First Horizon CorporationNYSE: FHN

Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

· Issued by First Horizon Corporation
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Management's Discussion and
Analysis of Financial Condition and Results of Operations
TABLE OF ITEM 2 TOPICS
Introduction
Executive Overview
Results of Operations
Analysis of Financial Condition
Capital
Risk Management
Market Uncertainties and Prospective Trends
Critical Accounting Policies and Estimates
Accounting Changes
Non-GAAP Information
1Q26 FORM 10-Q REPORT
PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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.
1Q26 FORM 10-Q REPORT
PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
(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.
1Q26 FORM 10-Q REPORT
PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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.
1Q26 FORM 10-Q REPORT
PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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 billion in average interest-bearing deposits, $478 million in federal funds purchased, and $213 million in other short-term borrowings. These increases were partially offset by a decrease of $308 million in average securities sold under agreements to repurchase.
Noninterest Income
The following table presents the significant components of noninterest income for the three months ended March 31, 2026 and 2025.
Table I.2.3
NONINTEREST INCOME
Three Months Ended
(Dollars in millions) March 31, 2026 March 31, 2025 $ Change % Change
Noninterest income:
Fixed income $ 53 $ 49 $ 4 8 %
Deposit transactions and cash management 43 40 3 8
Brokerage, management fees and commissions 29 26 3 12
Card and digital banking fees 18 18 - -
Other service charges and fees 16 12 4 33
Trust services and investment management 13 12 1 8
Mortgage banking income 9 8 1 13
Securities gains (losses), net (1) - (1) (100)
Other income 15 16 (1) (6)
Total noninterest income $ 195 $ 181 $ 14 8 %
Noninterest income for first quarter 2026 increased $14 million, or 8%, compared to first quarter 2025.
Fixed income of $53 million increased $4 million compared to first quarter 2025. Fixed income product revenue increased $9 million as average daily revenue of $742 thousand increased $157 thousand compared to the same quarter of 2025, reflecting more favorable market conditions. Revenue from other products decreased $5 million, largely attributable to decreases in revenues from loan sales.
Deposit transactions and cash management revenues increased $3 million, largely driven by higher cash management fees.
Brokerage, management fees and commissions increased $3 million, or 12%, largely reflecting improvements related to the outsourcing of FHN's retail brokerage and wealth management operations in third quarter 2025.
Other service charges and fees increased $4 million, largely driven by elevated income related to the equipment finance lease business.
1Q26 FORM 10-Q REPORT
PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
Noninterest Expense
The following table presents the significant components of noninterest expense for the three months ended March 31, 2026 and 2025.
Table I.2.4
NONINTEREST EXPENSE
Three Months Ended
(Dollars in millions) March 31, 2026 March 31, 2025 $ Change % Change
Noninterest expense:
Personnel expense $ 289 $ 279 $ 10 4 %
Computer software 38 32 6 19
Net occupancy expense 35 35 - -
Operations services 25 23 2 9
Legal and professional fees 16 14 2 14
Deposit insurance expense 13 13 - -
Equipment expense 11 10 1 10
Advertising and public relations 10 10 - -
Amortization of intangible assets 8 10 (2) (20)
Other expense 60 61 (1) (2)
Total noninterest expense $ 505 $ 487 $ 18 4 %
Noninterest expense of $505 million increased $18 million, or 4%, compared to first quarter 2025.
Personnel expense increased $10 million in first quarter 2026, largely reflecting a $10 million increase in salaries and benefits expense tied to higher associate headcount compared to first quarter 2025. Incentives and commissions expense declined $1 million as higher incentives expense was more than offset by lower equity based compensation.
Computer software expense increased $6 million, largely attributable to the timing of technology-related expenditures.
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 was $15 million for the first quarter 2026, compared to $40 million for first quarter 2025. Net charge-offs in first quarter 2026 were $28 million, or 18 basis points, compared to $29 million, or 19 basis points, in first quarter 2025.
The ACL to total loans and leases ratio decreased 3 basis points to 1.28% as of March 31, 2026 from 1.31% as of December 31, 2025, largely driven by improved grade migration and lower CRE and consumer loan balances. For additional information about the allowance for credit losses and general asset quality trends, refer to the Asset Quality section in this MD&A.
1Q26 FORM 10-Q REPORT
PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
Income Taxes
FHN recorded income tax expense of $76 million in first quarter 2026, compared to $63 million in first quarter 2025.
The effective tax rate was approximately 22.2% and 22.0% for the three months ended March 31, 2026 and March 31, 2025, 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 March 31, 2026, FHN's gross DTA after valuation allowance and gross DTL were $642 million and $567 million, respectively, resulting in a net DTA of $75 million at March 31, 2026, compared with a net DTA of $92 million at December 31, 2025.
As of March 31, 2026, FHN had DTA balances related to federal and state income tax carryforwards of $21 million and $3 million, respectively, which will expire at various dates.
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.
Business Segment Results
FHN's reportable segments include Commercial, Consumer & Wealth; Wholesale; and Corporate. See Note 12 - Business Segment Information to the Consolidated Financial Statements in Part I, Item 1 of this report for additional disclosures related to FHN's segments.
Commercial, Consumer & Wealth
Pre-tax income for first quarter 2026 increased $32 million to $393 million, compared to $361 million for first quarter 2025, driven by a $26 million increase in total revenue and a $30 million decrease in the provision for credit losses, partly offset by a $24 million increase in noninterest expense. Total revenue increased $26 million as net interest income increased $17 million and noninterest income increased $9 million compared to first quarter 2025. The increase in net interest income was largely driven by lower rates paid on interest-bearing deposits. The increase in noninterest income was largely driven by higher deposit transactions and cash management fees, brokerage, management fees and commissions, and other service charges and fees. Noninterest expense increased $24 million compared to first quarter 2025, largely due to increased advertising and public relations and technology expenses allocated to the segment in the current year, as well as higher personnel expense tied to increased incentive-based compensation and increased salary expense reflecting higher associate headcount.
Wholesale
Pre-tax income in the Wholesale segment increased $3 million compared to first quarter 2025. Revenue
increased $17 million, as net interest income increased $12 million and noninterest income increased $5 million compared to first quarter 2025. The increase in noninterest income was largely driven by a $4 million increase in fixed income, reflecting higher ADR tied to more favorable market conditions during first quarter 2026, partially offset by lower other product revenue. Provision for credit losses increased $6 million compared to first quarter 2025. Noninterest expense increased $8 million, largely driven by higher personnel expense tied to an increase in incentive-based compensation.
Corporate
Pre-tax loss for the Corporate segment was $85 million for first quarter 2026 compared to $107 million for first quarter 2025, largely reflecting a $7 million decrease in net interest expense, a $14 million decrease in noninterest expense, and a $1 million decrease in the provision for credit losses. The decrease in noninterest expense was largely attributable to increased advertising and public relations and technology expense allocations from Corporate to the Commercial, Consumer & Wealth segment, partially offset by higher computer software and operations services expense. Results for 2026 also reflect decreases of $5 million in Visa derivative valuation expense and $1 million in FDIC special assessment expense.
1Q26 FORM 10-Q REPORT
PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
Analysis of Financial Condition
Earning assets consist of loans and leases, loans held for sale, investment securities, and other earning assets, such as trading securities and interest-bearing deposits with banks. A detailed discussion of the major components of earning assets is provided in the following sections.
Loans and Leases
Period-end loans and leases of $64.4 billion as of March 31, 2026 increased $221 million compared to December 31, 2025. Commercial loans and leases increased $419 million, driven by growth in C&I loans, partially offset by a decrease in CRE loans. Consumer loans decreased $198 million, primarily from a decline in consumer real estate loans.
The following table provides details regarding FHN's loans and leases as of March 31, 2026 and December 31, 2025.
Table I.2.5
LOANS & LEASES
March 31, 2026 December 31, 2025
(Dollars in millions) Amount Percent of total Amount Percent of total Growth Rate
Commercial:
Commercial, financial, and industrial (a) $ 36,467 57 % $ 35,905 56 % 2 %
Commercial real estate 13,420 21 13,563 21 (1)
Total commercial 49,887 78 49,468 77 1
Consumer:
Consumer real estate 13,928 21 14,108 22 (1)
Credit card and other 562 1 580 1 (3)
Total consumer 14,490 22 14,688 23 (1)
Total loans and leases $ 64,377 100 % $ 64,156 100 % - %
(a)Includes equipment financing loans and leases.
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 5 - Mortgage Banking Activity to the Consolidated Financial Statements in Part I, Item 1 of this report.
On March 31, 2026 and December 31, 2025, loans HFS were $562 million and $406 million, respectively. Held-for-sale consumer mortgage loans secured by residential real
estate in process of foreclosure totaled $2 million and $1 million as of March 31, 2026 and December 31, 2025, respectively.
1Q26 FORM 10-Q REPORT
PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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 21% and 22% of total loans as of March 31, 2026 and December 31, 2025, respectively. Industry concentrations are discussed under the C&I heading below.
Credit underwriting guidelines are outlined in Item 7 of FHN's Annual Report on Form 10-K for the year ended December 31, 2025 in the Asset Quality section within the Analysis of Financial Condition discussion. FHN's credit underwriting guidelines and loan product offerings as of March 31, 2026 are generally consistent with those reported and disclosed in FHN's Form 10-K for the year ended December 31, 2025.
Commercial Loan and Lease Portfolios
C&I
C&I loans are the largest component of the loan and lease portfolio, comprising 57% and 56% of the total portfolio as of March 31, 2026 and December 31, 2025, 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.
Total C&I loans and leases increased $562 million to $36.5 billion as of March 31, 2026, compared to December 31, 2025. Loans to mortgage companies declined $62 million and other C&I loans grew $624 million.
The largest geographical concentrations of C&I balances as of March 31, 2026 were in Tennessee (19%), Florida (12%), Texas (10%), California (7%), North Carolina (6%), and Louisiana (6%), with no other state represented more than 5% of the portfolio. This mix was generally consistent with December 31, 2025.
The following table provides the composition of the C&I portfolio by industry as of March 31, 2026 and December 31, 2025. 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 I.2.6
C&I PORTFOLIO BY INDUSTRY
March 31, 2026 December 31, 2025
(Dollars in millions)
Amount Percent Amount Percent
Industry:
Loans to mortgage companies $ 4,641 13 % $ 4,703 13 %
Finance and insurance 4,100 11 4,117 12
Real estate and rental and leasing (a) 4,093 11 3,965 11
Wholesale trade 2,668 7 2,645 7
Health care and social assistance 2,529 7 2,564 7
Manufacturing 2,414 7 2,305 6
Accommodation and food service 2,385 7 2,322 7
Retail trade 1,857 5 1,802 5
Transportation and warehousing 1,772 5 1,740 5
Other (construction, professional, energy, etc.) (b) 10,008 27 9,742 27
Total C&I loan portfolio $ 36,467 100 % $ 35,905 100 %
(a)Leasing, rental of real estate, equipment, and goods.
(b)Industries in this category each comprise less than 5%.
1Q26 FORM 10-Q REPORT
PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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 24% and 25% of FHN's C&I loan portfolio as of March 31, 2026 and December 31, 2025, 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% of FHN's C&I portfolio as of both March 31, 2026 and December 31, 2025. As of March 31, 2026, 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% of the C&I portfolio as of both March 31, 2026 and December 31, 2025. This portfolio includes commercial lines of credit to qualified mortgage companies primarily for the temporary warehousing of eligible mortgage loans prior to the sale of those mortgage loans by FHN's borrower 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 March 31, 2026 and December 31, 2025. 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 first quarter 2026, approximately 58% of the loan originations were home purchases and 42% were refinance transactions.
Finance and Insurance
The finance and insurance component represented 11% and 12% of the C&I portfolio as of March 31, 2026 and
December 31, 2025, 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 March 31, 2026, asset-based lending to consumer finance companies represents approximately $1.5 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% of FHN's C&I portfolio as of both March 31, 2026 and December 31, 2025. 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 decreased to $13.4 billion as of March 31, 2026 compared to $13.6 billion as of December 31, 2025, largely attributable to paydowns as stabilized projects moved to permanent markets and non-pass loan resolutions reduced balances. 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.
The largest geographical concentrations of CRE balances as of March 31, 2026 were in Florida (26%), Texas (14%), North Carolina (12%), Tennessee (8%), Louisiana (8%), and Georgia (8%), with no other state representing more than 5% of the portfolio. The mix was generally consistent with December 31, 2025.
The following table represents subcategories of CRE loans by property type.
Table I.2.7
CRE PORTFOLIO BY PROPERTY TYPE
March 31, 2026 December 31, 2025
(Dollars in millions) Amount Percent Amount Percent
Property Type:
Multi-family $ 4,386 33 % $ 4,452 33 %
Office 2,632 20 2,694 20
Retail 2,404 18 2,354 17
Industrial 2,087 15 2,075 15
Hospitality 1,129 8 1,154 9
Other CRE (a) 782 6 834 6
Total CRE loan portfolio $ 13,420 100 % $ 13,563 100 %
(a) Property types in this category each comprise less than 5%.
1Q26 FORM 10-Q REPORT
PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
Consumer Loan Portfolios
Consumer Real Estate
The consumer real estate portfolio is primarily comprised of home equity lines and installment loans. This portfolio totaled $13.9 billion and $14.1 billion as of March 31, 2026 and December 31, 2025, respectively. The largest geographical concentrations of balances in the consumer real estate portfolio as of March 31, 2026 were in Florida (29%), Tennessee (22%), Texas (13%), Louisiana (8%), North Carolina (6%), and Georgia (6%), with no other state representing 5% or more of the portfolio. This mix was generally consistent with December 31, 2025.
As of March 31, 2026, approximately 88% 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 781 as of March 31, 2026, compared to FICO scores of 760 and 779, respectively, as of December 31, 2025. Generally, performance of this portfolio is affected by life events that affect borrowers' finances, the level of unemployment, and home prices.
As of March 31, 2026 and December 31, 2025, FHN had held-to-maturity consumer mortgage loans secured by real estate totaling $26 million and $27 million, respectively, that were in the process of foreclosure.
HELOCs comprised $2.2 billion of the consumer real estate portfolio as of both March 31, 2026 and December 31, 2025. 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 March 31, 2026 and December 31, 2025, approximately 95% of FHN's HELOCs were in the draw period. It is expected that $607 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.
Table I.2.8
HELOC DRAW TO REPAYMENT SCHEDULE
March 31, 2026 December 31, 2025
(Dollars in millions) Repayment
Amount		 Percent Repayment
Amount		 Percent
Months remaining in draw period:
0-12 $ 80 4 % $ 80 4 %
13-24 120 6 117 6
25-36 120 6 126 6
37-48 137 7 130 6
49-60 150 7 159 8
>60 1,450 70 1,449 70
Total $ 2,057 100 % $ 2,061 100 %
Credit Card and Other
The credit card and other consumer loan portfolio totaled $562 million and $580 million as of March 31, 2026 and December 31, 2025, respectively. This portfolio primarily consists of consumer-related credits, including home equity and other personal consumer loans, credit card receivables, and automobile loans. The $18 million decrease was driven by net repayments.
1Q26 FORM 10-Q REPORT
PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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 Note 4 to the Consolidated Financial Statements in Part I, Item 1 of this Report and "Critical Accounting Policies and Estimates" and Note 4 to the Consolidated Financial Statements in Part II, Item 8 of FHN's 2025 Form 10-K.
The ALLL totaled $730 million, or 1.13% of total loans and leases, as of March 31, 2026, compared to $738 million, or 1.15% of total loans and leases, as of December 31, 2025. The ACL to total loans and leases ratio decreased to 1.28% as of March 31, 2026 from 1.31% as of December 31, 2025, largely driven by improved grade migration and lower CRE and consumer loan balances.
Consolidated Net Charge-offs
Net charge-offs in first quarter 2026 were $28 million, or an annualized 18 basis points of total loans and leases,
compared to net charge-offs of $29 million, or 19 basis points, in first quarter 2025.
Table I.2.9
ANALYSIS OF ALLOWANCE FOR CREDIT LOSSES AND CHARGE-OFFS
(Dollars in millions) March 31, 2026 December 31, 2025 March 31, 2025
Allowance for loan and lease losses
C&I $ 353 $ 335 $ 345
CRE 156 177 225
Consumer real estate 201 206 230
Credit card and other 20 20 22
Total allowance for loan and lease losses $ 730 $ 738 $ 822
Reserve for remaining unfunded commitments
C&I $ 80 $ 81 $ 63
CRE 7 11 9
Consumer real estate 9 9 11
Total reserve for remaining unfunded commitments $ 96 $ 101 $ 83
Allowance for credit losses
C&I $ 433 $ 416 $ 408
CRE 163 188 234
Consumer real estate 210 215 241
Credit card and other 20 20 22
Total allowance for credit losses $ 826 $ 839 $ 905
Period-end loan and leases
C&I $ 36,467 $ 35,905 $ 33,354
CRE 13,420 13,563 14,139
Consumer real estate 13,928 14,108 14,089
Credit card and other 562 580 633
Total period-end loans and leases $ 64,377 $ 64,156 $ 62,215
ALLL / loans and leases %
C&I 0.97 % 0.93 % 1.04 %
CRE 1.16 1.30 1.59
Consumer real estate 1.44 1.46 1.63
Credit card and other 3.49 3.40 3.41
Total ALLL / loans and leases % 1.13 % 1.15 % 1.32 %
ACL / loans and leases %
C&I 1.19 % 1.16 % 1.22 %
1Q26 FORM 10-Q REPORT
PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
CRE 1.21 1.38 1.66
Consumer real estate 1.50 1.53 1.71
Credit card and other 3.49 3.40 3.41
Total ACL / loans and leases % 1.28 % 1.31 % 1.45 %
Quarter-to-date net charge-offs (recoveries)
C&I $ 22 $ 26 $ 28
CRE 4 2 (1)
Consumer real estate (1) (1) (1)
Credit card and other 3 3 3
Total net charge-offs (recoveries) $ 28 $ 30 $ 29
Average loans and leases
C&I $ 35,208 $ 35,004 $ 32,633
CRE 13,417 13,587 14,318
Consumer real estate 13,998 14,255 14,045
Credit card and other 569 586 649
Total average loans and leases $ 63,192 $ 63,432 $ 61,645
Charge-off % (annualized)
C&I 0.26 % 0.30 % 0.35 %
CRE 0.10 0.04 (0.02)
Consumer real estate (0.01) (0.02) (0.02)
Credit card and other 2.10 2.31 1.60
Total charge-off % 0.18 % 0.19 % 0.19 %
ALLL / annualized net charge-offs
C&I 383 % 323 % 303 %
CRE 1,110 2,953 NM
Consumer real estate NM NM NM
Credit card and other 165 146 208
Total ALLL / net charge-offs 627 % 612 % 695 %
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 remained steady at $617 million as of both March 31, 2026 and December 31, 2025. Nonperforming
loans and leases increased $2 million, largely driven by an increase in nonaccrual CRE and consumer real estate loans, partially offset by a decline in nonaccrual C&I loans. The increase in nonaccrual CRE loans was largely driven by an increase in loans with a hospitality property type, partially offset by declines in loans with office, industrial, and multifamily property types. These portfolios continue to maintain strong underwriting and client selection. The vast majority of NPLs have individual impairment reviews with no specific reserve required. The nonperforming loans and leases ratio remained steady at 0.94% as of both March 31, 2026 and December 31, 2025.
1Q26 FORM 10-Q REPORT
PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
Table I.2.10
NONPERFORMING ASSETS
(Dollars in millions)
Nonperforming loans and leases March 31, 2026 December 31, 2025
C&I $ 218 $ 224
CRE 243 239
Consumer real estate 144 140
Credit card and other 1 1
Total nonperforming loans and leases (a) $ 606 $ 604
Nonperforming loans held for sale (a) $ 9 $ 10
Foreclosed real estate and other assets 2 3
Total nonperforming assets (a) $ 617 $ 617
Nonperforming loans and leases to total loans and leases (b)
C&I 0.60 % 0.62 %
CRE 1.81 1.76
Consumer real estate 1.03 0.99
Credit card and other 0.19 0.16
Total NPL % 0.94 % 0.94 %
ALLL / NPLs (b)
C&I 162 % 150 %
CRE 64 74
Consumer real estate 140 147
Credit card and other 1,842 2,096
Total ALLL / NPLs 120 % 122 %
(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.
1Q26 FORM 10-Q REPORT
PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
The following table presents nonperforming assets by business segment.
Table I.2.11
NONPERFORMING ASSETS BY SEGMENT
(Dollars in millions)
Nonperforming loans and leases (a) (b) March 31, 2026 December 31, 2025
Commercial, Consumer & Wealth $ 581 $ 587
Wholesale 17 8
Corporate 8 9
Consolidated $ 606 $ 604
Foreclosed real estate
Commercial, Consumer & Wealth $ - $ -
Wholesale 1 2
Corporate 1 1
Consolidated $ 2 $ 3
Nonperforming Assets (a) (b)
Commercial, Consumer & Wealth $ 581 $ 587
Wholesale 18 10
Corporate 9 10
Consolidated $ 608 $ 607
Nonperforming loans and leases to loans and leases (b)
Commercial, Consumer & Wealth 1.02 % 1.04 %
Wholesale 0.24 0.11
Corporate 2.63 1.84
Consolidated 0.94 % 0.94 %
NPA % (b) (c)
Commercial, Consumer & Wealth 1.02 % 1.04 %
Wholesale 0.25 0.14
Corporate 2.83 1.98
Consolidated 0.94 % 0.95 %
(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.
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 $3 million as of March 31, 2026, compared to $8 million as of December 31, 2025. Loans 30 to 89 days past due and still
accruing increased to $92 million as of March 31, 2026, compared to $83 million as of December 31, 2025, driven by increases in past due CRE loans and consumer real estate loans, partially offset by a decrease in past due C&I loans.
1Q26 FORM 10-Q REPORT
PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
Table I.2.12
ACCRUING DELINQUENCIES & OTHER CREDIT DISCLOSURES
(Dollars in millions)
Accruing loans and leases 30+ days past due (a) March 31, 2026 December 31, 2025
C&I $ 31 $ 35
CRE 10 3
Consumer real estate 48 47
Credit card and other 6 6
Total accruing loans and leases 30+ days past due $ 95 $ 91
Accruing loans and leases 30+ days past due % (a)
C&I 0.08 % 0.10 %
CRE 0.07 0.02
Consumer real estate 0.35 0.33
Credit card and other 1.05 1.05
Total accruing loans and leases 30+ days past due % 0.15 % 0.14 %
Accruing loans and leases 90+ days past due (a) (b) (c)
C&I $ 1 $ 1
Consumer real estate 1 6
Credit card and other 1 1
Total accruing loans and leases 90+ days past due $ 3 $ 8
Loans held for sale
30 to 89 days past due (b) $ 4 $ 3
30 to 89 days past due - guaranteed portion (b) (d) 2 -
90+ days past due (b) 2 -
90+ days past due - guaranteed portion (b) (d) 2 -
(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 Federal banking regulators for loans classified as substandard. Potential problem assets in the loan portfolio totaled $1.8 billion as of March 31, 2026 compared to $1.7 billion as of December 31, 2025. 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.
1Q26 FORM 10-Q REPORT
PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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 - Basis of Presentation and Accounting Policies, Note 3 - Loans and Leases, and Note 4 - Allowance for Credit Losses to the Consolidated Financial Statements in Part I, Item 1 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.
Investment Securities
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 as of both March 31, 2026 and December 31, 2025, representing 11% of total assets for both periods. See Note 2 - Investment Securities to the Consolidated Financial Statements in Part I, Item 1 of this Report for more information about the securities portfolio.
1Q26 FORM 10-Q REPORT
PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
Deposits
Total deposits were $66.5 billion as of March 31, 2026 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 decrease in interest-bearing deposits was primarily driven by fluctuations in brokered deposit balances.
FHN continues to maintain a well-diversified and stable funding mix across its footprint and specialty lines of business. At March 31, 2026, commercial deposits were $38.9 billion, or 59% of total deposits, and consumer deposits were $27.6 billion, or 41% of total deposits. 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 March 31, 2026, 35% of deposits were associated with Tennessee, 17% with Florida, 12% with Louisiana, and 11%
with North Carolina, with no other state above 10%. This mix remained consistent with December 31, 2025.
Total estimated uninsured deposits were $28.0 billion as of March 31, 2026 and $28.1 billion as of December 31, 2025, representing 42% of total deposits as of each period end. Of the uninsured deposits as of March 31, 2026, $5.1 billion, or 8% of total deposits, were collateralized. As of December 31, 2025, collateralized deposits were $5.2 billion, or 8% of total deposits.
See Table I.2.2 - Average Balances, Net Interest Income and Yields/Rates in this report for information on average deposits, including average rates paid.
The following table summarizes the major components of deposits as of March 31, 2026 and December 31, 2025.
Table I.2.13
DEPOSITS
March 31, 2026 December 31, 2025
(Dollars in millions) Amount Percent of total Amount Percent of total Change Percent
Savings $ 26,007 39 % $ 26,010 39 % $ (3) - %
Time deposits 7,125 11 6,485 10 640 10
Other interest-bearing deposits 17,440 26 19,158 28 (1,718) (9)
Total interest-bearing deposits 50,572 76 51,653 77 (1,081) (2)
Noninterest-bearing deposits 15,910 24 15,823 23 87 1
Total deposits $ 66,482 100 % $ 67,476 100 % $ (994) (1) %
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 increased to $4.8 billion as of March 31, 2026 compared to $3.9 billion as of December 31, 2025. FHLB borrowings increased $1.7 billion and trading liabilities increased $59 million, while federal funds purchased and securities sold under agreements to repurchase decreased $819 million.
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.
Term Borrowings
Term borrowings include senior and subordinated borrowings with original maturities greater than one year. Total term borrowings were $1.3 billion as of both March 31, 2026 and December 31, 2025.
1Q26 FORM 10-Q REPORT
PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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 was $9.5 billion and $9.1 billion at March 31, 2026 and December 31, 2025, respectively. Significant changes included net income of $266 million and $392 million from the Series H preferred stock issuance, offset
by $235 million in common stock repurchases, $88 million in common and preferred dividends, and a decrease of $22 million in AOCI.
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.
Table I.2.14
REGULATORY CAPITAL DATA
(Dollars in millions) March 31, 2026 December 31, 2025
FHN shareholders' equity $ 9,170 $ 8,847
FHN non-cumulative perpetual preferred stock (741) (349)
Common equity tier 1 before regulatory adjustments $ 8,429 $ 8,498
Regulatory adjustments:
Disallowed goodwill and other intangibles $ (1,539) $ (1,548)
Net unrealized (gains) losses on securities available for sale 526 512
Net unrealized (gains) losses on pension and other postretirement plans 254 256
Net unrealized (gains) losses on cash flow hedges 52 42
Common equity tier 1 $ 7,722 $ 7,760
FHN non-cumulative perpetual preferred stock 741 349
Qualifying noncontrolling interest- First Horizon Bank preferred stock 295 295
Tier 1 capital $ 8,758 $ 8,404
Tier 2 capital 1,316 1,344
Total regulatory capital $ 10,074 $ 9,748
Risk-Weighted Assets
First Horizon Corporation $ 73,345 $ 73,036
First Horizon Bank 72,605 72,283
Average Assets for Leverage
First Horizon Corporation $ 82,395 $ 82,492
First Horizon Bank 81,543 81,560
Table I.2.15
REGULATORY RATIOS & AMOUNTS
March 31, 2026 December 31, 2025
(Dollars in millions)
Ratio Amount Ratio Amount
Common Equity Tier 1
First Horizon Corporation 10.53 % $ 7,722 10.63 % $ 7,760
First Horizon Bank 11.30 8,203 10.98 7,934
Tier 1
First Horizon Corporation 11.94 8,758 11.51 8,404
First Horizon Bank 11.70 8,498 11.38 8,229
Total
First Horizon Corporation 13.74 10,074 13.35 9,748
First Horizon Bank 13.31 9,667 13.04 9,425
Tier 1 Leverage
First Horizon Corporation 10.63 8,758 10.19 8,404
First Horizon Bank 10.42 8,498 10.09 8,229
Other Capital Ratios
Total period-end equity to period-end assets 11.25 10.90
Tangible common equity to tangible assets (a) 8.27 8.37
(a)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 I.2.25.
1Q26 FORM 10-Q REPORT
PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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 March 31, 2026, both FHN and First Horizon Bank had sufficient capital to qualify as well-capitalized institutions and to meet the capital conservation buffer requirement.
For FHN, the Tier 1, Total and Tier 1 Leverage ratios increased at the end of first quarter 2026 relative to year-end 2025 primarily from the impact of the Series H Preferred Stock issuance and net income less dividends, partially offset by common share repurchases. FHN's CET 1 ratio decreased largely from an increase in risk-weighted assets. For First Horizon Bank, the risk-based regulatory capital and Tier 1 Leverage ratios increased from year-end 2025 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.
Common Stock Purchase Program
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 program described below. FHN's Board has not authorized a preferred stock purchase program.
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. The October 2025 program is scheduled to expire on January 31, 2027. Purchases under this 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 March 31, 2026, $435 million in purchases had been made life-to-date under the October 2025 program at an average price per share of $23.18, or $23.16 excluding commissions. Program purchases made during the quarter ended March 31, 2026 are summarized in the following table.
Table I.2.16
COMMON STOCK PURCHASES-OCTOBER 2025 PROGRAM
(Dollar values and volume in thousands, except per share data) Total number
of shares
purchased		 Average price
paid per share (a)		 Total number of
shares purchased
as part of publicly
announced programs		 Maximum approximate dollar value that may yet be purchased under the programs
2026
January 1 to January 31 1,840 $ 24.35 1,840 $ 952,425
February 1 to February 28 5,585 25.10 5,585 812,266
March 1 to March 31 2,050 23.20 2,050 764,702
Total 9,475 $ 24.54 9,475
(a)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 March 31, 2026 are summarized in the following table.
1Q26 FORM 10-Q REPORT
PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
Table I.2.17
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
2026
January 1 to January 31 11 $ 24.06 N/A N/A
February 1 to February 28 1 25.84 N/A N/A
March 1 to March 31 91 24.16 N/A N/A
Total 103 $ 24.17
1Q26 FORM 10-Q REPORT
PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
Risk Management
There have been no significant changes to FHN's risk management practices as described under "Risk Management" included in Item 7 of FHN's 2025 Annual Report on Form 10-K.
Market Risk Management
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 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.
Table I.2.18
VaR & SVaR MEASURES
Three Months Ended
March 31, 2026		 As of
March 31, 2026
(Dollars in millions) Mean High Low
1-day
VaR $ 2 $ 3 $ 2 $ 2
SVaR 8 9 6 6
10-day
VaR 7 8 6 6
SVaR 41 50 36 36
Three Months Ended
March 31, 2025		 As of
March 31, 2025
(Dollars in millions) Mean High Low
1-day
VaR $ 2 $ 2 $ 1 $ 2
SVaR 7 8 6 7
10-day
VaR 4 4 3 3
SVaR 35 42 28 34
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
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PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
FHN's overall VaR measure includes both interest rate risk and credit spread risk. Separate measures of these component risks are as follows.
Table I.2.19
SCHEDULE OF RISKS INCLUDED IN VaR
As of
March 31, 2026		 As of
March 31, 2025		 As of
December 31, 2025
(Dollars in millions) 1-day 10-day 1-day 10-day 1-day 10-day
Interest rate risk $ 1 $ 2 $ - $ 1 $ 1 $ 2
Credit spread risk 1 1 1 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-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 three months ended March 31, 2026 and year ended December 31, 2025, 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.
1Q26 FORM 10-Q REPORT
PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
Interest Rate Risk Management
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 March 31, 2026, 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 Table I.2.20.
Table I.2.20
INTEREST RATE SENSITIVITY
Shifts in Interest Rates
(in bps)		 % Change in Projected
Net Interest Income
-200 (5.2)%
-100 (2.6)%
-50 (1.2)%
-25 (0.6)%
+25 0.5%
+50 1.0%
+100 1.9%
+200 3.3%
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 0.4%. These hypothetical scenarios are used to create a risk measurement framework and do not necessarily represent management's current view of future interest rates or market developments.
Use of Derivatives to Manage Interest Rate Risk
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 I.2.21
INTEREST RATE DERIVATIVES DESIGNATED AS CASH FLOW HEDGES
March 31, 2026
(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 $ (38) 2.3 2.78 %
Floors 3,000 5 2.2 1.88 %
Total $ 5,000 $ (33)
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)
1Q26 FORM 10-Q REPORT
PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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 March 31, 2026, 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 at March 31, 2026.
Table I.2.22
AVAILABLE LIQUIDITY
as of March 31, 2026
(Dollars in millions) Total
Capacity		 Outstanding Borrowings Available Liquidity
Cash on deposit with FRB (a) $ 1,017 $ - $ 1,017
FHLB 9,163 1,750 7,413
Discount Window 21,750 - 21,750
Unencumbered securities (b) 1,006 - 1,006
Total available liquidity
$ 31,186
(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 97% as of March 31, 2026 and 95% as of December 31, 2025.
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. As of March 31, 2026, FHN had outstanding $946 million in senior and subordinated unsecured debt. On March 12, 2026, FHN issued $400 million of Series H Non-Cumulative Perpetual Preferred Stock. As a result, FHN had $741 million in non-cumulative perpetual preferred stock outstanding as of March 31, 2026. Refer to Note 7 - Preferred Stock for additional information. On April 1, 2026, FHN provided notice of its intent to redeem all outstanding shares of its Series C Non-Cumulative Perpetual Preferred Stock, effective May 1, 2026. Following the redemption on May 1, 2026, no shares of Series C Preferred Stock remain outstanding. Refer to Note 17 - Subsequent Events for additional information. As of March 31, 2026, 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. Applying the dividend restrictions imposed under applicable federal and state rules, the Bank's total amount available for dividends was $327 million as of April 1, 2026.
First Horizon Bank declared and paid common dividends to the parent company in the amount of $50 million and $270 million in first quarter and second quarter 2026, respectively. Total common dividends of $1.0 billion were declared and paid to the parent company in 2025. First Horizon Bank declared and paid preferred dividends in first quarter 2026 and in each quarter of 2025. Additionally, First Horizon Bank declared preferred dividends in second quarter 2026, payable in July 2026.
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PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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 $0.17 per common share on April 1, 2026. FHN paid cash dividends of $1,625 per Series E preferred share and $1,175 per Series F preferred share on April 10, 2026 and $165 per Series C preferred share on May 1, 2026. In addition, in April 2026, the Board approved cash dividends per share in the following amounts:
Table I.2.23
CASH DIVIDENDS
APPROVED BUT NOT PAID
Dividend/Share Record Date Payment Date
Common Stock $ 0.17 06/12/2026 07/01/2026
Preferred Stock
Series E $ 1,625.00 06/25/2026 07/10/2026
Series F $ 1,175.00 06/25/2026 07/10/2026
Series H $ 2,212.50 06/25/2026 07/10/2026
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. Based on its available liquidity and available borrowing capacity, FHN anticipates it will continue to have sufficient funds to meet its current commitments.
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 the success or failure of FHN's strategic initiatives.
In addition to trends and events noted elsewhere in this MD&A, FHN believes the following trends and events are noteworthy at this time.
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% -
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3.75%, but in March 2026 the Federal Reserve decided to hold the target range steady. In its statement announcing its March decision to maintain the target range, the Federal Reserve noted that economic activity had been expanding at a solid pace and the unemployment rate had been little changed in recent months, but inflation remained somewhat elevated.
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, 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 continue to have a material impact on our mortgage lending and lending to mortgage companies.
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.
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 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 began to 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. Subsequently, in February 2026, the U.S. Supreme Court ruled that the International Economic Powers Act ("IEEPA"), which the U.S. administration relied on to impose certain tariffs, does not authorize the administration to impose tariffs. In March 2026, the U.S. Court of International Trade ordered the U.S. Customs and Border Protection ("CBP") to process refunds of the IEEPA tariffs, although this order has been suspended while the CBP determines a refund process. In response to the U.S. Supreme Court ruling mentioned above, the U.S. administration announced plans to implement new tariffs under alternative statutory authority. As of early May 2026, the full impact of the U.S. Supreme Court's ruling and the administration's response; the timing, scope and duration of tariffs; and the timing, scope and duration of any retaliatory measures by foreign governments remains uncertain, as does the impact of tariffs on economic growth, inflation rates, and
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employment rates. Any significant change in economic conditions related to tariffs could materially affect our financial condition and results of operations.
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 continued in 2025 and first quarter 2026 and could continue throughout the remainder of 2026.
Other Regulatory Proposals
In 2023, the Board of Governors of the Federal Reserve and other U.S. banking regulators issued a proposal to implement the final components of the Basel III framework ("Basel III Endgame"), which, if implemented, would have created some new requirements to banks, like FHN, with assets over $50 billion, but also created significantly increased regulatory constraints and compliance costs on all U.S. banks with assets over $100 billion.
In March 2026, the U.S. banking agencies rescinded the 2023 proposal and issued a revised proposal to implement the Basel III Endgame, which would revise certain capital requirements, including risk-weighted asset calculations and the treatment of specific exposures. The 2026 proposal remains subject to a notice-and-comment period and is not yet finalized. FHN is currently evaluating the potential impact of these proposed changes on its regulatory capital ratios and overall capital management strategy.
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).
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
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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.
1Q26 FORM 10-Q REPORT
PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
Critical Accounting Policies and Estimates
FHN has made no significant changes in its critical accounting policies and estimates from those disclosed in its 2025 Annual Report on Form 10-K.
Accounting Changes
Refer to Note 1 - Basis of Presentation and Accounting Policies in the Consolidated Financial Statements in Part I, Item 1 of this report for details of accounting changes adopted in the current year, which section is incorporated into MD&A by this reference.
Accounting and Reporting Developments
The following table describes updates to accounting standards that have been issued by the FASB but that are not yet effective.
Table I.2.24
ACCOUNTING STANDARDS ISSUED BUT NOT YET EFFECTIVE
Standard Summary of Guidance Effects on Financial Statements
ASU 2024-03
Disaggregation of Income Statement Expenses
Issued November 2024
•Requires tabular disclosure, on an annual and interim basis, of additional disaggregated information about prescribed expense categories if they are present in any expense caption on the face of the income statement within continuing operations. The prescribed categories applicable to FHN are employee compensation, depreciation, and intangible asset amortization. Other required expense disclosures must be included in the tabular disclosure when they are included in the same income statement caption as a prescribed expense category.
•Requires disclosure of the total amount of selling expenses and, annually, an entity's definition of selling expenses.
•Effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027.
•Early adoption and retrospective application are permitted.
•Required to be applied prospectively.
•FHN is currently assessing the effects of adopting ASU 2024-03 on its financial statement disclosures.
ASU 2025-06
Targeted Improvements to the Accounting for Internal-Use Software
Issued September 2025
•Simplifies the capitalization guidance by removing all references to software development project stages.
•Requires entities to begin capitalizing incurred software costs after management authorizes and commits to funding the software project, and it is probable that the project will be completed and the software will be used for its intended purpose.
•Effective for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years.
•Early adoption is permitted.
•The amendments in this update permit an entity to apply the new guidance using a prospective, retrospective or modified transition approach.
•FHN is currently assessing the effects of adopting ASU 2025-06 on its Consolidated Financial Statements and related disclosures.
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ASU 2025-10
Accounting for Government Grants Received by Business Entities
Issued December 2025
•Provides guidance on how business entities should recognize, measure, and present government grants received.
•Effective for fiscal years beginning after December 15, 2028, including interim periods within those fiscal years.
•Early adoption is permitted.
•May be applied using a modified prospective, modified retrospective, or retrospective approach.
•FHN is currently assessing the effects of adopting ASU 2025-10 on its consolidated financial statements and related disclosures.
ASU 2025-11
Narrow-Scope Improvements
Issued December 2025
•Provides clarifications intended to improve the consistency and usability of interim disclosure requirements.
•Includes a comprehensive listing of required interim disclosures and a new disclosure principle for reporting material events occurring after the most recent annual period.
•Effective for interim periods within annual reporting periods beginning after December 15, 2027.
•Early adoption is permitted.
•May be applied using a prospective or retrospective approach.
•FHN is currently assessing the effects of adopting ASU 2025-11 on its financial statement disclosures.
SEC Final Rule
In March 2024, the SEC adopted final rules, "The Enhancement and Standardization of Climate-Related Disclosures for Investors" (the "Climate Disclosures Rules") to require registrants to disclose certain climate-related information in registration statements and annual reports. Information required for inclusion within the footnotes to the financial statements for severe weather events and other natural conditions includes 1) income statement effects before insurance recoveries above 1% of pre-tax income/loss, 2) balance sheet effects above 1% of shareholders' equity, and 3) certain carbon offsets and renewable energy credits. Qualitative discussion is also required for material impacts on financial estimates and assumptions that are due to severe weather events and other natural conditions or disclosed climate-related targets or transition plans.
In April 2024, the SEC issued a stay of the Climate Disclosures Rules pending the completion of judicial review of various legal challenges. On March 27, 2025, the SEC voted to end the legal defense of the Climate Disclosures Rules, and in a July 23, 2025 court filing, the SEC stated it did not intend to review or reconsider its Climate Disclosures Rules prior to the court ruling on the pending petitions challenging those rules. 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 Climate Disclosures Rules through formal notice-and-comment rulemaking or renews its defense of
the rules. As a result of the SEC's and the Court's actions, the actual timing of any implementation of the Climate Disclosures Rules, and the form of the rules if implemented, remains uncertain. FHN is assessing the potential effects of the Climate Disclosures Rules on its financial statements.
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Non-GAAP Information
Table I.2.25
NON-GAAP TO GAAP RECONCILIATION
Three Months Ended
(Dollars in millions; shares in thousands) March 31, 2026 March 31, 2025
Pre-provision Net Revenue (Non-GAAP)
Net interest income (GAAP) $ 667 $ 631
Plus: Noninterest income (GAAP) 195 181
Total revenues (GAAP) 862 812
Less: Noninterest expense (GAAP) 505 487
Pre-provision net revenue (Non-GAAP) $ 357 $ 325
Tangible Common Equity (Non-GAAP)
(A) Total equity (GAAP) $ 9,465 $ 9,044
Less: Noncontrolling interest (a) 295 295
Less: Preferred stock (a) 741 426
(B) Total common equity 8,429 8,323
Less: Goodwill and other intangible assets (GAAP)(b) 1,607 1,643
(C) Tangible common equity (Non-GAAP) $ 6,822 $ 6,680
Tangible Assets (Non-GAAP)
(D) Total assets (GAAP) $ 84,132 $ 81,491
Less: Goodwill and other intangible assets (GAAP) (b) 1,607 1,643
(E) Tangible assets (Non-GAAP) $ 82,525 $ 79,848
Average Tangible Common Equity (Non-GAAP)
Average total equity (GAAP) $ 9,245 $ 9,111
Less: Average noncontrolling interest (a) 295 295
Less: Average preferred stock (a) 436 426
(F) Total average common equity 8,514 8,390
Less: Average goodwill and other intangible assets (GAAP) (b) 1,611 1,648
(G) Average tangible common equity (Non-GAAP) $ 6,903 $ 6,742
Net Income Available to Common Shareholders
(H) Net income available to common shareholders (annualized) (GAAP) $ 1,044 $ 864
Period-end Shares Outstanding
(I) Period-end shares outstanding 475,722 507,315
Ratios
(A)/(D) Total period-end equity to period-end assets (GAAP) 11.25 % 11.10 %
(C)/(E) Tangible common equity to tangible assets (Non-GAAP) 8.27 8.37
(H)/(F) Return on average common equity (GAAP) 12.26 10.30
(H)/(G) Return on average tangible common equity (Non-GAAP) 15.12 12.81
(B)/(I) Book value per common share (GAAP) $ 17.72 $ 16.40
(C)/(I) Tangible book value per common share (Non-GAAP) $ 14.34 $ 13.17
(a) Included in total equity on the Consolidated Balance Sheets.
(b) Includes goodwill and other intangible assets, net of amortization.
1Q26 FORM 10-Q REPORT
PART I, ITEM 3. DISCLOSURES ABOUT MARKET RISK AND ITEM 4. CONTROLS & PROCEDURES