First Horizon Announces Results of its 2025 Company-Run Stress Test

Rhea-AI Summary

First Horizon (NYSE:FHN) has released its 2025 company-run capital stress test results, demonstrating strong financial resilience under hypothetical severe economic scenarios. The bank's minimum Common Equity Tier 1 (CET1) Capital ratio would remain at 9.7%, significantly above the required 4.5% regulatory minimum, providing approximately $4 billion of additional pre-tax loss absorption capacity.

The stress test revealed a loan portfolio stressed loss rate of 2.3%, considerably lower than the Federal Reserve-published median DFAST result of 6.1%. The company's pre-provision net revenue as a percentage of total assets stands at 4.7%, outperforming the peer median of 2.3%, supported by its counter-cyclical businesses.

Positive

• CET1 ratio of 9.7% significantly exceeds 4.5% regulatory minimum
• Strong $4 billion pre-tax loss absorption capacity
• Low loan portfolio stressed loss rate of 2.3% vs. 6.1% industry median
• Pre-provision net revenue of 4.7% exceeds peer median of 2.3%
• Maintains $0.15 quarterly dividend throughout stress scenario

Negative

• None.

News Market Reaction

-0.59%

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-0.59% News Effect

On the day this news was published, FHN declined 0.59%, reflecting a mild negative market reaction.

Data tracked by StockTitan Argus on the day of publication.

MEMPHIS, Tenn., July 30, 2025 /PRNewswire/ -- First Horizon Corporation (NYSE: FHN) ("First Horizon" or "the Company") announced today its 2025 company-run capital stress test results. The 2025 test showed that, under hypothetical severe economic and business downturns, First Horizon would maintain capital ratios well above regulatory-required minimums. These internally generated results, which utilized the 2025 Dodd-Frank Act Stress Test Severely Adverse Scenario published by the Federal Reserve on February 5, 2025, reflect continued strong risk discipline.

"Our 2025 capital stress test results reflect the resilience of our diversified business model, prudent risk management, and strong capital position," said Chief Financial Officer Hope Dmuchowski. "Our minimum Common Equity Tier 1 Capital ratio of 9.7% is well above the required regulatory minimum of 4.5% and represents approximately $4 billion of additional pre-tax loss absorption capacity. These results demonstrate our ability to maintain safety and soundness and support clients across a broad range of economic scenarios with a near term target CET1 ratio of 10.75%."

The following table reflects the Company's actual and projected stressed capital ratios under the Federal Reserve's Severely Adverse Scenario compared to required regulatory minimums.

% Regulatory Ratio	Actual	Projected Stressed Capital Ratios	Regulatory Capital Ratios
	4Q24	Minimum	Minimum
Common Equity Tier 1 Capital ratio	11.2 %	9.7 %	4.5 %
Tier 1 Risk-based Capital ratio	12.2 %	10.7 %	6.0 %
Total Risk-based Capital ratio	14.2 %	12.8 %	8.0 %
Tier 1 Leverage ratio	10.6 %	9.5 %	4.0 %

These results include a $0.15 quarterly common stock dividend throughout the nine-quarter scenario horizon.

First Horizon's loan portfolio stressed loss rate of 2.3% is significantly lower than the 6.1% loss rate from the Federal Reserve-published median DFAST result. FHN's lower loss rate benefits from its portfolio mix, including lower-loss loans to mortgage companies and limited exposure to higher-loss rate credit cards. Additionally, the Company's pre-provision net revenue as a percentage of total assets of 4.7% exceeded the peer median of 2.3%. FHN's stresses to pre-provision net revenue are buffered by its counter-cyclical businesses of fixed income, loans to mortgage companies, and mortgage.

For more information, please see First Horizon's 2025 stress test disclosure at https://ir.firsthorizon.com/fixed-income/stress-test-results/default.aspx. 

About First Horizon 
First Horizon Corporation (NYSE: FHN), with $82.1 billion in assets as of June 30, 2025, is a leading regional financial services company, dedicated to helping our clients, communities and associates unlock their full potential with capital and counsel. Headquartered in Memphis, TN, the banking subsidiary First Horizon Bank operates in 12 states concentrated in the southern U.S. The Company and its subsidiaries offer commercial, private banking, consumer, small business, wealth and trust management, retail brokerage, capital markets, fixed income, and mortgage banking services. First Horizon has been recognized as one of the nation's best employers by Fortune and Forbes magazines and a Top 10 Most Reputable U.S. Bank. More information is available at www.FirstHorizon.com.

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SOURCE First Horizon Corporation

FAQ

What were First Horizon's (FHN) 2025 stress test results?

First Horizon's stress test showed a minimum CET1 ratio of 9.7%, well above the 4.5% regulatory minimum, with $4 billion in loss absorption capacity and a loan portfolio stressed loss rate of 2.3%.

How does First Horizon's loan portfolio loss rate compare to industry standards?

First Horizon's loan portfolio stressed loss rate of 2.3% is significantly lower than the Federal Reserve-published median DFAST result of 6.1%, due to its lower-risk portfolio mix.

What is First Horizon's dividend policy during the stress test period?

First Horizon maintains a $0.15 quarterly common stock dividend throughout the nine-quarter stress scenario horizon.

How does First Horizon's pre-provision net revenue compare to peers?

First Horizon's pre-provision net revenue of 4.7% of total assets exceeded the peer median of 2.3%, supported by counter-cyclical businesses including fixed income and mortgage operations.

What are First Horizon's current capital ratios as of Q4 2024?

First Horizon's actual ratios are: CET1 ratio of 11.2%, Tier 1 Risk-based Capital ratio of 12.2%, Total Risk-based Capital ratio of 14.2%, and Tier 1 Leverage ratio of 10.6%.