquidity, and other challenges that may arise if an exit results in significant legacy cash expenditures or financial loss.

Negative sentiment of stakeholders, including clients, associates, investors, regulators, and the communities we serve, could negatively impact our business. One of our key assets is our stakeholders' perception that we are trustworthy, highly ethical and competent. This

perception could be affected by our business practices, as well as by the practices of our competitors, our industry as a whole, and the parties with whom we have important relationships. Senior management oversees processes for monitoring and actively reporting on stakeholder sentiment and for ensuring that the Company and its brand continue to be viewed positively by both internal and external stakeholders.

Negative sentiment among stakeholders could hinder our ability to access the capital markets or otherwise impact our liquidity, could hamper our ability to attract new clients and retain existing ones, could impact the market value of our stock, and could undermine our ability to attract and retain talented associates, among other things. Negative sentiment regarding the reputation of our industry as a whole may result in greater regulatory and/or legislative scrutiny, which may lead to laws or regulations that change or constrain our business or operations. Negative stakeholder sentiment also may increase our litigation risk. In the most extreme cases, negative stakeholder sentiment could jeopardize the safety and soundness of an institution.

Political and social fragmentation in the U.S., combined with access to social media platforms, can increase the risk of negative stakeholder sentiment in ways that might not be easily avoided by traditional means. The predominant culture within the banking industry remains traditional: in order to preserve their perceptions by key stakeholders as trustworthy, highly ethical and competent, banks generally tend to avoid involvement in political or social controversy. Increasingly, though, certain groups—having highly specific political or social agendas and with the ability to communicate their views effectively using social media platforms—have made it more difficult to maintain a traditional approach. While the potential for interest group pressure has always existed, special interest groups today, using social media platforms, are more able and willing to publicize their criticisms. Those criticisms, in turn, could result in negative stakeholder sentiment which could lead to action by legislators or regulators.

Industry Disruption

Technological innovations continue to change financial services at a rapid pace, creating new competitive challenges. We provide a large number of services remotely (online and mobile). Technology has helped us reduce costs and improve service, but also has created new competitive challenges by allowing disruptors, such as peer-to-peer lending arrangers, non-bank deposit acceptors, and non-bank digital asset financial service providers, to enter traditional banking areas, and by enabling banks to make client inroads unrelated to physical presence. The competitive risks from technological innovation are especially pronounced from the largest U.S. banks, and from online-only banks and non-bank financial technology firms (including blockchain‑based payment networks, stablecoin issuers, and digital‑asset lending and financing platforms), due in part to the large investments they are able to sustain in their digital platforms.

We seek to meet these competitive challenges through increased investments in our own digital platforms, and through strategic equity investments, but there can be no assurance that these efforts will be successful.

New technologies proliferating in the financial services industry are subject to risks and uncertainties that could impair their effectiveness or have a negative impact on our business. New technologies, services, and systems based wholly or in part on artificial intelligence are proliferating within our industry, including at our Company as we are seeking to accelerate both our data capabilities and our responsible use of artificial

intelligence to deliver excellent client and associate outcomes. These technologies are subject to risks that algorithms and datasets may be flawed or insufficient or contain biased or incorrect information, risks that are exacerbated because models and processes related to artificial intelligence are not always transparent.

Responding successfully to the ongoing technology-driven evolution in the financial services industry requires substantial investment in information technology systems and innovation to develop workable proprietary solutions. The responses to technological innovation and disruption that will be successful in the long run remain unclear. Even with a substantial IT budget, we cannot match the technology spending of largest U.S. banking institutions. Therefore, like most U.S. banks, our strategy must be focused on leveraging products and solutions which are within our means, including those developed by external vendors. Our goal must be to keep pace with industry developments with a focus on improving the client’s differentiated experience with us by recognizing and responding to client needs.

Key risks for us are whether we will be able: to catch up to breakthroughs quickly enough to avoid client attrition; to adopt and enhance breakthroughs frequently enough, and without significant technical failures, to attract clients from competitors; and, if we are able to truly innovate, to press our advantage quickly before competitors adopt our innovation.

To thrive as our industry is disrupted, we will need to continue to embrace some of the attitudes of a

technology company and shed some of the traditional attitudes often associated with banking, while continuing to meet all applicable supervisory and regulatory standards. This has required, and will continue to require, an evolution in our corporate culture which, in turn, creates implementation risk. In this evolutionary process it is critical that we not lose sight of how our clients experience working with us and our systems, including those clients who still want traditionally-delivered services, those who seek and embrace the latest innovations, and those who mainly want services to be convenient, personalized, and understandable.

Just as disruptive business changes driven by new technologies and new client preferences can adversely impact us and our entire industry, similar events can adversely impact our commercial clients. In time, a major business disruption can cause dominant businesses to fail and can shrink or even end entire lines of business. To the extent disruptions impact our clients, we may experience elevated loan losses and loss of ongoing business which we may not be able to recapture with new clients.

Operational Risks

Fraud is a major, and increasing, operational risk for us and all banks. Two traditional areas—deposit fraud (check forging, check kiting, wire fraud, check washing, etc.) and loan fraud—continue to be major sources of fraud attempts and actual loss. Fraud directed against clients—generally using deception to persuade clients to transfer funds—has emerged as a third large source of fraud loss. The methods used to perpetrate and combat fraud continue to evolve as technology changes. In addition to cybersecurity risk (discussed below), new technologies—including the use of artificial intelligence—have made it easier for bad actors to obtain and use client personal information, mimic communications to or from clients, mimic signatures, and otherwise create false instructions and documents that appear genuine.

Our anti-fraud actions are both preventive (anticipating lines of attack, educating associates and clients, etc.) and responsive (detecting, halting, and remediating actual attacks). Our regulators require us to report actual and suspected fraud promptly, and regulators often advise banks of new schemes so that the entire industry can adapt as quickly as possible. However, some level of fraud loss is unavoidable, and the risk of a major loss cannot be eliminated.

Our ability to conduct and grow our businesses is dependent in part upon our ability to create, maintain, expand, and evolve an appropriate operational and organizational infrastructure, manage expenses, and recruit and retain personnel with the ability to manage a complex business. Operational risk can arise in many ways, including: errors related to failed or inadequate physical, operational, information technology, or other processes; faulty or disabled computer or other technology systems; fraud, theft, physical security breaches, electronic data and related security breaches (see Cybersecurity Risks below), or other criminal conduct by associates or third parties; and exposure to other external events. Inadequacies may present themselves in myriad ways. Also, our efforts to control expenses, which are a significant priority for us, increase our operational

challenges as we strive to maintain client service and compliance at high quality and low cost.

We expect to continue making investments in operational systems that may not result in significant immediate returns. Investments in new platforms and processes support continued improvements in operations and client experiences, reductions in ongoing operating costs, and future growth. We expect to continue making investments of this sort over the next several years. Although we believe these investments are necessary and appropriate, the financial returns from such investments may not result in significant immediate returns.

Failure to build and maintain, or outsource, the necessary operational infrastructure, failure of that infrastructure to perform its functions, or failure of our disaster preparedness plans if primary infrastructure components suffer damage, can lead to risk of loss of service to clients, legal actions, and noncompliance with applicable regulatory requirements. Additional information concerning operational risks and our management of them, all of which is incorporated into this Item 1A by this reference, appears under the caption Operational Risk Management beginning on page 72 of our 2025 MD&A (Item 7).

The delivery of financial services to clients and others increasingly depends upon technologies, systems, and multi-party infrastructures which are new, creating or exacerbating several risks discussed elsewhere. Examples of the risks created or compounded by the widespread and rapid adoption of relatively new technologies include: security incursions; operational malfunctions or other disruptions; and legal claims of patent or other intellectual property infringement.

We use third-party service providers for certain bank functions. The failure, interruption, or poor performance of these third parties, whether due to cyber incidents, financial distress, operational breakdowns, or regulatory actions, could disrupt our operations, compromise data security, interfere with client services, compromise client privacy, or result in violations of laws or regulations

applicable to us and the Bank. In addition, transitioning to alternative providers may be difficult, costly or time-consuming and could require regulatory approval. Any significant disruption or deficiency involving our third-party service providers could materially and adversely affect our business, financial condition, and results of operations.

Competition for talent is substantial and increasing. Moreover, revenue retention and growth in some business lines depends substantially upon top talent. In recent years the cost of hiring and retaining top revenue-producing talent, especially in specialty areas, has increased, and that trend is likely to continue. The primary tools we use to attract and retain talent are: salaries; commission, incentive, and retention compensation programs; retirement benefits; change in control severance benefits; health and other welfare benefits; and our corporate culture. To the extent we are unable to use these tools effectively, we face the risk that, over time, our talent will leave us and we will be unable to replace those persons effectively.

Incentives might operate poorly or have unintended adverse effects. Incentive programs are difficult to design well, and even if well-designed, often must be updated to address changes in our business. A poorly designed incentive program—where goals are too difficult, too easy, or not well related to desired outcomes—could provide little useful motivation to key associates, could increase turnover, and could impact client retention. Moreover, incentive programs may create unintended adverse consequences. For example, a program focused entirely on revenue production, without proper controls, may result in costs growing faster than revenues.

We provide a wide range of services to clients, and the provision of these services may create claims against us that we provided them in a manner that harmed the client or a third party, or was not compliant with applicable laws or rules. Our services include commercial,

private banking, consumer, small business, wealth and trust management, retail brokerage, capital markets, fixed income, and mortgage banking services, among others. We manage these risks primarily through training programs, compliance programs, and supervision processes.

Our ability to successfully manage expenses is important to our long-term success, but in part is subject to risks beyond our control. Many factors can influence the amount of our expenses, as well as how quickly they grow. As our businesses change, additional expenses can arise from asset purchases, structural reorganization, evolving business strategies, and changing regulations, among other things.

We manage controllable expenses and risk through a variety of means, including selectively outsourcing or multi-sourcing various functions and procurement coordination and processes. In recent years we have actively sought to make strategic businesses more efficient primarily by investing in technology, rethinking and right-sizing our physical facilities, and rethinking and right-sizing our workforce and incentive programs.

We have also employed economic profit analysis, which attempts to relate ordinary profit to the capital employed to create that profit, with the goal of achieving higher risk-adjusted (more efficient) returns on capital employed overall.

Despite our efforts to control expenses, our costs could rise due to adverse structural changes, market shifts, inflationary pressures, or errors in judgment. In addition, our costs could be impacted by increased regulatory compliance expense as we approach and surpass $100 billion in assets, which is the next regulatory tier above us now, but the extent of any additional regulatory compliance costs remains uncertain due to evolving regulatory policies and possible legislative or regulatory change.

Cybersecurity Risks

An information technology security (cybersecurity) breach or other similar incident is a major type of operational risk. A cybersecurity incident can cause significant damage, and can be difficult to detect even after it occurs. Among other things, that damage can occur due to outright theft, loss or extortion of our funds or our clients’ funds, fraud or identity theft perpetrated on clients, loss of confidential or proprietary information, business disruption, or adverse publicity associated with a breach or incident and its potential effects. Perpetrators potentially can be associates, clients, third parties, and certain vendors, all of whom legitimately have access to some portion of our systems, as well as outsiders with no legitimate access.

Attempted cybersecurity breaches or similar events happen frequently; they are an unavoidable part of doing business. Often, but not always, we detect and block the attempt. Often, but not always, the number of clients impacted is modest and our loss is minimal or none. However, even with significant loss prevention and mitigation systems, the risk of a financially or reputationally significant incursion cannot be eliminated. For that reason, the key goals of our processes are: block or prevent as many incursions as is practical, and detect and mitigate rapidly those that get through.

Common categories of cybersecurity incidents relevant to us, as a bank, include: account takeover, client spoofing, and payment fraud; ransomware and other malware;

client interface attacks (attempts to shut down or slow down our website or mobile app); and cloud (remote server) incursions. Common vulnerabilities include: clients, associates and third-party vendors that fall victim to malicious "phishing" emails or other communications and inappropriately share credentials allowing access to accounts or systems; older software or systems that do not have up-to-date security and are not sufficiently isolated from other systems; third-party software vulnerabilities; and third-party systems vulnerabilities. Bad actors can range from amateurs to criminal organizations to nation-states.

Cybersecurity risks for banks and other financial institutions have increased significantly in recent years in part because of the proliferation of technology-based products and services and the increased sophistication and activities of organized crime, hackers, terrorists, nation-states, nation state-supported actors, activists and other external parties. This increase is expected to continue and further intensify. The techniques used by cyber criminals change frequently, may be difficult to detect over extended periods, and can be initiated from a variety of sources, including terrorist organizations and hostile foreign governments. In addition, the effectiveness of these techniques may be further enhanced by the use of artificial intelligence.

Because of the potential for very serious consequences associated with cybersecurity risks, our electronic systems and their upgrades need to address internal and external security concerns to a high degree, and our systems must comply with applicable banking and other regulations pertaining to bank safety and client protection. We expect our systems and regulatory requirements will continue to evolve as technology and criminal techniques also continue to evolve.

Additional information concerning cybersecurity risks and our management of them, all of which is incorporated into this Item 1A by this reference, appears under the caption Cybersecurity Risk Management beginning on page 72 of our 2025 MD&A (Item 7).

The operational functions we outsource to third parties may experience similar disruptions that could adversely impact us and over which we may have limited control and, in some cases, limited ability to obtain an alternate vendor quickly. To the extent we rely on third party vendors to perform or assist operational functions, the challenge of managing the associated risks may become more difficult. We manage this risk by assessing the adequacy of cybersecurity prevention and detection systems and programs of critical vendors.

The operational functions of business counterparties, or businesses with which we have no relationship, may experience disruptions that could adversely impact us and over which we may have limited or no control. Although these events cannot be predicted individually, they have occurred in the past and, over time and in the aggregate, are certain to occur in the future. Possible points of incursion or disruption not within our control include retailers, utilities, insurers, health care service providers, internet service and electronic mail providers, social media portals, distant-server (“cloud”) service providers, electronic data security providers, telecommunications companies, and smart phone manufacturers. Although our systems are not breached by these third-party incursions, they can increase fraud impacting accounts at our Bank and can cause us to take costly steps to avoid significant theft loss to our Bank and to our clients. Our ability to recoup our losses may be limited legally or practically in many situations.

Risks from Economic Downturns & Changes

Generally, in an economic downturn, our realized credit losses increase, demand for our products and services declines, and the credit quality of our loan portfolio declines. Delinquencies and realized credit losses generally increase during economic downturns due to an increase in liquidity problems for clients and downward pressure on collateral values. Likewise, demand for loans (at a given level of creditworthiness), deposit and other products, and financial services may decline during an economic downturn, and may be adversely affected by other global, national, regional, or local economic factors that impact demand for loans and other financial products and services. Such factors include, for example, changes in employment rates, interest rates, real estate prices, or expectations concerning rates or prices, changes in regulatory, trade (including tariffs), and tax policies and

laws, and geopolitical instability or conflict. Accordingly, an economic downturn or other adverse economic change (local, regional, national, or global) can hurt our financial performance in the form of higher loan losses, lower loan production levels, lower deposit levels, compression of our net interest margin, and lower fees from transactions and services. Those effects can continue for many years after the downturn technically ends.

Because all banks are sensitive to the risk of downturns, the stock prices of all banks typically decline, sometimes substantially, if the market believes that a downturn has become more likely or is imminent. This effect can and often does occur indiscriminately, initially without much regard to different risk postures of different banks.

Risks Associated with Monetary Events

In recent years, the Federal Reserve has implemented significant economic strategies that have impacted interest rates, inflation, asset values, and the shape of the yield curve. These strategies have had, and will continue to have, a significant impact on our business and on many of our clients. Federal Reserve strategies can, and often are intended to, affect the domestic money supply, inflation, interest rates, and the shape of the yield curve. Among other things, easing strategies are intended to lower interest rates, encourage borrowing, expand the money supply, and stimulate economic activity, while tightening strategies are intended to increase interest rates, discourage borrowing, tighten the money supply, and restrain economic activity. These effects significantly impact our business, including through impacts on deposit levels, and may also materially affect many of our customers.

Many external factors may interfere with the effects of the Federal Reserve's plans or cause them to be changed, perhaps quickly. Such factors include significant economic trends or events, as well as political pressures and significant international monetary policies and events. Such strategies also can affect the U.S. and worldwide financial systems in ways that may be difficult to predict.

We may be adversely affected by economic and political situations outside the U.S. The U.S. economy and the businesses of many of our clients are linked significantly to economic and market conditions outside the U.S., especially in North and Central America, Europe, and Asia, and increasingly in South America. Although our direct exposure to non-U.S.-dollar-denominated assets or non-U.S. sovereign debt is insignificant, in the future major adverse events outside the U.S. could have a substantial indirect adverse impact upon us. Key potential events which could have such an impact include (1) sovereign debt default, (2) bank and/or corporate debt default, (3) market and other liquidity disruptions, (4) the collapse of governments, alliances, or currencies, and (5) military conflicts. The methods by which such events could adversely affect us are highly varied but broadly include the following: an increase in our cost of borrowed funds or, in a worst case, the unavailability of borrowed funds through conventional markets; impacts upon our hedging and other counterparties; impacts upon our clients; impacts upon the U.S. economy, especially in the areas of employment rates, real estate values, interest rates, and inflation rates; and impacts upon us from substantial and unpredictable shifts in our regulatory environment from possible political responses to major financial disruptions.

Credit Risks

We face the risk that our clients may not repay their loans or make payments on their leases and that the realizable value of collateral and other credit support may be insufficient to avoid a charge-off. We also face risks that other counterparties, in a wide range of situations, may fail to honor their obligations to pay us. In our business some level of credit charge-offs is unavoidable and overall levels of credit charge-offs have varied substantially over time, but it is extremely difficult for banks, and for investors, to know whether an upturn or downturn in credit loss is merely idiosyncratic or instead portends a major credit cycle change.

Our ability to manage credit risks depends primarily upon our ability to assess the creditworthiness of loan and lease clients and other counterparties and the value of any collateral, including real estate, among other things. We further manage credit risk by diversifying our loan and lease portfolio, by managing its granularity, and by following per-relationship lending limits. We further manage other counterparty credit risk in a variety of ways, some of which are discussed in other parts of this Item 1A and all of which have as a primary goal the avoidance of having too much risk concentrated with any single counterparty.

We record loan and lease charge-offs in accordance with accounting and regulatory guidelines and rules. As

indicated in this Item 1A under the caption Accounting Risks beginning on page 33, these guidelines and rules have changed in the past and could do so again in the future, causing provision expense or charge-offs to be more volatile, or to be recognized on an accelerated basis, for reasons not always related to the underlying performance of our portfolio. Moreover, the SEC or PCAOB could take accounting positions applicable to our holding company that may be inconsistent with those taken by the Federal Reserve or other banking regulators.

Our credit and other loan-management models could be wrong, or could become wrong if external factors change. A significant challenge for us is to keep the credit and other models and approaches we use to originate and manage loans updated to take into account changes in the competitive environment, in real estate prices and other collateral values, in the economy, and in the regulatory environment, among other things, based on our experience originating loans and servicing loan portfolios. Changes in modeling could have significant impacts upon our reported financial results and condition. In addition, we use those models and approaches to manage our loan portfolios and lending businesses. To the extent our models and approaches are not consistent with underlying real-world conditions, our management decisions could be

misguided or otherwise affected with substantial adverse consequences to us.

As interest rates rise, default risk generally also rises. As borrowers’ obligations to pay interest increases, financial weaknesses generally become more evident. Initially this results in lower consumer credit scores and deteriorating commercial loan grading, and later results in higher default rates. Although interest rates began to decline in last half of 2024, the full effects of the 2022-23 rate hikes may not yet be fully reflected in loan default rates. In addition, there can be no assurance that the recent decline in interest rates will persist.

The composition of our loans inherently increases our sensitivity to certain credit risks. Our total loans and leases consist of the commercial, financial, and industrial (C&I) portfolio, the commercial real estate (CRE) portfolio, and the consumer loan portfolio.

Two large components of the C&I portfolio at year end were loans to mortgage companies and loans to finance and insurance companies. Taken together, approximately 25% of the C&I portfolio was sensitive to impacts on the financial services industry. The financial services industry is more sensitive to interest rate and yield curve changes, monetary policy, regulatory policy, changes in real estate and other asset values, and changes in general economic conditions, than many other industries. Negative impacts on the industry could dampen new lending in these lines of business and could create credit impacts for the loans in our portfolio.

The stability and value of the CRE portfolio depends substantially upon the financial health of the underlying real estate assets and upon commercial real estate market values generally. Many CRE assets are rental properties, and for those occupancy and vacancy rates are critical factors along with business trends that impact tenants. Most of the remainder are owner-occupied, significantly dependent on the financial health of the borrower. Part of

our rental CRE consists of traditional office space. The COVID pandemic disrupted traditional office space demand and utilization. It is uncertain what demand and utilization will be once that disruption fully ends. Another part of our CRE portfolio consists of multi-family properties, a sector which has also been subject to recent stress.

The consumer real estate portfolio contains a number of concentrations which affect credit risk assessment of the portfolio.

•Product and collateral concentration. The consumer real estate portfolio consists primarily of consumer installment loans, and much of the remainder consists of home equity lines of credit. This entire category is secured by residential real estate.

•Geographic concentration. At year end, about 63% of the consumer real estate portfolio related to clients in three states: Florida, Tennessee, and Texas.

The consumer real estate category is highly sensitive to economic impacts on consumer clients and on residential real estate values.

Volatility in the oil and gas industry can impact us. At year end, approximately 2% of our total loans were directly related to the oil and gas industry. In addition to general credit and other risks mentioned elsewhere in this Item 1A, these businesses and their related assets are sensitive to a number of factors specific to that industry. Key among those is global demand for energy and other products from oil and gas in relation to supply. Significant oil-price volatility caused by shifts in global demand, macroeconomic and geopolitical risks, and weather conditions have had in the past, and could have in the future, an impact on our overall business in this industry. Another set of risks specific to that industry relate to environmental concerns and the risks of adverse changes in consumption habits generally.

Regulatory, Legislative, & Legal Risks

We operate in a heavily regulated industry, and our business, operations and income may be adversely affected by changes in statutes, rules, regulations, and policies governing our operations. We are subject to many banking, deposit, insurance, securities brokerage and underwriting, investment management, and consumer lending regulations in addition to the rules applicable to all companies publicly traded in the U.S. securities markets and, in particular, on the New York Stock Exchange. We also are subject to Federal and state regulations that significantly limit the types of activities in which we, as a financial institution, may engage, and to a wide array of other regulations that govern other aspects of how we conduct our business, such as in the areas of employment and intellectual property. Failure to comply

with applicable laws and regulations could result in financial, structural, and operational penalties. In addition, efforts to comply with applicable laws and regulations have in the past increased, and may in the future further increase, our costs and/or limit our ability to pursue certain business opportunities. See Supervision and Regulation within Item 1 of this report, beginning on page 10, for additional information concerning financial industry regulation.

Changes to statutes, regulations or regulatory policies, or their interpretation or implementation, and/or regulatory practices, requirements or expectations, could affect us in substantial and unpredictable ways. In particular, the potential effects of a number of proposed regulations on us remain uncertain due to legal challenges

and the 2025 changes in the U.S. presidential administration and control of the U.S. Senate, which have resulted in, and could result in additional, changing federal or state regulatory priorities.

We are unable to predict the form or nature of any future changes to statutes or regulation, including the interpretation or implementation thereof. Changes to statutes, regulations, or regulatory policies, including changes in interpretation or implementation of statutes, regulations, or policies, have and could in the future subject us to additional costs, limit the types of financial services and products we may offer, and/or increase the ability of non-banks to offer competing financial services and products, among other things. Failure to comply with laws, regulations, policies or supervisory guidance, and any such changes, could result in enforcement and other legal actions by Federal or state authorities, including criminal and civil penalties, the loss of FDIC insurance, revocation of a banking charter, other sanctions by regulatory agencies, civil money penalties, and/or damage to our brand, any of which could have a material adverse effect on our business, financial condition, and results of operations.

We and the Bank both are required to maintain certain regulatory capital levels and ratios. U.S. capital standards are discussed in Item 1 of this report. Pressures to maintain appropriate capital levels and address business needs in a changing economy may lead to actions that could be dilutive or otherwise adverse to our shareholders. Such actions could include: reduction or elimination of dividends; the issuance of common or preferred stock, or securities convertible into stock; or the issuance of any class of stock having rights that are adverse to those of the holders of our existing classes of common or preferred stock.

Regulation of banks is tiered based on asset size; we are close to reaching $100 billion, which is currently the next tier above us. Regulatory restrictions and costs tend to increase based on asset tier. For us, significant impacts of crossing the $100 billion threshold, under current regulatory standards, include becoming subject to Category IV enhanced prudential standards and becoming at-risk for being subject to a liquidity coverage ratio requirement. Compliance costs associated with those and other over-$100-billion regulations could be significant, and many of those costs will need to be borne (and are already being borne) as we approach the $100 billion tier and proceed with upgrading compliance systems, processes, and staffing. However, current regulatory standards applicable to banks crossing the $100-billion threshold could change, possibly reducing compliance requirements and costs, due to evolving regulatory policies and possible legislative or regulatory change.

Legal disputes are an unavoidable part of business, and the outcome of pending or threatened litigation cannot

be predicted with any certainty. We face the risk of litigation from clients, associates, vendors, contractual parties, and other persons, either singly or in class actions, and from federal or state regulators. Matters of that sort are pending currently. We manage litigation risks through internal controls, personnel training, insurance, litigation management, our compliance and ethics processes, and other means. However, the commencement, outcome, and magnitude of litigation cannot be predicted or controlled with any certainty. Typically, we are unable to estimate our loss exposure from legal claims until relatively late in the litigation process, which can make our financial recognition of loss from litigation unpredictable and highly uneven from one period to the next.

Political volatility within the federal government creates the potential for significant abrupt shifts in federal policy, as well as government shutdowns. Political conflict within and among branches of government has and could in the future result in abrupt policy shifts regarding bank regulation, taxes, and the economy, any of which could have significant impacts on our business and financial performance, as well as that of our commercial clients. Moreover, political conflict within and among branches of government, and within and among government agencies, has in the past risen to, and could again rise to, a level where day-to-day functions could be interrupted or impaired, including as a result of government shutdowns. Most recently, in October 2025, the U.S. government entered into a prolonged shutdown, which ended on November 12, 2025, as well as a briefer partial shutdown in February 2026, negatively impacting companies, likely including some of our commercial clients, who do substantial business with, or related to, the U.S. government. As of early 2026, the risk of additional U.S. government shutdowns, and their potential impacts, continues.

Data privacy is becoming an area of heightened legislative and regulatory focus. One prominent example is the California Consumer Privacy Act, which applies to for-profit businesses that conduct business in California and meet certain revenue and data collection thresholds, including the Bank. Further general regulation to protect data privacy appears likely. Banks in the U.S. already operate under privacy-protection laws and rules, but banking industry regulations in this area might be enlarged in response to this concern. Any enlargement of general or banking industry data privacy laws or regulations could adversely affect our business if it requires us to alter our systems or change our business practices.

Public expectations concerning corporate controls on emissions of carbon dioxide, methane, and other greenhouse gases (GHG) could, in the future, increase our operating costs and curtail some aspects of our business. At present, federal environmental regulations do not require us to monitor the direct or indirect GHG

emissions associated with building, operating, or maintaining our physical facilities, nor are we taxed or fined in relation to those emissions. Changing expectations could pressure us to physically measure, monitor, and curtail direct emissions and to estimate indirect emissions or impacts and eventually could result in federal environmental legal requirements to take those actions or to pay for measured or estimated emissions.

Recent state laws and federal disclosure rules concerning GHG emissions could impose significant additional costs upon us. Recent state and federal disclosure laws and regulations related to GHG emissions are discussed in Item

1 of this report. Should these laws become effective as adopted, they could impose significant direct and indirect costs on us, including creating systems to capture relevant data and engaging vendors to provide required assurances.

General regulation of GHG emissions, carbon taxation schemes, government subsidies for "green" industries over carbon-intensive ones, and other such political/governmental actions could substantially and directly impact us or our clients. Even if we are not directly impacted in any significant manner by such actions, impacts on clients could have a significant impact on us.

Geographic Risks

We are subject to risks of operating in various jurisdictions. To a significant degree our banking business is exposed to economic, regulatory, natural disaster, and other risks that primarily impact the southeastern and south-central U.S. where we do most of our traditional lending and deposit taking business. If, as on some occasions in the past, those regions of the U.S. were to experience adversity not shared by other parts of the country, we could experience adversity to a degree not shared by those competitors which have a broader or different regional footprint.

Cost increases and uncertainties impacting clients and communities in our coastal markets may jeopardize the substantial growth trends of those markets and could have a significant impact on us. A significant part of our growth prospects are concentrated in the major gulf coast markets and several markets on the southern Atlantic seacoast of the U.S. Many of our fastest growing markets, including most significantly those in Florida, have been and can be impacted significantly by hurricanes and other severe coastal weather events.

In recent years it has been widely reported that the economic costs of hurricane and other severe weather events in the U.S. gulf and southern Atlantic coastal areas have been rising significantly, triggering concerns

regarding the availability, reliability, and cost of adequate property insurance. Instability in property insurance has made, and will continue to make, our business decisions more difficult, while also increasing our risks of loan loss. 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, our business could be impacted.

We have international assets, mainly in the form of loans and letters of credit. Holding non-U.S. assets creates a number of risks: the risk that taxes, fees, prohibitions, and other barriers and constraints may be created or increased by the U.S. or other countries that would impact our holdings; the risk that currency exchange rates could move unfavorably so as to diminish the U.S. dollar value of assets, or to enlarge the U.S. dollar value of liabilities; and the risk that legal recourse against foreign counterparties may be limited in unexpected ways. Our ability to manage those and other risks depends upon a number of factors, including: our ability to recognize and anticipate differences in legal, cultural, and other expectations applicable to clients, regulators, vendors, and other business partners and counterparties; and our ability to recognize and manage any exchange rate risks to which we are exposed.

Insurance

Our property and casualty insurance may not cover, or may be inadequate to fully cover, the risks that we face, and we may be adversely affected by a default by insurers. We use insurance to mitigate a number of risks, including damage or destruction of property and losses as well as legal and other liability, including for cyber-related incidents. Not all such risks are insured, in any given insured situation our insurance may be inadequate to cover all loss, and many risks we face are uninsurable. For those risks that are insured, we also face the risks that the insurer may default on its obligations or refuse to honor them. We treat the risk of default as a type of credit risk,

which we manage by reviewing the insurers that we use and by striving to use more than one insurer when practical. The risk of refusal, whether due to honest disagreement or bad faith, is inherent in any contractual situation.

A portion of our consumer loan portfolio involves mortgage default insurance. If a default insurer were to experience a significant credit downgrade or were to become insolvent, that could adversely affect the carrying value of loans insured by that company, which could result in an immediate increase in our loan loss provision or write-down of the carrying value of those loans on our

balance sheet and, in either case, a corresponding impact on our financial results. If many default insurers were to experience downgrades or insolvency at the same time, the risk of a financial impact would be amplified.

We own certain bank-owned life insurance policies as assets on our balance sheet. Some of those policies are “general account” and others are “separate account.” The general account policies are subject to the risk that the carrier might experience a significant downgrade or become insolvent. The separate account policies are less

susceptible to carrier risk, but do carry a higher risk of value fluctuations in securities which underlie those policies. Both risks are managed through periodic reviews of the carriers and the underlying security values. However, particularly for the general account policies, our ability to liquidate a policy in anticipation of an adverse carrier event is significantly limited by applicable insurance contracts and regulations as well as by a substantial tax penalty which could be levied upon early policy termination.

Liquidity & Funding Risks

Liquidity is essential to our business model and a lack of liquidity, or an increase in the cost of liquidity, may materially and adversely affect our businesses, results of operations, financial condition, and cash flows. In general, the costs of our funding directly impact our costs of doing business and, therefore, can positively or negatively affect our financial results. Our funding requirements in 2025 were met principally by deposits, by financing from other financial institutions, and by funds obtained from the capital markets.

Deposits traditionally have provided our most affordable funds and deposits by far are the largest portion of our funding. However, deposit trends can shift with economic conditions and with public perception of risk in the banking industry or of risk in our Bank in particular. That shift can be sudden and extreme. If public confidence fails, deposit levels in our Bank could fall, perhaps quickly, as depositors seek safety and are able to move their funds rapidly. In the mildest version of this scenario, we could be forced to raise interest rates we pay on our deposits, raising costs appreciably. In a severe case, deposit flight could render the Bank insolvent.

In the first half of 2023, following the failure of three large U.S. regional banks, we experienced significant but much more modest levels of run-off, which we successfully countered with a significant deposit campaign.

In the aftermath of the 2023 bank failures, the following factors appear to have been key to institutional risk: deposits not insured by FDIC insurance were much more likely to depart rapidly when risk perceptions changed suddenly; deposit clients who were not traditional clients with primary banking relationships were much more likely to depart rapidly; and deposits concentrated in fewer, high-balance accounts (with FDIC insurance coverage on only a small portion of the balances) were much more likely to depart rapidly than deposits spread among many more-typical clients and accounts. All but the very largest banks, including our Bank, faced all three of these factors to an extent.

Deposit levels may be affected, fairly quickly, by changes in monetary policy. The Federal Reserve began reducing short-term rates in the last half of 2024 based on

economic events during the year, including reduced inflationary pressures, employment data, and overall economic activity, and rate reductions continued in 2025, leading to decreased competition for deposits. However, even in a declining interest rate environment, quantitative tightening by the Federal Reserve can trigger increased competition for deposits. Whether, and to what extent, economic conditions will support continued short-term rate reductions in 2026 remains uncertain.

Loss of deposits or a change in deposit mix could increase our funding costs. Deposits generally are a low cost and stable source of funding. We compete with banks and other financial institutions, including (more recently) digital asset providers, for deposits and as a result, we could lose deposits in the future, or we may need to raise interest rates to avoid deposit attrition. Funding costs may also increase if deposits lost are replaced with wholesale funding. Higher funding costs reduce our net interest margin, net interest income, and net income.

The market among banks for deposits may be impacted by regulatory funding and liquidity requirements. Regulatory rules generally provide favorable treatment for core deposits. Institutions with less than $100 billion of assets are not required to maintain a minimum liquidity coverage ratio. At or above $100 billion, the requirement increases with size and certain activities. The largest banks, which must maintain the highest minimum ratio, may be incented to compete for core deposits vigorously. Although mid-sized banks, like ours, are only lightly impacted by this rule, if some large banks in our markets take aggressive actions we could lose deposit share or be compelled to adjust our deposit pricing and practices in ways that could increase our costs.

Continued availability of funding from the Federal Home Loan Bank and discount window at the Federal Reserve depends on policies set by federal agencies, the federal government and, ultimately, by the U.S. Congress; for that reason, long-term continuation of current programs is beyond our control. We have and use credit facilities with one of the Federal Home Loan Banks. Those facilities provide funding quickly when we need it, up to program limits. Program limits are based, in part, on the fair value

of potential collateral we can provide, which fluctuates with market conditions. We also have and use access to the discount window at the Federal Reserve. Although we do not view borrowing at the Federal Home Loan Bank or at the discount window at the Federal Reserve as a primary source of liquidity, the curtailment or elimination of our access to these funding sources would significantly alter how we plan for and manage routine and contingency funding situations.

We also depend upon financing from private institutional or other investors by means of the capital markets. In the past, we have issued and sold preferred stock, as well as senior and subordinated notes. We expect to, and believe we could, access the capital markets in the future. Risk remains, however, that capital markets may become unavailable to us for reasons beyond our control.

A number of more general factors could make funding more difficult, more expensive, or unavailable on

affordable terms. These include, but are not limited to, our financial results, organizational or political changes, adverse impacts on key stakeholder sentiment, changes in the activities of our business partners, disruptions in the capital markets, specific events that adversely impact the financial services industry, counterparty availability, changes affecting our loan portfolio or other assets, changes affecting our corporate and regulatory structure, interest rate fluctuations, ratings agency actions, general economic conditions, and the legal, regulatory, accounting, and tax environments governing our funding transactions. In addition, our ability to raise funds is strongly affected by the general state of the U.S. and world economies and financial markets as well as the policies and capabilities of the U.S. government and its agencies, and could become more difficult due to economic and other factors beyond our control.

Credit Ratings

Our credit ratings directly affect the availability and cost of our unsecured funding. Our holding company (the Corporation) and our Bank currently receive ratings from rating agencies for unsecured borrowings. A rating below investment grade typically reduces availability and increases the cost of market-based funding. At December 31, 2025, both rating agencies rated the unsecured senior debt of the Corporation and of the Bank as investment grade. To the extent that in the future we depend on institutional borrowing and the capital markets for funding and capital, we could experience reduced liquidity and increased cost of unsecured funding if our debt ratings were lowered, particularly if lowered below investment grade. In addition, other actions by ratings agencies can create uncertainty about our ratings in the future and thus can adversely affect the cost and availability of funding, including placing us on negative outlook or on watchlist.

Reductions in our credit ratings could result in counterparties reducing or terminating their relationships with us. Some parties with whom we do business have internal policies restricting the business that can be done with financial institutions that have credit ratings lower than a certain threshold.

Reductions in our credit ratings could allow some counterparties to terminate and immediately force us to settle certain derivatives agreements, and could force us to provide additional collateral with respect to certain derivatives agreements. Under our margin agreements, we are required to post collateral in the amount of our derivative liability positions with derivative counterparties. FHN could be asked to post collateral of an undetermined amount based on changes in credit ratings and derivative value.

Interest Rate & Yield Curve Risks

We are subject to interest rate risk because a significant portion of our business involves borrowing and lending money and investing in financial instruments. A considerable portion of our funding comes from short-term and demand deposits, while a sizable portion of our lending and investing is in medium-term and long-term instruments. Changes in interest rates directly impact our revenues and expenses and could expand or compress our net interest margin. We actively manage our balance sheet to control the risks of a reduction in net interest margin brought about by ordinary fluctuations in rates. In addition, our fixed income business tends to perform better when rates decline or markets are moderately

volatile, which tends to partially offset net interest margin compression.

A flat or inverted yield curve may reduce our net interest margin and adversely affect our lending and fixed income businesses. The yield curve is a reflection of interest rates, at various maturities, applicable to assets and liabilities. 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. A flat or inverted yield curve tends to decrease net interest margin, which adversely impacts our lending businesses, and it

tends to reduce demand for long-term debt securities, which adversely impacts the revenues of our fixed income business.

Expectations by the market regarding the direction of future interest rate movements can impact the demand for and value of our fixed income investments and can impact the revenues of our fixed income business. Demand for, and the value of, our fixed income investments is negatively impacted during times of rising interest rates. The last rising rate cycle started in 2022 and

continued through 2023. The improvement in the shape of the yield curve in the second half of 2024, which continued in 2025, subsequently resulted in an increase in fixed income values and revenues.

Events affecting interest rates, markets, and other factors may adversely affect the demand for our products and services in our fixed income business. As a result, disruptions in those areas may adversely impact our earnings in that business unit.

Asset Inventories & Market Risks

The trading securities inventories and loans held for sale in our fixed income business are subject to market and credit risks. In the course of that business we hold trading securities inventory and loan positions for purposes of distribution to clients, and we are exposed to certain market risks attributable principally to interest rate risk and credit risk associated with those assets. We manage the risks of holding inventories of securities and loans through certain market risk management policies and procedures, including, for example, hedging activities and Value-at-Risk (“VaR”) limits, trading policies, modeling, and stress analyses. Additional information concerning these risks and our management of them appears under the caption Market Risk Management beginning on page 68 of our 2025 MD&A (Item 7).

Declines, disruptions, or precipitous changes in markets or market prices can adversely affect our fees and other income sources. We earn fees and other income related to our brokerage business and our management of assets for clients. Declines, disruptions, or precipitous changes in markets or market prices can adversely affect those revenue sources.

Significant changes to the securities market’s performance can have a material impact upon our assets, liabilities, and financial results. We have a number of assets and obligations that are linked, directly or indirectly, to major securities markets. Significant changes in market performance can have a material impact upon our assets, liabilities, and financial results.

Our hedging activities may be ineffective, may not adequately hedge our risks, and are subject to credit risk. In the normal course of our businesses we attempt to create partial or full economic hedges of various, though not all, financial risks. Hedging creates certain risks for us, including the risk that the other party to the hedge transaction will fail to perform (counterparty risk), and the risk that the hedge will not fully protect us from loss as intended (hedge ineffectiveness risk). Unexpected counterparty failure or hedge ineffectiveness could have a significant adverse effect on our liquidity and earnings.

Mortgage Business Risks

Two of our mortgage-related businesses—mortgage origination and lending to mortgage companies—are highly sensitive to interest rates and rate cycles. When rates are higher, client activity (and our related income) tends to be muted. Lower rates tend to foster higher activity. The U.S. experienced extremely low interest rates for several years, ending in early 2022. Higher rates since 2022 have negatively impacted our income from these businesses.

We have contractual risks from our mortgage business. Our traditional mortgage business includes home mortgages some of which we sell, rather than hold, as well as home mortgages which qualify for a government-guarantee program. The mortgage terms conform to the requirements of the mortgage buyers or government agencies, and we make representations to those buyers or agencies concerning conformity of each mortgage at

origination. Although the buyers and agencies generally take the risk that a mortgage defaults, we retain the risk that our representations were materially incorrect. In such a case, the buyer or agency generally has the power to force us to take the loan back for its face value, or to make the buyer or agency whole for its loss.

Some government mortgage programs could impose penalties on us for misrepresentations at the time of obtaining benefits under the program. Penalties can be severe, up to three times the agency’s loss. As a result, mortgage origination processes need to emphasize being thorough and correct, in compliance with all agency standards.

The mortgage servicing business creates regulatory risks. Servicing requires continual interaction with consumer clients. Federal, state, and sometimes local laws regulate

when and how we interact with consumer clients. The requirements can be complex and difficult for us to administer, especially if a client experiences difficulty with

the mortgage loan. Failure to follow the applicable rules can result in significant penalties or other loss for us.

Accounting Risks

The preparation of our consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make significant subjective and complex estimates that affect the financial statements. The estimate that is consistently one of our most critical is the level of the allowance for credit losses. However, other estimates can be highly significant at discrete times or during periods of varying length, for example the valuation (or impairment) of our deferred tax assets. Estimates are made at specific points in time. Accordingly, as actual events unfold, estimates may be adjusted. If our estimates are inaccurate or need to be adjusted, our financial condition and results of operations could be materially impacted.

A significant merger or acquisition requires us to make many estimates, including the fair values of acquired assets and liabilities. With larger transactions, fair value and other estimations can take up to four quarters to finalize. These estimates, and their revisions, can have a substantial effect on the presentation of our financial condition and operating results after the transaction closes. In addition, the excess of the value “paid” by us in the merger or acquisition over the fair value of the assets acquired, net of liabilities assumed, is recorded as goodwill. Goodwill is subject to periodic impairment assessment, a process that can result in impairment expense which may be significant and sudden.

Changes in accounting rules can significantly affect how we record and report assets, liabilities, revenues,

expenses, and earnings. Although such changes generally affect all companies in a given industry, in practice changes sometimes have a disparate impact due to differences in the circumstances or business operations of companies within the same industry. Changes in accounting rules are beyond our control, can be hard to predict, and have had in the past, and could have in the future, a material impact how we report our results of operations and financial condition. We could be required to apply a new or revised standard retrospectively, which may result in us having to revise our prior period financial statements by material amounts.

Changes in regulatory rules can create significant accounting impacts for us. Because we operate in a regulated industry, we prepare regulatory financial reports based on regulatory accounting standards. Changes in those standards have had in the past, and could have in the future, significant impacts upon us in terms of regulatory compliance and financial reporting.

Our controls and procedures may fail or be circumvented. Internal controls, disclosure controls and procedures, and corporate governance policies and procedures (“controls and procedures”) must be effective in order to provide assurance that financial reports are materially accurate. A failure or circumvention of our controls and procedures or failure to comply with regulations related to controls and procedures could have a material adverse effect on our business, financial condition and results of operations.

Share Owning & Governance Risks

The principal source of cash flow to pay dividends on our stock, as well as service our debt, is dividends and distributions from the Bank, and the Bank may become unable to pay dividends to us. First Horizon Corporation primarily depends upon common dividends from the Bank for cash to fund dividends we pay to our common and preferred shareholders, and to service our outstanding debt. Whether the Bank is able to pay dividends depends on its ability to generate sufficient net income to meet certain regulatory requirements, and the amount of such dividends may then be limited by federal and state laws. In addition, in certain circumstances, regulatory constraints might limit or prevent the Bank from declaring and paying dividends to us without regulatory approval. Also, we are required to provide financial support to the Bank. Accordingly, at any given time a portion of our funds may need to be used for that purpose and therefore would be unavailable for dividends.

Our shareholders may suffer dilution if we raise capital through public or private equity financings to fund our operations, to increase our capital, or to expand. If we raise funds by issuing equity securities or instruments that are convertible into equity securities, the percentage ownership of our current common shareholders will be reduced, the new equity securities may have rights and preferences superior to those of our common or outstanding preferred stock, and any additional issuances could be at a sales price which is dilutive to current shareholders. We may also issue equity securities directly as consideration for acquisitions we may make that would be dilutive to shareholders in terms of voting power and share-of-ownership, and could be dilutive financially or economically. We have engaged in securities issuances in the past that have resulted in the effects described in this paragraph and could do so again in the future.

We must pay all preferred dividends ahead of any common dividends. Currently we have four series of preferred stock outstanding, one issued by the Bank and three by First Horizon Corporation. Under the terms of the preferred stock, no dividends can be declared or paid on shares of common stock, and no shares of common stock can be repurchased, redeemed or otherwise acquired by First Horizon or the Bank, unless the full dividends for the most recently completed dividend period for each series of preferred stock have been declared and paid in full or declared and a sum sufficient for payment of those dividends has been set aside. Subject to capital needs and market conditions, additional series of preferred stock may be issued in the future.

Provisions of Tennessee law, and certain provisions of our charter and bylaws, could make it more difficult for a third party to acquire control of us or could have the effect of discouraging a third party from attempting to acquire control of us. These provisions could make it more difficult for a third party to acquire us even if an acquisition might be at a price attractive to many of our shareholders. In addition, federal banking laws prohibit non-financial-industry companies from owning a bank and require regulatory approval of any change in control of a bank, and Tennessee banking laws require prior regulatory approval of the acquisition of control of a Tennessee bank (or a person controlling such a bank).

Certain legal rights of holders of our common stock and of depositary shares related to our preferred stock to pursue claims against us or the depositary, as applicable, are limited by our bylaws and by the terms of the deposit agreements. Our bylaws provide that, unless we consent in writing to an alternative forum, a state or federal court located within Shelby County in the State of Tennessee will be the sole and exclusive forum for (i) any derivative action or proceeding brought in our right or name, (ii) any

action asserting a claim of breach of a fiduciary duty owed by any director, officer or other associate of ours to us or our shareholders, (iii) any action asserting a claim against us or any director, officer or other associate of ours arising pursuant to any provision of the Tennessee Business Corporation Act or our charter or bylaws, or (iv) any action asserting a claim against us or any director, officer or other associate of ours that is governed by the internal affairs doctrine. In addition, each deposit agreement between us and the depositary, which governs the rights of the depositary shares related to our Series C preferred stock, provides that any action or proceeding arising out of or relating in any way to the deposit agreement may only be brought in a state court located in the State of New York or in the United States District Court for the Southern District of New York.

The foregoing exclusive forum clauses may have the effect of discouraging lawsuits against us or our directors, officers or other associates, or against the depositary, as applicable. Exclusive forum clauses may also lead to increased costs to bring a claim or may limit the ability of holders of our common stock or depositary shares to bring a claim in a judicial forum they find favorable.

In addition, the exclusive forum clauses in our bylaws and deposit agreements could apply to actions or proceedings that may arise under the federal securities laws, depending on the nature of the claim alleged. To the extent these exclusive forum clauses restrict the courts in which holders of our common stock or depositary shares may bring claims arising under the federal securities laws, there is uncertainty as to whether a court would enforce such provisions. These exclusive forum provisions do not mean that holders of our common stock or depositary shares have waived our obligations to comply with the federal securities laws and the rules and regulations thereunder.