FHN 10-K & 10-Q changes, risk factors and insider trading

This Item highlights risks that could impact us in material ways by causing future results to differ materially from past results, by causing future results to differ materially from current expectations, or by causing material changes in our financial condition.ways. In this Item we have outlined risks that we believe are important to us at the present time. However, other risks may prove to be important in the future, and new risks may emerge at any time. We cannot predict all potential developments that could materially affect our financial performance or condition. Before making an investment decision, you should carefully consider the risks and uncertainties together with all of the other information included or incorporated by reference in this report.

We are subject to intense competition for clients, and the nature of that competition is changing quickly. Our primary areas of competition include: consumer and commercial deposits, commercial loans, consumer loans including home mortgages and lines of credit, financial planning and wealth management, fixed income products and services, and other consumer and commercial financial products and services.changing. Our competitors in these areas include national, state, and non-US banks, savings and loan associations, credit unions, consumer finance companies, trust companies, investment counseling firms, money market and other mutual funds, insurance companies and agencies, securities firms, mortgage banking companies, hedge funds, and other financial services companies that serve in our markets. The emergence of non-traditional, disruptive service providers (see Industry Disruption within this Item 1A beginning on page 3322) has intensified the competitive environment.

Some competitors are traditional banks, subject to the same regulatory framework as we are, while others are not banks and in many cases experience a significantly different or reduced degree of regulation. Examples of less-regulated activities include private credit from non-bank lenders, check-cashing services, independent ATM services, and “peer-to-peer” lending, where investors provide debt financing or other capital directly to borrowers.

FailureWe may be unable to achievesuccessfully one or more key elements needed for successful organic growth would adversely affectimplement our businessstrategies andto earnings.organically grow our businesses. We believe that the successful execution of organic growth depends upon a number of key elements, including:

•our ability to attractattracting and retainretaining clients in our commercial and consumer banking market areas and in our specialty banking markets;

•our ability to achieveachieving and maintainmaintaining growth in our earnings while pursuing new business opportunities;

•our ability to maintainmaintaining a high level of client service while optimizing our physical banking center count due to changing client demand, all while expanding our remote banking services and expanding or enhancing our information processing, technology, compliance, and other operational infrastructures effectively and efficiently;

•our ability to managemanaging the liquidity and capital requirements associated with growth, especially organic growth and cash-funded acquisitions; and

•our ability to managemanaging effectively and efficiently the changes and adaptations necessitated by a complex, burdensome,complex and evolving regulatory environment.

OtherNew technologies proliferating in the financial services industry are subject to risks and uncertainties that could impair their effectiveness or have a negative impact on our business. New technologies, services, and systems based wholly or in part on artificial intelligence and machine learning are proliferating within our industryindustry, including at our Company as we are seeking to accelerate both our data capabilities and amongour manyresponsible use of ourartificial commercialintelligence clients,to resultingdeliver inexcellent anclient environmentand whichassociate is changing rapidly.outcomes. These technologies are subject to risks that algorithms and datasets may be flawed or insufficient or contain biased or incorrect information, risks that are exacerbated because models and processes related to artificial intelligence and machine learning are not always transparent. Our challenge is to maintain critical stability and security while also being nimble enough to adapt quickly to changing circumstances and client demands.

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

Technological innovation has tended to reduce barriers to entry based on cost. Put another way, once someone finds a new, better method to accomplish a task in our industry, often others are able to replicate or improve on that method, sometimes quite rapidly. Key risks for us, therefore,us are whether we will be able: to catch up to breakthroughs quickly enough to avoid client attrition; to adopt and enhance breakthroughs frequently enough, and without significant technical failures, to attract clients from competitors; and, if we are able to truly innovate, to press our advantage quickly before competitors adopt it.our innovation.

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

Just as disruptive business changes driven by new technologies and new client preferences can adversely impact us and our entire industry, similar events can adversely impact our commercial clients. In time, a major business disruption can cause dominant businesses to fail and can shrink or even end entire lines of business. An example of this is the business failure of the Blockbuster video distribution chain and most other video distribution stores, and the rise of Netflix and similar services. Many other examples of this kind of process are ongoing today in many industries, including publishing, retail sales, news, and the creation as well as distribution of audio and video entertainment. To the extent disruptions impact our clients, we may experience elevated loan losses and loss of ongoing business which we may not be able to recapture with new clients.

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

Our ability to conduct and grow our businesses is dependent in part upon our ability to create, maintain, expand, and evolve an appropriate operational and organizational infrastructure, manage expenses, and recruit and retain personnel with the ability to manage a complex business. Operational risk can arise in many ways, including: errors related to failed or inadequate physical, operational, information technology, or other processes; faulty or disabled computer or other technology systems; fraud, theft, physical security breaches, electronic data and related security breaches (see Cybersecurity Risks below), or other criminal conduct by associates or third parties; and exposure to other external events. Inadequacies may present themselves in myriad ways. Actions taken to manage one risk may be ineffective against others. For example, information technology systems may be insufficiently redundant to withstand a fire, incursion, malware, or other major casualty, and they may be insufficiently adaptable to new business conditions or opportunities. Efforts to make systems more robust may make them less adaptable, and vice-versa. Also, our efforts to control expenses, which isare a significant priority for us, increase our operational challenges as we strive to maintain client service and compliance at high quality and low cost.

We expect to makecontinue significantmaking investments over the next several years in operational systems that aremay unlikely tonot result in significant immediate returns. In 2021 we started to invest significantlyInvestments in new platforms and processes tosupport modernizecontinued operations,improvements providein aoperations betterand client experience,experiences, reducereductions in ongoing operating costs or otherwise improve efficiencies,costs, and support future growth. We expect significantto continue making investments of thatthis sort to grow over the next several years as we prepare for business growth and increased regulatory demands. Investments of that sort are expensive.years. Although we believe theythese investments are necessary for our future and are appropriate for our company at this time,appropriate, the financial returns onfrom these investments will be highly uncertain and, at best, likely to occur only over a long time horizon. In addition, investments of this sort lay the foundation for growth; if growth does not materialize, many of thesesuch investments may havenot littleresult practicalin value.significant immediate returns.

The delivery of financial services to clients and others increasingly depends upon technologies, systems, and multi-party infrastructures which are new, creating or exacerbating several risks discussed elsewhere. Examples of the risks created or compounded by the widespread and rapid adoption of relatively untestednew technologies include: security incursions; operational malfunctions or other disruptions; and legal claims of patent or other intellectual property infringement. A prominent illustration, the distribution of a faulty update by a major security software provider in 2024 triggered internet outages across industries (including in banking and financial services) and around the world, rendering websites and mobile applications inaccessible for extended periods.

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

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

First Horizon Corporation (NYSE common stock trading symbol “FHN”) is a financial holding company headquartered in Memphis, Tennessee. FHN’s principal subsidiary, and only banking subsidiary, is First Horizon Bank. Through the Bank and other subsidiaries, FHN offers commercial, private banking, consumer, small business, wealth and trust management, retail brokerage, capital markets, fixed income, and mortgage banking services. At December 31, 2025, FHN had over 450 business locations in 23 states, including over 400 banking centers in 12 states, and employed approximately 7,400 associates.

Net interest income is FHN's largest source of revenue and is the difference between the interest earned on interest-earning assets (generally loans, leases and investment securities) and the interest expense incurred in connection with interest-bearing liabilities (generally deposits and borrowed funds). The level of net interest income is primarily a function of the difference between the effective yield on average interest-earning assets and the effective cost of interest-bearing liabilities. These factors are influenced by the pricing and mix of interest-earning assets and interest-bearing liabilities which, in turn, are impacted by external factors such as local economic conditions, competition for loans and deposits, the monetary policy of the FRBFRB, and market interest rates.

Net interest income of $2.5$2.6 billion in 20242025 decreasedincreased $29$111 million, or 1%,4%, from 2023.2024. The decreaseincrease was largely attributable to higherlower fundingdeposit costs,pricing, partially offset by higherlower loan yields and loan growth.yields. Interest income increaseddecreased $252$166 million, largely driven by higherlower interest on loans and leases of $299$176 million. Interest expense increaseddecreased $281$277 million, largely fromdue higherto lower interest expense on deposits of $354 million, partially offset by a decline in interest on short-term borrowings of $80$281 million.

FHN's net interest margin decreasedincreased 712 basis points to 3.35%3.47% in 20242025 compared to 20232024 and the net interest spread decreasedincreased 631 basis points to 2.38%2.69% over the same period. The declineincrease in the margin was attributable to a 3557 basis point increasedecrease in the cost of interest-bearing liabilities, partially offset by a 2926 basis point increasedecrease in earning asset yields.

Total average earning assets increased $665$469 million in 2024,2025, largely driven by average loan growth of $1.8$605 billion,million and a $220 million increase in average trading securities, partially offset by lower levels ofaverage interest-bearing deposits with banks andof investment$351 securities.million. Total average interest-bearing liabilities increased $3.0$937 billion,million, largely driven by an increase of $514 million in federal funds purchased and securities sold under agreements to repurchase, $206 million in term borrowings, and average interest-bearing deposit growth of $4.4$224 billion, partially offset by a decrease in other short-term borrowings.million.

(a) Calculated using total net interest income adjusted for FTE assuming a statutory federal income tax rate of 21%,21% andand, where applicable, state income taxes.

The following table presents the changechanges in interest income and interest expense due to changes in both average volumerate and average rate.volume.

(c) Reflects taxable-equivalent adjustments, using the statutory federal income tax rate of 21%,21% andand, where applicable, state income taxes.

For additional information about general asset quality trendstrends, refer to the Allowance for Credit Losses and the Asset Quality sectionsections in this MD&A.

Noninterest income of $679$797 million decreasedincreased $248$118 million from $927$679 million in 2023,2024, largely driven by theprior $225 million gain on merger termination in 2023. Results in 2024 also reflect higheryear securities losses dueof to$91 anmillion opportunisticfrom a restructuring of a portion of the securitiesAFS portfolio, partiallyas offsetwell byas improvementsincreases in fixed income and mortgage banking income. Noninterest income represented 21%23% and 27%21% of total revenue for 20242025 and 2023,2024, respectively.

Fixed income improved $54$19 million, or 41%,10%, for 20242025 compared to 2023.2024. Fixed income product revenue increased $58$13 million, largely driven by more favorable market conditions. Revenue from other products decreasedincreased $4$6 million, largely driven by lower investment advisory fees due to the sale of the assets of FHN Financial Main Street Advisorsincreases in fourthrevenues quarterfrom 2023 and lower derivativeloan sales.

Mortgage banking income of $35$43 million increased $12$8 million from $23$35 million in 2023,2024, largely driven by highera secondary$5 volume.million gain from a sale of mortgage servicing rights.

Noninterest expense of $2.0$2.1 billion decreasedincreased $44$39 million, or 2%, compared to 2023.2024.

Personnel expense of $1.1$1.2 billion increased $37$22 million compared to 2023,2024, reflecting highertalent salariesadditions andthroughout benefitsthe expense and incentive-based compensation,year, partially offset by thea decrease to merger-related expenses, as there were no merger and integration expensesdecline in 2024deferred comparedcompensation to $51 million in 2023.expense.

Net occupancy expense increased $7$9 million, computer software expense increased $10$17 million and legal and professional fees increased $15$22 million in 2024,2025, largely attributable to strategic investments.investments in various technology, risk and product initiatives.

Deposit insurance expense declined $58$22 million, largely attributable to $68a $9 million special assessment expense credit in 2025, compared to $9 million in special assessment expense in 2023, compared to $9 million in 2024.

Contributions decreasedexpense $43increased $8 million, largely attributabledriven toby a $50$20 million contribution to the First Horizon Foundation in 2023 following the termination of the TD Transaction,2025, compared to a $10 million contribution in 2024.

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,premium and executive compensation, and merger expenses.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. During 2024, FHN recognized net favorable discrete items primarily attributable to the lapse of the statute of limitations for uncertain positions. In 2023, the reduction in the rate from the statutory U.S. federal income tax rate of 21% was primarily related to the benefit from the settlement of uncertain tax positions related to prior merger-related items, which was partially

A deferred tax asset ("DTA") or deferred tax liability ("DTL") is recognized for the tax consequences of temporary differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. The tax consequence is calculated by applying current enacted statutory tax rates to these temporary differences in future years. As of December 31, 2025, FHN’s gross DTA after valuation allowance and gross DTL were $672 million and $580 million, respectively, resulting in a net DTA wasof $227 million and $215$92 million at December 31, 2024 and 2023, respectively.2025,

FHN’s gross DTA after valuation allowance was $768 million and $737 million as of December 31, 2024 and 2023, respectively. Based on current analysis, FHN believes that its ability to realize the net DTA is more likely than not. FHN monitors its net DTA and the need for a valuation allowance on a quarterly basis. A significant adverse change in FHN’s taxable earnings outlook could result in the need for a valuation allowance.

FHN and its eligible subsidiaries are included in a consolidated federal income tax return. FHN files separate returns for subsidiaries that are not eligible to be included in a consolidated federal income tax return. Based on the laws of the applicable states where it conducts business operations, FHN either files consolidated, combined, or separate returns. The statute of limitations for FHN’s consolidated federal income tax returns remains open for tax years 2022 through 2024. Additionally, 2019-2021 could be subject to limited review related to refund claims and amended returns filed. With few exceptions, the statute of limitations for FHN's state income tax returns remains open for tax years 2021 through 2023.2024. Most states have a three to four year limitation for assessments. On occasion, as federal or state auditors examine the tax returns of FHN and its subsidiaries, FHN may extend the statute of limitations for a reasonable period. Otherwise, the statutes of limitations remain open only for tax years in accordance with federal and state statutes. The earliest year under state audit is 2016. See Note 14 - Income Taxes to the Consolidated Financial Statements in Part II, Item 8 of this Report for additional information.

During 2024, FHN reorganized its internal management structure and, accordingly, its segment reporting structure. Prior to the restructure, FHN's reportable segments were Regional Banking, Specialty Banking, and Corporate. As a result of the restructure, FHN revised its reportable segments to include: (1) Commercial, Consumer & Wealth, (2) Wholesale, and (3) Corporate. Segment results for years prior to 2024 have been recast to adjust for the realignment of the segment reporting structure. See Note 19 - Business Segment Information to the Consolidated Financial Statements in Part II, Item 8 of this Report for additional disclosures related to FHN's segments.

At MarchJune 31,30, 2026, FHN had over 450 business locations in 23 states, including over 400 banking centers in 12 states, and employed approximately 7,400 associates.

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 177 — SubsequentPreferred EventsStock in the Consolidated Financial Statements in Part I, Item 1 of this report.

FirstSecond Quarter 2026 Financial Performance Review

FHN reported firstsecond quarter 2026 net income available to common shareholders of $257$260 million, or $0.53$0.54 per diluted share, compared to $213$233 million, or $0.41$0.45 per diluted share, in firstsecond quarter 2025.

Net interest income increased $36$35 million compared to firstsecond quarter 2025, largely driven by lower interest-bearingfunding depositcosts costs,and loan growth, partially offset by lower loan yields.

Provision for credit losses was $15 million for firstsecond quarter 2026 compared to $40$30 million for firstsecond quarter 2025. Net charge-offs were $28$33 million, or 1820 basis points, compared to $29$34 million, or 1922 basis points, in firstsecond quarter 2025.

Noninterest income of $195$211 million for firstsecond quarter 2026 increased $14$22 million compared to firstsecond quarter 2025, largely driven by higherincreases in fixed income revenues of $4 million and higher other service charges and fees of $4 million, along with increases of $3 million inincome, brokerage, management fees and commissions and $3deferred millioncompensation in deposit transactions and cash management fees.income.

Compared with firstsecond quarter 2025, noninterest expense of $505$532 million increased $18$41 million, largely drivenattributable byto a $10$22 million increase in personnel expenses,expenses tied to higher salaries and benefits expense from increased associate headcount, along with higher incentive-based compensation whichand was offset by lower equity baseddeferred compensation. Additionally,Second quarter 2026 results also reflected higher computer software expense increasedof $6 million comparedand to$5 firstmillion quarterin 2025.Visa derivative valuation expense.

Period-end loans and leases of $64.4$65.3 billion increased $221$1.2 millionbillion from December 31, 2025. Commercial loans increased $419$1.4 million,billion, driven by an increaseincreases of $562$1.4 millionbillion in the C&I portfolio,portfolio partiallyand offset by a $143$32 million decline in the CRE portfolio. Consumer loans contracted by $198$249 million for the year-to-date period.

Period-end deposits were $66.5$68.1 billion compared to $67.5 billion as of December 31, 2025, as interest-bearing deposits decreasedincreased $1.1$425 billionmillion and noninterest-bearing deposits increased $87$171 million.

The Common Equity Tier 1 ratio decreased 1017 basis points to 10.53%10.46% at MarchJune 31,30, 20262026, 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%11.77% and 13.74%13.39% at MarchJune 31,30, 2026, respectively, compared to 11.51% and 13.35% at December 31, 2025, respectively, largely driven by the $400 million Series H Preferred Stock issuance in March 2026, partially offset by the Series C Preferred Stock redemption in May 2026.

The following portions of this MD&A focus in more detail on the results of operations for the three and six months ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025, and on information about FHN's financial condition, loan and lease portfolio, liquidity, funding sources, capital, and other matters.

Net interest income increased $36$35 million from firstsecond quarter 2025 and net interest margin increased 109 basis points to 3.52%3.49% in firstsecond quarter 2026. Net interest income and net interest margin primarily benefited from lower funding costs as well as loan growth. The rate on interest-bearing deposit costs, whichliabilities decreased 4445 basis points from firstsecond quarter 2025. ThisThese benefitbenefits waswere partially offset by the impact of lower yieldsloan on earning assets,yields, which decreased 2125 basis points compared to the same period of 2025.

Average earning assets increased $2.1 billion from firstsecond quarter 2025, driven by increasesaverage loan growth of $1.5$2.1 billion as a $2.6 billion increase in average commercial loans and leases,leases $354was partially offset by a $408 million in trading securities, and $245 milliondecline in investmentaverage securities.consumer loans. Average interest-bearing liabilities increased $2.0 billion, primarily driven by increasesan increase of $1.6$2.1 billion in average interest-bearing deposits, $478as increases of $1.9 billion in average time deposits and $552 million in federal funds purchased, and $213 million inaverage other short-terminterest-bearing borrowings. These increasesdeposits were partially offset by a decrease of $308$281 million in average securitiessavings solddeposits under agreementscompared to repurchase.second quarter 2025.

The following table presents the significant components of noninterest income for the three months ended MarchJune 31,30, 2026 and 2025.

Noninterest income for firstsecond quarter 2026 increased $14$22 million, or 8%,12%, compared to firstsecond quarter 2025.

Fixed income of $53$46 million increased $4 million compared to firstsecond quarter 2025. Fixed income product revenue increased $9$3 million asand averagerevenue from other products increased $1 million. Average daily revenue ofwas $742 thousand increased $157$594 thousand compared to $550 thousand for 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.

Brokerage, management fees and commissions increased $3$5 million, or 12%,19%, largely reflecting improvements related to the outsourcing of FHN's retail brokerage and wealth management operations in thirdsecond quarter 2025.

OtherDeposit service chargestransactions and cash management fees increased $4$5 million, largely driven by elevatedhigher incomecash relatedmanagement to the equipment finance lease business.fees.

The following table presents the significant components of noninterest expense for the three months ended MarchJune 31,30, 2026 and 2025.

Noninterest expense of $505$532 million increased $18$41 million, or 4%,8%, compared to firstsecond quarter 2025.

Personnel expense increased $10$22 million in firstsecond quarter 2026, largely reflecting a $10$9 million increase in salaries and benefits expense tied to higher associate headcount compared to firstsecond quarter 2025. Incentives and commissions expense declinedincreased $1$3 millionmillion, aslargely attributable to higher incentivesincentive-based compensation expense wastied moreto thanthe offsetincrease byin lowerfixed income revenue. Deferred compensation expense increased $10 million, reflecting higher equity basedmarket compensation.fluctuations relative to the prior year.

Provision for credit losses was $15 million for the firstsecond quarter 2026, compared to $40$30 million for firstsecond quarter 2025. Net charge-offs in firstsecond quarter 2026 were $28$33 million, or 1820 basis points, compared to $29$34 million, or 1922 basis points, in firstsecond quarter 2025. Provision for credit losses was $30 million and $70 million for the six months ended June 30, 2026 and June 30, 2025, respectively.

The ACL to total loans and leases ratio decreased 37 basis points to 1.28%1.24% as of MarchJune 31,30, 2026 from 1.31% as of December 31, 2025, largely driven by improvedimprovements gradein migrationcertain macroeconomic factors and lowerimproved CRE andcredit consumer loan balances.quality. For additional information about the allowance for credit losses and general asset quality trends, refer to the Asset Quality section in this MD&A.

FHN recorded income tax expense of $76$66 million in firstsecond quarter 2026, compared to $63$64 million in firstsecond quarter 2025. For the six months ended June 30, 2026 and 2025, FHN recorded income tax expense of $142 million and $127 million, respectively.