First Horizon (NYSE: FHN) Q2 2026 profit climbs to $274M
Rhea-AI Filing Summary
First Horizon Corporation reported Q2 2026 net income of $274 million and net income available to common shareholders of $260 million, up from $245 million and $233 million a year earlier. Diluted EPS was $0.54 versus $0.45. Net interest income rose to $676 million while provision for credit losses declined to $15 million from $30 million, reflecting improved credit performance.
For the first six months of 2026, net income was $541 million compared with $467 million in 2025, as net interest income increased to $1.34 billion and noninterest income to $405 million. Total loans and leases grew to $65.33 billion and deposits to $68.07 billion at June 30, 2026. Nonaccrual loans and leases decreased to $531 million from $604 million at year-end 2025, and the allowance for credit losses stood at $808 million.
FHN undertook several capital actions, repurchasing $233 million and $100 million of common stock in the first and second quarters under its general purchase program and issuing $400 million of Series H preferred stock while redeeming its Series C preferred. FHN shareholders’ equity increased to $9.17 billion, while accumulated other comprehensive loss widened to $846 million, driven by securities and hedge valuation changes.
Positive
- None.
Negative
- None.
Filing Explained
At June 30, completed capital actions left 473,919,939 common shares and a $700 million preferred liquidation amount outstanding.
First Horizon Corporation’s unaudited Form 10-Q provides interim financial statements and updates through
The capital actions changed the mix of securities supporting the company: common shares outstanding declined from
The preferred-stock table lists Series F’s earliest optional redemption date as
Key Figures
Q2 2026 Net Income: $274 million
Q2 2026 Diluted EPS: $0.54 per share
Total Assets: $84,437 million
+5 more
8 metrics
Q2 2026 Net Income
$274 million
Consolidated net income for the quarter ended June 30, 2026
Q2 2026 Diluted EPS
$0.54 per share
Diluted earnings per common share for Q2 2026
Total Assets
$84,437 million
Total assets as of June 30, 2026
Loans and Leases
$65,330 million
Gross loans and leases outstanding as of June 30, 2026
Total Deposits
$68,072 million
Total deposits as of June 30, 2026
Allowance for Credit Losses
$808 million
Combined allowance for loans and unfunded commitments at June 30, 2026
Nonaccrual Loans and Leases
$531 million
Total nonaccrual loans and leases as of June 30, 2026
Operating Cash Flow
$863 million
Net cash provided by operating activities for six months ended June 30, 2026
Key Terms
Allowance for credit losses, nonaccrual loans, collateral-dependent loans, Accumulated other comprehensive income (loss), +1 more
5 terms
Allowance for credit losses financial
"The Allowance for Credit Losses, or the ACL, is maintained at a level management believes appropriate"
Allowance for credit losses is a reserve set aside by a financial institution to cover potential losses from borrowers who may not repay their loans. It acts like a safety net, helping the institution prepare for loans that might turn sour. For investors, it signals how cautious the institution is about the quality of its loans and potential risks to its financial health.
nonaccrual loans financial
"Loans and leases are placed on nonaccrual if it becomes evident that full collection of principal and interest is at risk"
Nonaccrual loans are loans a lender has stopped counting toward interest income because the borrower is overdue or unlikely to pay; the lender only records cash payments received and may set aside extra funds to cover potential losses. For investors, a rising number or amount of nonaccrual loans signals weaker credit quality, lower future interest revenue and larger potential write-downs — similar to pausing expected subscription income when many customers stop paying.
collateral-dependent loans financial
"Collateral-dependent loans are defined as loans for which repayment is expected from operation or sale of collateral"
Accumulated other comprehensive income (loss) financial
"The following tables provide the changes in accumulated other comprehensive income (loss) by component, net of tax"
A balance-sheet line that tracks certain gains and losses that haven’t flowed through the company’s profit-and-loss statement, such as unrealized changes in the value of investments, foreign-currency adjustments, and some pension-related items. Think of it like a storage closet for value swings the company hasn’t ‘realized’ by selling or settling them yet; it changes shareholders’ equity and helps investors see hidden volatility or potential future impacts on book value.
non-cumulative perpetual preferred stock financial
"The following table presents a summary of FHN's non-cumulative perpetual preferred stock"
Non-cumulative perpetual preferred stock is a type of investment that pays a fixed dividend forever, without a set end date. If the company skips some dividends in a year, you don’t get that money later, and it’s gone forever. It matters because investors get regular income but may miss out if the company faces financial trouble.
AI-generated analysis. How Rhea-AI works. Not financial advice.
FAQ
How did First Horizon (FHN) perform financially in Q2 2026?
First Horizon reported Q2 2026 net income of $274 million, with net income available to common shareholders of $260 million. Diluted EPS was $0.54, compared with $0.45 in Q2 2025, as higher net interest income and lower credit provisions supported results.
What were First Horizon (FHN)'s results for the first half of 2026?
For the first six months of 2026, First Horizon generated net income of $541 million, up from $467 million in 2025. Net interest income reached $1.34 billion and noninterest income $405 million, while provision for credit losses fell to $30 million from $70 million.
How did loans, deposits, and asset quality change for FHN in 2026?
At June 30, 2026, loans and leases were $65.33 billion and deposits $68.07 billion. Nonaccrual loans and leases declined to $531 million from 604 million at December 31, 2025, and 90+ days past due accruing balances fell to 2 million from 8 million.
What capital actions did First Horizon (FHN) take in the first half of 2026?
First Horizon repurchased $233 million and $100 million of common stock in Q1 and Q2 2026 under its general purchase program. It also issued 4,000 Series H preferred shares with $400 million liquidation amount and redeemed all outstanding Series C preferred shares.
What is First Horizon (FHN)'s allowance for credit losses and recent trend?
As of June 30, 2026, the combined allowance for credit losses was $808 million, including $709 million for loans and leases and $99 million for unfunded commitments. This was down from $901 million a year earlier, reflecting improved macroeconomic factors and positive credit migration.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________
FORM 10-Q
_____________________________________
| (Mark One) | |||||
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended June 30, 2026
or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from __________ to__________
Commission File Number: 001-15185
____________________________________
(Exact name of registrant as specified in its charter)
______________________________________
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||||||||
(Address of principal executive offices) | (Zip Code) | ||||||||||
(Registrant’s telephone number, including area code) (901 ) 523-4444
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
| | ||||||||
a share of Non-Cumulative Perpetual Preferred Stock, Series E | ||||||||
a share of Non-Cumulative Perpetual Preferred Stock, Series F | ||||||||
Depositary Shares, each representing a 1/4,000th interest in a share of Non-Cumulative Perpetual Preferred Stock, Series H | ||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| ☒ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | ||||||||||||||||||||||
| Smaller reporting company | Emerging growth company | |||||||||||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
| Class | Outstanding on July 31, 2026 | |||||||
Common Stock, $0.625 par value | ||||||||
| 10-Q REPORT TABLE OF CONTENTS | ||
Table of Contents
Glossary | 1 | ||||
Forward-Looking Statements | 2 | ||||
Non-GAAP Information | 3 | ||||
Part I. Financial Information | 4 | ||||
Item 1. Financial Statements | 4 | ||||
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | 70 | ||||
Item 3. Quantitative and Qualitative Disclosures About Market Risk | 107 | ||||
Item 4. Controls and Procedures | 107 | ||||
Part II. Other Information | 108 | ||||
Item 1. Legal Proceedings | 108 | ||||
Item 1A. Risk Factors | 108 | ||||
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 108 | ||||
Item 3. Defaults Upon Senior Securities | 108 | ||||
Item 4. Mine Safety Disclosures | 108 | ||||
Item 5. Other Information | 109 | ||||
Item 6. Exhibits | 109 | ||||
Signatures | 111 | ||||
| GLOSSARY | ||||||||
Table of Contents | ||||||||
Glossary
The following is a list of common acronyms and terms used throughout this report:
| ACL | Allowance for credit losses | ||||
| ADR | Average daily revenue | ||||
| AFS | Available for sale | ||||
| AIR | Accrued interest receivable | ||||
| ALCO | Asset/Liability Committee | ||||
| ALLL | Allowance for loan and lease losses | ||||
| ALM | Asset/liability management | ||||
| AOCI | Accumulated other comprehensive income | ||||
| ASC | FASB Accounting Standards Codification | ||||
| Associate | Person employed by FHN | ||||
| ASU | Accounting Standards Update | ||||
| Bank | First Horizon Bank | ||||
| C&I | Commercial, financial, and industrial loan portfolio | ||||
| CECL | Current expected credit loss | ||||
| CME | Chicago Mercantile Exchange | ||||
| CMO | Collateralized mortgage obligations | ||||
| CODM | Chief Operating Decision Maker | ||||
| Company | First Horizon Corporation | ||||
| Corporation | First Horizon Corporation | ||||
| CRE | Commercial real estate | ||||
| DTA | Deferred tax asset | ||||
| DTL | Deferred tax liability | ||||
| EAD | Exposure at default | ||||
| EPS | Earnings per share | ||||
| Fannie Mae | Federal National Mortgage Association | ||||
| FASB | Financial Accounting Standards Board | ||||
| FDIC | Federal Deposit Insurance Corporation | ||||
| Federal Reserve | Federal Reserve Board | ||||
| Fed | Federal Reserve Board | ||||
| FHA | Federal Housing Administration | ||||
| FHLB | Federal Home Loan Bank | ||||
| FHN | First Horizon Corporation | ||||
| FHNF | FHN Financial; FHN's fixed income division | ||||
| FICO | Fair Isaac Corporation | ||||
| First Horizon | First Horizon Corporation | ||||
| FRB | Federal Reserve Bank or the Federal Reserve Board | ||||
| Freddie Mac | Federal Home Loan Mortgage Corporation | ||||
| FTE | Fully taxable equivalent | ||||
| FTP | Funds transfer pricing | ||||
| FTRESC | FT Real Estate Securities Company, Inc. | ||||
| GAAP | Generally accepted accounting principles (U.S.) | ||||
| GHG | Greenhouse gas | ||||
| GNMA | Government National Mortgage Association or Ginnie Mae | ||||
| GSE | Government sponsored enterprises, in this report references Fannie Mae and Freddie Mac | ||||
| HELOC | Home equity line of credit | ||||
| HFS | Held for sale | ||||
| HTM | Held to maturity | ||||
| IBKC | IBERIABANK Corporation | ||||
| IBKC merger | FHN's merger of equals with IBKC that closed July 2020 | ||||
| ISDA | International Swap and Derivatives Association | ||||
| LGD | Loss given default | ||||
| LIBOR | London Interbank Offered Rate | ||||
| LIHTC | Low Income Housing Tax Credit | ||||
| LLC | Limited liability company | ||||
| LMC | Loans to mortgage companies | ||||
| LOCOM | Lower of cost or market | ||||
| LTV | Loan-to-value | ||||
| MBS | Mortgage-backed securities | ||||
| MD&A | Management’s Discussion and Analysis of Financial Condition and Results of Operations | ||||
| NAICS | North American Industry Classification System | ||||
| NII | Net interest income | ||||
| NIM | Net interest margin | ||||
| NM | Not meaningful | ||||
| NMTC | New Market Tax Credit | ||||
| NPA | Nonperforming asset | ||||
| NPL | Nonperforming loan | ||||
| NYSE | New York Stock Exchange | ||||
| OCI | Other comprehensive income | ||||
| OREO | Other real estate owned | ||||
PCD | Purchased credit-deteriorated | ||||
| PD | Probability of default | ||||
| PPNR | Pre-provision net revenue | ||||
| PTNI | Pre-tax net income | ||||
| SAD | Special Assets Department | ||||
| SBA | Small Business Administration | ||||
| SEC | Securities and Exchange Commission | ||||
| SOFR | Secured Overnight Funding Rate | ||||
| SVaR | Stressed Value-at-Risk | ||||
| TRUP | Trust preferred loan | ||||
| UPB | Unpaid principal balance | ||||
| USDA | United States Department of Agriculture | ||||
| VaR | Value-at-Risk | ||||
| VIE | Variable interest entities | ||||
| we / us / our | First Horizon Corporation | ||||
 | 1 | 2Q26 FORM 10-Q REPORT | ||||||
| FORWARD-LOOKING STATEMENTS | ||||||||
Table of Contents | ||||||||
Forward-Looking Statements
This report, including materials incorporated into it, contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, with respect to FHN's beliefs, plans, goals, expectations, and estimates. Forward-looking statements are not a representation of historical information, but instead pertain to future operations, strategies, financial results or other developments. Forward-looking statements often use words such as “believe,” “expect,” “anticipate,” “intend,” “estimate,” “should,” “is likely,” “will,” “going forward,” and other similar expressions that indicate future events and trends.
Forward-looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, operational, economic, and competitive uncertainties and contingencies, many of which are beyond our control, and many of which, with respect to future business decisions and actions (including acquisitions and divestitures), are subject to change and could cause our actual future results and outcomes to differ materially from those contemplated by forward-looking statements or historical performance. While there is no assurance that any list of uncertainties and contingencies is complete, examples of factors which could cause actual results to differ from those contemplated by forward-looking statements or historical performance include:
•global, national, and local economic and business conditions, including economic recession or depression;
•the stability or volatility of values and activity in the residential housing and commercial real estate markets;
•expectations of and actual timing and amount of interest rate movements, including the slope and shape of the yield curve, which can have a significant impact on a financial services institution;
•market and monetary fluctuations, including fluctuations in mortgage markets;
•the financial condition of borrowers and other counterparties;
•the financial condition and stability of major financial and market participants, including private financial institutions as well as governments and governmental agencies;
•competition within and outside the financial services industry;
•the occurrence of natural or man-made disasters, pandemics, conflicts, or terrorist attacks, or other adverse external events;
•effectiveness and cost-efficiency of FHN’s hedging practices;
•fraud, theft, or other incursions through conventional, electronic, or other means directly or indirectly affecting FHN or its clients, business counterparties, or competitors;
•the ability to adapt products and services to changing industry standards and client preferences;
•risks inherent in originating, selling, servicing, and holding loans and loan-based assets, including prepayment risks, pricing concessions, fluctuation in U.S. housing and other real estate prices, fluctuation of collateral values, and changes in client profiles;
•changes in the regulation of the U.S. financial services industry;
•changes in laws, regulations, and administrative actions, including executive orders, whether or not specific to the financial services industry;
•changes in trade policies, including the imposition of tariffs and retaliatory responses;
•potential claims alleging mortgage servicing failures, individually, on a class basis, or as master servicer of securitized loans;
•potential claims relating to participation in government programs, especially lending or other financial services programs;
•changes in accounting policies, standards, and interpretations;
•evolving capital and liquidity standards under applicable regulatory rules;
•accounting policies and processes that require management to make estimates about matters that are uncertain; and
•other factors that may affect future results of FHN.
Any forward-looking statements made by or on behalf of FHN speak only as of the date they are made, and FHN assumes no obligation to update or revise any forward-looking statements that are made in this report or in any other statement, release, report, or filing from time to time. Actual results could differ and expectations could change, possibly materially, because of one or more factors, including those factors listed above or presented elsewhere in this report, those factors listed in material incorporated by reference into this report, and other factors not listed. In evaluating forward-looking statements and assessing our prospects, readers of this report should carefully consider the factors mentioned above along with the additional risks and factors discussed in Item 2 of Part I and Item 1A of Part II of this report, and in the forepart, and in Items 1, 1A, and 7, of FHN’s most recent Annual Report on Form 10-K, among others. Readers should also consult any further disclosures of a forward-looking nature in any subsequent Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, or Current Reports on Form 8-K.
| 2 | 2Q26 FORM 10-Q REPORT | ||||||
| NON-GAAP INFORMATION | ||||||||
Table of Contents | ||||||||
Non-GAAP Information
Certain measures included in this report are “non-GAAP,” meaning they are not presented in accordance with U.S. GAAP and also are not codified in U.S. banking regulations currently applicable to FHN. Although other entities may use calculation methods that differ from those used by FHN for non-GAAP measures, FHN’s management believes such measures are relevant to understanding the financial condition, capital position, and financial results of FHN and its business segments. Non-GAAP measures are reported to FHN’s management and Board of Directors through various internal reports.
The non-GAAP measures presented in this report are pre-provision net revenue, return on average tangible common equity, tangible common equity to tangible assets, and tangible book value per common share. Table I.2.28 appearing in the MD&A (Item 2 of Part I) of this report provides a reconciliation of non-GAAP items presented in this report to the most comparable GAAP presentation.
Presentation of regulatory measures, even those which are not GAAP, provides a meaningful basis for comparability to other financial institutions subject to the same regulations as FHN, as demonstrated by their use by banking regulators in reviewing capital adequacy of financial institutions. Although not GAAP terms, these regulatory measures are not considered “non-GAAP” under U.S. financial reporting rules as long as their presentation conforms to regulatory standards. Regulatory measures used in this report include: common equity tier 1 capital, generally defined as common equity less goodwill, other intangibles, and certain other required regulatory deductions; tier 1 capital, generally defined as the sum of core capital (including common equity and instruments that cannot be redeemed at the option of the holder) adjusted for certain items under risk based capital regulations; and risk-weighted assets, which is a measure of total on- and off-balance sheet assets adjusted for credit and market risk, used to determine regulatory capital ratios.
| 3 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | ||||||||
PART I. FINANCIAL INFORMATION | ||
Item 1. Financial Statements
Consolidated Balance Sheets (unaudited) | 5 | ||||
Consolidated Statements of Income (unaudited) | 6 | ||||
Consolidated Statements of Comprehensive Income (unaudited) | 7 | ||||
Consolidated Statements of Changes in Equity (unaudited) | 8 | ||||
Consolidated Statements of Cash Flows (unaudited) | 10 | ||||
Notes to the Consolidated Financial Statements (unaudited) | 11 | ||||
Note 1 Basis of Presentation and Accounting Policies | 11 | ||||
Note 2 Investment Securities | 13 | ||||
Note 3 Loans and Leases | 16 | ||||
Note 4 Allowance for Credit Losses | 24 | ||||
Note 5 Mortgage Banking Activity | 27 | ||||
Note 6 Goodwill and Other Intangible Assets | 28 | ||||
Note 7 Preferred Stock | 29 | ||||
Note 8 Components of Other Comprehensive Income (Loss) | 30 | ||||
Note 9 Earnings Per Share | 32 | ||||
Note 10 Contingencies and Other Disclosures | 33 | ||||
Note 11 Retirement Plans | 34 | ||||
Note 12 Business Segment Information | 35 | ||||
Note 13 Variable Interest Entities | 42 | ||||
Note 14 Derivatives | 46 | ||||
Note 15 Master Netting and Similar Agreements - Repurchase, Reverse Repurchase, and Securities Borrowing Transactions | 53 | ||||
Note 16 Fair Value of Assets and Liabilities | 55 | ||||
| 4 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | ||||||||
CONSOLIDATED BALANCE SHEETS
| (Unaudited) | ||||||||||||||
| June 30, | December 31, | |||||||||||||
| (Dollars in millions, except per share amounts) | 2026 | 2025 | ||||||||||||
| Assets | ||||||||||||||
| Cash and due from banks | $ | $ | ||||||||||||
| Interest-bearing deposits with banks | ||||||||||||||
| Federal funds sold and securities purchased under agreements to resell | ||||||||||||||
| Trading securities | ||||||||||||||
| Securities available for sale at fair value | ||||||||||||||
Securities held to maturity (fair value of $ | ||||||||||||||
Loans held for sale (including $ | ||||||||||||||
| Loans and leases | ||||||||||||||
| Allowance for loan and lease losses | ( | ( | ||||||||||||
| Net loans and leases | ||||||||||||||
| Premises and equipment | ||||||||||||||
| Goodwill | ||||||||||||||
| Other intangible assets | ||||||||||||||
| Other assets | ||||||||||||||
| Total assets | $ | $ | ||||||||||||
| Liabilities | ||||||||||||||
| Noninterest-bearing deposits | $ | $ | ||||||||||||
| Interest-bearing deposits | ||||||||||||||
| Total deposits | ||||||||||||||
| Trading liabilities | ||||||||||||||
| Short-term borrowings | ||||||||||||||
| Term borrowings | ||||||||||||||
| Other liabilities | ||||||||||||||
| Total liabilities | ||||||||||||||
| Equity | ||||||||||||||
Preferred stock, Non-cumulative perpetual, no par value; authorized | ||||||||||||||
Common stock, $ | ||||||||||||||
| Capital surplus | ||||||||||||||
| Retained earnings | ||||||||||||||
| Accumulated other comprehensive loss, net | ( | ( | ||||||||||||
| FHN shareholders' equity | ||||||||||||||
| Noncontrolling interest | ||||||||||||||
| Total equity | ||||||||||||||
| Total liabilities and equity | $ | $ | ||||||||||||
See accompanying notes to consolidated financial statements.
| 5 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | ||||||||
CONSOLIDATED STATEMENTS OF INCOME
See accompanying notes to consolidated financial statements.
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| (Dollars in millions, except per share data; shares in thousands) (Unaudited) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Interest income | |||||||||||||||||||||||
| Interest and fees on loans and leases | $ | $ | $ | $ | |||||||||||||||||||
| Interest and fees on loans held for sale | |||||||||||||||||||||||
| Interest on investment securities | |||||||||||||||||||||||
| Interest on trading securities | |||||||||||||||||||||||
| Interest on other earning assets | |||||||||||||||||||||||
| Total interest income | |||||||||||||||||||||||
| Interest expense | |||||||||||||||||||||||
| Interest on deposits | |||||||||||||||||||||||
| Interest on trading liabilities | |||||||||||||||||||||||
| Interest on short-term borrowings | |||||||||||||||||||||||
| Interest on term borrowings | |||||||||||||||||||||||
| Total interest expense | |||||||||||||||||||||||
| Net interest income | |||||||||||||||||||||||
| Provision for credit losses | |||||||||||||||||||||||
| Net interest income after provision for credit losses | |||||||||||||||||||||||
| Noninterest income | |||||||||||||||||||||||
| Fixed income | |||||||||||||||||||||||
| Deposit transactions and cash management | |||||||||||||||||||||||
| Brokerage, management fees and commissions | |||||||||||||||||||||||
| Card and digital banking fees | |||||||||||||||||||||||
| Other service charges and fees | |||||||||||||||||||||||
| Deferred compensation income | |||||||||||||||||||||||
| Trust services and investment management | |||||||||||||||||||||||
| Mortgage banking income | |||||||||||||||||||||||
| Other income | |||||||||||||||||||||||
| Total noninterest income | |||||||||||||||||||||||
| Noninterest expense | |||||||||||||||||||||||
| Personnel expense | |||||||||||||||||||||||
| Computer software | |||||||||||||||||||||||
| Net occupancy expense | |||||||||||||||||||||||
| Operations services | |||||||||||||||||||||||
| Legal and professional fees | |||||||||||||||||||||||
| Advertising and public relations | |||||||||||||||||||||||
| Deposit insurance expense | |||||||||||||||||||||||
| Equipment expense | |||||||||||||||||||||||
| Amortization of intangible assets | |||||||||||||||||||||||
| Other expense | |||||||||||||||||||||||
| Total noninterest expense | |||||||||||||||||||||||
| Income before income taxes | |||||||||||||||||||||||
| Income tax expense | |||||||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||
| Net income attributable to noncontrolling interest | |||||||||||||||||||||||
| Net income attributable to controlling interest | $ | $ | $ | $ | |||||||||||||||||||
| Preferred stock dividends | |||||||||||||||||||||||
| Net income available to common shareholders | $ | $ | $ | $ | |||||||||||||||||||
| Basic earnings per common share | $ | $ | $ | $ | |||||||||||||||||||
| Diluted earnings per common share | $ | $ | $ | $ | |||||||||||||||||||
| Weighted average common shares | |||||||||||||||||||||||
| Diluted average common shares | |||||||||||||||||||||||
| 6 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | ||||||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| (Dollars in millions) (Unaudited) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||
| Other comprehensive income (loss), net of tax: | |||||||||||||||||||||||
| Net unrealized gains (losses) on securities available for sale | ( | ( | |||||||||||||||||||||
| Net unrealized gains (losses) on cash flow hedges | ( | ( | |||||||||||||||||||||
| Net unrealized gains on pension and other postretirement plans | |||||||||||||||||||||||
| Other comprehensive income (loss) | ( | ( | |||||||||||||||||||||
| Comprehensive income | |||||||||||||||||||||||
| Comprehensive income attributable to noncontrolling interest | |||||||||||||||||||||||
| Comprehensive income attributable to controlling interest | $ | $ | $ | $ | |||||||||||||||||||
| Income tax expense of items included in other comprehensive income: | |||||||||||||||||||||||
| Net unrealized gains (losses) on securities available for sale | $ | ( | $ | $ | ( | $ | |||||||||||||||||
| Net unrealized gains (losses) on cash flow hedges | ( | ( | |||||||||||||||||||||
| Net unrealized gains on pension and other postretirement plans | |||||||||||||||||||||||
See accompanying notes to consolidated financial statements.
| 7 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | ||||||||
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
| Six Months Ended June 30, 2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (In millions, except share and per share data) (unaudited) | Shares | Amount | Shares | Amount | Capital Surplus | Retained Earnings | Accumulated Other Comprehensive Income (Loss) (a) | Noncontrolling Interest | Total | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2025 | $ | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Cash dividends declared: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred stock | — | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
Common stock ($ | — | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
Preferred stock issuance ( | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock repurchased (b) | — | — | ( | ( | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Excise tax on common stock repurchased | — | — | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock options exercised and restricted stock awards | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends declared - noncontrolling interest of subsidiary preferred stock | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2026 | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Cash dividends declared: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred stock | — | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
Common stock ($ | — | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Series C preferred stock redemption | ( | ( | — | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||
| Refund of excise tax on Series D preferred stock redemption | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock repurchased (b) | — | — | ( | ( | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Excise tax on common stock repurchased | — | — | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock options exercised and restricted stock awards | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends declared - noncontrolling interest of subsidiary preferred stock | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2026 | $ | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||
(a)Due to the nature of the preferred stock issued by FHN and its subsidiaries, all components of other comprehensive income (loss) have been attributed solely to FHN as the controlling interest holder.
(b)Includes $233 million and $100 million repurchased during first and second quarter, respectively, under FHN's general purchase program.
| 8 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | ||||||||
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (continued)
| Six Months Ended June 30, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (In millions, except share and per share data) (unaudited) | Shares | Amount | Shares | Amount | Capital Surplus | Retained Earnings | Accumulated Other Comprehensive Income (Loss) (a) | Noncontrolling Interest | Total | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2024 | $ | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Cash dividends declared: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred stock | — | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
Common stock ($ | — | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Common stock repurchased (b) | — | — | ( | ( | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Excise tax on common stock repurchased | — | — | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock options exercised and restricted stock awards | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends declared - noncontrolling interest of subsidiary preferred stock | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2025 | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Cash dividends declared: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred stock | — | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
Common stock ($ | — | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Common stock repurchased (b) | — | — | ( | ( | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock options exercised and restricted stock awards | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends declared - noncontrolling interest of subsidiary preferred stock | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2025 | $ | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||
(a)Due to the nature of the preferred stock issued by FHN and its subsidiaries, all components of other comprehensive income (loss) have been attributed solely to FHN as the controlling interest holder.
(b)Includes $360 million and $9 million repurchased during first and second quarter, respectively, under FHN's general purchase program.
See accompanying notes to consolidated financial statements.
| 9 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | ||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Six Months Ended June 30, | ||||||||||||||
| (Dollars in millions) (Unaudited) | 2026 | 2025 | ||||||||||||
| Operating Activities | ||||||||||||||
| Net income | $ | $ | ||||||||||||
| Adjustments to reconcile net income to net cash from operating activities: | ||||||||||||||
| Provision for credit losses | ||||||||||||||
| Deferred income tax expense | ||||||||||||||
| Depreciation and amortization of premises and equipment | ||||||||||||||
| Amortization of intangible assets | ||||||||||||||
| Net other amortization (accretion) | ( | ( | ||||||||||||
| Net decrease in trading securities | ||||||||||||||
| Net decrease (increase) in derivatives | ( | |||||||||||||
| Stock-based compensation expense | ||||||||||||||
| Loans held for sale: | ||||||||||||||
| Purchases and originations | ( | ( | ||||||||||||
| Gross proceeds from settlements and sales | ||||||||||||||
| Gain (loss) due to fair value adjustments and other | ( | |||||||||||||
| Other operating activities, net | ( | ( | ||||||||||||
| Total adjustments | ( | |||||||||||||
| Net cash provided by operating activities | ||||||||||||||
| Investing Activities | ||||||||||||||
| Proceeds from maturities of securities available for sale | ||||||||||||||
| Purchases of securities available for sale | ( | ( | ||||||||||||
| Proceeds from prepayments of securities held to maturity | ||||||||||||||
| Purchases of premises and equipment | ( | ( | ||||||||||||
| Net increase in loans and leases | ( | ( | ||||||||||||
| Net (increase) decrease in interest-bearing deposits with banks | ( | |||||||||||||
| Other investing activities, net | ||||||||||||||
| Net cash used in investing activities | ( | ( | ||||||||||||
| Financing Activities | ||||||||||||||
| Common stock: | ||||||||||||||
| Stock options exercised | ||||||||||||||
| Cash dividends paid | ( | ( | ||||||||||||
| Repurchase of shares | ( | ( | ||||||||||||
| Preferred stock: | ||||||||||||||
| Series C preferred stock redemption | ( | |||||||||||||
| Series H preferred stock issuance | ||||||||||||||
| Cash dividends paid - preferred stock - noncontrolling interest | ( | ( | ||||||||||||
| Cash dividends paid - preferred stock | ( | ( | ||||||||||||
| Net increase (decrease) in deposits | ( | |||||||||||||
| Net increase (decrease) in short-term borrowings | ( | |||||||||||||
| Proceeds from issuance of term borrowings | ||||||||||||||
| Repayment of term borrowing | ( | |||||||||||||
| Decreases in secured term borrowings | ( | ( | ||||||||||||
| Net cash provided by (used in) financing activities | ( | |||||||||||||
| Net increase (decrease) in cash and cash equivalents | ( | |||||||||||||
| Cash and cash equivalents at beginning of period | ||||||||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||||||||
| Supplemental Disclosures | ||||||||||||||
| Total interest paid | $ | $ | ||||||||||||
| Total taxes paid | ||||||||||||||
| Total taxes refunded | ||||||||||||||
| Transfer from loans to OREO | ||||||||||||||
| Transfer from loans HFS to trading securities | ||||||||||||||
| Transfer from loans to loans HFS | ( | |||||||||||||
See accompanying notes to consolidated financial statements.
| 10 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 1—BASIS OF PRESENTATION & ACCOUNTING POLICIES | |||||||
Notes to the Consolidated Financial Statements (Unaudited)
Note 1—Basis of Presentation and Accounting Policies
The accompanying unaudited consolidated financial statements have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all information and notes necessary for complete financial statements in accordance with GAAP. In the opinion of management, the accompanying unaudited consolidated financial statements contain all significant adjustments, consisting of normal and recurring items, considered necessary for fair presentation. These interim financial statements should be read in conjunction with FHN's audited consolidated financial statements and notes in FHN's Annual Report on Form 10-K for the year ended December 31, 2025. Operating results for the interim period are not necessarily indicative of the results that may be expected for the full year.
All significant intercompany balances and transactions have been eliminated in consolidation. Certain amounts reported in prior years have been reclassified to conform to the current period presentation. See the Glossary included in this report for terms used herein.
Summary of Accounting Changes
The following table describes updates to accounting standards issued by the Financial Accounting Standards Board ("FASB") that have been adopted by FHN during the current year and the effects of adoption on FHN's financial statements.
ACCOUNTING STANDARDS ADOPTED SINCE JANUARY 1, 2026
| Standard | Summary of Guidance | Effects on Financial Statements | ||||||
ASU 2025-08 Purchased Loans Issued November 2025 | •Amends the guidance in ASC 326 on the accounting for certain purchased loans. •Requires entities to account for acquired loans (excluding credit cards) that meet certain criteria at acquisition (purchased seasoned loans) by recognizing them at their purchase price plus an allowance for expected credit losses (gross-up approach) which eliminates the credit mark double-count that was previously recognized for all non-PCD loans. Purchased seasoned loans are defined as either: (1) non-PCD loans that are obtained in a business combination, or (2) non-PCD loans that (a) are obtained in an asset acquisition or upon consolidation of a variable interest entity that is not a business and (b) are acquired more than 90 days after their origination date by a transferee that was not involved in their origination. •Introduces an accounting policy election related to the subsequent measurement of expected credit losses for entities that use a method other than a discounted cash flow analysis to estimate credit losses on purchased seasoned loans. If this accounting policy is elected, entities can use the amortized cost basis of the asset to subsequently measure their credit loss allowance which facilitates pooling of purchased seasoned loans with originated loans for the determination of ACL post-acquisition. | •Effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years. •Early adoption is permitted. •Required to be applied prospectively to loans that are acquired on or after the initial application date. •FHN early adopted ASU 2025-08 beginning January 1, 2026. Since ASU 2025-08 only affects prospective loan acquisitions, there was no effect of adoption on FHN's consolidated financial statements. | ||||||
| 11 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 1—BASIS OF PRESENTATION & ACCOUNTING POLICIES | |||||||
ASU 2025-09 Hedge Accounting Improvements Issued November 2025 | •Amends the guidance in ASC 815 to more closely align hedge accounting with the economics of an entity’s risk management activities. •Expands the hedged risks permitted to be aggregated in a group of individual forecasted transactions for cash flow hedges and increases the variable price components eligible to be designated as the hedged risk in the forecasted purchase or sale of nonfinancial assets. •Eliminates the requirement to apply the net written option test when certain compound derivatives are used in interest rate hedges. •Simplifies the application of hedge accounting for entities hedging forecasted interest payments on choose-your-rate debt instruments and addresses application issues related to “dual hedges,” where a foreign-currency-denominated debt instrument is designated as a hedging instrument and a hedged item. | •Effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years. •Early adoption is permitted. •Required to be applied prospectively for all hedging relationships. •Entities may elect to adopt the amendments in ASU 2025-09 for hedging relationships that exist as of the date of adoption. •FHN early adopted ASU 2025-09 beginning January 1, 2026. There were no effects on FHN's existing accounting hedges as a result of adoption. | ||||||
| 12 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 2—INVESTMENT SECURITIES | |||||||
Note 2—Investment Securities
The following table summarizes FHN’s investment securities as of June 30, 2026 and December 31, 2025.
INVESTMENT SECURITIES | ||||||||||||||||||||||||||
| June 30, 2026 | ||||||||||||||||||||||||||
| (Dollars in millions) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||||||||||||
| Securities available for sale: | ||||||||||||||||||||||||||
| Government agency issued MBS | $ | $ | $ | ( | $ | |||||||||||||||||||||
| Government agency issued CMO | ( | |||||||||||||||||||||||||
| Other U.S. government agencies | ( | |||||||||||||||||||||||||
| States and municipalities | ( | |||||||||||||||||||||||||
| Total securities available for sale (a) | $ | $ | $ | ( | $ | |||||||||||||||||||||
| Securities held to maturity: | ||||||||||||||||||||||||||
| Government agency issued MBS | $ | $ | $ | ( | $ | |||||||||||||||||||||
| Government agency issued CMO | ( | |||||||||||||||||||||||||
| Total securities held to maturity (a) | $ | $ | $ | ( | $ | |||||||||||||||||||||
| December 31, 2025 | ||||||||||||||||||||||||||
| (Dollars in millions) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||||||||||||
| Securities available for sale: | ||||||||||||||||||||||||||
| Government agency issued MBS | $ | $ | $ | ( | $ | |||||||||||||||||||||
| Government agency issued CMO | ( | |||||||||||||||||||||||||
| Other U.S. government agencies | ( | |||||||||||||||||||||||||
| States and municipalities | ( | |||||||||||||||||||||||||
| Total securities available for sale (a) | $ | $ | $ | ( | $ | |||||||||||||||||||||
| Securities held to maturity: | ||||||||||||||||||||||||||
| Government agency issued MBS | $ | $ | $ | ( | $ | |||||||||||||||||||||
| Government agency issued CMO | ( | |||||||||||||||||||||||||
| Total securities held to maturity (a) | $ | $ | $ | ( | $ | |||||||||||||||||||||
(a)Includes $6.8 billion and $7.2 billion of securities available for sale as of June 30, 2026 and December 31, 2025, respectively and $789 million and $1.1 billion of securities held to maturity as of June 30, 2026 and December 31, 2025, respectively pledged to secure public deposits, securities sold under agreements to repurchase, and for other purposes.
| 13 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 2—INVESTMENT SECURITIES | |||||||
The amortized cost and fair value by contractual maturity for the debt securities portfolio as of June 30, 2026 are provided below.
| DEBT SECURITIES PORTFOLIO MATURITIES | ||||||||||||||||||||||||||
| Held to Maturity | Available for Sale | |||||||||||||||||||||||||
| (Dollars in millions) | Amortized Cost | Fair Value | Amortized Cost | Fair Value | ||||||||||||||||||||||
| Within 1 year | $ | $ | $ | $ | ||||||||||||||||||||||
| After 1 year through 5 years | ||||||||||||||||||||||||||
| After 5 years through 10 years | ||||||||||||||||||||||||||
| After 10 years | ||||||||||||||||||||||||||
| Subtotal | ||||||||||||||||||||||||||
| Government agency issued MBS and CMO (a) | ||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
(a)Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
There were no
The following table provides information on investments within the available-for-sale portfolio that had unrealized losses as of June 30, 2026 and December 31, 2025.
AFS INVESTMENT SECURITIES WITH UNREALIZED LOSSES
| As of June 30, 2026 | ||||||||||||||||||||||||||||||||||||||
| Less than 12 months | 12 months or longer | Total | ||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | ||||||||||||||||||||||||||||||||
| Government agency issued MBS | $ | $ | ( | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||||
| Government agency issued CMO | ( | ( | ( | |||||||||||||||||||||||||||||||||||
| Other U.S. government agencies | ( | ( | ( | |||||||||||||||||||||||||||||||||||
| States and municipalities | ( | ( | ||||||||||||||||||||||||||||||||||||
| Total | $ | $ | ( | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||||
| As of December 31, 2025 | ||||||||||||||||||||||||||||||||||||||
| Less than 12 months | 12 months or longer | Total | ||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | ||||||||||||||||||||||||||||||||
| Government agency issued MBS | $ | $ | ( | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||||
| Government agency issued CMO | ( | ( | ||||||||||||||||||||||||||||||||||||
| Other U.S. government agencies | ( | ( | ( | |||||||||||||||||||||||||||||||||||
| States and municipalities | ( | ( | ||||||||||||||||||||||||||||||||||||
| Total | $ | $ | ( | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||||
| 14 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 2—INVESTMENT SECURITIES | |||||||
FHN has evaluated all AFS debt securities that were in unrealized loss positions in accordance with its accounting policy for recognition of credit losses. No AFS debt securities were determined to have credit losses. Total AIR not included in the fair value or amortized cost basis of AFS debt securities was $27 million and $28 million as of June 30, 2026 and December 31, 2025, respectively. Consistent with FHN's review of the related securities, there were no credit-related write-downs of AIR for AFS debt securities during the reporting periods. Additionally, for AFS debt securities with unrealized losses, FHN does not intend to sell them, and it is more likely than not that FHN will not be required to sell them prior to recovery. Therefore, no write-downs of these investments to fair value occurred during the reporting periods. There were no
For HTM securities, an allowance for credit losses is required to absorb estimated lifetime credit losses. Total AIR not included in the fair value or amortized cost basis of HTM debt securities was $3 no
The carrying amount of equity investments without a readily determinable fair value was $126 million and $119 million at June 30, 2026 and December 31, 2025, respectively. The year-to-date 2026 and 2025 gross amounts of upward and downward valuation adjustments were not significant.
For equity investments with readily determinable fair values, net unrealized gains of $7 million and $6 million were recognized in the three and six months ended June 30, 2026, respectively. For equity investments with readily determinable fair values, net unrealized gains of $6 million and $3 million were recognized in the three and six months ended June 30, 2025, respectively.
| 15 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 3—LOANS & LEASES | |||||||
Note 3—Loans and Leases
The loan and lease portfolio is disaggregated into portfolio segments and then further disaggregated into classes for certain disclosures. GAAP defines a portfolio segment as the level at which an entity develops and documents a systematic method for determining its allowance for credit losses. A class is generally a disaggregation of a portfolio segment and is generally determined based on risk characteristics of the loan and FHN’s method for monitoring and assessing credit risk and performance. FHN's loan and lease portfolio segments are commercial and consumer. The classes of loans and leases are: (1) commercial, financial, and industrial, which includes
commercial and industrial loans and leases and loans to mortgage companies, (2) commercial real estate, (3) consumer real estate, which includes both real estate installment and home equity lines of credit, and (4) credit card and other.
The following table provides the amortized cost basis of loans and leases by portfolio segment and class as of June 30, 2026 and December 31, 2025, excluding accrued interest of $249 million and $257 million, respectively, which is included in other assets in the Consolidated Balance Sheets.
| LOANS AND LEASES BY PORTFOLIO SEGMENT | ||||||||||||||
| (Dollars in millions) | June 30, 2026 | December 31, 2025 | ||||||||||||
| Commercial: | ||||||||||||||
| Commercial and industrial (a) | $ | $ | ||||||||||||
| Loans to mortgage companies | ||||||||||||||
| Total commercial, financial, and industrial | ||||||||||||||
| Commercial real estate | ||||||||||||||
| Consumer: | ||||||||||||||
| HELOC | ||||||||||||||
| Real estate installment loans | ||||||||||||||
| Total consumer real estate | ||||||||||||||
| Credit card and other (b) | ||||||||||||||
| Loans and leases | $ | $ | ||||||||||||
| Allowance for loan and lease losses | ( | ( | ||||||||||||
| Net loans and leases | $ | $ | ||||||||||||
(a)Includes equipment financing leases of $1.5
(b)Includes $153 million and $143 million of commercial credit card balances as of June 30, 2026 and December 31, 2025, respectively.
Restrictions
Loans and leases with carrying values of $45.7 billion and $45.1 billion were pledged as collateral for borrowings at June 30, 2026 and December 31, 2025, respectively.
Concentrations of Credit Risk
Most of FHN’s business activity is with clients located in the southern United States. FHN’s lending activity is concentrated in its market areas within those states. As of June 30, 2026, FHN had loans to mortgage companies of $4.8 billion and loans to finance and insurance companies of $4.3 billion. As a result, 24 % of the C&I portfolio is sensitive to impacts on the financial services industry.
Credit Quality Indicators
FHN employs a dual grade commercial risk grading methodology to assign an estimate for the probability of default and the loss given default for each commercial loan using factors specific to various industry, portfolio, or product segments that result in a rank ordering of risk and the assignment of grades PD 1 to PD 16 . This credit grading
system is intended to identify and measure the credit quality of the loan and lease portfolio by analyzing the migration between grading categories. It is also integral to the estimation methodology utilized in determining the ALLL since an allowance is established for pools of commercial loans based on the credit grade assigned. Each PD grade corresponds to an estimated one-year default probability percentage. PD grades are continually evaluated but require a formal scorecard annually.
PD 1 through PD 12 are “pass” grades. PD grades 13-16 correspond to the regulatory-defined categories of special mention (13), substandard (14), doubtful (15), and loss (16). Special mention commercial loans and leases have potential weaknesses that, if left uncorrected, may result in deterioration of FHN's credit position at some future date. Substandard commercial loans and leases have well-defined weaknesses and are characterized by the distinct possibility that FHN will sustain some loss if the deficiencies are not corrected. Doubtful commercial loans and leases have the same weaknesses as substandard loans and leases with the added characteristics that the
| 16 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 3—LOANS & LEASES | |||||||
probability of loss is high and collection of the full amount is improbable.
The following tables provide the amortized cost basis of the commercial loan portfolio by year of origination and
credit quality indicator as of June 30, 2026 and December 31, 2025.
| C&I PORTFOLIO | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| June 30, 2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | 2026 | 2025 | 2024 | 2023 | 2022 | Prior to 2022 | LMC (a) | Revolving Loans | Revolving Loans Converted to Term Loans | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Credit Quality Indicator: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass (PD grades 1 through 12) | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Special Mention (PD grade 13) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard, Doubtful, or Loss (PD grades 14, 15, and 16) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total C&I loans | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | 2025 | 2024 | 2023 | 2022 | 2021 | Prior to 2021 | LMC (a) | Revolving Loans | Revolving Loans Converted to Term Loans | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Credit Quality Indicator: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass (PD grades 1 through 12) | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Special Mention (PD grade 13) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard, Doubtful, or Loss (PD grades 14, 15, and 16) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total C&I loans | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||
(a) LMC includes non-revolving commercial lines of credit to qualified mortgage companies primarily for the temporary warehousing of eligible mortgage loans prior to the borrower's sale of those mortgage loans to third-party investors. The loans are of short duration with maturities less than one year.
| CRE PORTFOLIO | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| June 30, 2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | 2026 | 2025 | 2024 | 2023 | 2022 | Prior to 2022 | Revolving Loans | Revolving Loans Converted to Term Loans | Total | |||||||||||||||||||||||||||||||||||||||||||||||
| Credit Quality Indicator: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass (PD grades 1 through 12) | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Special Mention (PD grade 13) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard, Doubtful, or Loss (PD grades 14, 15, and 16) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total CRE loans | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | 2025 | 2024 | 2023 | 2022 | 2021 | Prior to 2021 | Revolving Loans | Revolving Loans Converted to Term Loans | Total | |||||||||||||||||||||||||||||||||||||||||||||||
| Credit Quality Indicator: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass (PD grades 1 through 12) | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Special Mention (PD grade 13) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard, Doubtful, or Loss (PD grades 14, 15, and 16) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total CRE loans | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| 17 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 3—LOANS & LEASES | |||||||
The consumer portfolio is comprised primarily of smaller-balance loans which are very similar in nature in that most are standard products and are backed by residential real estate. Because of the similarities of consumer loan types, FHN is able to utilize the FICO score, among other attributes, to assess the credit quality of consumer borrowers. FICO scores are refreshed on a quarterly basis in an attempt to reflect the recent risk profile of the borrowers. Accruing delinquency amounts are indicators of asset quality within the credit card and other consumer portfolio.
The following table reflects the amortized cost basis by year of origination and refreshed FICO scores for consumer
real estate loans as of June 30, 2026 and December 31, 2025. Within consumer real estate, classes include HELOC and real estate installment loans. HELOCs are loans which during their draw period are classified as revolving loans. Once the draw period ends and the loan enters its repayment period, the loan converts to a term loan and is classified as a revolving loan converted to a term loan. All loans classified in the following table as revolving loans or revolving loans converted to term loans are HELOCs. Real estate installment loans are originated as fixed term loans and are classified below in their vintage year. All loans in the following table classified in a vintage year are real estate installment loans.
| CONSUMER REAL ESTATE PORTFOLIO | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| June 30, 2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | 2026 | 2025 | 2024 | 2023 | 2022 | Prior to 2022 | Revolving Loans | Revolving Loans Converted to Term Loans | Total | |||||||||||||||||||||||||||||||||||||||||||||||
| FICO score 740 or greater | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| FICO score 720-739 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FICO score 700-719 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FICO score 660-699 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FICO score 620-659 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FICO score less than 620 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total consumer real estate loans | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | 2025 | 2024 | 2023 | 2022 | 2021 | Prior to 2021 | Revolving Loans | Revolving Loans Converted to Term Loans | Total | |||||||||||||||||||||||||||||||||||||||||||||||
| FICO score 740 or greater | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| FICO score 720-739 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FICO score 700-719 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FICO score 660-699 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FICO score 620-659 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FICO score less than 620 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total consumer real estate loans | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| 18 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 3—LOANS & LEASES | |||||||
The following table reflects the amortized cost basis by year of origination and refreshed FICO scores for credit
card and other loans as of June 30, 2026 and December 31, 2025.
| CREDIT CARD & OTHER PORTFOLIO | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| June 30, 2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | 2026 | 2025 | 2024 | 2023 | 2022 | Prior to 2022 | Revolving Loans | Revolving Loans Converted to Term Loans | Total | |||||||||||||||||||||||||||||||||||||||||||||||
| FICO score 740 or greater | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| FICO score 720-739 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FICO score 700-719 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FICO score 660-699 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FICO score 620-659 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FICO score less than 620 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total credit card and other loans | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | 2025 | 2024 | 2023 | 2022 | 2021 | Prior to 2021 | Revolving Loans | Revolving Loans Converted to Term Loans | Total | |||||||||||||||||||||||||||||||||||||||||||||||
| FICO score 740 or greater | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| FICO score 720-739 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FICO score 700-719 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FICO score 660-699 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FICO score 620-659 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FICO score less than 620 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total credit card and other loans | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
Nonaccrual and Past Due Loans and Leases
Loans and leases are placed on nonaccrual if it becomes evident that full collection of principal and interest is at risk, 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.
Past due loans are loans contractually past due as to interest or principal payments, but which have not yet been put on nonaccrual status.
| 19 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 3—LOANS & LEASES | |||||||
The following table reflects accruing and non-accruing loans and leases by class on June 30, 2026 and December 31, 2025.
| ACCRUING & NON-ACCRUING LOANS AND LEASES | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| June 30, 2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accruing | Non-Accruing | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | Current | 30-89 Days Past Due | 90+ Days Past Due | Total Accruing | Current | 30-89 Days Past Due | 90+ Days Past Due | Total Non- Accruing | Total Loans and Leases | |||||||||||||||||||||||||||||||||||||||||||||||
| Commercial, financial, and industrial: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| C&I (a) | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Loans to mortgage companies | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total commercial, financial, and industrial | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial real estate: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| CRE (b) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Consumer real estate: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| HELOC (c) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Real estate installment loans (d) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total consumer real estate | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Credit card and other: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Credit card | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total credit card and other | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total loans and leases | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accruing | Non-Accruing | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | Current | 30-89 Days Past Due | 90+ Days Past Due | Total Accruing | Current | 30-89 Days Past Due | 90+ Days Past Due | Total Non- Accruing | Total Loans and Leases | |||||||||||||||||||||||||||||||||||||||||||||||
| Commercial, financial, and industrial: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| C&I (a) | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Loans to mortgage companies | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total commercial, financial, and industrial | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial real estate: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| CRE (b) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Consumer real estate: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| HELOC (c) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Real estate installment loans (d) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total consumer real estate | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Credit card and other: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Credit card | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total credit card and other | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total loans and leases | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
(a) $182 million and $211 million of C&I loans are nonaccrual loans that have been specifically reviewed for impairment with no related allowance in 2026 and 2025, respectively.
(b) $183 million and $238 million of CRE loans are nonaccrual loans that have been specifically reviewed for impairment with no related allowance in 2026 and 2025, respectively.
(c) $4 million and $3 million of HELOC loans are nonaccrual loans that have been specifically reviewed for impairment with no related allowance in 2026 and 2025, respectively.
(d) $8
Collateral-Dependent Loans
Collateral-dependent loans are defined as loans for which repayment is expected to be derived substantially through the operation or sale of the collateral and where the borrower is experiencing financial difficulty. At a minimum,
the estimated value of the collateral for each loan equals the current book value.
As of June 30, 2026 and December 31, 2025, FHN had commercial loans with amortized cost of approximately $311 million and $400 million, respectively, that were based on the value of underlying collateral. Collateral-
| 20 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 3—LOANS & LEASES | |||||||
dependent C&I and CRE loans totaled $126 million and $185 million, respectively, at June 30, 2026. The collateral for these loans generally consists of business assets including land, buildings, equipment, and financial assets. During the three and six months ended June 30, 2026, FHN recognized charge-offs of $27 million and $46 million, respectively, on these loans related to reductions in estimated collateral values.
Consumer HELOC and real estate installment loans with amortized cost based on the value of underlying real estate collateral were approximately $5 million and $43 million, respectively, as of June 30, 2026 and $5 million and $46 million, respectively, as of December 31, 2025. Charge-offs relating to collateral-dependent consumer loans were $1 million for the six months ended June 30, 2026 and not significant for the six months ended June 30, 2025.
Loan Modifications to Troubled Borrowers
As part of FHN’s ongoing risk management practices, FHN attempts to work with borrowers when necessary to extend or modify loan terms to better align with their current ability to repay. Modifications could include extension of the maturity date, reductions of the interest rate, reduction or forgiveness of accrued interest, or principal forgiveness. Combinations of these modifications may also be made for individual loans. Extensions and modifications to loans are made in accordance with internal policies and guidelines which conform to regulatory guidance. Principal reductions may be made in limited circumstances, typically for specific commercial loan workouts, and in the event of borrower bankruptcy. Each occurrence is unique to the borrower and is evaluated separately.
Troubled loans are considered those in which the borrower is experiencing financial difficulty. The assessment of whether a borrower is experiencing financial difficulty can be subjective in nature and management’s judgment may be required in making this determination. FHN may
determine that a borrower is experiencing financial difficulty if the borrower is currently in default on any of its debt, or if it is probable that a borrower may default in the foreseeable future absent a modification. Many aspects of a borrower’s financial situation are assessed when determining whether they are experiencing financial difficulty.
Troubled commercial loans are typically modified through forbearance agreements which could include reduced interest rates, reduced payments, term extension, or entering into short sale agreements. Principal reductions may occur in specific circumstances.
Modifications for troubled consumer loans are generally structured using parameters of U.S. government-sponsored programs. For HELOC and real estate installment loans, troubled loans are typically modified by an interest rate reduction and a possible maturity date extension to reach an affordable housing expense-to-income ratio. Despite the absence of a loan modification by FHN, the discharge of personal liability through bankruptcy proceedings is considered a court-imposed modification.
For the credit card portfolio, troubled loan modifications are typically effected 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 six months to one year . In the credit card workout program, borrowers are granted a rate reduction to 0 % and a term extension for up to five years .
Modifications to Borrowers Experiencing Financial Difficulty
The following table presents the amortized cost basis at the end of the reporting period of loans modified to borrowers experiencing financial difficulty, disaggregated by class of financing receivable and type of modification made as of June 30, 2026 and June 30, 2025.
| 21 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 3—LOANS & LEASES | |||||||
| LOAN MODIFICATIONS TO BORROWERS EXPERIENCING FINANCIAL DIFFICULTY | ||||||||||||||||||||||||||||||||||||||
| Amortized Cost | ||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | Interest Rate Reduction | Term Extension | Principal Forgiven/Payment Deferred | Combination (a) | Total | % of Total Class | ||||||||||||||||||||||||||||||||
| As of June 30, 2026 | ||||||||||||||||||||||||||||||||||||||
| C&I | $ | $ | $ | $ | $ | % | ||||||||||||||||||||||||||||||||
| CRE | ||||||||||||||||||||||||||||||||||||||
| Consumer real estate | ||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | % | ||||||||||||||||||||||||||||||||
| As of June 30, 2025 | ||||||||||||||||||||||||||||||||||||||
| C&I | $ | $ | $ | $ | $ | % | ||||||||||||||||||||||||||||||||
| CRE | ||||||||||||||||||||||||||||||||||||||
| Consumer real estate | ||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | % | ||||||||||||||||||||||||||||||||
| (a) Combination modifications consist primarily of loans modified with both an interest rate reduction and a term extension. | ||||||||||||||||||||||||||||||||||||||
The following table describes the financial effect of the loan modifications made to borrowers experiencing financial difficulty.
FINANCIAL EFFECT OF LOAN MODIFICATIONS TO BORROWERS EXPERIENCING FINANCIAL DIFFICULTY (a) | ||||||||||||||||||||||||||||||||
| Combination | ||||||||||||||||||||||||||||||||
| (Dollars in millions) | Weighted-average Interest Rate Reduction | Weighted-average Term Extension (in years) | Amount of Principal Forgiven/Payment Deferred | Weighted-average Interest Rate Reduction | Weighted-average Term Extension (in years) | |||||||||||||||||||||||||||
| As of June 30, 2026 | ||||||||||||||||||||||||||||||||
| C&I | % | $ | % | |||||||||||||||||||||||||||||
| CRE | ||||||||||||||||||||||||||||||||
| Consumer real estate | ||||||||||||||||||||||||||||||||
| As of June 30, 2025 | ||||||||||||||||||||||||||||||||
| C&I | % | $ | % | |||||||||||||||||||||||||||||
| CRE | ||||||||||||||||||||||||||||||||
| Consumer real estate | ||||||||||||||||||||||||||||||||
| (a) Certain disclosures related to financial effects of modifications do not include those deemed to be immaterial. | ||||||||||||||||||||||||||||||||
Loan modifications to borrowers experiencing financial difficulty that had a payment default during the period and were modified in the 12 months before default totaled $8 million and $1 million for the six months ended June 30, 2026 and June 30, 2025, respectively. FHN closely monitors
the performance of the loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts.
| 22 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 3—LOANS & LEASES | |||||||
The following table depicts the performance of loans that have been modified in the last 12 months.
| PERFORMANCE OF LOANS THAT HAVE BEEN MODIFIED IN THE LAST 12 MONTHS | ||||||||||||||||||||||||||||||||
| June 30, 2026 | ||||||||||||||||||||||||||||||||
| (Dollars in millions) | Current | 30-89 Days Past Due | 90+ Days Past Due | Non-Accruing | Total | |||||||||||||||||||||||||||
| C&I | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| CRE | ||||||||||||||||||||||||||||||||
| Consumer Real Estate | ||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| June 30, 2025 | ||||||||||||||||||||||||||||||||
| (Dollars in millions) | Current | 30-89 Days Past Due | 90+ Days Past Due | Non-Accruing | Total | |||||||||||||||||||||||||||
| C&I | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| CRE | ||||||||||||||||||||||||||||||||
| Consumer Real Estate | ||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| 23 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 4—ALLOWANCE FOR CREDIT LOSSES | |||||||
Note 4—Allowance for Credit Losses
Management's estimate of expected credit losses in the loan and lease portfolios is recorded in the ALLL and the reserve for unfunded lending commitments, collectively referred to as the Allowance for Credit Losses, or the ACL. The ALLL and the reserve for unfunded lending commitments are reported on the Consolidated Balance Sheets in the allowance for loan and lease losses and in other liabilities, respectively. Provisions for credit losses related to loans and leases and unfunded lending commitments are reported in the Consolidated Statements of Income as provision for credit losses.
The ACL is maintained at a level management believes to be appropriate to absorb expected credit losses over the contractual life of the loan and lease portfolio and unfunded lending commitments. The determination of the ACL is based on periodic evaluation of the loan and lease portfolios and unfunded lending commitments considering a number of relevant underlying factors, including key assumptions and evaluation of quantitative and qualitative information.
The expected loan losses are the product of multiplying FHN’s estimates of probability of default ("PD"), loss given default ("LGD"), and individual loan level exposure at default ("EAD"), including amortization and prepayment assumptions, on an undiscounted basis. FHN uses models or assumptions to develop the expected loss forecasts, which incorporate multiple macroeconomic forecasts over a reasonable and supportable forecast period of at most three years . After the reasonable and supportable forecast period, the Company reverts on a straight-line basis to its historical loss averages, evaluated over the historical observation period, for the remaining estimated life of the loans. In order to capture the unique risks of the loan portfolio within the PD, LGD, and prepayment models, FHN segments the portfolio into pools, generally incorporating loan grades for commercial loans. As there can be no certainty that actual economic performance will precisely follow any specific macroeconomic forecast, FHN uses qualitative adjustments where current loan characteristics or current or forecasted economic conditions differ from historical periods.
The evaluation of quantitative and qualitative information is performed through assessments of groups of assets that share similar risk characteristics and certain individual loans and leases that do not share similar risk characteristics with the collective group. As described in Note 3 - Loans and Leases, loans are grouped generally by product type and significant loan portfolios are assessed for credit losses using analytical or statistical models. The quantitative component utilizes economic forecast information as its foundation and is primarily based on analytical models that use known or estimated data as of the balance sheet date and forecasted data over the reasonable and supportable period. The ACL is also
affected by qualitative factors that FHN considers to reflect current judgment of various events and risks that are not measured in the quantitative calculations, including alternative economic forecasts.
In accordance with its accounting policy elections, FHN does not recognize a separate allowance for expected credit losses for AIR and records reversals of AIR as reductions of interest income. FHN reverses previously accrued but uncollected interest when an asset is placed on nonaccrual status. AIR and the related allowance for expected credit losses are included as a component of other assets. The total amount of interest reversals from loans placed on nonaccrual status and the amount of income recognized on nonaccrual loans during the three and six months ended June 30, 2026 and 2025 were not material.
Expected credit losses for unfunded commitments are estimated for periods where the commitment is not unconditionally cancellable. The measurement of expected credit losses for unfunded commitments mirrors that of loans and leases with the additional estimate of future draw rates (timing and amount).
The decrease in the ACL balance as of June 30, 2026, as compared to December 31, 2025, was driven in part by improvements in certain macroeconomic factors, continued loan resolutions, and positive grade migration in the CRE portfolio. In developing credit loss estimates for its loan and lease portfolios, FHN utilized multiple scenarios for its macroeconomic inputs, including a baseline scenario, an upside scenario, and a downside scenario from Moody’s. As of June 30, 2026, among other things, FHN's scenario selection process factored in GDP, inflation, employment, and real estate prices. FHN selected one scenario as its base case, which was the Moody's baseline scenario. The heaviest weight was placed on this scenario. Smaller weights were placed on the FHN-selected downside scenario and on the FHN-selected upside scenario.
Management also made qualitative adjustments to reflect estimated recoveries based on a review of prior charge-off and recovery levels, for default risk associated with large balances with individual borrowers, for estimated loss amounts not reflected in historical factors due to specific portfolio risk or identified model limitations, and for instances where limited data for acquired loans is considered to affect modeled results.
| 24 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 4—ALLOWANCE FOR CREDIT LOSSES | |||||||
The following table provides a rollforward of the ALLL and the reserve for unfunded lending commitments by
portfolio type for the three and six months ended June 30, 2026 and 2025.
| ROLLFORWARD OF ALLL & RESERVE FOR UNFUNDED LENDING COMMITMENTS | ||||||||||||||||||||||||||||||||
| (Dollars in millions) | Commercial, Financial, and Industrial | Commercial Real Estate | Consumer Real Estate | Credit Card and Other | Total | |||||||||||||||||||||||||||
| Three Months Ended June 30, 2026 | ||||||||||||||||||||||||||||||||
| Allowance for loan and lease losses: | ||||||||||||||||||||||||||||||||
| Balance as of April 1, 2026 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Charge-offs | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||
| Recoveries | ||||||||||||||||||||||||||||||||
| Provision (benefit) for loan and lease losses | ( | ( | ||||||||||||||||||||||||||||||
| Balance as of June 30, 2026 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Reserve for remaining unfunded commitments: | ||||||||||||||||||||||||||||||||
| Balance as of April 1, 2026 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Provision (benefit) for remaining unfunded commitments | ( | |||||||||||||||||||||||||||||||
| Balance as of June 30, 2026 | ||||||||||||||||||||||||||||||||
| Allowance for credit losses as of June 30, 2026 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Three Months Ended June 30, 2025 | ||||||||||||||||||||||||||||||||
| Allowance for loan and lease losses: | ||||||||||||||||||||||||||||||||
| Balance as of April 1, 2025 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Charge-offs | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||
| Recoveries | ||||||||||||||||||||||||||||||||
| Provision (benefit) for loan and lease losses | ( | |||||||||||||||||||||||||||||||
| Balance as of June 30, 2025 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Reserve for remaining unfunded commitments: | ||||||||||||||||||||||||||||||||
| Balance as of April 1, 2025 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Provision (benefit) for remaining unfunded commitments | ( | |||||||||||||||||||||||||||||||
| Balance as of June 30, 2025 | ||||||||||||||||||||||||||||||||
| Allowance for credit losses as of June 30, 2025 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| 25 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 4—ALLOWANCE FOR CREDIT LOSSES | |||||||
| (Dollars in millions) | Commercial, Financial, and Industrial | Commercial Real Estate | Consumer Real Estate | Credit Card and Other | Total | |||||||||||||||||||||||||||
| Six Months Ended June 30, 2026 | ||||||||||||||||||||||||||||||||
| Allowance for loan and lease losses: | ||||||||||||||||||||||||||||||||
| Balance as of January 1, 2026 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Charge-offs | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||
| Recoveries | ||||||||||||||||||||||||||||||||
| Provision (benefit) for loan and lease losses | ( | ( | ||||||||||||||||||||||||||||||
| Balance as of June 30, 2026 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Reserve for remaining unfunded commitments: | ||||||||||||||||||||||||||||||||
| Balance as of January 1, 2026 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Provision (benefit) for remaining unfunded commitments | ( | ( | ( | |||||||||||||||||||||||||||||
| Balance as of June 30, 2026 | ||||||||||||||||||||||||||||||||
| Allowance for credit losses as of June 30, 2026 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Six Months Ended June 30, 2025 | ||||||||||||||||||||||||||||||||
| Allowance for loan and lease losses: | ||||||||||||||||||||||||||||||||
| Balance as of January 1, 2025 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Charge-offs | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||
| Recoveries | ||||||||||||||||||||||||||||||||
| Provision (benefit) for loan and lease losses | ( | |||||||||||||||||||||||||||||||
| Balance as of June 30, 2025 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Reserve for remaining unfunded commitments: | ||||||||||||||||||||||||||||||||
| Balance as of January 1, 2025 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Provision (benefit) for remaining unfunded commitments | ( | ( | ||||||||||||||||||||||||||||||
| Balance as of June 30, 2025 | ||||||||||||||||||||||||||||||||
| Allowance for credit losses as of June 30, 2025 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
The following table presents gross charge-offs by year of origination for the six months ended June 30, 2026 and 2025.
| GROSS CHARGE-OFFS | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Six Months Ended June 30, 2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | 2026 | 2025 | 2024 | 2023 | 2022 | Prior to 2022 | Revolving Loans | Total | ||||||||||||||||||||||||||||||||||||||||||
| C&I | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| CRE | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Consumer real estate | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Credit card and other | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| Six Months Ended June 30, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | 2025 | 2024 | 2023 | 2022 | 2021 | Prior to 2021 | Revolving Loans | Total | ||||||||||||||||||||||||||||||||||||||||||
| C&I | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| CRE | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Consumer real estate | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Credit card and other | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| 26 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 5—MORTGAGE BANKING ACTIVITY | |||||||
Note 5—Mortgage Banking Activity
FHN originates mortgage loans for sale into the secondary market. These loans primarily consist 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 loans are primarily sold to private companies that are unaffiliated with the GSEs on a servicing-released basis. Gains and losses on these mortgage loans are included in mortgage banking income on the Consolidated Statements of Income.
FHN records estimated losses related to prior mortgage loan sales within a repurchase and foreclosure accrual. FHN estimates losses based on prior origination levels, losses recognized upon repurchases, and the impact of current economic conditions on estimated loss content. Based on currently available information and experience
to date, FHN evaluated its loan repurchase, make-whole, foreclosure, and certain related exposures and accrued for losses of $12
At June 30, 2026, FHN had approximately $25 million of loans that remained from pre-2009 mortgage business operations of legacy First Horizon. Activity related to the pre-2009 mortgage loans was primarily limited to payments and write-offs in 2026 and 2025, with no new originations or loan sales, and only an insignificant amount of repurchases. These loans are excluded from the following table, which summarizes activity relating to residential mortgage loans held for sale for the six months ended June 30, 2026 and the year ended December 31, 2025.
| MORTGAGE LOAN ACTIVITY | ||||||||||||||
| (Dollars in millions) | June 30, 2026 | December 31, 2025 | ||||||||||||
| Balance at beginning of period | $ | $ | ||||||||||||
| Originations and purchases | ||||||||||||||
| Sales, net of gains | ( | ( | ||||||||||||
| Balance at end of period | $ | $ | ||||||||||||
Mortgage Servicing Rights
FHN records mortgage servicing rights at the lower of cost or market value and amortizes them over the remaining servicing life of the loans, with consideration given to prepayment assumptions.
Mortgage servicing rights are included in other assets on the Consolidated Balance Sheets. The following table presents the carrying values of mortgage servicing rights as of June 30, 2026 and December 31, 2025.
| MORTGAGE SERVICING RIGHTS | ||||||||||||||||||||||||||||||||||||||
| June 30, 2026 | December 31, 2025 | |||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||||||||||||||||||||||||
| Mortgage servicing rights | $ | $ | ( | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||
In addition, there was an insignificant amount of non-mortgage and commercial servicing rights as of June 30, 2026 and December 31, 2025. Total mortgage servicing fees included in mortgage banking income were $1 million and $2 million for the six months ended June 30, 2026 and 2025, respectively.
| 27 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 6—GOODWILL & OTHER INTANGIBLE ASSETS | |||||||
Note 6—Goodwill and Other Intangible Assets
Goodwill
The following is a summary of goodwill by reportable segment included in the Consolidated Balance Sheets as of June 30, 2026 and December 31, 2025.
| GOODWILL | ||||||||||||||||||||
| (Dollars in millions) | Commercial, Consumer & Wealth | Wholesale | Total | |||||||||||||||||
| December 31, 2024 | $ | $ | $ | |||||||||||||||||
| Additions | ||||||||||||||||||||
| December 31, 2025 | $ | $ | $ | |||||||||||||||||
| Additions | ||||||||||||||||||||
| June 30, 2026 | $ | $ | $ | |||||||||||||||||
FHN performed the required annual goodwill impairment test as of October 1, 2025. The annual impairment test did not indicate impairment in any of FHN’s reporting units as of the testing date. Following the testing date, management evaluated the events and circumstances that could indicate that goodwill might be impaired and concluded that it is not more likely than not that goodwill was impaired. If there are any triggering events between annual evaluations, management will evaluate whether an interim impairment analysis is warranted.
Accounting estimates and assumptions were made about FHN's future performance and cash flows, as well as other prevailing market factors (e.g., interest rates, economic
trends, etc.) when determining fair value as part of the goodwill impairment test. While management used the best information available to estimate future performance for each reporting unit, future adjustments to management's projections may be necessary if conditions differ substantially from the assumptions used in making the estimates.
Other intangible assets
The following table, which excludes fully amortized intangibles, presents other intangible assets included in the Consolidated Balance Sheets.
| OTHER INTANGIBLE ASSETS | ||||||||||||||||||||||||||||||||||||||
| June 30, 2026 | December 31, 2025 | |||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Value | Gross Carrying Amount | Accumulated Amortization | Net Carrying Value | ||||||||||||||||||||||||||||||||
| Core deposit intangibles | $ | $ | ( | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||
| Client relationships | ( | ( | ||||||||||||||||||||||||||||||||||||
| Other (a) | ( | ( | ||||||||||||||||||||||||||||||||||||
| Total | $ | $ | ( | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||
(a)Includes non-compete covenants and purchased credit card intangible assets. Also includes state banking licenses which are not subject to amortization.
| 28 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 7—PREFERRED STOCK | |||||||
Note 7—Preferred Stock
The following table presents a summary of FHN's non-cumulative perpetual preferred stock.
| PREFERRED STOCK | ||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | June 30, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance Date | Earliest Redemption Date (a) | Annual Dividend Rate | Dividend Payments | Shares Outstanding | Liquidation Amount | Carrying Amount | Carrying Amount | |||||||||||||||||||||||||||||||||||||||||||
| Series C | 7/2/2020 | 5/1/2026 | (b) | Quarterly | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
| Series E | 5/28/2020 | 10/10/2025 | Quarterly | |||||||||||||||||||||||||||||||||||||||||||||||
| Series F | 5/3/2021 | 7/10/2026 | Quarterly | |||||||||||||||||||||||||||||||||||||||||||||||
| Series H | 3/12/2026 | 4/10/2031 | Quarterly | |||||||||||||||||||||||||||||||||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||
(a)Denotes earliest optional redemption date. Earlier redemption is possible, at FHN's election, if certain regulatory capital events occur.
(b)On May 1, 2026, FHN redeemed all outstanding shares of its Series C Preferred Stock. The fixed dividend rate was set to convert to three-month CME Term SOFR plus 5.18161 % (0.26161 % plus 4.920 %) on May 1, 2026.
FHN redeemed all outstanding shares of its Series C Preferred Stock effective May 1, 2026. The difference between the outstanding liquidation preference amount and the carrying value of the Series C Preferred Stock resulted in $2
Subsidiary Preferred Stock
First Horizon Bank has issued 300,000 shares of Class A Non-Cumulative Perpetual Preferred Stock ("Class A Preferred Stock") with a liquidation preference of $1,000 per share. Dividends on the Class A Preferred Stock, if declared, accrue and are payable each quarter, in arrears, at a floating rate equal to the greater of three-month CME Term SOFR plus 1.11161 % (0.26161 % plus 0.85 %) or 3.75 % per annum. These securities qualify fully as Tier 1 capital for both First Horizon Bank and FHN. On June 30, 2026 and December 31, 2025, $295
FT Real Estate Securities Company, Inc. ("FTRESC"), an indirect subsidiary of FHN, has issued 50 shares of 9.50 % Cumulative Preferred Stock, Class B ("Class B Preferred Shares"), with a liquidation preference of $1 million per share; of those shares, 47 were issued to nonaffiliates. FTRESC is a real estate investment trust established for the purpose of acquiring, holding, and managing real estate mortgage assets. Dividends on the Class B Preferred Shares are cumulative and are payable semi-annually. At June 30, 2026 and December 31, 2025, the Class B Preferred Shares qualified as Tier 2 capital. For all periods
presented, these securities are presented in the Consolidated Balance Sheets as term borrowings.
The Class B Preferred Shares are mandatorily redeemable on March 31, 2031, and redeemable at the discretion of FTRESC in the event that the Class B Preferred Shares cannot be accounted for as Tier 2 capital or there is more than an insubstantial risk that dividends paid with respect to the Class B Preferred Shares will not be fully deductible for tax purposes.
| 29 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 8—COMPONENTS OF OTHER COMPREHENSIVE INCOME (LOSS) | |||||||
Note 8—Components of Other Comprehensive Income (Loss)
The following tables provide the changes in accumulated other comprehensive income (loss) by component, net of tax, for the three and six months ended June 30, 2026 and 2025.
| ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | ||||||||||||||||||||||||||
| (Dollars in millions) | Securities AFS | Cash Flow Hedges | Pension and Postretirement Plans | Total | ||||||||||||||||||||||
| Balance as of April 1, 2026 | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
| Net unrealized gains (losses) | ( | ( | ( | |||||||||||||||||||||||
| Amounts reclassified from AOCI | ||||||||||||||||||||||||||
| Other comprehensive income (loss) | ( | ( | ( | |||||||||||||||||||||||
| Balance as of June 30, 2026 | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
| (Dollars in millions) | Securities AFS | Cash Flow Hedges | Pension and Postretirement Plans | Total | ||||||||||||||||||||||
| Balance as of January 1, 2026 | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
| Net unrealized gains (losses) | ( | ( | ( | |||||||||||||||||||||||
| Amounts reclassified from AOCI | ||||||||||||||||||||||||||
| Other comprehensive income (loss) | ( | ( | ( | |||||||||||||||||||||||
| Balance as of June 30, 2026 | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
| (Dollars in millions) | Securities AFS | Cash Flow Hedges | Pension and Postretirement Plans | Total | ||||||||||||||||||||||
| Balance as of April 1, 2025 | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
| Net unrealized gains (losses) | ||||||||||||||||||||||||||
| Amounts reclassified from AOCI | ||||||||||||||||||||||||||
| Other comprehensive income (loss) | ||||||||||||||||||||||||||
| Balance as of June 30, 2025 | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
| (Dollars in millions) | Securities AFS | Cash Flow Hedges | Pension and Postretirement Plans | Total | ||||||||||||||||||||||
| Balance as of January 1, 2025 | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
| Net unrealized gains (losses) | ||||||||||||||||||||||||||
| Amounts reclassified from AOCI | ||||||||||||||||||||||||||
| Other comprehensive income (loss) | ||||||||||||||||||||||||||
| Balance as of June 30, 2025 | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
| 30 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 8—COMPONENTS OF OTHER COMPREHENSIVE INCOME (LOSS) | |||||||
Reclassifications from AOCI, and related tax effects, were as follows.
| RECLASSIFICATIONS FROM AOCI | ||||||||||||||||||||||||||||||||
| (Dollars in millions) | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||
| Details about AOCI | 2026 | 2025 | 2026 | 2025 | Affected line item in the Consolidated Statements of Income | |||||||||||||||||||||||||||
| Cash Flow Hedges: | ||||||||||||||||||||||||||||||||
| Realized (gains) losses on cash flow hedges | $ | $ | $ | $ | Interest and fees on loans and leases | |||||||||||||||||||||||||||
| Tax expense (benefit) | ( | ( | ( | ( | Income tax expense | |||||||||||||||||||||||||||
| Pension and Postretirement Plans: | ||||||||||||||||||||||||||||||||
| Amortization of prior service cost and net actuarial (gain) loss | $ | $ | $ | $ | Other expense | |||||||||||||||||||||||||||
| Tax expense (benefit) | ( | ( | ( | Income tax expense | ||||||||||||||||||||||||||||
| Total reclassification from AOCI | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| 31 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 9—EARNINGS PER SHARE | |||||||
Note 9—Earnings Per Share
The computations of basic and diluted earnings per common share were as follows.
| EARNINGS PER SHARE COMPUTATIONS | ||||||||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| (Dollars in millions, except per share data; shares in thousands) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||
| Net income | $ | $ | $ | $ | ||||||||||||||||||||||
| Net income attributable to noncontrolling interest | ||||||||||||||||||||||||||
| Net income attributable to controlling interest | ||||||||||||||||||||||||||
| Preferred stock dividends | ||||||||||||||||||||||||||
| Net income available to common shareholders | $ | $ | $ | $ | ||||||||||||||||||||||
| Weighted average common shares outstanding—basic | ||||||||||||||||||||||||||
| Effect of dilutive restricted stock, performance equity awards and options | ||||||||||||||||||||||||||
| Weighted average common shares outstanding—diluted | ||||||||||||||||||||||||||
| Basic earnings per common share | $ | $ | $ | $ | ||||||||||||||||||||||
| Diluted earnings per common share | $ | $ | $ | $ | ||||||||||||||||||||||
The following table presents average outstanding options and other equity awards that were excluded from the calculation of diluted earnings per share because they
were either anti-dilutive (the exercise price was higher than the weighted-average market price for the period) or the performance conditions have not been met.
| ANTI-DILUTIVE EQUITY AWARDS | ||||||||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| (Shares in thousands) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||
| Stock options excluded from the calculation of diluted EPS | ||||||||||||||||||||||||||
| Weighted average exercise price of stock options excluded from the calculation of diluted EPS | $ | $ | $ | $ | ||||||||||||||||||||||
| Other equity awards excluded from the calculation of diluted EPS | ||||||||||||||||||||||||||
| 32 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 10—CONTINGENCIES & OTHER DISCLOSURES | |||||||
Note 10—Contingencies and Other Disclosures
Contingencies
Contingent Liabilities Overview
Contingent liabilities arise in the ordinary course of business. Often, they are related to lawsuits, arbitration, mediation, and other forms of litigation. Various litigation matters currently are threatened or pending against FHN and its subsidiaries. Also, FHN at times receives requests for information, subpoenas, or other inquiries from federal, state, and local regulators, from other government authorities, and from other parties concerning various matters relating to FHN’s current or former businesses. Certain matters of that sort are pending at most times, and FHN generally cooperates when those matters arise. Pending and threatened litigation matters sometimes are settled by the parties, and sometimes pending matters are resolved in court or before an arbitrator, or are withdrawn. Regardless of the manner of resolution, frequently the most significant changes in status of a matter occur over a short time period, often following a lengthy period of little substantive activity. In view of the inherent difficulty of predicting the outcome of these matters, particularly where the claimants seek very large or indeterminate damages, or where the cases present novel legal theories or involve a large number of parties, or where claims or other actions may be possible but have not been brought, FHN cannot reasonably determine what the eventual outcome of the matters will be, what the timing of the ultimate resolution of these matters may be, or what the eventual loss or impact related to each matter may be. FHN establishes a loss contingency liability for a litigation matter when loss is both probable and reasonably estimable as prescribed by applicable financial accounting guidance. If loss for a matter is probable and a range of possible loss outcomes is the best estimate available, accounting guidance requires a liability to be established at the low end of the range.
Based on current knowledge, and after consultation with counsel, management is of the opinion that loss contingencies related to threatened or pending litigation matters should not have a material adverse effect on the consolidated financial condition of FHN but may be material to FHN’s operating results for any particular reporting period depending, in part, on the results from that period.
Material Loss Contingency Matters
As used in this Note, except for matters that are reported as having been substantially settled or otherwise substantially resolved, FHN's “material loss contingency matters” generally fall into at least one of the following categories: (i) FHN has determined material loss to be probable and has established a material loss liability in accordance with applicable financial accounting guidance;
(ii) FHN has determined material loss to be probable but is not reasonably able to estimate an amount or range of material loss liability; or (iii) FHN has determined that material loss is not probable but is reasonably possible, and the amount or range of that reasonably possible material loss is estimable. As defined in applicable accounting guidance, loss is reasonably possible if there is more than a remote chance of a material loss outcome for FHN. FHN provides contingencies note disclosures for certain pending or threatened litigation matters each quarter, including all matters mentioned in categories (i) or (ii) and, occasionally, certain matters mentioned in category (iii). In all litigation matters discussed in this Note, unless settled or otherwise resolved, FHN believes it has meritorious defenses and intends to pursue those defenses vigorously.
FHN reassesses the liability for litigation matters each quarter as the matters progress. At June 30, 2026, the aggregate amount of liabilities established for all such loss contingency matters was $1 million.
In each material litigation-related loss contingency matter, except as otherwise noted, there is more than a remote chance that any of the following outcomes will occur: the plaintiff will substantially prevail; the defense will substantially prevail; the plaintiff will prevail in part; or the matter will be settled by the parties. At June 30, 2026, FHN estimates that for all material litigation-related loss contingency matters, estimable reasonably possible losses in future periods in excess of currently established liabilities could aggregate in a range from zero to less than $1 million.
As a result of the general uncertainties discussed above and the specific uncertainties discussed for each matter mentioned below, it is possible that the ultimate future loss experienced by FHN for any particular matter may materially exceed the amount, if any, of currently established liability for that matter.
Other Disclosures
Indemnification Agreements and Guarantees
In the ordinary course of business, FHN enters into indemnification agreements for legal proceedings against its directors and officers and standard representations and warranties for underwriting agreements, merger and acquisition agreements, loan sales, contractual commitments, and various other business transactions or arrangements.
The extent of FHN’s obligations under these agreements depends upon the occurrence of future events; therefore, it is not possible to estimate a maximum potential amount of payouts that could be required by such agreements.
| 33 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 11—RETIREMENT PLANS | |||||||
Note 11—Retirement Plans
FHN sponsors a noncontributory, qualified defined benefit pension plan for associates hired or rehired on or before September 1, 2007. Pension benefits are based on years of service, average compensation near retirement or other termination, and estimated Social Security benefits at age 65 . Benefits under the plan are “frozen” so that years of service and compensation changes after 2012 do not affect the benefit owed. Minimum contributions are based upon actuarially determined amounts necessary to fund the total benefit obligation. Decisions to contribute to the plan are based upon pension funding requirements under the Pension Protection Act, the maximum amount deductible under the Internal Revenue Code, the actual performance of plan assets, and trends in the regulatory environment. FHN made no contributions to the qualified pension plan in 2025. Management does not currently anticipate that FHN will make a contribution to the qualified pension plan in 2026.
FHN also maintains non-qualified plans, including a supplemental retirement plan that covers certain
associates whose benefits under the qualified pension plan have been limited by tax rules. These other non-qualified plans are unfunded, and contributions to these plans cover all benefits paid under the non-qualified plans. Payments made under the non-qualified plans were $5 million for 2025. FHN anticipates making benefit payments under the non-qualified plans of $5 million in 2026.
Service cost is included in personnel expense in the Consolidated Statements of Income. All other components of net periodic benefit cost are included in other expense.
For more information on FHN's pension plan and other postretirement benefit plans, see Note 17 - Retirement Plans and Other Employee Benefits in FHN's 2025 Annual Report on Form 10-K.
The components of net periodic benefit cost for the three and six months ended June 30, 2026 and 2025 were as follows.
| COMPONENTS OF NET PERIODIC BENEFIT COST | ||||||||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| (Dollars in millions) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||
| Components of net periodic benefit cost | ||||||||||||||||||||||||||
| Interest cost | $ | $ | $ | $ | ||||||||||||||||||||||
| Expected return on plan assets | ( | ( | ( | ( | ||||||||||||||||||||||
| Amortization of unrecognized: | ||||||||||||||||||||||||||
| Actuarial (gain) loss | ||||||||||||||||||||||||||
| Net periodic benefit cost | $ | $ | $ | $ | ||||||||||||||||||||||
| 34 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 12—BUSINESS SEGMENT INFORMATION | |||||||
Note 12—Business Segment Information
FHN's operating segments are composed of the following:
•Commercial, Consumer & Wealth segment offers financial products and services, including traditional lending and deposit taking, to commercial and consumer clients primarily in the southern U.S. and other selected markets. Commercial, Consumer & Wealth also consists of lines of business that deliver product offerings and services with niche industry knowledge including asset-based lending, commercial real estate, equipment finance/leasing, energy, international banking, healthcare, and transportation and logistics. Additionally, Commercial, Consumer & Wealth provides investment, wealth management, financial planning, trust and asset management services for consumer clients as well as delivering treasury management solutions, loan syndications, and corporate banking services.
•Wholesale segment consists of lines of business that deliver product offerings and services with differentiated industry knowledge. Wholesale’s lines of business include mortgage warehouse lending, franchise finance, correspondent banking, and mortgage. Additionally, Wholesale has a line of business focused on fixed income securities sales, trading, underwriting, and strategies for institutional clients in the U.S. and abroad, as well as loan sales, portfolio advisory services, and derivative sales.
•Corporate segment consists primarily of corporate support functions including risk management, audit, accounting, finance, executive office, and corporate communications. Shared support services such as human resources, marketing, properties, technology, credit risk and bank operations are allocated to the activities of Commercial, Consumer & Wealth, Wholesale, and Corporate. Additionally, the Corporate segment includes centralized management of capital and funding to support the business activities of the company including management of balance sheet funding, liquidity, and capital management and allocation. The Corporate segment also includes the revenue and expense associated with run-off businesses such as pre-2009 mortgage banking elements, run-off consumer and trust preferred loan portfolios, and other exited businesses.
Basis of Presentation
Results of individual segments are presented based on FHN's internal management reporting practices. There is no comprehensive, authoritative body of guidance for management accounting equivalent to GAAP; therefore, the financial results of FHN's individual segments are not necessarily comparable with similar information for any other company.
Periodically, FHN adapts its segments to reflect managerial or strategic changes. FHN may also modify its methodology of allocating expenses and equity among segments, which could change historical segment results. Business segment revenue, expense, asset, and equity levels reflect those which are specifically identifiable, or which are allocated based on an internal allocation method. Because the allocations are based on internally developed assignments and allocations, to an extent they are subjective. Generally, all assignments and allocations have been consistently applied for all periods presented.
Funds Transfer Pricing
Net interest income in segment results reflects FHN's internal funds transfer pricing methodology which is designed to consider interest rate and liquidity risks. Under this methodology, assets receive a funding charge while liabilities and capital receive a funding credit based on market interest rates, product characteristics, and other factors.
The transfer pricing framework considers the application of funding curves and methodologies consistently across the balance sheet. A residual gain or loss from funds transfer pricing operations is retained within Corporate.
Segment Allocations
Financial results are presented, to the extent practicable, as if each segment operated on a stand-alone basis and include expense allocations for corporate overhead services used by the segments.
FHN has allocated the ALLL and the reserve for unfunded lending commitments based on the loan exposures within each segment’s portfolio.
The Company's Chief Operating Decision Maker ("CODM") is comprised of the chief executive officer and segment leadership.
For both the Commercial, Consumer & Wealth and Wholesale segments, the CODM uses both Pre-Provision Net Revenue ("PPNR") and Pre-Tax Net Income ("PTNI") to evaluate performance and allocate resources. The measure of PPNR focuses on the Company's primary businesses principally by excluding the volatility associated with credit risk estimates due to the CECL life-of-loan estimation requirement, which is highly sensitive to changes in economic forecasts. PPNR also represents a metric utilized by regulatory agencies in stress testing assessments. PTNI is used to incorporate credit risk estimates for a holistic view of pre-tax results in the evaluation of segment performance.
For the Corporate segment, the CODM uses after-tax income to evaluate performance and allocate resources. After-tax income is most relevant for the Corporate segment because of minimal credit risk and inclusion of
| 35 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 12—BUSINESS SEGMENT INFORMATION | |||||||
the impacts from all consolidated tax matters, which are not allocated, in addition to all other methodologies affecting pre-tax income among reported segments (e.g., FTP and cost allocations).
The following table presents financial information for each reportable business segment for the three and six months ended June 30, 2026 and 2025.
| SEGMENT FINANCIAL INFORMATION | |||||||||||||||||||||||
| Three Months Ended June 30, 2026 | |||||||||||||||||||||||
| (Dollars in millions) | Commercial, Consumer & Wealth | Wholesale | Corporate | Consolidated | |||||||||||||||||||
| Interest income | $ | $ | $ | $ | |||||||||||||||||||
| Interest expense | |||||||||||||||||||||||
| Funds transfer pricing | ( | ( | |||||||||||||||||||||
| Net interest income (expense) | ( | ||||||||||||||||||||||
| Noninterest income | |||||||||||||||||||||||
| Total revenues | ( | ||||||||||||||||||||||
| Noninterest expense (a) | |||||||||||||||||||||||
| Pre-provision net revenue (b) | ( | ||||||||||||||||||||||
| Provision (benefit) for credit losses | ( | ||||||||||||||||||||||
| Income (loss) before income taxes | ( | ||||||||||||||||||||||
| Income tax expense (benefit) | ( | ||||||||||||||||||||||
| Net income (loss) | $ | $ | $ | ( | $ | ||||||||||||||||||
| Average assets | $ | $ | $ | $ | |||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||
| Expenditures for long-lived assets | |||||||||||||||||||||||
| Three Months Ended June 30, 2025 | |||||||||||||||||||||||
| (Dollars in millions) | Commercial, Consumer & Wealth | Wholesale | Corporate | Consolidated | |||||||||||||||||||
| Interest income | $ | $ | $ | $ | |||||||||||||||||||
| Interest expense | |||||||||||||||||||||||
| Funds transfer pricing | ( | ( | |||||||||||||||||||||
| Net interest income (expense) | ( | ||||||||||||||||||||||
| Noninterest income | |||||||||||||||||||||||
| Total revenues | ( | ||||||||||||||||||||||
| Noninterest expense (a) | |||||||||||||||||||||||
| Pre-provision net revenue (b) | ( | ||||||||||||||||||||||
| Provision (benefit) for credit losses | |||||||||||||||||||||||
| Income (loss) before income taxes | ( | ||||||||||||||||||||||
| Income tax expense (benefit) | ( | ||||||||||||||||||||||
| Net income (loss) | $ | $ | $ | ( | $ | ||||||||||||||||||
| Average assets | $ | $ | $ | $ | |||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||
| Expenditures for long-lived assets | |||||||||||||||||||||||
(a)2026 includes $5 million in derivative valuation adjustments related to prior Visa Class B share sales in the Corporate segment. 2025 includes an FDIC special assessment expense credit of $1 million and a $4 million expense credit related to an accrual release in deferred compensation in the Corporate segment.
(b)Pre-provision net revenue is a non-GAAP measure and is reconciled to income (loss) before income taxes (GAAP) in this table.
| 36 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 12—BUSINESS SEGMENT INFORMATION | |||||||
| Six Months Ended June 30, 2026 | |||||||||||||||||||||||
| (Dollars in millions) | Commercial, Consumer & Wealth | Wholesale | Corporate | Consolidated | |||||||||||||||||||
| Interest income | $ | $ | $ | $ | |||||||||||||||||||
| Interest expense | |||||||||||||||||||||||
| Funds transfer pricing | ( | ( | |||||||||||||||||||||
| Net interest income (expense) | ( | ||||||||||||||||||||||
| Noninterest income | |||||||||||||||||||||||
| Total revenues | ( | ||||||||||||||||||||||
| Noninterest expense (a) | |||||||||||||||||||||||
| Pre-provision net revenue (b) | ( | ||||||||||||||||||||||
| Provision (benefit) for credit losses | ( | ||||||||||||||||||||||
| Income (loss) before income taxes | ( | ||||||||||||||||||||||
| Income tax expense (benefit) | ( | ||||||||||||||||||||||
| Net income (loss) | $ | $ | $ | ( | $ | ||||||||||||||||||
| Average assets | $ | $ | $ | $ | |||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||
| Expenditures for long-lived assets | |||||||||||||||||||||||
| Six Months Ended June 30, 2025 | |||||||||||||||||||||||
| (Dollars in millions) | Commercial, Consumer & Wealth | Wholesale | Corporate | Consolidated | |||||||||||||||||||
| Interest income | $ | $ | $ | $ | |||||||||||||||||||
| Interest expense | |||||||||||||||||||||||
| Funds transfer pricing | ( | ( | |||||||||||||||||||||
| Net interest income (expense) | ( | ||||||||||||||||||||||
| Noninterest income | |||||||||||||||||||||||
| Total revenues | ( | ||||||||||||||||||||||
| Noninterest expense (a) | |||||||||||||||||||||||
| Pre-provision net revenue (b) | ( | ||||||||||||||||||||||
| Provision (benefit) for credit losses | |||||||||||||||||||||||
| Income (loss) before income taxes | ( | ||||||||||||||||||||||
| Income tax expense (benefit) | ( | ||||||||||||||||||||||
| Net income (loss) | $ | $ | $ | ( | $ | ||||||||||||||||||
| Average assets | $ | $ | $ | $ | |||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||
| Expenditures for long-lived assets | |||||||||||||||||||||||
(a)2026 includes $5 million in derivative valuation adjustments related to prior Visa Class B share sales in the Corporate segment. 2025 includes a $4 million expense credit related to an accrual release in deferred compensation, and $5 million in derivative valuation adjustments related to prior Visa Class B share sales in the Corporate segment.
(b)Pre-provision net revenue is a non-GAAP measure and is reconciled to income (loss) before income taxes (GAAP) in this table.
| 37 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 12—BUSINESS SEGMENT INFORMATION | |||||||
The following tables present a disaggregation of FHN’s noninterest income by major product line and reportable segment for the three and six months ended June 30, 2026 and 2025.
| NONINTEREST INCOME DETAIL BY SEGMENT | |||||||||||||||||||||||
| Three Months Ended June 30, 2026 | |||||||||||||||||||||||
| (Dollars in millions) | Commercial, Consumer & Wealth | Wholesale | Corporate | Consolidated | |||||||||||||||||||
| Noninterest income: | |||||||||||||||||||||||
| Fixed income (a) | $ | $ | $ | $ | |||||||||||||||||||
| Deposit transactions and cash management | |||||||||||||||||||||||
| Brokerage, management fees and commissions | |||||||||||||||||||||||
| Card and digital banking fees | |||||||||||||||||||||||
| Other service charges and fees | |||||||||||||||||||||||
| Deferred compensation income | |||||||||||||||||||||||
| Trust services and investment management | |||||||||||||||||||||||
| Mortgage banking income | |||||||||||||||||||||||
| Other income (b) | |||||||||||||||||||||||
| Total noninterest income | $ | $ | $ | $ | |||||||||||||||||||
| Three Months Ended June 30, 2025 | |||||||||||||||||||||||
| (Dollars in millions) | Commercial, Consumer & Wealth | Wholesale | Corporate | Consolidated | |||||||||||||||||||
| Noninterest income: | |||||||||||||||||||||||
| Fixed income (a) | $ | $ | $ | $ | |||||||||||||||||||
| Deposit transactions and cash management | |||||||||||||||||||||||
| Brokerage, management fees and commissions | |||||||||||||||||||||||
| Card and digital banking fees | |||||||||||||||||||||||
| Other service charges and fees | |||||||||||||||||||||||
| Deferred compensation income | |||||||||||||||||||||||
| Trust services and investment management | |||||||||||||||||||||||
| Mortgage banking income | |||||||||||||||||||||||
| Other income (b) | |||||||||||||||||||||||
| Total noninterest income | $ | $ | $ | $ | |||||||||||||||||||
(a)2026 and 2025 include $11 million and $9 million, respectively, of underwriting, portfolio advisory, and other noninterest income in scope of ASC 606, "Revenue from Contracts with Customers."
(b)Includes letter of credit fees and insurance commissions in scope of ASC 606.
| 38 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 12—BUSINESS SEGMENT INFORMATION | |||||||
| Six Months Ended June 30, 2026 | |||||||||||||||||||||||
| (Dollars in millions) | Commercial, Consumer & Wealth | Wholesale | Corporate | Consolidated | |||||||||||||||||||
| Noninterest income: | |||||||||||||||||||||||
| Fixed income (a) | $ | $ | $ | $ | |||||||||||||||||||
| Deposit transactions and cash management | |||||||||||||||||||||||
| Brokerage, management fees and commissions | |||||||||||||||||||||||
| Card and digital banking fees | |||||||||||||||||||||||
| Other service charges and fees | |||||||||||||||||||||||
| Deferred compensation income | |||||||||||||||||||||||
| Trust services and investment management | |||||||||||||||||||||||
| Mortgage banking income | |||||||||||||||||||||||
| Other income (b) | |||||||||||||||||||||||
| Total noninterest income | $ | $ | $ | $ | |||||||||||||||||||
| Six Months Ended June 30, 2025 | |||||||||||||||||||||||
| (Dollars in millions) | Commercial, Consumer & Wealth | Wholesale | Corporate | Consolidated | |||||||||||||||||||
| Noninterest income: | |||||||||||||||||||||||
| Fixed income (a) | $ | $ | $ | $ | |||||||||||||||||||
| Deposit transactions and cash management | |||||||||||||||||||||||
| Brokerage, management fees and commissions | |||||||||||||||||||||||
| Card and digital banking fees | |||||||||||||||||||||||
| Other service charges and fees | |||||||||||||||||||||||
| Deferred compensation income | |||||||||||||||||||||||
| Trust services and investment management | |||||||||||||||||||||||
| Mortgage banking income | |||||||||||||||||||||||
| Other income (b) | |||||||||||||||||||||||
| Total noninterest income | $ | $ | $ | $ | |||||||||||||||||||
(a)2026 and 2025 include $22 million and $18 million, respectively, of underwriting, portfolio advisory, and other noninterest income in scope of ASC 606, "Revenue from Contracts with Customers."
(b)Includes letter of credit fees and insurance commissions in scope of ASC 606.
| 39 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 12—BUSINESS SEGMENT INFORMATION | |||||||
The following tables present a disaggregation of FHN's noninterest expense by reportable segment for the three and six months ended June 30, 2026 and 2025.
| NONINTEREST EXPENSE DETAIL BY SEGMENT | |||||||||||||||||||||||
| Three Months Ended June 30, 2026 | |||||||||||||||||||||||
| (Dollars in millions) | Commercial, Consumer & Wealth | Wholesale | Corporate | Consolidated | |||||||||||||||||||
| Noninterest expense: | |||||||||||||||||||||||
| Personnel expense | $ | $ | $ | $ | |||||||||||||||||||
| Computer software | |||||||||||||||||||||||
| Net occupancy expense | |||||||||||||||||||||||
| Operations services | |||||||||||||||||||||||
| Legal and professional fees | |||||||||||||||||||||||
| Advertising and public relations | |||||||||||||||||||||||
| Deposit insurance expense | |||||||||||||||||||||||
| Equipment expense | |||||||||||||||||||||||
| Amortization of intangible assets | |||||||||||||||||||||||
| Other expense | |||||||||||||||||||||||
| Cost allocations | ( | ||||||||||||||||||||||
| Total noninterest expense | $ | $ | $ | $ | |||||||||||||||||||
| Three Months Ended June 30, 2025 | |||||||||||||||||||||||
| (Dollars in millions) | Commercial, Consumer & Wealth | Wholesale | Corporate | Consolidated | |||||||||||||||||||
| Noninterest expense: | |||||||||||||||||||||||
| Personnel expense | $ | $ | $ | $ | |||||||||||||||||||
| Computer software | |||||||||||||||||||||||
| Net occupancy expense | |||||||||||||||||||||||
| Operations services | |||||||||||||||||||||||
| Legal and professional fees | |||||||||||||||||||||||
| Advertising and public relations | |||||||||||||||||||||||
| Deposit insurance expense | |||||||||||||||||||||||
| Equipment expense | |||||||||||||||||||||||
| Amortization of intangible assets | |||||||||||||||||||||||
| Other expense | |||||||||||||||||||||||
| Cost allocations | ( | ||||||||||||||||||||||
| Total noninterest expense | $ | $ | $ | $ | |||||||||||||||||||
| 40 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 12—BUSINESS SEGMENT INFORMATION | |||||||
| Six Months Ended June 30, 2026 | |||||||||||||||||||||||
| (Dollars in millions) | Commercial, Consumer & Wealth | Wholesale | Corporate | Consolidated | |||||||||||||||||||
| Noninterest expense: | |||||||||||||||||||||||
| Personnel expense | $ | $ | $ | $ | |||||||||||||||||||
| Computer software | |||||||||||||||||||||||
| Net occupancy expense | |||||||||||||||||||||||
| Operations services | |||||||||||||||||||||||
| Legal and professional fees | |||||||||||||||||||||||
| Advertising and public relations | |||||||||||||||||||||||
| Deposit insurance expense | |||||||||||||||||||||||
| Equipment expense | |||||||||||||||||||||||
| Amortization of intangible assets | |||||||||||||||||||||||
| Other expense | |||||||||||||||||||||||
| Cost allocations | ( | ||||||||||||||||||||||
| Total noninterest expense | $ | $ | $ | $ | |||||||||||||||||||
| Six Months Ended June 30, 2025 | |||||||||||||||||||||||
| (Dollars in millions) | Commercial, Consumer & Wealth | Wholesale | Corporate | Consolidated | |||||||||||||||||||
| Noninterest expense: | |||||||||||||||||||||||
| Personnel expense | $ | $ | $ | $ | |||||||||||||||||||
| Computer software | |||||||||||||||||||||||
| Net occupancy expense | |||||||||||||||||||||||
| Operations services | |||||||||||||||||||||||
| Legal and professional fees | |||||||||||||||||||||||
| Advertising and public relations | |||||||||||||||||||||||
| Deposit insurance expense | |||||||||||||||||||||||
| Equipment expense | |||||||||||||||||||||||
| Amortization of intangible assets | |||||||||||||||||||||||
| Other expense | |||||||||||||||||||||||
| Cost allocations | ( | ||||||||||||||||||||||
| Total noninterest expense | $ | $ | $ | $ | |||||||||||||||||||
| 41 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 13—VARIABLE INTEREST ENTITIES | |||||||
Note 13—Variable Interest Entities
FHN makes equity investments in various entities that are considered VIEs, as defined by GAAP. A VIE typically does not have sufficient equity at risk to finance its activities without additional subordinated financial support from other parties. The Company’s variable interest arises from contractual, ownership, or other monetary interests in the entity, which change with fluctuations in the fair value of the entity's net assets. FHN consolidates a VIE if FHN is the primary beneficiary of the entity. FHN is the primary beneficiary of a VIE if FHN's variable interest provides it with the power to direct the activities that most significantly impact the VIE and the right to receive benefits (or the obligation to absorb losses) that could potentially be significant to the VIE. To determine whether or not a variable interest held could potentially be significant to the VIE, FHN considers both qualitative and quantitative factors regarding the nature, size, and form of its involvement with the VIE. FHN assesses whether or not it is the primary beneficiary of a VIE on an ongoing basis.
Consolidated Variable Interest Entities
FHN has established certain rabbi trusts related to deferred compensation plans offered to its employees.
FHN contributes employee cash compensation deferrals to the trusts and directs the underlying investments made by the trusts. The assets of these trusts are available to FHN’s creditors only in the event that FHN becomes insolvent. These trusts are considered VIEs as there is no equity at risk in the trusts since FHN provided the equity interest to its employees in exchange for services rendered. FHN is considered the primary beneficiary of the rabbi trusts as it has the power to direct the activities that most significantly impact the economic performance of the rabbi trusts through its ability to direct the underlying investments made by the trusts. Additionally, FHN could potentially receive benefits or absorb losses that are significant to the trusts due to its right to receive any asset values in excess of liability payoffs and its obligation to fund any liabilities to employees that are in excess of a rabbi trust’s assets.
The following table summarizes the carrying value of assets and liabilities associated with rabbi trusts used for deferred compensation plans which are consolidated by FHN as of June 30, 2026 and December 31, 2025.
| CONSOLIDATED VIEs | ||||||||||||||
| (Dollars in millions) | June 30, 2026 | December 31, 2025 | ||||||||||||
| Assets: | ||||||||||||||
| Other assets | $ | $ | ||||||||||||
| Liabilities: | ||||||||||||||
| Other liabilities | $ | $ | ||||||||||||
Nonconsolidated Variable Interest Entities
Tax Credit Investments
Through designated wholly-owned subsidiaries, First Horizon Bank makes equity investments as a limited partner in various partnerships that sponsor affordable housing projects utilizing the LIHTC. Through designated subsidiaries, First Horizon Bank periodically makes equity investments as a non-managing member in various LLCs that sponsor community development projects utilizing the NMTC. First Horizon Bank also makes equity investments as a limited partner or non-managing member in entities that receive historic tax credits. The
purpose of these investments is to achieve a satisfactory return on capital and to support FHN’s community reinvestment initiatives. These entities are considered VIEs as First Horizon Bank's subsidiaries represent the holders of the equity investment at risk, but do not have the ability to direct the activities that most significantly affect the performance of the entities. FHN is therefore not the primary beneficiary of any of these entities. Accordingly, FHN does not consolidate these VIEs and accounts for these investments in other assets on the Consolidated Balance Sheets. FHN accounts for equity investments in LIHTC, NMTC and historic tax credit entities under the proportional amortization method.
| 42 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 13—VARIABLE INTEREST ENTITIES | |||||||
The following table summarizes the impact to income tax expense on the Consolidated Statements of Income for the three and six months ended June 30, 2026 and 2025 for investments accounted for under the proportional amortization method. The impact of these investments is included in other operating activities, net in the Consolidated Statements of Cash Flows.
TAX CREDIT IMPACTS ON TAX EXPENSE | ||||||||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| (Dollars in millions) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||
| Income tax expense (benefit): | ||||||||||||||||||||||||||
| Amortization of qualifying investments | $ | $ | $ | $ | ||||||||||||||||||||||
| Tax credits | ( | ( | ( | ( | ||||||||||||||||||||||
| Other tax benefits related to qualifying investments | ( | ( | ( | ( | ||||||||||||||||||||||
Small Issuer Trust Preferred Holdings
First Horizon Bank holds variable interests in trusts which have issued mandatorily redeemable preferred capital securities (“trust preferreds”) for smaller banking and insurance enterprises. First Horizon Bank has no voting rights for the trusts’ activities. The trusts’ only assets are junior subordinated debentures of the issuing enterprises. The creditors of the trusts have no recourse to the assets of First Horizon Bank. Since First Horizon Bank is solely a holder of the trusts’ securities, it has no rights which would give it the power to direct the activities that most significantly impact the trusts’ economic performance and thus it is not considered the primary beneficiary of the trusts. First Horizon Bank has no contractual requirements to provide financial support to the trusts.
On-Balance Sheet Trust Preferred Securitization
In 2007, First Horizon Bank executed a securitization of certain small issuer trust preferreds for which the underlying trust meets the definition of a VIE as the holders of the equity investment at risk do not have the power through voting rights, or similar rights, to direct the activities that most significantly impact the entity’s economic performance. Since First Horizon Bank did not retain servicing or other decision-making rights, First Horizon Bank is not the primary beneficiary as it does not have the power to direct the activities that most significantly impact the trust’s economic performance. Accordingly, First Horizon Bank has accounted for the funds received through the securitization as a term borrowing in its Consolidated Balance Sheets. First Horizon Bank has no contractual requirements to provide financial support to the trust.
Holdings in Agency Mortgage-Backed Securities
FHN holds securities issued by various Agency securitization trusts. Based on their restrictive nature, the trusts meet the definition of a VIE since the holders of the equity investments at risk do not have the power through voting rights, or similar rights, to direct the activities that most significantly impact the entities’ economic performance. FHN could potentially receive benefits or
absorb losses that are significant to the trusts based on the nature of the trusts’ activities and the size of FHN’s holdings. However, FHN is solely a holder of the trusts’ securities and does not have the power to direct the activities that most significantly impact the trusts’ economic performance and is not considered the primary beneficiary of the trusts. FHN has no contractual requirements to provide financial support to the trusts.
Commercial Loan Modifications to Borrowers Experiencing Financial Difficulty
For certain troubled commercial loans, First Horizon Bank modifies the terms of the borrower’s debt in an effort to increase the probability of receipt of amounts contractually due. Following a modification to borrowers experiencing financial difficulty, the borrower entity typically meets the definition of a VIE as the initial determination of whether an entity is a VIE must be reconsidered as events have proven that the entity’s equity is not sufficient to permit it to finance its activities without additional subordinated financial support or a restructuring of the terms of its financing. As First Horizon Bank does not have the power to direct the activities that most significantly impact such troubled commercial borrowers’ operations, it is not considered the primary beneficiary even in situations where, based on the size of the financing provided, First Horizon Bank is exposed to potentially significant benefits and losses of the borrowing entity. First Horizon Bank has no contractual requirements to provide financial support to the borrowing entities beyond certain funding commitments established upon restructuring of the terms of the debt that allows for preparation of the underlying collateral for sale.
Proprietary Trust Preferred Issuances
In conjunction with its acquisitions, FHN acquired junior subordinated debt underlying multiple issuances of trust preferred debt. All of the trusts are considered VIEs because the ownership interests from the capital contributions to these trusts are not considered “at risk” in evaluating whether the holders of the equity investments at risk in the trusts have the ability to direct the activities that most significantly impact the entities’ economic performance. Thus, FHN cannot be the trusts’
| 43 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 13—VARIABLE INTEREST ENTITIES | |||||||
primary beneficiary because its ownership interests in the trusts are not considered variable interests as they are not considered “at risk”. Consequently, none of the trusts are consolidated by FHN.
SBA Interest-Only Strip Proprietary Securitizations
As part of its market making activities for government guaranteed loans, FHN often strips a portion of the interest from the guaranteed portion of an SBA loan and recognizes the resulting interest-only strip in trading assets. In response to investor preferences, FHN periodically executes proprietary securitization transactions that involve the pooling of interest-only strips to support securities issued by an associated trust. FHN has no contractual requirements to provide financial support to the trust. Based on their restrictive nature, the trusts are considered VIEs as the holders of equity at risk do not have the power through voting rights, or similar
rights, to direct the activities that most significantly impact a trust’s economic performance. To the extent that a portion of the resultant securities are retained for a period of time after a securitization, FHN has a potentially significant variable interest in a securitization trust depending on the size of the retained holdings. Once a sufficient volume of securities has been sold to investors, FHN relinquishes unilateral control of the limited voting rights held by a trust’s security holders. After that point, since FHN does not retain servicing or other decision-making rights, FHN is not considered the primary beneficiary as it does not have the power to direct the activities that most significantly impact the trust’s economic performance.
The following tables summarize FHN’s nonconsolidated VIEs as of June 30, 2026 and December 31, 2025.
NONCONSOLIDATED VIEs AT JUNE 30, 2026 | ||||||||||||||||||||
(Dollars in millions) | Maximum Loss Exposure | Liability Recognized | Classification | |||||||||||||||||
Type: | ||||||||||||||||||||
| Low income housing partnerships | $ | $ | (a) | |||||||||||||||||
| Other tax credit investments (b) | Other assets | |||||||||||||||||||
| Small issuer trust preferred holdings (c) | Loans and leases | |||||||||||||||||||
| On-balance sheet trust preferred securitization | (d) | |||||||||||||||||||
| Holdings of agency mortgage-backed securities (c) | (e) | |||||||||||||||||||
| Commercial loan modifications to borrowers experiencing financial difficulty (f) | Loans and leases | |||||||||||||||||||
| Proprietary trust preferred issuances (g) | Term borrowings | |||||||||||||||||||
(a)Maximum loss exposure represents $486 million of current investments and $244 million of accrued contractual funding commitments. Current investments are recognized in other assets. Accrued funding commitments represent unconditional contractual obligations for future funding events and are recognized in other liabilities. FHN currently expects to be required to fund these accrued commitments by the end of 2026.
(b)Maximum loss exposure represents the value of current investments.
(c)Maximum loss exposure represents the value of current investments. A liability is not recognized as FHN is solely a holder of the trusts’ securities.
(d)Includes $113 million classified as loans and leases and $1 million classified as trading securities, which are offset by $91 million classified as term borrowings.
(e)Includes $376 million classified as trading securities, $1.2 billion classified as securities held to maturity, and $6.1 billion classified as securities available for sale.
(f)Maximum loss exposure represents $320 million of current receivables with $1 million in additional contractual funding commitments on loans related to commercial loan modifications to borrowers experiencing financial difficulty.
(g)No exposure to loss due to nature of FHN's involvement.
| 44 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 13—VARIABLE INTEREST ENTITIES | |||||||
NONCONSOLIDATED VIEs AT DECEMBER 31, 2025 | ||||||||||||||||||||
| (Dollars in millions) | Maximum Loss Exposure | Liability Recognized | Classification | |||||||||||||||||
Type: | ||||||||||||||||||||
| Low income housing partnerships | $ | $ | (a) | |||||||||||||||||
| Other tax credit investments (b) | Other assets | |||||||||||||||||||
| Small issuer trust preferred holdings (c) | Loans and leases | |||||||||||||||||||
| On-balance sheet trust preferred securitization | (d) | |||||||||||||||||||
| Holdings of agency mortgage-backed securities (c) | (e) | |||||||||||||||||||
| Commercial loan modifications to borrowers experiencing financial difficulty (f) | Loans and leases | |||||||||||||||||||
| Proprietary trust preferred issuances (g) | Term borrowings | |||||||||||||||||||
(a)Maximum loss exposure represents $473 million of current investments and $260 million of accrued contractual funding commitments. Current investments are recognized in other assets. Accrued funding commitments represent unconditional contractual obligations for future funding events and are recognized in other liabilities. FHN currently expects to be required to fund these accrued commitments by the end of 2026.
(b)Maximum loss exposure represents current investments.
(c)Maximum loss exposure represents the value of current investments. A liability is not recognized as FHN is solely a holder of the trusts’ securities.
(d)Includes $113 million classified as loans and leases and $1 million classified as trading securities, which are offset by $89 million classified as term borrowings.
(e)Includes $678 million classified as trading securities, $1.2 billion classified as securities held to maturity, and $6.5 billion classified as securities available for sale.
(f)Maximum loss exposure represents $477 million of current receivables with $1 million in additional contractual funding commitments on loans related to commercial loan modifications to borrowers experiencing financial difficulty.
(g)No exposure to loss due to nature of FHN's involvement.
| 45 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 14—DERIVATIVES | |||||||
Note 14—Derivatives
In the normal course of business, FHN utilizes various financial instruments (including derivative contracts and credit-related agreements) through its fixed income and risk management operations, as part of its risk management strategy and as a means to meet clients’ needs. Derivative instruments are subject to credit and market risks in excess of the amount recorded on the balance sheet as required by GAAP. The contractual or notional amounts of these financial instruments do not necessarily represent the amount of credit or market risk. However, they can be used to measure the extent of involvement in various types of financial instruments. Controls and monitoring procedures for these instruments have been established and are routinely reevaluated. The ALCO controls, coordinates, and monitors the usage and effectiveness of these financial instruments.
Credit risk represents the potential loss that may occur if a party to a transaction fails to perform according to the terms of the contract. The measure of credit exposure is the replacement cost of contracts with a positive fair value. FHN manages credit risk by entering into financial instrument transactions through national exchanges, primary dealers or approved counterparties, and by using mutual margining and master netting agreements whenever possible to limit potential exposure. FHN also maintains collateral posting requirements with certain counterparties to limit credit risk. Daily margin posted or received with central clearinghouses is considered a legal settlement of the related derivative contracts which results in a net presentation for each contract in the Consolidated Balance Sheets. Treatment of daily margin as a settlement has no effect on hedge accounting or gains/losses for the applicable derivative contracts. On June 30, 2026 and December 31, 2025, respectively, FHN had $312 million and $243 million of cash receivables and $17 million and $20 million of cash payables related to collateral posting under master netting arrangements, inclusive of collateral posted related to contracts with adjustable collateral posting thresholds and over-collateralized positions, with derivative counterparties. With exchange-traded contracts, the credit risk is limited to the clearinghouse used. For non-exchange traded instruments, credit risk may occur when there is a gain in the fair value of the financial instrument and the counterparty fails to perform according to the terms of the contract and/or when the collateral proves to be of insufficient value. See additional discussion regarding master netting agreements and collateral posting requirements later in this note under the heading “Master Netting and Similar Agreements.”
Market risk represents the potential loss due to the decrease in the value of a financial instrument caused primarily by changes in interest rates or the prices of debt instruments. FHN manages market risk by establishing and
monitoring limits on the types and degree of risk that may be undertaken. FHN continually measures this risk through the use of models that measure value-at-risk and earnings-at-risk.
Derivative Instruments
FHN enters into various derivative contracts both to facilitate client transactions and as a risk management tool. Where contracts have been created for clients, FHN enters into upstream transactions with dealers to offset its risk exposure. Contracts with dealers that require central clearing are novated to a clearing agent who becomes FHN’s counterparty. Derivatives are also used as a risk management tool to hedge FHN’s exposure to changes in interest rates or other defined market risks.
Forward contracts are over-the-counter contracts where two parties agree to purchase and sell a specific quantity of a financial instrument at a specified price, with delivery or settlement at a specified date. Futures contracts are exchange-traded contracts where two parties agree to purchase and sell a specific quantity of a financial instrument at a specified price, with delivery or settlement at a specified date. Interest rate option contracts give the purchaser the right, but not the obligation, to buy or sell a specified quantity of a financial instrument, at a specified price, during a specified period of time. Caps and floors are options that are linked to a notional principal amount and an underlying indexed interest rate. Interest rate swaps involve the exchange of interest payments at specified intervals between two parties without the exchange of any underlying principal. Swaptions are options on interest rate swaps that give the purchaser the right, but not the obligation, to enter into an interest rate swap agreement during a specified period of time.
Trading Activities
FHNF trades U.S. Treasury, U.S. Agency, government-guaranteed loan, mortgage-backed, corporate and municipal fixed income securities, and other securities for distribution to clients. When these securities settle on a delayed basis, they are considered forward contracts. FHNF also enters into interest rate contracts, including caps, swaps, and floors, for its clients. In addition, FHNF enters into futures and option contracts to economically hedge interest rate risk associated with a portion of its securities inventory. These transactions are measured at fair value, with changes in fair value recognized in noninterest income. Related assets and liabilities are recorded on the Consolidated Balance Sheets as derivative assets and derivative liabilities within other assets and other liabilities. The FHNF Risk Committee and the Credit Risk Management Committee collaborate to mitigate credit risk related to these transactions. Credit risk is controlled through credit approvals, risk control limits, and ongoing monitoring procedures. Total trading
| 46 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 14—DERIVATIVES | |||||||
revenues were $37 million and $34 million for the three months ended June 30, 2026 and 2025, and $83 million and $70 million for the six months ended June 30, 2026 and 2025, respectively. Trading revenues are inclusive of both derivative and non-derivative financial instruments and are included in fixed income on the Consolidated Statements of Income.
The following table summarizes derivatives associated with FHNF's trading activities as of June 30, 2026 and December 31, 2025.
| DERIVATIVES ASSOCIATED WITH TRADING | ||||||||||||||||||||
| June 30, 2026 | ||||||||||||||||||||
| (Dollars in millions) | Notional | Assets | Liabilities | |||||||||||||||||
| Customer interest rate contracts | $ | $ | $ | |||||||||||||||||
| Offsetting upstream interest rate contracts | ||||||||||||||||||||
| Forwards and futures purchased | ||||||||||||||||||||
| Forwards and futures sold | ||||||||||||||||||||
| December 31, 2025 | ||||||||||||||||||||
| (Dollars in millions) | Notional | Assets | Liabilities | |||||||||||||||||
| Customer interest rate contracts | $ | $ | $ | |||||||||||||||||
| Offsetting upstream interest rate contracts | ||||||||||||||||||||
| Forwards and futures purchased | ||||||||||||||||||||
| Forwards and futures sold | ||||||||||||||||||||
Interest Rate Risk Management
FHN’s ALCO focuses on managing market risk by controlling and limiting earnings volatility attributable to changes in interest rates. Interest rate risk exists to the extent that interest-earning assets and interest-bearing liabilities have different maturity or repricing characteristics. FHN uses derivatives, primarily swaps, that are designed to moderate the impact on earnings as interest rates change. Interest paid or received for swaps utilized by FHN to hedge the fair value of long-term debt is recognized as an adjustment of the interest expense of the liabilities whose risk is being managed. FHN’s interest rate risk management policy is to use derivatives to hedge
interest rate risk or market value of assets or liabilities, not to speculate. In addition, FHN has entered into certain interest rate swaps and caps as a part of a product offering to commercial clients that includes customer derivatives paired with upstream offsetting market instruments that, when completed, are designed to mitigate interest rate risk. These contracts do not qualify for hedge accounting and are measured at fair value with gains or losses included in current earnings in noninterest expense on the Consolidated Statements of Income.
The following table summarizes FHN’s derivatives associated with interest rate risk management activities as of June 30, 2026 and December 31, 2025.
| DERIVATIVES ASSOCIATED WITH INTEREST RATE RISK MANAGEMENT | ||||||||||||||||||||
| June 30, 2026 | ||||||||||||||||||||
| (Dollars in millions) | Notional | Assets | Liabilities | |||||||||||||||||
Customer Interest Rate Contracts Hedging | ||||||||||||||||||||
Hedging Instruments and Hedged Items: | ||||||||||||||||||||
| Customer interest rate contracts | $ | $ | $ | |||||||||||||||||
| Offsetting upstream interest rate contracts | ||||||||||||||||||||
| 47 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 14—DERIVATIVES | |||||||
| December 31, 2025 | ||||||||||||||||||||
| (Dollars in millions) | Notional | Assets | Liabilities | |||||||||||||||||
| Customer Interest Rate Contracts Hedging | ||||||||||||||||||||
Hedging Instruments and Hedged Items: | ||||||||||||||||||||
| Customer interest rate contracts | $ | $ | $ | |||||||||||||||||
| Offsetting upstream interest rate contracts | ||||||||||||||||||||
The following table summarizes gains (losses) on FHN’s derivatives associated with interest rate risk management activities for the three and six months ended June 30, 2026 and 2025.
| DERIVATIVE GAINS (LOSSES) ASSOCIATED WITH INTEREST RATE RISK MANAGEMENT | ||||||||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| (Dollars in millions) | Gains (Losses) | Gains (Losses) | Gains (Losses) | Gains (Losses) | ||||||||||||||||||||||
| Customer Interest Rate Contracts Hedging | ||||||||||||||||||||||||||
| Hedging Instruments and Hedged Items: | ||||||||||||||||||||||||||
| Customer interest rate contracts (a) | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||
| Offsetting upstream interest rate contracts (a) | ( | ( | ||||||||||||||||||||||||
(a)Gains (losses) included in other expense within the Consolidated Statements of Income.
Cash Flow Hedges
In 2022, FHN entered into interest rate contracts (floors and swaps) which have been designated as cash flow hedges. These hedges reference 1-Month Term SOFR and FHN made certain elections under ASU 2020-04 to facilitate qualification for hedge accounting during the time that hedged items transitioned away from 1-Month LIBOR.
In a cash flow hedge, the entire change in the fair value of the interest rate derivatives included in the assessment of
hedge effectiveness is initially recorded in OCI and is subsequently reclassified from OCI to current period earnings (interest income or interest expense) in the same period that the hedged item affects earnings.
The following tables summarize FHN’s derivative activities associated with cash flow hedges as of June 30, 2026 and December 31, 2025.
| DERIVATIVES ASSOCIATED WITH CASH FLOW HEDGES | ||||||||||||||||||||
| June 30, 2026 | ||||||||||||||||||||
| (Dollars in millions) | Notional | Assets | Liabilities | |||||||||||||||||
Cash Flow Hedges | ||||||||||||||||||||
Hedging Instruments: | ||||||||||||||||||||
| Interest rate contracts | $ | $ | $ | |||||||||||||||||
| Hedged Items: | ||||||||||||||||||||
| Variability in cash flows related to debt instruments (primarily loans) | N/A | $ | N/A | |||||||||||||||||
| 48 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 14—DERIVATIVES | |||||||
| December 31, 2025 | ||||||||||||||||||||
| (Dollars in millions) | Notional | Assets | Liabilities | |||||||||||||||||
| Cash Flow Hedges | ||||||||||||||||||||
Hedging Instruments: | ||||||||||||||||||||
| Interest rate contracts | $ | $ | $ | |||||||||||||||||
| Hedged Items: | ||||||||||||||||||||
| Variability in cash flows related to debt instruments (primarily loans) | N/A | $ | N/A | |||||||||||||||||
The following table summarizes gains (losses) on FHN’s derivatives associated with cash flow hedges for the three and six months ended June 30, 2026 and 2025.
| DERIVATIVE GAINS (LOSSES) ASSOCIATED WITH CASH FLOW HEDGES | ||||||||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| (Dollars in millions) | Gains (Losses) | Gains (Losses) | Gains (Losses) | Gains (Losses) | ||||||||||||||||||||||
| Cash Flow Hedges | ||||||||||||||||||||||||||
| Hedging Instruments: | ||||||||||||||||||||||||||
| Interest rate contracts (a) | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||
| Gain (loss) recognized in other comprehensive income (loss) | ( | ( | ||||||||||||||||||||||||
| Gain (loss) reclassified from AOCI into interest income | ||||||||||||||||||||||||||
(a)Approximately $27 million of pre-tax losses are expected to be reclassified into earnings in the next twelve months.
Other Derivatives
FHN has mortgage banking operations that include the origination and sale of loans into the secondary market. As part of the origination of loans, FHN enters into interest rate lock commitments with borrowers. Additionally, FHN
enters into forward sales contracts with buyers for delivery of loans at a future date. Both of these contracts qualify as freestanding derivatives and are recognized at fair value through earnings. The notional and fair values of these contracts are presented in the table below.
| DERIVATIVES ASSOCIATED WITH MORTGAGE BANKING HEDGES | ||||||||||||||||||||
| June 30, 2026 | ||||||||||||||||||||
| (Dollars in millions) | Notional | Assets | Liabilities | |||||||||||||||||
| Mortgage Banking Hedges | ||||||||||||||||||||
| Option contracts written | $ | $ | $ | |||||||||||||||||
| Forward contracts written | ||||||||||||||||||||
| December 31, 2025 | ||||||||||||||||||||
| (Dollars in millions) | Notional | Assets | Liabilities | |||||||||||||||||
| Mortgage Banking Hedges | ||||||||||||||||||||
| Option contracts written | $ | $ | $ | |||||||||||||||||
| Forward contracts written | ||||||||||||||||||||
| 49 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 14—DERIVATIVES | |||||||
The following table summarizes gains (losses) on FHN's derivatives associated with mortgage banking activities for the three and six months ended June 30, 2026 and 2025.
| DERIVATIVE GAINS (LOSSES) ASSOCIATED WITH MORTGAGE BANKING HEDGES | ||||||||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| (Dollars in millions) | Gains (Losses) | Gains (Losses) | Gains (Losses) | Gains (Losses) | ||||||||||||||||||||||
| Mortgage Banking Hedges | ||||||||||||||||||||||||||
| Option contracts written | $ | ( | $ | $ | ( | $ | ( | |||||||||||||||||||
| Forward contracts written | ( | |||||||||||||||||||||||||
In conjunction with pre-2020 sales of Visa Class B shares, FHN entered into derivative transactions whereby FHN will make or receive cash payments whenever the conversion ratio of the Visa Class B shares into Visa Class A shares is adjusted. As of June 30, 2026 and December 31, 2025, the derivative liabilities associated with the sales of Visa Class B shares were $21 million and $25 million, respectively. FHN recognized $5 25 million for the year ended December 31, 2025. See Note 16 - Fair Value of Assets and Liabilities for discussion of the valuation inputs and processes for these Visa-related derivatives.
FHN utilizes cross-currency swaps and cross-currency interest rate swaps to economically hedge its exposure to foreign currency risk and interest rate risk associated with non-U.S. dollar denominated loans. As of June 30, 2026 and December 31, 2025, these loans were valued at $23 million and $19 million, respectively. The balance sheet amount and the gains/losses associated with these derivatives were not significant.
Related to its loan participation/syndication activities, FHN enters into risk participation agreements, under which it assumes exposure for, or receives indemnification for, borrowers’ performance on underlying interest rate derivative contracts. FHN's counterparties in these contracts are other lending institutions involved in the loan participation/syndication arrangements for which the underlying interest rate derivative contract is intended to hedge interest rate risk for the borrower. FHN will make (other institution is the lead bank) or receive (FHN is the lead bank) payments for risk participations if the borrower defaults on its obligation to perform under the terms of its interest rate derivative agreement with the lead bank in the participation.
As of June 30, 2026 and December 31, 2025, the notional values of FHN’s risk participations were $326 million and $184 million of derivative assets and $1.1 billion and $1.0 billion of derivative liabilities, respectively. The notional value for risk participation/syndication agreements is consistent with the percentage of
participation in the lending arrangement. FHN's maximum exposure or benefit in the risk participation agreements is contingent on the fair value of the underlying interest rate derivative contracts for which the borrower is in a liability position at the time of default. FHN monitors the credit risk associated with the borrowers to which the risk participations relate through the same credit risk assessment process utilized for establishing credit loss estimates for its loan portfolio. These credit risk estimates are included in the determination of fair value for the risk participations. Assuming all underlying third-party customers referenced in the swap contracts defaulted at June 30, 2026 and December 31, 2025, the exposure from these agreements would not be material based on the fair value of the underlying swaps.
Master Netting and Similar Agreements
FHN uses master netting agreements, mutual margining agreements and collateral posting requirements to minimize credit risk on derivative contracts. Master netting and similar agreements are used when counterparties have multiple derivatives contracts that allow for a “right of setoff,” meaning that a counterparty may net offsetting positions and collateral with the same counterparty under the contract to determine a net receivable or payable. The following discussion provides an overview of these arrangements which may vary due to the derivative type and market in which a derivative transaction is executed.
Interest rate derivatives are subject to agreements consistent with standard agreement forms of the ISDA. Currently, all interest rate derivative contracts are entered into as over-the-counter transactions and collateral posting requirements are based on the net asset or liability position with each respective counterparty. For contracts that require central clearing, novation to a counterparty with access to a clearinghouse occurs and initial margin is posted.
Cash margin received (posted) that is considered settlements for the derivative contracts is included in the respective derivative asset (liability) value. Cash margin that is considered collateral received (posted) for interest
| 50 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 14—DERIVATIVES | |||||||
rate derivatives is recognized as a liability (asset) on FHN’s Consolidated Balance Sheets.
Interest rate derivatives with clients that are smaller financial institutions typically require posting of collateral by the counterparty to FHN. This collateral is subject to a threshold with daily adjustments based upon changes in the level or fair value of the derivative position. Positions and related collateral can be netted in the event of default. Collateral pledged by a counterparty is typically cash or securities. The securities pledged as collateral are not recognized within FHN’s Consolidated Balance Sheets. Interest rate derivatives associated with lending arrangements share the collateral with the related loan(s). The derivative and loan positions may be netted in the event of default. For disclosure purposes, the entire collateral amount is allocated to the loan.
Interest rate derivatives with larger financial institutions typically contain provisions whereby the collateral posting thresholds under the agreements adjust based on the credit ratings of both counterparties. If the credit rating of FHN and/or First Horizon Bank is lowered, FHN could be required to post additional collateral with the counterparties. Conversely, if the credit rating of FHN and/or First Horizon Bank is increased, FHN could have collateral released and be required to post less collateral in the future. Also, if a counterparty’s credit ratings were to decrease, FHN and/or First Horizon Bank could require the posting of additional collateral; whereas if a counterparty’s credit ratings were to increase, the counterparty could require the release of excess collateral. Collateral for these arrangements is adjusted daily based on changes in the net fair value position with each counterparty.
The net fair value, determined by individual counterparty, of all derivative instruments with adjustable collateral posting thresholds was $3 million of assets and $118 million of liabilities on June 30, 2026, and $10 million of assets and $92 million of liabilities on December 31, 2025. As of June 30, 2026 and December 31, 2025, FHN had received collateral of $52 million and $68 million and
posted collateral of $69 million and $52 million, respectively, in the normal course of business related to these agreements.
Certain agreements also contain accelerated termination provisions, inclusive of the right of offset, if a counterparty’s credit rating falls below a specified level. If a counterparty’s debt rating (including FHN’s and First Horizon Bank’s) were to fall below these minimums, these provisions would be triggered, and the counterparties could terminate the agreements and require immediate settlement of all derivative contracts under the agreements. The net fair value, determined by individual counterparty, of all interest rate derivative instruments with credit-risk-related contingent accelerated termination provisions was $3 million of assets and $118 million of liabilities on June 30, 2026, and $11 million of assets and $92 million of liabilities on December 31, 2025. As of June 30, 2026 and December 31, 2025, FHN had received collateral of $52 million and $68 million and posted collateral of $69 million and $52 million, respectively, in the normal course of business related to these contracts.
FHNF buys and sells various types of securities for its clients. When these securities settle on a delayed basis, they are considered forward contracts. For futures and options, FHN transacts through a third party, and the transactions are subject to margin and collateral maintenance requirements. In the event of default, open positions can be offset along with the associated collateral.
For this disclosure, FHN considers the impact of master netting and other similar agreements which allow FHN to settle all contracts with a single counterparty on a net basis and to offset the net derivative asset or liability position with the related securities and cash collateral. The application of the collateral cannot reduce the net derivative asset or liability position below zero, and therefore any excess collateral is not reflected in the following tables.
| 51 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 14—DERIVATIVES | |||||||
The following table provides details of derivative assets and collateral received as presented on the Consolidated Balance Sheets as of June 30, 2026 and December 31, 2025.
| DERIVATIVE ASSETS & COLLATERAL RECEIVED | ||||||||||||||||||||||||||||||||||||||
| Gross amounts not offset in the Balance Sheets | ||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | Gross amounts of recognized assets | Gross amounts offset in the Balance Sheets | Net amounts of assets presented in the Balance Sheets (a) | Derivative liabilities available for offset | Collateral received | Net amount | ||||||||||||||||||||||||||||||||
| Derivative assets: | ||||||||||||||||||||||||||||||||||||||
| June 30, 2026 | ||||||||||||||||||||||||||||||||||||||
| Interest rate derivative contracts | $ | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||
| Forward contracts | ( | ( | ||||||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||
| December 31, 2025 | ||||||||||||||||||||||||||||||||||||||
| Interest rate derivative contracts | $ | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||
| Forward contracts | ( | ( | ||||||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||
(a)Included in other assets on the Consolidated Balance Sheets. As of both June 30, 2026 and December 31, 2025, less than $1
The following table provides details of derivative liabilities and collateral pledged as presented on the Consolidated Balance Sheets as of June 30, 2026 and December 31, 2025.
| DERIVATIVE LIABILITIES & COLLATERAL PLEDGED | ||||||||||||||||||||||||||||||||||||||
| Gross amounts not offset in the Balance Sheets | ||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | Gross amounts of recognized liabilities | Gross amounts offset in the Balance Sheets | Net amounts of liabilities presented in the Balance Sheets (a) | Derivative assets available for offset | Collateral pledged | Net amount | ||||||||||||||||||||||||||||||||
| Derivative liabilities: | ||||||||||||||||||||||||||||||||||||||
| June 30, 2026 | ||||||||||||||||||||||||||||||||||||||
| Interest rate derivative contracts | $ | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||
| Forward contracts | ( | ( | ||||||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||
| December 31, 2025 | ||||||||||||||||||||||||||||||||||||||
| Interest rate derivative contracts | $ | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||
| Forward contracts | ( | ( | ||||||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||
(a)Included in other liabilities on the Consolidated Balance Sheets. As of June 30, 2026 and December 31, 2025, $22 million and $26 million, respectively, of derivative liabilities (primarily Visa-related derivatives) have been excluded from these tables because they are generally not subject to master netting or similar agreements.
| 52 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 15—MASTER NETTING & SIMILAR AGREEMENTS | |||||||
Note 15—Master Netting and Similar Agreements – Repurchase, Reverse Repurchase, and Securities Borrowing Transactions
For repurchase, reverse repurchase, and securities borrowing transactions, FHN and each counterparty have the ability to offset all open positions and related collateral in the event of default. Due to the nature of these transactions, the value of the collateral for each transaction approximates the value of the corresponding receivable or payable. For repurchase agreements through FHN’s fixed income business (securities purchased under agreements to resell and securities sold under agreements to repurchase), transactions are collateralized by securities and/or government guaranteed loans which are delivered on the settlement date and are maintained throughout the term of the transaction. For FHN’s repurchase agreements through banking activities (securities sold under agreements to repurchase), securities are typically pledged at settlement and not released until maturity. For asset positions, the collateral is not included on FHN’s Consolidated Balance Sheets. For liability positions, securities collateral pledged by FHN is generally represented within FHN’s trading or available-for-sale securities portfolios.
For this disclosure, FHN considers the impact of master netting and other similar agreements that allow FHN to settle all contracts with a single counterparty on a net basis and to offset the net asset or liability position with the related securities collateral. The application of the collateral cannot reduce the net asset or liability position below zero, and therefore any excess collateral is not reflected in the tables below.
Securities purchased under agreements to resell is included in federal funds sold and securities purchased under agreements to resell in the Consolidated Balance Sheets. Securities sold under agreements to repurchase is included in short-term borrowings.
The following table provides details of securities purchased under agreements to resell and collateral pledged by counterparties as of June 30, 2026 and December 31, 2025.
| SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL | ||||||||||||||||||||||||||||||||||||||
| Gross amounts not offset in the Balance Sheets | ||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | Gross amounts of recognized assets | Gross amounts offset in the Balance Sheets | Net amounts of assets presented in the Balance Sheets | Offsetting securities sold under agreements to repurchase | Securities collateral (not recognized on FHN’s Balance Sheets) | Net amount | ||||||||||||||||||||||||||||||||
| Securities purchased under agreements to resell: | ||||||||||||||||||||||||||||||||||||||
| June 30, 2026 | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||
| December 31, 2025 | ( | ( | ||||||||||||||||||||||||||||||||||||
The following table provides details of securities sold under agreements to repurchase and collateral pledged by FHN as of June 30, 2026 and December 31, 2025.
| SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE | ||||||||||||||||||||||||||||||||||||||
| Gross amounts not offset in the Balance Sheets | ||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | Gross amounts of recognized liabilities | Gross amounts offset in the Balance Sheets | Net amounts of liabilities presented in the Balance Sheets | Offsetting securities purchased under agreements to resell | Securities/ government guaranteed loans collateral | Net amount | ||||||||||||||||||||||||||||||||
| Securities sold under agreements to repurchase: | ||||||||||||||||||||||||||||||||||||||
| June 30, 2026 | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||
| December 31, 2025 | ( | ( | ||||||||||||||||||||||||||||||||||||
Due to the short duration of securities sold under agreements to repurchase and the nature of collateral involved, the risks associated with these transactions are considered minimal.
| 53 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 15—MASTER NETTING & SIMILAR AGREEMENTS | |||||||
The following table provides details, by collateral type, of the remaining contractual maturity of securities sold under agreements to repurchase as of June 30, 2026 and December 31, 2025.
| MATURITIES OF SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE | ||||||||||||||||||||
| June 30, 2026 | ||||||||||||||||||||
| (Dollars in millions) | Overnight and Continuous | Up to 30 Days | Total | |||||||||||||||||
| Securities sold under agreements to repurchase: | ||||||||||||||||||||
| Government agency issued MBS | $ | $ | $ | |||||||||||||||||
| Government agency issued CMO | ||||||||||||||||||||
| Other U.S. government agencies | ||||||||||||||||||||
| Total securities sold under agreements to repurchase | $ | $ | $ | |||||||||||||||||
| December 31, 2025 | ||||||||||||||||||||
| (Dollars in millions) | Overnight and Continuous | Up to 30 Days | Total | |||||||||||||||||
| Securities sold under agreements to repurchase: | ||||||||||||||||||||
| U.S. treasuries | $ | $ | $ | |||||||||||||||||
| Government agency issued MBS | ||||||||||||||||||||
| Government agency issued CMO | ||||||||||||||||||||
| Other U.S. government agencies | ||||||||||||||||||||
| Total securities sold under agreements to repurchase | $ | $ | $ | |||||||||||||||||
| 54 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 16—FAIR VALUE OF ASSETS AND LIABILITIES | |||||||
Note 16—Fair Value of Assets and Liabilities
FHN groups its assets and liabilities measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. This hierarchy requires FHN to maximize the use of observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. Each fair value measurement is placed into the proper level based on the lowest level of significant input. These levels are:
•Level 1—Valuation is based upon quoted prices for identical instruments traded in active markets.
•Level 2—Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.
•Level 3—Valuation is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include the use of option pricing models, discounted cash flow models, and similar techniques.
| 55 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 16—FAIR VALUE OF ASSETS AND LIABILITIES | |||||||
Recurring Fair Value Measurements
The following table presents the balances of assets and liabilities measured at fair value on a recurring basis as of June 30, 2026 and December 31, 2025.
ASSETS & LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS | ||||||||||||||||||||||||||
| June 30, 2026 | ||||||||||||||||||||||||||
| (Dollars in millions) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||
| Trading securities: | ||||||||||||||||||||||||||
| Government agency issued MBS | $ | $ | $ | $ | ||||||||||||||||||||||
| Government agency issued CMO | ||||||||||||||||||||||||||
| Other U.S. government agencies | ||||||||||||||||||||||||||
| States and municipalities | ||||||||||||||||||||||||||
| Corporate and other debt | ||||||||||||||||||||||||||
| Equity, mutual funds, and other | ||||||||||||||||||||||||||
| SBA interest-only strips | ||||||||||||||||||||||||||
| Total trading securities | ||||||||||||||||||||||||||
| Loans held for sale (elected fair value) | ||||||||||||||||||||||||||
| Securities available for sale: | ||||||||||||||||||||||||||
| Government agency issued MBS | ||||||||||||||||||||||||||
| Government agency issued CMO | ||||||||||||||||||||||||||
| Other U.S. government agencies | ||||||||||||||||||||||||||
| States and municipalities | ||||||||||||||||||||||||||
| Total securities available for sale | ||||||||||||||||||||||||||
| Other assets: | ||||||||||||||||||||||||||
| Deferred compensation mutual funds | ||||||||||||||||||||||||||
| Equity, mutual funds, and other | ||||||||||||||||||||||||||
| Derivatives, forwards and futures | ||||||||||||||||||||||||||
| Derivatives, interest rate contracts | ||||||||||||||||||||||||||
| Total other assets | ||||||||||||||||||||||||||
| Total assets | $ | $ | $ | $ | ||||||||||||||||||||||
| Trading liabilities: | ||||||||||||||||||||||||||
| U.S. treasuries | $ | $ | $ | $ | ||||||||||||||||||||||
| Government agency issued CMO | ||||||||||||||||||||||||||
| Corporate and other debt | ||||||||||||||||||||||||||
| Equity, mutual funds, and other | ||||||||||||||||||||||||||
| Total trading liabilities | ||||||||||||||||||||||||||
| Other liabilities: | ||||||||||||||||||||||||||
| Derivatives, forwards and futures | ||||||||||||||||||||||||||
| Derivatives, interest rate contracts | ||||||||||||||||||||||||||
| Derivatives, other | ||||||||||||||||||||||||||
| Total other liabilities | ||||||||||||||||||||||||||
| Total liabilities | $ | $ | $ | $ | ||||||||||||||||||||||
| 56 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 16—FAIR VALUE OF ASSETS AND LIABILITIES | |||||||
| December 31, 2025 | ||||||||||||||||||||||||||
| (Dollars in millions) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||
| Trading securities: | ||||||||||||||||||||||||||
| U.S. treasuries | $ | $ | $ | $ | ||||||||||||||||||||||
| Government agency issued MBS | ||||||||||||||||||||||||||
| Government agency issued CMO | ||||||||||||||||||||||||||
| Other U.S. government agencies | ||||||||||||||||||||||||||
| States and municipalities | ||||||||||||||||||||||||||
| Corporate and other debt | ||||||||||||||||||||||||||
| SBA interest-only strips | ||||||||||||||||||||||||||
| Total trading securities | ||||||||||||||||||||||||||
| Loans held for sale (elected fair value) | ||||||||||||||||||||||||||
| Securities available for sale: | ||||||||||||||||||||||||||
| Government agency issued MBS | ||||||||||||||||||||||||||
| Government agency issued CMO | ||||||||||||||||||||||||||
| Other U.S. government agencies | ||||||||||||||||||||||||||
| States and municipalities | ||||||||||||||||||||||||||
| Total securities available for sale | ||||||||||||||||||||||||||
| Other assets: | ||||||||||||||||||||||||||
| Deferred compensation mutual funds | ||||||||||||||||||||||||||
| Equity, mutual funds, and other | ||||||||||||||||||||||||||
| Derivatives, forwards and futures | ||||||||||||||||||||||||||
| Derivatives, interest rate contracts | ||||||||||||||||||||||||||
| Total other assets | ||||||||||||||||||||||||||
| Total assets | $ | $ | $ | $ | ||||||||||||||||||||||
| Trading liabilities: | ||||||||||||||||||||||||||
| U.S. treasuries | $ | $ | $ | $ | ||||||||||||||||||||||
| Corporate and other debt | ||||||||||||||||||||||||||
| Total trading liabilities | ||||||||||||||||||||||||||
| Other liabilities: | ||||||||||||||||||||||||||
| Derivatives, forwards and futures | ||||||||||||||||||||||||||
| Derivatives, interest rate contracts | ||||||||||||||||||||||||||
| Derivatives, other | ||||||||||||||||||||||||||
| Total other liabilities | ||||||||||||||||||||||||||
| Total liabilities | $ | $ | $ | $ | ||||||||||||||||||||||
| 57 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 16—FAIR VALUE OF ASSETS AND LIABILITIES | |||||||
Changes in Recurring Level 3 Fair Value Measurements
The changes in Level 3 assets and liabilities measured at fair value for the three months ended June 30, 2026 and 2025 on a recurring basis are summarized as follows.
| CHANGES IN LEVEL 3 ASSETS & LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS | ||||||||||||||||||||||||||||||||||||||
| Three Months Ended June 30, 2026 | ||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | SBA interest-only strips | Loans held for sale | Net derivative liabilities | |||||||||||||||||||||||||||||||||||
| Balance on April 1, 2026 | $ | $ | $ | ( | ||||||||||||||||||||||||||||||||||
| Total net gains (losses) included in net income | ( | ( | ||||||||||||||||||||||||||||||||||||
| Settlements | ||||||||||||||||||||||||||||||||||||||
| Net transfers into (out of) Level 3 | (b) | |||||||||||||||||||||||||||||||||||||
| Balance on June 30, 2026 | $ | $ | $ | ( | ||||||||||||||||||||||||||||||||||
| Net unrealized gains (losses) included in net income | $ | ( | (c) | $ | (a) | $ | ( | (d) | ||||||||||||||||||||||||||||||
| Three Months Ended June 30, 2025 | ||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | SBA interest-only strips | Loans held for sale | Net derivative liabilities | |||||||||||||||||||||||||||||||||||
| Balance on April 1, 2025 | $ | $ | $ | ( | ||||||||||||||||||||||||||||||||||
| Total net gains (losses) included in net income | ( | |||||||||||||||||||||||||||||||||||||
| Sales | ( | |||||||||||||||||||||||||||||||||||||
| Settlements | ||||||||||||||||||||||||||||||||||||||
| Net transfers into (out of) Level 3 | (b) | |||||||||||||||||||||||||||||||||||||
| Balance on June 30, 2025 | $ | $ | $ | ( | ||||||||||||||||||||||||||||||||||
| Net unrealized gains (losses) included in net income | $ | ( | (c) | $ | (a) | $ | (d) | |||||||||||||||||||||||||||||||
(a)Primarily included in mortgage banking income on the Consolidated Statements of Income.
(b)Transfers into (out of) Level 3 SBA interest-only strips reflect transfers from (to) SBA loans held for sale, which are Level 2 assets measured on a nonrecurring basis. Refer to the nonrecurring measurement table included in the following section of this Note.
(c)Primarily included in fixed income on the Consolidated Statements of Income.
(d)Included in other expense on the Consolidated Statements of Income.
| 58 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 16—FAIR VALUE OF ASSETS AND LIABILITIES | |||||||
The changes in Level 3 assets and liabilities measured at fair value for the six months ended June 30, 2026 and 2025 on a recurring basis are summarized as follows.
| CHANGES IN LEVEL 3 ASSETS & LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS | ||||||||||||||||||||||||||||||||||||||
| Six Months Ended June 30, 2026 | ||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | SBA interest-only strips | Loans held for sale | Net derivative liabilities | |||||||||||||||||||||||||||||||||||
| Balance on January 1, 2026 | $ | $ | $ | ( | ||||||||||||||||||||||||||||||||||
| Total net gains (losses) included in net income | ( | ( | ||||||||||||||||||||||||||||||||||||
| Settlements | ||||||||||||||||||||||||||||||||||||||
| Net transfers into (out of) Level 3 | ( | (b) | ||||||||||||||||||||||||||||||||||||
| Balance on June 30, 2026 | $ | $ | $ | ( | ||||||||||||||||||||||||||||||||||
| Net unrealized gains (losses) included in net income | $ | ( | (c) | $ | (a) | $ | ( | (d) | ||||||||||||||||||||||||||||||
| Six Months Ended June 30, 2025 | ||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | SBA interest-only strips | Loans held for sale | Net derivative liabilities | |||||||||||||||||||||||||||||||||||
| Balance on January 1, 2025 | $ | $ | $ | ( | ||||||||||||||||||||||||||||||||||
| Total net gains (losses) included in net income | ( | ( | ||||||||||||||||||||||||||||||||||||
| Sales | ( | ( | ||||||||||||||||||||||||||||||||||||
| Settlements | ||||||||||||||||||||||||||||||||||||||
| Net transfers into (out of) Level 3 | (b) | |||||||||||||||||||||||||||||||||||||
| Balance on June 30, 2025 | $ | $ | $ | ( | ||||||||||||||||||||||||||||||||||
| Net unrealized gains (losses) included in net income | $ | ( | (c) | $ | (a) | $ | ( | (d) | ||||||||||||||||||||||||||||||
(a)Primarily included in mortgage banking income on the Consolidated Statements of Income.
(b)Transfers into (out of) Level 3 SBA interest-only strips reflect transfers from (to) SBA loans held for sale, which are Level 2 assets measured on a nonrecurring basis. Refer to the nonrecurring measurement table included in the following section of this Note.
(c)Primarily included in fixed income on the Consolidated Statements of Income.
(d)Included in other expense on the Consolidated Statements of Income.
There were no
| 59 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 16—FAIR VALUE OF ASSETS AND LIABILITIES | |||||||
measured at fair value on a nonrecurring basis which were still held on the Consolidated Balance Sheets at June 30, 2026 and December 31, 2025, respectively, the following tables provide the level of valuation assumptions used to determine each adjustment and the related carrying value.
LEVEL OF VALUATION ASSUMPTIONS FOR ASSETS MEASURED AT FAIR VALUE ON A NONRECURRING BASIS | ||||||||||||||||||||||||||
| Carrying value at June 30, 2026 | ||||||||||||||||||||||||||
| (Dollars in millions) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||
| Loans held for sale—SBAs and USDA | $ | $ | $ | $ | ||||||||||||||||||||||
| Loans and leases (a) | ||||||||||||||||||||||||||
| OREO (b) | ||||||||||||||||||||||||||
| Carrying value at December 31, 2025 | ||||||||||||||||||||||||||
| (Dollars in millions) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||
| Loans held for sale—SBAs and USDA | $ | $ | $ | $ | ||||||||||||||||||||||
| Loans and leases (a) | ||||||||||||||||||||||||||
| OREO (b) | ||||||||||||||||||||||||||
(a)Represents carrying value of loans for which adjustments are required to be based on the appraised value of the collateral less estimated costs to sell.
(b)Represents the fair value and related losses of foreclosed properties that were measured subsequent to their initial classification as OREO. Balance excludes OREO related to government-insured mortgages.
For assets measured on a nonrecurring basis which were still held on the Consolidated Balance Sheets at period end, the following table provides information about the fair value adjustments recorded during the three and six months ended June 30, 2026 and 2025.
| FAIR VALUE ADJUSTMENTS ON ASSETS MEASURED ON A NONRECURRING BASIS | |||||||||||||||||||||||
| Net gains (losses) Three Months Ended June 30, | Net gains (losses) Six Months Ended June 30, | ||||||||||||||||||||||
| (Dollars in millions) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Loans held for sale—SBAs and USDA | $ | ( | $ | $ | ( | $ | |||||||||||||||||
| Loans and leases (a) | ( | ( | ( | ( | |||||||||||||||||||
| $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||
(a)Write-downs on these loans are recognized as part of provision for credit losses.
| 60 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 16—FAIR VALUE OF ASSETS AND LIABILITIES | |||||||
Lease asset impairments recognized represent the reduction in value of the right-of-use assets associated with leases that are being exited in advance of the contractual lease expiration.
Impairments are measured using a discounted cash flow methodology, which is considered a Level 3 valuation.
Impairments of long-lived tangible assets reflect locations where the associated land and building are either owned or leased. The fair values of owned sites were determined using estimated sales prices from appraisals and broker opinions less estimated costs to sell with adjustments
upon final disposition. The fair values of owned assets in leased sites (e.g., leasehold improvements) were determined using a discounted cash flow approach, based on the revised estimated useful lives of the related assets. Both measurement methodologies are considered Level 3 valuations. Impairment adjustments recognized upon disposition of a location are considered Level 2 valuations.
Fixed asset and leased asset impairments were immaterial
Level 3 Measurements
The following table provides information regarding the unobservable inputs utilized in determining the fair value of Level 3 recurring and nonrecurring measurements as of June 30, 2026 and December 31, 2025.
| UNOBSERVABLE INPUTS USED IN LEVEL 3 FAIR VALUE MEASUREMENTS | ||||||||||||||||||||||||||||||||
| (Dollars in millions) | Values Utilized | |||||||||||||||||||||||||||||||
| Level 3 Class | Fair Value at June 30, 2026 | Valuation Techniques | Unobservable Input | Range | Weighted Average (c) | |||||||||||||||||||||||||||
| Trading securities - SBA interest-only strips | $ | Discounted cash flow | Constant prepayment rate | |||||||||||||||||||||||||||||
| Bond equivalent yield | ||||||||||||||||||||||||||||||||
| Loans held for sale - residential real estate | $ | Discounted cash flow | Prepayment speeds - First mortgage | |||||||||||||||||||||||||||||
| Foreclosure losses | ||||||||||||||||||||||||||||||||
| Loss severity trends - First mortgage | ||||||||||||||||||||||||||||||||
| Derivative liabilities, other | $ | Discounted cash flow | Visa Covered Litigation resolution amount | $ | $ | |||||||||||||||||||||||||||
| Probability of resolution scenarios | ||||||||||||||||||||||||||||||||
| Time until resolution | ||||||||||||||||||||||||||||||||
| Loans and leases (a) | $ | Appraisals from comparable properties | Marketability adjustments for specific properties | NM | ||||||||||||||||||||||||||||
| Other collateral valuations | Borrowing base certificates liquidation adjustment | NM | ||||||||||||||||||||||||||||||
| Financial statements liquidation adjustment | NM | |||||||||||||||||||||||||||||||
| Auction appraisals marketability adjustment | NM | |||||||||||||||||||||||||||||||
| OREO (b) | $ | Appraisals from comparable properties | Adjustment for value changes since appraisal | NM | ||||||||||||||||||||||||||||
NM - Not meaningful
(a)Represents carrying value of loans for which adjustments are required to be based on the appraised value of the collateral less estimated costs to sell. Write-downs on these loans are recognized as part of provision for credit losses.
(b)Represents the fair value of foreclosed properties that were measured subsequent to their initial classification as OREO. Balance excludes OREO related to government-insured mortgages.
(c)Weighted averages are determined by the relative fair value of the instruments or the relative contribution to an instrument's fair value.
| 61 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 16—FAIR VALUE OF ASSETS AND LIABILITIES | |||||||
| (Dollars in millions) | Values Utilized | |||||||||||||||||||||||||||||||
| Level 3 Class | Fair Value at December 31, 2025 | Valuation Techniques | Unobservable Input | Range | Weighted Average (c) | |||||||||||||||||||||||||||
| Trading securities - SBA interest-only strips | $ | Discounted cash flow | Constant prepayment rate | |||||||||||||||||||||||||||||
| Bond equivalent yield | ||||||||||||||||||||||||||||||||
| Loans held for sale - residential real estate | $ | Discounted cash flow | Prepayment speeds - First mortgage | |||||||||||||||||||||||||||||
| Foreclosure losses | ||||||||||||||||||||||||||||||||
| Loss severity trends - First mortgage | ||||||||||||||||||||||||||||||||
| Derivative liabilities, other | $ | Discounted cash flow | Visa Covered Litigation resolution amount | $ | $ | |||||||||||||||||||||||||||
| Probability of resolution scenarios | ||||||||||||||||||||||||||||||||
| Time until resolution | ||||||||||||||||||||||||||||||||
| Loans and leases (a) | $ | Appraisals from comparable properties | Marketability adjustments for specific properties | NM | ||||||||||||||||||||||||||||
| Other collateral valuations | Borrowing base certificates liquidation adjustment | NM | ||||||||||||||||||||||||||||||
| Financial statements liquidation adjustment | NM | |||||||||||||||||||||||||||||||
| Auction appraisals marketability adjustment | NM | |||||||||||||||||||||||||||||||
| OREO (b) | $ | Appraisals from comparable properties | Adjustment for value changes since appraisal | NM | ||||||||||||||||||||||||||||
NM - Not meaningful
(a)Represents carrying value of loans for which adjustments are required to be based on the appraised value of the collateral less estimated costs to sell. Write-downs on these loans are recognized as part of provision for credit losses.
(b)Represents the fair value of foreclosed properties that were measured subsequent to their initial classification as OREO. Balance excludes OREO related to government-insured mortgages.
(c)Weighted averages are determined by the relative fair value of the instruments or the relative contribution to an instrument's fair value.
Trading Securities - SBA Interest-only Strips
Increases (decreases) in estimated prepayment rates and bond equivalent yields negatively (positively) affect the value of SBA interest-only strips. Management additionally considers whether the loans underlying related SBA interest-only strips are delinquent, in default or prepaying, and adjusts the fair value down 20 - 100 % depending on the length of time in default.
Loans Held for Sale
Foreclosure losses and prepayment rates are significant unobservable inputs used in the fair value measurement of FHN’s residential real estate loans held for sale. Loss severity trends are also assessed to evaluate the reasonableness of fair value estimates resulting from discounted cash flow methodologies as well as to estimate fair value for newly repurchased loans and loans that are near foreclosure. Significant increases (decreases) in any of these inputs in isolation would result in significantly
lower (higher) fair value measurements. All observable and unobservable inputs are reassessed quarterly.
Derivative Liabilities
In conjunction with pre-2020 sales of Visa Class B shares, FHN and the purchasers entered into derivative transactions whereby FHN will make, or receive, cash payments whenever the conversion ratio of the Visa Class B shares into Visa Class A shares is adjusted. FHN uses a discounted cash flow methodology in order to estimate the fair value of FHN’s derivative liabilities associated with its prior sales of Visa Class B shares. The methodology includes estimation of both the resolution amount for Visa’s Covered Litigation matters and the length of time until the resolution occurs. Significant increases (decreases) in either of these inputs in isolation would result in significantly higher (lower) fair value measurements for the derivative liabilities. Additionally, FHN performs a probability-weighted multiple resolution
| 62 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 16—FAIR VALUE OF ASSETS AND LIABILITIES | |||||||
scenario to calculate the estimated fair value of these derivative liabilities. Assignment of higher (lower) probabilities to the larger potential resolution scenarios would result in an increase (decrease) in the estimated fair value of the derivative liabilities. Since this estimation process requires application of judgment in developing significant unobservable inputs used to determine the possible outcomes and the probability weighting assigned to each scenario, these derivatives have been classified within Level 3 in fair value measurements disclosures.
Loans and Leases and Other Real Estate Owned
Collateral-dependent loans and OREO are primarily valued using appraisals based on sales of comparable properties in the same or similar markets. Other collateral (receivables, inventory, equipment, etc.) is valued through borrowing base certificates, financial statements and/or auction valuations. These valuations are discounted based on the quality of reporting, knowledge of the marketability/collectability of the collateral and historical disposition rates.
Fair Value Option
FHN previously elected the fair value option on a prospective basis for substantially all types of mortgage loans originated for sale purposes. FHN determined that the election reduces certain timing differences and better
matches changes in the value of such loans with changes in the value of derivatives and forward delivery commitments used as economic hedges for these assets at the time of election.
Repurchased loans relating to mortgage banking operations conducted prior to the IBKC merger are recognized within loans held for sale at fair value at the time of repurchase, which includes consideration of the credit status of the loans and the estimated liquidation value. FHN has elected to continue recognition of these loans at fair value in periods subsequent to reacquisition. Due to the credit-distressed nature of the vast majority of repurchased loans and the related loss severities experienced upon repurchase, FHN believes that the fair value election provides a more timely recognition of changes in value for these loans that occur subsequent to repurchase. Absent the fair value election, these loans would be subject to valuation at the LOCOM value, which would prevent subsequent values from exceeding the initial fair value, determined at the time of repurchase, but would require recognition of subsequent declines in value. Thus, the fair value election provides for a more timely recognition of any potential future recoveries in asset values while not affecting the requirement to recognize subsequent declines in value.
The following table reflects the differences between the fair value carrying amount of residential real estate loans held for sale measured at fair value in accordance with management’s election and the aggregate unpaid principal amount FHN is contractually entitled to receive at maturity.
| DIFFERENCES BETWEEN FAIR VALUE CARRYING AMOUNTS AND CONTRACTUAL AMOUNTS OF RESIDENTIAL REAL ESTATE LOANS REPORTED AT FAIR VALUE | ||||||||||||||||||||
| June 30, 2026 | ||||||||||||||||||||
| (Dollars in millions) | Fair value carrying amount | Aggregate unpaid principal | Fair value carrying amount less aggregate unpaid principal | |||||||||||||||||
| Residential real estate loans held for sale reported at fair value: | ||||||||||||||||||||
| Total loans | $ | $ | $ | ( | ||||||||||||||||
| Nonaccrual loans | ( | |||||||||||||||||||
| December 31, 2025 | ||||||||||||||||||||
| (Dollars in millions) | Fair value carrying amount | Aggregate unpaid principal | Fair value carrying amount less aggregate unpaid principal | |||||||||||||||||
| Residential real estate loans held for sale reported at fair value: | ||||||||||||||||||||
| Total loans | $ | $ | $ | ( | ||||||||||||||||
| Nonaccrual loans | ( | |||||||||||||||||||
Changes in the fair value of residential real estate loans held for sale are included in mortgage banking income within noninterest income in the Consolidated Statements of Income. The following table presents the amounts recognized for the three and six months ended June 30, 2026 and 2025.
| 63 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 16—FAIR VALUE OF ASSETS AND LIABILITIES | |||||||
| CHANGES IN FAIR VALUE RECOGNIZED IN NET INCOME | |||||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| (Dollars in millions) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Changes in fair value included in net income: | |||||||||||||||||||||||
| Mortgage banking noninterest income | |||||||||||||||||||||||
| Loans held for sale | $ | $ | $ | ( | $ | ||||||||||||||||||
For the three and six months ended June 30, 2026 and 2025, the amount for residential real estate loans held for sale included an insignificant amount of gains in pre-tax earnings that are attributable to changes in instrument-specific credit risk. The portion of the fair value adjustments related to credit risk was determined based on estimated default rates and estimated loss severities. Interest income on residential real estate loans held for sale measured at fair value is calculated based on the note rate of the loan and is recorded in the interest income section of the Consolidated Statements of Income as interest on loans held for sale.
Determination of Fair Value
Fair values are based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following describes the assumptions and methodologies used to estimate the fair value of financial instruments recorded at fair value in the Consolidated Balance Sheets and for estimating the fair value of financial instruments for which fair value is disclosed.
Short-term financial assets
Federal funds sold, securities purchased under agreements to resell, and interest-bearing deposits with other financial institutions and the Federal Reserve are carried at historical cost. The carrying amount is a reasonable estimate of fair value because of the relatively short time between the origination of the instrument and its expected realization.
Trading securities and trading liabilities
Trading securities and trading liabilities are recognized at fair value through current earnings. Trading inventory held for broker-dealer operations is included in trading securities and trading liabilities. Broker-dealer long positions are valued at the bid price in the bid-ask spread. Short positions are valued at the ask price. Inventory positions are valued using observable inputs including current market transactions, benchmark yields, credit spreads, and consensus prepayment speeds. Trading loans are valued using observable inputs including current market transactions, swap rates, mortgage rates, and consensus prepayment speeds.
Trading securities - SBA interest-only strips
Interest-only strips are normally valued at fair value based on an income approach using an internal valuation model. The internal valuation model includes assumptions regarding projections of future cash flows, prepayment rates, default rates and interest-only strip terms. These securities bear the risk of loan prepayment or default that may result in FHN not recovering all or a portion of its recorded investment. When appropriate, valuations are adjusted for various factors including default or prepayment status of the underlying SBA loans. Because of the inherent uncertainty of valuation, those estimated values may be higher or lower than the values that would have been used had a ready market for the securities existed and may change in the near term. The valuation of securities supported by pools of SBA interest-only strips also incorporates consideration of recent transaction pricing.
Securities available for sale and held to maturity
Valuations of debt securities are performed using observable inputs obtained from market transactions in similar securities. Typical inputs include benchmark yields, consensus prepayment speeds, and credit spreads. Trades in similar securities and broker quotes are used to support these valuations.
Loans held for sale
FHN determines the fair value of loans held for sale using either current transaction prices or discounted cash flow models. Fair values are determined using current transaction prices and/or values on similar assets when available, including committed bids for specific loans or loan portfolios. Uncommitted bids may be adjusted based on other available market information.
The fair value of residential real estate loans held for sale is determined using a discounted cash flow model that incorporates both observable and unobservable inputs. Inputs in the discounted cash flow model include current mortgage rates for similar products, estimated prepayment rates, foreclosure losses, and various loan performance measures (delinquency, LTV, credit score). Adjustments for delinquency and other differences in loan characteristics are typically reflected in the model’s discount rates. Loss severity trends and the value of underlying collateral are also considered in assessing the
| 64 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 16—FAIR VALUE OF ASSETS AND LIABILITIES | |||||||
appropriate fair value for severely delinquent loans and loans in foreclosure. The valuation of HELOCs also incorporates estimated cancellation rates for loans expected to become delinquent.
Non-mortgage consumer loans held for sale are valued using committed bids for specific loans or loan portfolios or current market pricing for similar assets with adjustments for differences in credit standing (delinquency, historical default rates for similar loans), yield, collateral values and prepayment rates. If pricing for similar assets is not available, a discounted cash flow methodology is utilized, which incorporates all of these factors into an estimate of investor required yield for the discount rate.
FHN utilizes quoted market prices of similar instruments or broker and dealer quotations to value the SBA and USDA guaranteed loans. FHN's valuation of SBA-unguaranteed interests in loans held for sale is based on individual loan characteristics, such as industry type and pay history and generally follows an income approach. Furthermore, these valuations are adjusted for changes in prepayment estimates and are reduced due to restrictions on trading. The fair value of other non-residential real estate loans held for sale is approximated by their carrying values based on current transaction values.
Mortgage loans held for investment at fair value option
The fair value of mortgage loans held for investment at fair value option is determined by a third party using a discounted cash flow model using various assumptions about future loan performance (constant prepayment rate, constant default rate and loss severity trends) and market discount rates.
Loans held for investment
The fair values of mortgage loans are estimated using an exit price methodology that is based on present values using the interest rate that would be charged for a similar loan to a borrower with similar risk, weighted for varying maturity dates and adjusted for a liquidity discount based on the estimated time period to complete a sale transaction with a market participant.
Other loans and leases are valued based on present values using the interest rate that would be charged for a similar instrument to a borrower with similar risk, applicable to each category of instruments, and adjusted for a liquidity discount based on the estimated time period to complete a sale transaction with a market participant.
For loans measured using the estimated fair value of collateral less costs to sell, fair value is estimated using appraisals of the collateral. Collateral values are monitored and additional write-downs are recognized if it is determined that the estimated collateral values have declined further. Estimated costs to sell are based on current amounts of disposal costs for similar assets.
Carrying value is considered to reflect fair value for these loans.
Derivative assets and liabilities
The fair value for forwards and futures contracts is based on current transactions involving identical securities. Futures contracts are exchange-traded and thus have no credit risk factor assigned as the risk of non-performance is limited to the clearinghouse used.
Valuations of other derivatives (primarily interest rate contracts) are based on inputs observed in active markets for similar instruments. Typical inputs include benchmark yields, option volatility and option skew. Centrally cleared derivatives are discounted using SOFR as required by clearinghouses. In measuring the fair value of these derivative assets and liabilities, FHN has elected to consider credit risk based on the net exposure to individual counterparties. Credit risk is mitigated for these instruments through the use of mutual margining and master netting agreements as well as collateral posting requirements. For derivative contracts with daily cash margin requirements that are considered settlements, the daily margin amount is netted within derivative assets or liabilities. Any remaining credit risk related to interest rate derivatives is considered in determining fair value through evaluation of additional factors such as client loan grades and debt ratings. Foreign currency related derivatives also utilize observable exchange rates in the determination of fair value. The determination of fair value for FHN’s derivative liabilities associated with its prior sales of Visa Class B shares is classified within Level 3 in the fair value measurements disclosure, as previously discussed in the unobservable inputs discussion.
The fair value of risk participations is determined in reference to the fair value of the related derivative contract between the borrower and the lead bank in the participation structure, which is determined consistent with the valuation process discussed above. This value is adjusted for the pro rata portion of the reference derivative’s notional value and an assessment of credit risk for the referenced borrower.
OREO
OREO primarily consists of properties that have been acquired in satisfaction of debt. These properties are carried at the lower of the outstanding loan amount or estimated fair value less estimated costs to sell the real estate. Estimated fair value is determined using appraised values with subsequent adjustments for deterioration in values that are not reflected in the most recent appraisal.
Other assets
For disclosure purposes, other assets consist of tax credit investments, FRB and FHLB Stock, deferred compensation mutual funds and equity investments (including other mutual funds) with readily determinable fair values. The
| 65 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 16—FAIR VALUE OF ASSETS AND LIABILITIES | |||||||
fair value of tax credit investments is estimated using recent transaction information with adjustments for differences in individual investments. Deferred compensation mutual funds are recognized at fair value, which is based on quoted prices in active markets. Investments in the stock of the Federal Reserve Bank and Federal Home Loan Banks are recognized at historical cost, which is considered to approximate fair value, in the Consolidated Balance Sheets. Investments in mutual funds are measured at the funds’ reported closing net asset values. Investments in equity securities are valued using quoted market prices when available.
Defined maturity deposits
The fair value of these deposits is estimated by discounting future cash flows to their present value. Future cash flows are discounted by using the current market rates of similar instruments applicable to the remaining maturity. For disclosure purposes, defined maturity deposits include all time deposits.
Short-term financial liabilities
The fair value of federal funds purchased, securities sold under agreements to repurchase, and other short-term borrowings is approximated by the book value. The carrying amount is a reasonable estimate of fair value because of the relatively short time between the origination of the instrument and its expected realization.
Loan commitments
Fair values of these commitments are based on fees charged to enter into similar agreements taking into account the remaining terms of the agreements and the counterparties’ credit standing.
Other commitments
Fair values of these commitments are based on fees charged to enter into similar agreements.
The following fair value estimates are determined as of a specific point in time utilizing various assumptions and estimates. The use of assumptions and various valuation techniques, as well as the absence of secondary markets for certain financial instruments, reduces the comparability of fair value disclosures between financial institutions. Due to market illiquidity, the fair values for loans and leases, loans held for sale, and term borrowings as of June 30, 2026 and December 31, 2025 involve the use of significant internally developed pricing assumptions for certain components of these line items. The assumptions and valuations utilized for this disclosure are considered to reflect inputs that market participants would use in transactions involving these instruments as of the measurement date. These considerations affect the estimate of a potential acquirer’s cost of capital and cash flow volatility assumptions from these assets and the resulting fair value measurements may depart significantly from FHN’s internal estimates of the intrinsic value of these assets.
Assets and liabilities that are not financial instruments — such as premises and equipment, goodwill, other intangible assets such as the value of long-term relationships with deposit and trust clients, deferred taxes, and certain other assets and other liabilities — have not been included in the following table. Additionally, the fair value measurements presented in the following table are solely for financial instruments as of the measurement date and do not consider the earnings potential of our various business lines. Accordingly, the total of the fair value amounts does not represent, and should not be construed to represent, the underlying value of FHN.
| 66 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 16—FAIR VALUE OF ASSETS AND LIABILITIES | |||||||
| BOOK VALUE AND ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS | ||||||||||||||||||||||||||||||||
| June 30, 2026 | ||||||||||||||||||||||||||||||||
| Book Value | Fair Value | |||||||||||||||||||||||||||||||
| (Dollars in millions) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||||||||
| Loans and leases, net of allowance for loan and lease losses | ||||||||||||||||||||||||||||||||
| Commercial: | ||||||||||||||||||||||||||||||||
Commercial, financial, and industrial | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Commercial real estate | ||||||||||||||||||||||||||||||||
| Consumer: | ||||||||||||||||||||||||||||||||
| Consumer real estate | ||||||||||||||||||||||||||||||||
| Credit card and other | ||||||||||||||||||||||||||||||||
| Total loans and leases, net of allowance for loan and lease losses | ||||||||||||||||||||||||||||||||
| Short-term financial assets: | ||||||||||||||||||||||||||||||||
| Interest-bearing deposits with banks | ||||||||||||||||||||||||||||||||
| Federal funds sold | ||||||||||||||||||||||||||||||||
| Securities purchased under agreements to resell | ||||||||||||||||||||||||||||||||
| Total short-term financial assets | ||||||||||||||||||||||||||||||||
| Trading securities (a) | ||||||||||||||||||||||||||||||||
| Loans held for sale: | ||||||||||||||||||||||||||||||||
| Mortgage loans (elected fair value) | ||||||||||||||||||||||||||||||||
| USDA & SBA loans - LOCOM | ||||||||||||||||||||||||||||||||
| Mortgage loans - LOCOM | ||||||||||||||||||||||||||||||||
| Total loans held for sale | ||||||||||||||||||||||||||||||||
| Securities available for sale (a) | ||||||||||||||||||||||||||||||||
| Securities held to maturity | ||||||||||||||||||||||||||||||||
| Derivative assets (a) | ||||||||||||||||||||||||||||||||
| Other assets: | ||||||||||||||||||||||||||||||||
| Tax credit investments | ||||||||||||||||||||||||||||||||
| Deferred compensation mutual funds | ||||||||||||||||||||||||||||||||
| Equity, mutual funds, and other (b) | ||||||||||||||||||||||||||||||||
| Total other assets | ||||||||||||||||||||||||||||||||
| Total assets | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||||||||
| Defined maturity deposits | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Trading liabilities (a) | ||||||||||||||||||||||||||||||||
| Short-term financial liabilities: | ||||||||||||||||||||||||||||||||
| Federal funds purchased | ||||||||||||||||||||||||||||||||
| Securities sold under agreements to repurchase | ||||||||||||||||||||||||||||||||
| Other short-term borrowings | ||||||||||||||||||||||||||||||||
| Total short-term financial liabilities | ||||||||||||||||||||||||||||||||
| Term borrowings: | ||||||||||||||||||||||||||||||||
| Real estate investment trust-preferred | ||||||||||||||||||||||||||||||||
Notes payable—New Market Tax Credit investments | ||||||||||||||||||||||||||||||||
| Secured borrowings | ||||||||||||||||||||||||||||||||
| Junior subordinated debentures | ||||||||||||||||||||||||||||||||
| Other long-term borrowings | ||||||||||||||||||||||||||||||||
| Total term borrowings | ||||||||||||||||||||||||||||||||
| Derivative liabilities (a) | ||||||||||||||||||||||||||||||||
| Total liabilities | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
(a)Classes are detailed in the recurring measurement table.
(b)Level 1 primarily consists of mutual funds with readily determinable fair values. Level 3 includes restricted investments in FHLB-Cincinnati stock of $93 million and FRB stock of $203 million.
| 67 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 16—FAIR VALUE OF ASSETS AND LIABILITIES | |||||||
| December 31, 2025 | ||||||||||||||||||||||||||||||||
| Book Value | Fair Value | |||||||||||||||||||||||||||||||
| (Dollars in millions) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||||||||
| Loans and leases, net of allowance for loan and lease losses | ||||||||||||||||||||||||||||||||
| Commercial: | ||||||||||||||||||||||||||||||||
Commercial, financial, and industrial | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Commercial real estate | ||||||||||||||||||||||||||||||||
| Consumer: | ||||||||||||||||||||||||||||||||
| Consumer real estate | ||||||||||||||||||||||||||||||||
| Credit card and other | ||||||||||||||||||||||||||||||||
| Total loans and leases, net of allowance for loan and lease losses | ||||||||||||||||||||||||||||||||
| Short-term financial assets: | ||||||||||||||||||||||||||||||||
| Interest-bearing deposits with banks | ||||||||||||||||||||||||||||||||
| Federal funds sold | ||||||||||||||||||||||||||||||||
| Securities purchased under agreements to resell | ||||||||||||||||||||||||||||||||
| Total short-term financial assets | ||||||||||||||||||||||||||||||||
| Trading securities (a) | ||||||||||||||||||||||||||||||||
| Loans held for sale: | ||||||||||||||||||||||||||||||||
| Mortgage loans (elected fair value) | ||||||||||||||||||||||||||||||||
| USDA & SBA loans - LOCOM | ||||||||||||||||||||||||||||||||
| Mortgage loans - LOCOM | ||||||||||||||||||||||||||||||||
| Total loans held for sale | ||||||||||||||||||||||||||||||||
| Securities available for sale (a) | ||||||||||||||||||||||||||||||||
| Securities held to maturity | ||||||||||||||||||||||||||||||||
| Derivative assets (a) | ||||||||||||||||||||||||||||||||
| Other assets: | ||||||||||||||||||||||||||||||||
| Tax credit investments | ||||||||||||||||||||||||||||||||
| Deferred compensation mutual funds | ||||||||||||||||||||||||||||||||
| Equity, mutual funds, and other (b) | ||||||||||||||||||||||||||||||||
| Total other assets | ||||||||||||||||||||||||||||||||
| Total assets | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||||||||
| Defined maturity deposits | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Trading liabilities (a) | ||||||||||||||||||||||||||||||||
| Short-term financial liabilities: | ||||||||||||||||||||||||||||||||
| Federal funds purchased | ||||||||||||||||||||||||||||||||
| Securities sold under agreements to repurchase | ||||||||||||||||||||||||||||||||
| Other short-term borrowings | ||||||||||||||||||||||||||||||||
| Total short-term financial liabilities | ||||||||||||||||||||||||||||||||
| Term borrowings: | ||||||||||||||||||||||||||||||||
| Real estate investment trust-preferred | ||||||||||||||||||||||||||||||||
Notes payable—New Market Tax Credit investments | ||||||||||||||||||||||||||||||||
| Secured borrowings | ||||||||||||||||||||||||||||||||
| Junior subordinated debentures | ||||||||||||||||||||||||||||||||
| Other long-term borrowings | ||||||||||||||||||||||||||||||||
| Total term borrowings | ||||||||||||||||||||||||||||||||
| Derivative liabilities (a) | ||||||||||||||||||||||||||||||||
| Total liabilities | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
(a)Classes are detailed in the recurring measurement table.
(b)Level 1 primarily consists of mutual funds with readily determinable fair values. Level 3 includes restricted investments in FHLB-Cincinnati stock of $41 million and FRB stock of $203 million.
| 68 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 1. FINANCIAL STATEMENTS | ||||||||
Table of Contents | NOTE 16—FAIR VALUE OF ASSETS AND LIABILITIES | |||||||
The following table presents the contractual amount and fair value of unfunded loan commitments and standby and other commitments as of June 30, 2026 and December 31, 2025.
| UNFUNDED COMMITMENTS | ||||||||||||||||||||||||||
| Contractual Amount | Fair Value | |||||||||||||||||||||||||
| (Dollars in millions) | June 30, 2026 | December 31, 2025 | June 30, 2026 | December 31, 2025 | ||||||||||||||||||||||
| Unfunded Commitments: | ||||||||||||||||||||||||||
| Loan commitments | $ | $ | $ | $ | ||||||||||||||||||||||
| Standby and other commitments | ||||||||||||||||||||||||||
| 69 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A) | ||||||||
Table of Contents | ||||||||
Item 2. Management's Discussion and
Analysis of Financial Condition and Results of Operations
Analysis of Financial Condition and Results of Operations
TABLE OF ITEM 2 TOPICS | |||||
Introduction | 71 | ||||
Executive Overview | 71 | ||||
Results of Operations | 73 | ||||
Analysis of Financial Condition | 83 | ||||
Capital | 94 | ||||
Risk Management | 97 | ||||
Market Uncertainties and Prospective Trends | 101 | ||||
Critical Accounting Policies and Estimates | 104 | ||||
Accounting Changes | 104 | ||||
Non-GAAP Information | 106 | ||||
| 70 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A) | ||||||||
Table of Contents | ||||||||
Introduction
First Horizon Corporation (NYSE common stock trading symbol “FHN”) is a financial holding company headquartered in Memphis, Tennessee. FHN’s principal subsidiary, and only banking subsidiary, is First Horizon Bank. Through the Bank and other subsidiaries, FHN offers commercial, private banking, consumer, small business, wealth and trust management, retail brokerage, capital markets, fixed income, and mortgage banking services.
At June 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.
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 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 7 — Preferred Stock 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 | As of or for the six months ended | |||||||||||||||||||||||||
| (Dollars in millions, except per share data) | June 30, 2026 | June 30, 2025 | June 30, 2026 | June 30, 2025 | ||||||||||||||||||||||
| Pre-provision net revenue (a) | $ | 355 | $ | 339 | $ | 713 | $ | 664 | ||||||||||||||||||
| Diluted earnings per common share | $ | 0.54 | $ | 0.45 | $ | 1.07 | $ | 0.86 | ||||||||||||||||||
| Return on average assets (b) | 1.31 | % | 1.20 | % | 1.30 | % | 1.16 | % | ||||||||||||||||||
| Return on average common equity (c) | 12.33 | % | 11.14 | % | 12.30 | % | 10.72 | % | ||||||||||||||||||
| Return on average tangible common equity (a) (d) | 15.21 | % | 13.85 | % | 15.17 | % | 13.33 | % | ||||||||||||||||||
| Net interest margin (e) | 3.49 | % | 3.40 | % | 3.50 | % | 3.41 | % | ||||||||||||||||||
| Noninterest income to total revenue (f) | 23.73 | % | 22.73 | % | 23.19 | % | 22.51 | % | ||||||||||||||||||
| Efficiency ratio (g) | 59.88 | % | 59.20 | % | 59.22 | % | 59.63 | % | ||||||||||||||||||
| Allowance for loan and lease losses to total loans and leases | 1.09 | % | 1.29 | % | 1.09 | % | 1.29 | % | ||||||||||||||||||
| Net charge-offs (recoveries) to average loans and leases (annualized) | 0.20 | % | 0.22 | % | 0.19 | % | 0.20 | % | ||||||||||||||||||
| Total period-end equity to period-end assets | 11.21 | % | 11.28 | % | 11.21 | % | 11.28 | % | ||||||||||||||||||
| Tangible common equity to tangible assets (a) | 8.31 | % | 8.58 | % | 8.31 | % | 8.58 | % | ||||||||||||||||||
| Cash dividends declared per common share | $ | 0.17 | $ | 0.15 | $ | 0.34 | $ | 0.30 | ||||||||||||||||||
| Book value per common share | $ | 17.91 | $ | 16.78 | $ | 17.91 | $ | 16.78 | ||||||||||||||||||
| Tangible book value per common share (a) | $ | 14.53 | $ | 13.57 | $ | 14.53 | $ | 13.57 | ||||||||||||||||||
| Common Equity Tier 1 | 10.46 | % | 10.99 | % | 10.46 | % | 10.99 | % | ||||||||||||||||||
| Market capitalization | $ | 12,151 | $ | 10,787 | $ | 12,151 | $ | 10,787 | ||||||||||||||||||
(a) Represents a non-GAAP measure which is reconciled in the non-GAAP to GAAP reconciliation in Table I.2.28.
(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).
| 71 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A) | ||||||||
Table of Contents | ||||||||
Second Quarter 2026 Financial Performance Review
Second Quarter 2026 Highlights
FHN reported second quarter 2026 net income available to common shareholders of $260 million, or $0.54 per diluted share, compared to $233 million, or $0.45 per diluted share, in second quarter 2025.
Net interest income increased $35 million compared to second quarter 2025, largely driven by lower funding costs and loan growth, partially offset by lower loan yields.
Provision for credit losses was $15 million for second quarter 2026 compared to $30 million for second quarter 2025. Net charge-offs were $33 million, or 20 basis points, compared to $34 million, or 22 basis points, in second quarter 2025.
Noninterest income of $211 million for second quarter 2026 increased $22 million compared to second quarter 2025, largely driven by increases in fixed income, brokerage, management fees and commissions and deferred compensation income.
Compared with second quarter 2025, noninterest expense of $532 million increased $41 million, largely attributable to a $22 million increase in personnel expenses tied to higher salaries and benefits expense from increased associate headcount, along with higher incentive-based compensation and deferred compensation. Second quarter 2026 results also reflected higher computer software expense of $6 million and $5 million in Visa derivative valuation expense.
Year-to-Date and Period End Highlights
For the six months ended June 30, 2026, net income available to common shareholders was $518 million, or $1.07 per diluted share, compared to $446 million, or $0.86 per diluted share, for the six months ended June 30, 2025.
Net interest income increased $72 million, largely driven by lower funding costs and loan growth, partially offset by lower loan yields.
Provision for credit losses of $30 million decreased $40 million for the year-to-date period of 2026 compared to the same period of 2025. Net charge-offs were $61 million for the year-to-date period of 2026 compared to $63 million for the same period of 2025. Nonperforming loans of $531 million declined $73 million compared to December 31, 2025, as nonperforming loans in both the C&I and CRE portfolios declined. The ACL to total loans and leases ratio decreased 7 basis points to 1.24% as of June 30, 2026, compared to December 31, 2025, driven by improvements in certain macroeconomic factors, continued loan resolutions, and positive grade migration in the CRE portfolio.
Noninterest income for the year-to-date period increased $35 million, or 9%, largely from higher fixed income
revenues, brokerage, management fees and commissions, and deposit transactions and cash management fees.
Noninterest expense for the year-to-date period increased $58 million, largely attributable to an increase of $32 million in personnel expense and an increase of $11 million in computer software expense.
Period-end loans and leases of $65.3 billion increased $1.2 billion from December 31, 2025. Commercial loans increased $1.4 billion, driven by increases of $1.4 billion in the C&I portfolio and $32 million in the CRE portfolio. Consumer loans contracted by $249 million for the year-to-date period.
Period-end deposits were $68.1 billion compared to $67.5 billion as of December 31, 2025, as interest-bearing deposits increased $425 million and noninterest-bearing deposits increased $171 million.
The Common Equity Tier 1 ratio decreased 17 basis points to 10.46% at June 30, 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 11.77% and 13.39% at June 30, 2026, respectively, compared to 11.51% and 13.35% at December 31, 2025, respectively, largely driven by the 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 June 30, 2026 and June 30, 2025, and on information about FHN's financial condition, loan and lease portfolio, liquidity, funding sources, capital, and other matters.
| 72 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A) | ||||||||
Table of Contents | ||||||||
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.
The following tables present the major components of net interest income and net interest margin for the three and six months ended June 30, 2026 and 2025.
| 73 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A) | ||||||||
Table of Contents | ||||||||
Table I.2.2
QUARTER-TO-DATE AVERAGE BALANCES, NET INTEREST INCOME & YIELDS/RATES
| Three Months Ended | ||||||||||||||||||||||||||||||||||||||
| June 30, 2026 | June 30, 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 | $ | 50,256 | $ | 735 | 5.87 | % | $ | 47,704 | $ | 738 | 6.21 | % | ||||||||||||||||||||||||||
| Consumer loans | 14,439 | 180 | 4.97 | 14,847 | 186 | 4.99 | ||||||||||||||||||||||||||||||||
| Total loans and leases | 64,695 | 915 | 5.67 | 62,551 | 924 | 5.92 | ||||||||||||||||||||||||||||||||
| Loans held for sale | 532 | 8 | 6.18 | 502 | 8 | 6.76 | ||||||||||||||||||||||||||||||||
| Investment securities | 9,218 | 70 | 3.05 | 9,330 | 71 | 3.06 | ||||||||||||||||||||||||||||||||
| Trading securities | 1,677 | 23 | 5.55 | 1,609 | 23 | 5.72 | ||||||||||||||||||||||||||||||||
| Federal funds sold | 13 | — | 4.09 | 8 | — | 4.88 | ||||||||||||||||||||||||||||||||
| Securities purchased under agreements to resell | 657 | 6 | 3.55 | 628 | 7 | 4.23 | ||||||||||||||||||||||||||||||||
| Interest-bearing deposits with banks | 1,168 | 11 | 3.69 | 1,259 | 14 | 4.45 | ||||||||||||||||||||||||||||||||
| Total earning assets / Total interest income | $ | 77,960 | $ | 1,033 | 5.31 | % | $ | 75,887 | $ | 1,047 | 5.53 | % | ||||||||||||||||||||||||||
| Cash and due from banks | 923 | 864 | ||||||||||||||||||||||||||||||||||||
| Goodwill and other intangible assets, net | 1,603 | 1,638 | ||||||||||||||||||||||||||||||||||||
| Premises and equipment, net | 544 | 565 | ||||||||||||||||||||||||||||||||||||
| Allowance for loan and lease losses | (732) | (828) | ||||||||||||||||||||||||||||||||||||
| Other assets | 3,799 | 3,832 | ||||||||||||||||||||||||||||||||||||
| Total assets | $ | 84,097 | $ | 81,958 | ||||||||||||||||||||||||||||||||||
| Liabilities and Shareholders' Equity: | ||||||||||||||||||||||||||||||||||||||
| Interest-bearing deposits: | ||||||||||||||||||||||||||||||||||||||
| Savings | $ | 25,618 | $ | 138 | 2.17 | % | $ | 25,899 | $ | 177 | 2.73 | % | ||||||||||||||||||||||||||
| Other interest-bearing deposits | 16,914 | 84 | 1.99 | 16,362 | 96 | 2.36 | ||||||||||||||||||||||||||||||||
| Time deposits | 8,501 | 74 | 3.48 | 6,630 | 64 | 3.88 | ||||||||||||||||||||||||||||||||
| Total interest-bearing deposits | 51,033 | 296 | 2.33 | 48,891 | 337 | 2.76 | ||||||||||||||||||||||||||||||||
| Federal funds purchased | 1,086 | 10 | 3.75 | 893 | 10 | 4.50 | ||||||||||||||||||||||||||||||||
| Securities sold under agreements to repurchase | 1,432 | 9 | 2.59 | 1,799 | 14 | 3.16 | ||||||||||||||||||||||||||||||||
| Trading liabilities | 645 | 6 | 4.00 | 613 | 6 | 4.07 | ||||||||||||||||||||||||||||||||
| Other short-term borrowings | 1,400 | 14 | 3.83 | 1,208 | 13 | 4.47 | ||||||||||||||||||||||||||||||||
| Term borrowings | 1,319 | 19 | 5.65 | 1,556 | 22 | 5.60 | ||||||||||||||||||||||||||||||||
| Total interest-bearing liabilities / Total interest expense | $ | 56,915 | $ | 354 | 2.49 | % | $ | 54,960 | $ | 402 | 2.94 | % | ||||||||||||||||||||||||||
| Noninterest-bearing liabilities: | ||||||||||||||||||||||||||||||||||||||
| Noninterest-bearing deposits | 15,749 | 15,851 | ||||||||||||||||||||||||||||||||||||
| Other liabilities | 1,988 | 2,050 | ||||||||||||||||||||||||||||||||||||
| Total liabilities | 74,652 | 72,861 | ||||||||||||||||||||||||||||||||||||
| Shareholders' equity | 9,150 | 8,802 | ||||||||||||||||||||||||||||||||||||
| Noncontrolling interest | 295 | 295 | ||||||||||||||||||||||||||||||||||||
| Total shareholders' equity | 9,445 | 9,097 | ||||||||||||||||||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 84,097 | $ | 81,958 | ||||||||||||||||||||||||||||||||||
| Net earning assets / Net interest income (TE) / Net interest spread | $ | 21,045 | $ | 679 | 2.82 | % | $ | 20,927 | $ | 645 | 2.59 | % | ||||||||||||||||||||||||||
| Taxable equivalent adjustment | (3) | 0.67 | (4) | 0.81 | ||||||||||||||||||||||||||||||||||
| Net interest income / Net interest margin (a) | $ | 676 | 3.49 | % | $ | 641 | 3.40 | % | ||||||||||||||||||||||||||||||
(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.
| 74 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A) | ||||||||
Table of Contents | ||||||||
Net interest income increased $35 million from second quarter 2025 and net interest margin increased 9 basis points to 3.49% in second quarter 2026. Net interest income benefited from lower funding costs as well as loan growth. The rate on interest-bearing liabilities decreased 45 basis points from second quarter 2025. These benefits were partially offset by the impact of lower loan yields, which decreased 25 basis points compared to the same period of 2025.
Average earning assets increased $2.1 billion from second quarter 2025, driven by average loan growth of $2.1 billion as a $2.6 billion increase in average commercial loans and leases was partially offset by a $408 million decline in average consumer loans. Average interest-bearing liabilities increased $2.0 billion, primarily driven by an increase of $2.1 billion in average interest-bearing deposits, as increases of $1.9 billion in average time deposits and $552 million in average other interest-bearing deposits were partially offset by a decrease of $281 million in average savings deposits compared to second quarter 2025.
| 75 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A) | ||||||||
Table of Contents | ||||||||
Table I.2.3
YEAR-TO-DATE AVERAGE BALANCES, NET INTEREST INCOME & YIELDS/RATES
| Six Months Ended | ||||||||||||||||||||||||||||||||||||||
| June 30, 2026 | June 30, 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 | $ | 49,445 | $ | 1,441 | 5.88 | % | $ | 47,330 | $ | 1,454 | 6.20 | % | ||||||||||||||||||||||||||
| Consumer loans | 14,503 | 361 | 4.98 | 14,771 | 367 | 4.97 | ||||||||||||||||||||||||||||||||
| Total loans and leases | 63,948 | 1,802 | 5.67 | 62,101 | 1,821 | 5.90 | ||||||||||||||||||||||||||||||||
| Loans held for sale | 505 | 16 | 6.21 | 510 | 18 | 6.93 | ||||||||||||||||||||||||||||||||
| Investment securities | 9,336 | 141 | 3.03 | 9,270 | 141 | 3.04 | ||||||||||||||||||||||||||||||||
| Trading securities | 1,736 | 47 | 5.40 | 1,526 | 43 | 5.65 | ||||||||||||||||||||||||||||||||
| Federal funds sold | 10 | — | 4.09 | 7 | — | 4.90 | ||||||||||||||||||||||||||||||||
| Securities purchased under agreements to resell | 703 | 13 | 3.55 | 667 | 14 | 4.23 | ||||||||||||||||||||||||||||||||
| Interest-bearing deposits with banks | 1,200 | 22 | 3.69 | 1,262 | 28 | 4.44 | ||||||||||||||||||||||||||||||||
| Total earning assets / Total interest income | $ | 77,438 | $ | 2,041 | 5.30 | % | $ | 75,343 | $ | 2,065 | 5.51 | % | ||||||||||||||||||||||||||
| Cash and due from banks | 930 | 875 | ||||||||||||||||||||||||||||||||||||
| Goodwill and other intangible assets, net | 1,607 | 1,643 | ||||||||||||||||||||||||||||||||||||
| Premises and equipment, net | 544 | 568 | ||||||||||||||||||||||||||||||||||||
| Allowance for loan and lease losses | (741) | (827) | ||||||||||||||||||||||||||||||||||||
| Other assets | 3,796 | 3,862 | ||||||||||||||||||||||||||||||||||||
| Total assets | $ | 83,574 | $ | 81,464 | ||||||||||||||||||||||||||||||||||
| Liabilities and Shareholders' Equity: | ||||||||||||||||||||||||||||||||||||||
| Interest-bearing deposits: | ||||||||||||||||||||||||||||||||||||||
| Savings | $ | 25,882 | $ | 277 | 2.16 | % | $ | 26,220 | $ | 351 | 2.70 | % | ||||||||||||||||||||||||||
| Other interest-bearing deposits | 17,294 | 173 | 2.02 | 16,230 | 188 | 2.34 | ||||||||||||||||||||||||||||||||
| Time deposits | 7,633 | 130 | 3.44 | 6,480 | 127 | 3.94 | ||||||||||||||||||||||||||||||||
| Total interest-bearing deposits | 50,809 | 580 | 2.30 | 48,930 | 666 | 2.74 | ||||||||||||||||||||||||||||||||
| Federal funds purchased | 1,065 | 20 | 3.72 | 730 | 16 | 4.49 | ||||||||||||||||||||||||||||||||
| Securities sold under agreements to repurchase | 1,519 | 19 | 2.55 | 1,856 | 29 | 3.17 | ||||||||||||||||||||||||||||||||
| Trading liabilities | 687 | 13 | 3.90 | 652 | 14 | 4.18 | ||||||||||||||||||||||||||||||||
| Other short-term borrowings | 1,148 | 22 | 3.81 | 946 | 21 | 4.44 | ||||||||||||||||||||||||||||||||
| Term borrowings | 1,319 | 37 | 5.65 | 1,445 | 40 | 5.51 | ||||||||||||||||||||||||||||||||
| Total interest-bearing liabilities / Total interest expense | $ | 56,547 | $ | 691 | 2.46 | % | $ | 54,559 | $ | 786 | 2.90 | % | ||||||||||||||||||||||||||
| Noninterest-bearing liabilities: | ||||||||||||||||||||||||||||||||||||||
| Noninterest-bearing deposits | 15,689 | 15,694 | ||||||||||||||||||||||||||||||||||||
| Other liabilities | 1,992 | 2,107 | ||||||||||||||||||||||||||||||||||||
| Total liabilities | 74,228 | 72,360 | ||||||||||||||||||||||||||||||||||||
| Shareholders' equity | 9,051 | 8,809 | ||||||||||||||||||||||||||||||||||||
| Noncontrolling interest | 295 | 295 | ||||||||||||||||||||||||||||||||||||
| Total shareholders' equity | 9,346 | 9,104 | ||||||||||||||||||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 83,574 | $ | 81,464 | ||||||||||||||||||||||||||||||||||
| Net earning assets / Net interest income (TE) / Net interest spread | $ | 20,891 | $ | 1,350 | 2.84 | % | $ | 20,784 | $ | 1,279 | 2.61 | % | ||||||||||||||||||||||||||
| Taxable equivalent adjustment | (6) | 0.66 | (7) | 0.80 | ||||||||||||||||||||||||||||||||||
| Net interest income / Net interest margin (a) | $ | 1,344 | 3.50 | % | $ | 1,272 | 3.41 | % | ||||||||||||||||||||||||||||||
(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.
| 76 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A) | ||||||||
Table of Contents | ||||||||
For the six months ended June 30, 2026, net interest income of $1.3 billion increased $72 million from the same period in 2025, largely driven by lower funding costs and loan growth, partially offset by lower loan yields.
Total average earning assets increased $2.1 billion for the six months ended June 30, 2026 compared to the same period in 2025, largely driven by average loan growth of $1.8 billion and higher average trading securities balances of $210 million.
The year-to-date net interest margin of 3.50% increased 9 basis points compared to 3.41% for the same period of 2025 as an improvement in the rate paid on interest-bearing deposits was partially offset by lower loan yields. The cost of interest-bearing deposits decreased 44 basis points and loan yields decreased 23 basis points.
Noninterest Income
The following table presents the significant components of noninterest income for the three months ended June 30, 2026 and 2025.
Table I.2.4
NONINTEREST INCOME
| Three Months Ended | ||||||||||||||||||||||||||
| (Dollars in millions) | June 30, 2026 | June 30, 2025 | $ Change | % Change | ||||||||||||||||||||||
| Noninterest income: | ||||||||||||||||||||||||||
| Fixed income | $ | 46 | $ | 42 | $ | 4 | 10 | % | ||||||||||||||||||
| Deposit transactions and cash management | 43 | 41 | 2 | 5 | ||||||||||||||||||||||
| Brokerage, management fees and commissions | 31 | 26 | 5 | 19 | ||||||||||||||||||||||
| Card and digital banking fees | 18 | 19 | (1) | (5) | ||||||||||||||||||||||
| Other service charges and fees | 15 | 14 | 1 | 7 | ||||||||||||||||||||||
| Deferred compensation income | 15 | 8 | 7 | 88 | ||||||||||||||||||||||
| Trust services and investment management | 14 | 13 | 1 | 8 | ||||||||||||||||||||||
| Mortgage banking income | 9 | 10 | (1) | (10) | ||||||||||||||||||||||
| Other income | 20 | 16 | 4 | 25 | ||||||||||||||||||||||
| Total noninterest income | $ | 211 | $ | 189 | $ | 22 | 12 | % | ||||||||||||||||||
Noninterest income for second quarter 2026 increased $22 million, or 12%, compared to second quarter 2025.
Fixed income of $46 million increased $4 million compared to second quarter 2025. Fixed income product revenue increased $3 million and revenue from other products increased $1 million. Average daily revenue was $594 thousand compared to $550 thousand for the same quarter of 2025, reflecting more favorable market conditions.
Brokerage, management fees and commissions increased $5 million, or 19%, largely reflecting improvements related to the outsourcing of FHN's retail brokerage and wealth management operations in second quarter 2025.
Deferred compensation income of $15 million increased $7 million, reflecting fluctuations in equity market valuations relative to the prior year.
| 77 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A) | ||||||||
Table of Contents | ||||||||
The following table presents the significant components of noninterest income for the six months ended June 30, 2026 and 2025.
Table I.2.5
NONINTEREST INCOME
| Six Months Ended | ||||||||||||||||||||||||||
| (Dollars in millions) | June 30, 2026 | June 30, 2025 | $ Change | % Change | ||||||||||||||||||||||
| Noninterest income: | ||||||||||||||||||||||||||
| Fixed income | $ | 99 | $ | 91 | $ | 8 | 9 | % | ||||||||||||||||||
| Deposit transactions and cash management | 86 | 81 | 5 | 6 | ||||||||||||||||||||||
| Brokerage, management fees and commissions | 60 | 52 | 8 | 15 | ||||||||||||||||||||||
| Card and digital banking fees | 36 | 37 | (1) | (3) | ||||||||||||||||||||||
| Other service charges and fees | 31 | 26 | 5 | 19 | ||||||||||||||||||||||
| Trust services and investment management | 27 | 25 | 2 | 8 | ||||||||||||||||||||||
| Mortgage banking income | 18 | 18 | — | — | ||||||||||||||||||||||
| Deferred compensation income | 12 | 5 | 7 | 140 | ||||||||||||||||||||||
| Other income | 36 | 35 | 1 | 3 | ||||||||||||||||||||||
| Total noninterest income | $ | 405 | $ | 370 | $ | 35 | 9 | % | ||||||||||||||||||
For the six months ended June 30, 2026, noninterest income of $405 million increased $35 million, or 9%, compared to the same period of 2025.
Fixed income increased $8 million for the six months ended June 30, 2026, compared to the same period of 2025. Fixed income product revenue increased $13 million largely driven by more favorable market conditions. Revenue from other products decreased $5 million primarily driven by decreases in revenues from loan sales.
Deposit transactions and cash management fees increased $5 million, largely driven by higher cash management fees.
Brokerage, management fees and commissions increased $8 million, or 15%, largely reflecting improvements related to the outsourcing of FHN's retail brokerage and wealth management operations in second quarter 2025.
Other service charges and fees increased $5 million, largely driven by elevated income related to the equipment finance lease business.
Deferred compensation income of $12 million increased $7 million, reflecting fluctuations in equity market valuations relative to the prior year.
| 78 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A) | ||||||||
Table of Contents | ||||||||
Noninterest Expense
The following table presents the significant components of noninterest expense for the three months ended June 30, 2026 and 2025.
Table I.2.6
NONINTEREST EXPENSE
| Three Months Ended | ||||||||||||||||||||||||||
| (Dollars in millions) | June 30, 2026 | June 30, 2025 | $ Change | % Change | ||||||||||||||||||||||
| Noninterest expense: | ||||||||||||||||||||||||||
| Personnel expense | $ | 304 | $ | 282 | $ | 22 | 8 | % | ||||||||||||||||||
| Computer software | 40 | 34 | 6 | 18 | ||||||||||||||||||||||
| Net occupancy expense | 36 | 34 | 2 | 6 | ||||||||||||||||||||||
| Operations services | 26 | 23 | 3 | 13 | ||||||||||||||||||||||
| Legal and professional fees | 18 | 17 | 1 | 6 | ||||||||||||||||||||||
| Advertising and public relations | 17 | 14 | 3 | 21 | ||||||||||||||||||||||
| Deposit insurance expense | 12 | 12 | — | — | ||||||||||||||||||||||
| Equipment expense | 11 | 11 | — | — | ||||||||||||||||||||||
| Amortization of intangible assets | 8 | 10 | (2) | (20) | ||||||||||||||||||||||
| Other expense | 60 | 54 | 6 | 11 | ||||||||||||||||||||||
| Total noninterest expense | $ | 532 | $ | 491 | $ | 41 | 8 | % | ||||||||||||||||||
Noninterest expense of $532 million increased $41 million, or 8%, compared to second quarter 2025.
Personnel expense increased $22 million in second quarter 2026, largely reflecting a $9 million increase in salaries and benefits expense tied to higher associate headcount compared to second quarter 2025. Incentives and commissions expense increased $3 million, largely attributable to higher incentive-based compensation expense tied to the increase in fixed income revenue. Deferred compensation expense increased $10 million, reflecting higher equity market fluctuations relative to the prior year.
Computer software expense increased $6 million, largely attributable to the timing of technology-related expenditures.
The $6 million increase in other expense compared to the prior year quarter was largely attributable to $5 million in Visa derivative valuation expenses in second quarter 2026.
| 79 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A) | ||||||||
Table of Contents | ||||||||
The following table presents the significant components of noninterest expense for the six months ended June 30, 2026 and 2025.
Table I.2.7
NONINTEREST EXPENSE
| Six Months Ended | ||||||||||||||||||||||||||
| (Dollars in millions) | June 30, 2026 | June 30, 2025 | $ Change | % Change | ||||||||||||||||||||||
| Noninterest expense: | ||||||||||||||||||||||||||
| Personnel expense | $ | 593 | $ | 561 | $ | 32 | 6 | % | ||||||||||||||||||
| Computer software | 77 | 66 | 11 | 17 | ||||||||||||||||||||||
| Net occupancy expense | 71 | 69 | 2 | 3 | ||||||||||||||||||||||
| Operations services | 52 | 46 | 6 | 13 | ||||||||||||||||||||||
| Legal and professional fees | 34 | 31 | 3 | 10 | ||||||||||||||||||||||
| Advertising and public relations | 27 | 24 | 3 | 13 | ||||||||||||||||||||||
| Deposit insurance expense | 25 | 25 | — | — | ||||||||||||||||||||||
Equipment expense | 22 | 22 | — | — | ||||||||||||||||||||||
| Amortization of intangible assets | 16 | 20 | (4) | (20) | ||||||||||||||||||||||
| Other expense | 119 | 114 | 5 | 4 | ||||||||||||||||||||||
| Total noninterest expense | $ | 1,036 | $ | 978 | $ | 58 | 6 | % | ||||||||||||||||||
For the six months ended June 30, 2026, noninterest expense increased $58 million compared to the same period of 2025.
Personnel expense of $593 million increased $32 million, largely reflecting higher salaries and deferred compensation expenses. Higher incentive-based compensation expense tied to increased fixed income revenue was partially offset by lower equity-based compensation expense.
Computer software expense increased $11 million for the year-to-date period, largely from increased spending related to technology projects.
Operations services increased $6 million, largely attributable to higher outside computer services expense.
The $5 million increase in other expense was primarily attributable to higher contract employment and outsourcing expense in 2026. Other expense results also included $5 million in Visa derivative valuation expense in both periods.
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 second quarter 2026, compared to $30 million for second quarter 2025. Net charge-offs in second quarter 2026 were $33 million, or 20 basis points, compared to $34 million, or 22 basis points, in second 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 7 basis points to 1.24% as of June 30, 2026 from 1.31% as of December 31, 2025, driven by improvements in certain macroeconomic factors and improved CRE credit 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.
| 80 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A) | ||||||||
Table of Contents | ||||||||
Income Taxes
FHN recorded income tax expense of $66 million in second quarter 2026, compared to $64 million in second quarter 2025. For the six months ended June 30, 2026 and 2025, FHN recorded income tax expense of $142 million and $127 million, respectively.
The effective tax rate was approximately 19.5% and 20.8% for the three months ended June 30, 2026 and June 30, 2025, respectively. The effective tax rate was approximately 20.8% and 21.3% for the six months ended June 30, 2026 and 2025, respectively. The effective tax rate decreased compared to the prior year period due to a higher volume of discrete excess tax benefits realized from stock-based compensation vesting events in the quarter.
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 June 30, 2026, FHN’s gross DTA after valuation allowance and gross DTL were $615 million and $580 million, respectively, resulting in a net DTA of $35 million at June 30, 2026, compared with a net DTA of $92 million at December 31, 2025.
As of June 30, 2026, FHN had DTA balances related to federal and state income tax carryforwards of $22 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 second quarter 2026 increased $12 million to $400 million, compared to $388 million for second quarter 2025, largely driven by a $12 million decrease in the provision for credit losses. Total revenue increased $21 million as net interest income increased $11 million and noninterest income increased $10 million compared to second 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 brokerage, management fees and commissions; deposit transactions and cash management fees; and other service charges and fees. Noninterest expense increased $21 million compared to second 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.
Pre-tax income of $793 million for the six months ended June 30, 2026 increased $44 million compared to the same period of 2025, largely from a $42 million decrease in the provision for credit losses. Total revenue increased $47 million, as net interest income increased $28 million and noninterest income increased $19 million. The increase in net interest income was largely driven by improvement in the cost of interest-bearing deposits. The increase in noninterest income was largely driven by higher brokerage, management fees and commissions; deposit transactions and cash management fees; and other service charges and fees. Noninterest expense increased $45 million, largely attributable 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, partially offset by lower other expenses.
Wholesale
Pre-tax income in the Wholesale segment decreased $7 million compared to second quarter 2025. Revenue increased $14 million, as net interest income increased $9 million and noninterest income increased $5 million compared to second quarter 2025. The increase in net interest income was largely driven by commercial loan
| 81 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A) | ||||||||
Table of Contents | ||||||||
growth, primarily loans to mortgage companies. 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 second quarter 2026 and higher other product revenue. Provision for credit losses increased $17 million and noninterest expense increased $4 million compared to second quarter 2025.
Pre-tax income of $57 million for the six months ended June 30, 2026 decreased $4 million from the same period of 2025, largely reflecting a $23 million increase in the provision for credit losses and a $12 million increase in noninterest expense, partially offset by a $31 million increase in revenue. The increase in noninterest expense was largely attributable to higher personnel expense tied to an increase in incentive-based compensation from growth in fixed income. The increase in revenue was largely a result of higher net interest income of $22 million, primarily driven by growth in loans to mortgage companies. Noninterest income also increased $9 million, driven by higher fixed income of $8 million.
Corporate
Pre-tax loss for the Corporate segment was $83 million for second quarter 2026 compared to $109 million for second quarter 2025, reflecting a $22 million increase in total revenues and a $20 million decrease in the provision for credit losses, partially offset by a $16 million increase in noninterest expense. The increase in revenue was driven by lower net interest expense of $15 million and higher noninterest income of $7 million. The increase in noninterest expense was largely attributable to higher personnel expense as a result of increased deferred compensation expense and higher Visa derivative valuation expenses of $5 million compared to second quarter 2025.
Pre-tax loss was $167 million for the six months ended June 30, 2026 compared to $216 million for the same period of 2025. The decrease in loss was driven by higher total revenues of $29 million and a decrease in provision for credit losses of $21 million, partially offset by a $1 million increase in noninterest expense. The increase in revenue was driven by lower net interest expense of $22 million and higher noninterest income of $7 million. Noninterest expense results reflect a $4 million expense credit related to an accrual release in deferred compensation in the prior year and Visa derivative valuation expenses of $5 million in both 2026 and 2025.
| 82 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A) | ||||||||
Table of Contents | ||||||||
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 $65.3 billion as of June 30, 2026 increased $1.2 billion compared to December 31, 2025. Commercial loans and leases increased $1.4 billion, driven by growth in both C&I and commercial real estate loans. Consumer loans decreased $249 million, primarily from a decline in consumer real estate loans.
The following table provides details regarding FHN's loans and leases as of June 30, 2026 and December 31, 2025.
Table I.2.8
LOANS & LEASES
| June 30, 2026 | December 31, 2025 | |||||||||||||||||||||||||||||||
| (Dollars in millions) | Amount | Percent of total | Amount | Percent of total | Growth Rate | |||||||||||||||||||||||||||
| Commercial: | ||||||||||||||||||||||||||||||||
| Commercial, financial, and industrial (a) | $ | 37,296 | 57 | % | $ | 35,905 | 56 | % | 4 | % | ||||||||||||||||||||||
| Commercial real estate | 13,595 | 21 | 13,563 | 21 | — | |||||||||||||||||||||||||||
| Total commercial | 50,891 | 78 | 49,468 | 77 | 3 | |||||||||||||||||||||||||||
| Consumer: | ||||||||||||||||||||||||||||||||
| Consumer real estate | 13,869 | 21 | 14,108 | 22 | (2) | |||||||||||||||||||||||||||
| Credit card and other | 570 | 1 | 580 | 1 | (2) | |||||||||||||||||||||||||||
| Total consumer | 14,439 | 22 | 14,688 | 23 | (2) | |||||||||||||||||||||||||||
| Total loans and leases | $ | 65,330 | 100 | % | $ | 64,156 | 100 | % | 2 | % | ||||||||||||||||||||||
(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 June 30, 2026 and December 31, 2025, loans HFS were $501 million and $406 million, respectively. Held-for-sale consumer mortgage loans secured by residential real
estate in process of foreclosure totaled $1 million as of both June 30, 2026 and December 31, 2025.
| 83 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A) | ||||||||
Table of Contents | ||||||||
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 June 30, 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 June 30, 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 June 30, 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 $1.4 billion to $37.3 billion as of June 30, 2026, compared to December 31, 2025, reflecting growth among a broad range of industries.
The largest geographical concentrations of C&I balances as of June 30, 2026 were in Tennessee (18%), Florida (12%), Texas (10%), California (6%), 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 June 30, 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.2.9
C&I PORTFOLIO BY INDUSTRY
| June 30, 2026 | December 31, 2025 | |||||||||||||||||||||||||
(Dollars in millions) | Amount | Percent | Amount | Percent | ||||||||||||||||||||||
Industry: | ||||||||||||||||||||||||||
| Loans to mortgage companies | $ | 4,759 | 13 | % | $ | 4,703 | 13 | % | ||||||||||||||||||
| Real estate and rental and leasing (a) | 4,305 | 12 | 3,965 | 11 | ||||||||||||||||||||||
| Finance and insurance | 4,259 | 11 | 4,117 | 12 | ||||||||||||||||||||||
| Wholesale trade | 2,733 | 7 | 2,645 | 7 | ||||||||||||||||||||||
| Health care and social assistance | 2,510 | 7 | 2,564 | 7 | ||||||||||||||||||||||
| Manufacturing | 2,470 | 7 | 2,305 | 6 | ||||||||||||||||||||||
| Accommodation and food service | 2,399 | 6 | 2,322 | 7 | ||||||||||||||||||||||
| Retail trade | 1,837 | 5 | 1,802 | 5 | ||||||||||||||||||||||
| Transportation and warehousing | 1,763 | 5 | 1,740 | 5 | ||||||||||||||||||||||
| Other (construction, professional, energy, etc.) (b) | 10,261 | 27 | 9,742 | 27 | ||||||||||||||||||||||
| Total C&I loan portfolio | $ | 37,296 | 100 | % | $ | 35,905 | 100 | % | ||||||||||||||||||
(a)Leasing, rental of real estate, equipment, and goods.
(b)Industries in this category each comprise less than 5%.
| 84 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A) | ||||||||
Table of Contents | ||||||||
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 June 30, 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 12% and 11% of FHN's C&I portfolio as of June 30, 2026 and December 31, 2025, respectively. As of June 30, 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 June 30, 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 June 30, 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 second quarter 2026, approximately 72% of the loan originations were home purchases and 28% were refinance transactions.
Real Estate and Rental and Leasing
Loans to borrowers in the real estate and rental and leasing industry were 12% and 11% of FHN's C&I portfolio
as of June 30, 2026 and December 31, 2025, respectively. This portfolio primarily consists of equipment financing loans and leases to clients across FHN's footprint in a broad range of industries and asset types. This portfolio also includes a smaller balance of loans and leases for solar and wind generating facilities.
Finance and Insurance
The finance and insurance component represented 11% and 12% of the C&I portfolio as of June 30, 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 June 30, 2026, asset-based lending to consumer finance companies represents approximately $1.6 billion of the finance and insurance component.
Commercial Real Estate
The CRE portfolio totaled $13.6 billion as of both June 30, 2026 and December 31, 2025. 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 June 30, 2026 were in Florida (26%), Texas (14%), North Carolina (12%), Tennessee (8%), Louisiana (8%), and Georgia (7%), 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.2.10
CRE PORTFOLIO BY PROPERTY TYPE
| June 30, 2026 | December 31, 2025 | |||||||||||||||||||||||||
| (Dollars in millions) | Amount | Percent | Amount | Percent | ||||||||||||||||||||||
| Property Type: | ||||||||||||||||||||||||||
| Multi-family | $ | 4,496 | 33 | % | $ | 4,452 | 33 | % | ||||||||||||||||||
| Office | 2,671 | 20 | 2,694 | 20 | ||||||||||||||||||||||
| Retail | 2,393 | 17 | 2,354 | 17 | ||||||||||||||||||||||
| Industrial | 2,127 | 16 | 2,075 | 15 | ||||||||||||||||||||||
| Hospitality | 1,109 | 8 | 1,154 | 9 | ||||||||||||||||||||||
| Other CRE (a) | 799 | 6 | 834 | 6 | ||||||||||||||||||||||
| Total CRE loan portfolio | $ | 13,595 | 100 | % | $ | 13,563 | 100 | % | ||||||||||||||||||
(a) Property types in this category each comprise less than 5%.
| 85 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A) | ||||||||
Table of Contents | ||||||||
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 June 30, 2026 and December 31, 2025, respectively. The largest geographical concentrations of balances in the consumer real estate portfolio as of June 30, 2026 were in Florida (28%), 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 June 30, 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 782 as of June 30, 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 June 30, 2026 and December 31, 2025, FHN had held-to-maturity consumer mortgage loans secured by real estate totaling $20 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 June 30, 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 June 30, 2026 and December 31, 2025, approximately 95% of FHN's HELOCs were in the draw period. It is expected that $604 million, or 29%, 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.2.11
HELOC DRAW TO REPAYMENT SCHEDULE
| June 30, 2026 | December 31, 2025 | |||||||||||||||||||||||||
| (Dollars in millions) | Repayment Amount | Percent | Repayment Amount | Percent | ||||||||||||||||||||||
| Months remaining in draw period: | ||||||||||||||||||||||||||
| 0-12 | $ | 84 | 4 | % | $ | 80 | 4 | % | ||||||||||||||||||
| 13-24 | 121 | 6 | 117 | 6 | ||||||||||||||||||||||
| 25-36 | 115 | 5 | 126 | 6 | ||||||||||||||||||||||
| 37-48 | 143 | 7 | 130 | 6 | ||||||||||||||||||||||
| 49-60 | 141 | 7 | 159 | 8 | ||||||||||||||||||||||
| >60 | 1,446 | 71 | 1,449 | 70 | ||||||||||||||||||||||
| Total | $ | 2,050 | 100 | % | $ | 2,061 | 100 | % | ||||||||||||||||||
Credit Card and Other
The credit card and other consumer loan portfolio totaled $570 million and $580 million as of June 30, 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 $10 million decrease was driven by net repayments.
| 86 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A) | ||||||||
Table of Contents | ||||||||
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 $709 million, or 1.09% of total loans and leases, as of June 30, 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 1.24% as of June 30, 2026 from 1.31% as of December 31, 2025, driven by improvements in certain macroeconomic factors, continued loan resolutions, and positive grade migration in the CRE portfolio.
Consolidated Net Charge-offs
Net charge-offs in second quarter 2026 were $33 million, or an annualized 20 basis points of total loans and leases,
compared to net charge-offs of $34 million, or 22 basis points, in second quarter 2025.
Table I.2.12
ANALYSIS OF ALLOWANCE FOR CREDIT LOSSES AND CHARGE-OFFS
| (Dollars in millions) | June 30, 2026 | December 31, 2025 | June 30, 2025 | ||||||||||||||||||||
| Allowance for loan and lease losses | |||||||||||||||||||||||
| C&I | $ | 350 | $ | 335 | $ | 347 | |||||||||||||||||
| CRE | 150 | 177 | 213 | ||||||||||||||||||||
| Consumer real estate | 190 | 206 | 233 | ||||||||||||||||||||
| Credit card and other | 19 | 20 | 21 | ||||||||||||||||||||
| Total allowance for loan and lease losses | $ | 709 | $ | 738 | $ | 814 | |||||||||||||||||
| Reserve for remaining unfunded commitments | |||||||||||||||||||||||
| C&I | $ | 84 | $ | 81 | $ | 68 | |||||||||||||||||
| CRE | 7 | 11 | 10 | ||||||||||||||||||||
| Consumer real estate | 8 | 9 | 9 | ||||||||||||||||||||
| Total reserve for remaining unfunded commitments | $ | 99 | $ | 101 | $ | 87 | |||||||||||||||||
| Allowance for credit losses | |||||||||||||||||||||||
| C&I | $ | 434 | $ | 416 | $ | 415 | |||||||||||||||||
| CRE | 157 | 188 | 223 | ||||||||||||||||||||
| Consumer real estate | 198 | 215 | 242 | ||||||||||||||||||||
| Credit card and other | 19 | 20 | 21 | ||||||||||||||||||||
| Total allowance for credit losses | $ | 808 | $ | 839 | $ | 901 | |||||||||||||||||
| Period-end loans and leases | |||||||||||||||||||||||
| C&I | $ | 37,296 | $ | 35,905 | $ | 34,359 | |||||||||||||||||
| CRE | 13,595 | 13,563 | 13,936 | ||||||||||||||||||||
| Consumer real estate | 13,869 | 14,108 | 14,368 | ||||||||||||||||||||
| Credit card and other | 570 | 580 | 597 | ||||||||||||||||||||
| Total period-end loans and leases | $ | 65,330 | $ | 64,156 | $ | 63,260 | |||||||||||||||||
| ALLL / loans and leases % | |||||||||||||||||||||||
| C&I | 0.94 | % | 0.93 | % | 1.01 | % | |||||||||||||||||
| CRE | 1.10 | 1.30 | 1.53 | ||||||||||||||||||||
| Consumer real estate | 1.37 | 1.46 | 1.63 | ||||||||||||||||||||
| Credit card and other | 3.42 | 3.40 | 3.50 | ||||||||||||||||||||
| Total ALLL / loans and leases % | 1.09 | % | 1.15 | % | 1.29 | % | |||||||||||||||||
| ACL / loans and leases % | |||||||||||||||||||||||
| C&I | 1.16 | % | 1.16 | % | 1.21 | % | |||||||||||||||||
| 87 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A) | ||||||||
Table of Contents | ||||||||
| CRE | 1.15 | 1.38 | 1.59 | ||||||||||||||||||||
| Consumer real estate | 1.42 | 1.53 | 1.69 | ||||||||||||||||||||
| Credit card and other | 3.42 | 3.40 | 3.50 | ||||||||||||||||||||
| Total ACL / loans and leases % | 1.24 | % | 1.31 | % | 1.42 | % | |||||||||||||||||
| Quarter-to-date net charge-offs (recoveries) | |||||||||||||||||||||||
| C&I | $ | 27 | $ | 26 | $ | 22 | |||||||||||||||||
| CRE | 3 | 2 | 7 | ||||||||||||||||||||
| Consumer real estate | (1) | (1) | 1 | ||||||||||||||||||||
| Credit card and other | 4 | 3 | 4 | ||||||||||||||||||||
| Total net charge-offs (recoveries) | $ | 33 | $ | 30 | $ | 34 | |||||||||||||||||
| Average loans and leases | |||||||||||||||||||||||
| C&I | $ | 36,745 | $ | 35,004 | $ | 33,634 | |||||||||||||||||
| CRE | 13,510 | 13,587 | 14,070 | ||||||||||||||||||||
| Consumer real estate | 13,873 | 14,255 | 14,224 | ||||||||||||||||||||
| Credit card and other | 567 | 586 | 623 | ||||||||||||||||||||
| Total average loans and leases | $ | 64,695 | $ | 63,432 | $ | 62,551 | |||||||||||||||||
| Net charge-off (recovery) % (annualized) | |||||||||||||||||||||||
| C&I | 0.30 | % | 0.30 | % | 0.26 | % | |||||||||||||||||
| CRE | 0.08 | 0.04 | 0.22 | ||||||||||||||||||||
| Consumer real estate | (0.02) | (0.02) | — | ||||||||||||||||||||
| Credit card and other | 2.17 | 2.31 | 2.64 | ||||||||||||||||||||
| Total net charge-off % | 0.20 | % | 0.19 | % | 0.22 | % | |||||||||||||||||
| ALLL / annualized net charge-offs | |||||||||||||||||||||||
| C&I | 318 | % | 323 | % | 398 | % | |||||||||||||||||
| CRE | 1,307 | 2,953 | 674 | ||||||||||||||||||||
| Consumer real estate | NM | NM | NM | ||||||||||||||||||||
| Credit card and other | 159 | 146 | 127 | ||||||||||||||||||||
| Total ALLL / net charge-offs | 540 | % | 612 | % | 599 | % | |||||||||||||||||
NM - not meaningful
Nonperforming Assets
Nonperforming loans are loans placed on nonaccrual if it becomes evident that full collection of principal and interest is at risk, if impairment has been recognized as a partial charge-off of principal balance due to insufficient collateral value and past due status, or (on a case-by-case basis) if FHN continues to receive payments but there are other borrower-specific issues. Included in nonaccrual are loans for which FHN continues to receive payments, including residential real estate loans where the borrower has been discharged of personal obligation through bankruptcy. NPAs consist of nonperforming loans and leases, nonperforming loans held for sale, and OREO.
Total NPAs were $542 million as of June 30, 2026 compared to $617 million as of December 31, 2025.
Nonperforming loans and leases decreased $73 million, largely driven by a $55 million decrease in nonaccrual CRE loans and a $19 million decrease in nonaccrual C&I loans. The decrease in nonaccrual CRE loans was largely driven by paydowns in the office and industrial portfolios, partially offset by an increase in hospitality loans. 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 decreased 13 basis points to 0.81% as of June 30, 2026 compared to December 31, 2025.
| 88 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A) | ||||||||
Table of Contents | ||||||||
Table I.2.13
NONPERFORMING ASSETS
| (Dollars in millions) | |||||||||||||||||
| Nonperforming loans and leases | June 30, 2026 | December 31, 2025 | |||||||||||||||
| C&I | $ | 205 | $ | 224 | |||||||||||||
| CRE | 184 | 239 | |||||||||||||||
| Consumer real estate | 141 | 140 | |||||||||||||||
| Credit card and other | 1 | 1 | |||||||||||||||
| Total nonperforming loans and leases (a) | $ | 531 | $ | 604 | |||||||||||||
| Nonperforming loans held for sale (a) | $ | 9 | $ | 10 | |||||||||||||
| Foreclosed real estate and other assets | 2 | 3 | |||||||||||||||
| Total nonperforming assets (a) | $ | 542 | $ | 617 | |||||||||||||
| Nonperforming loans and leases to total loans and leases (b) | |||||||||||||||||
| C&I | 0.55 | % | 0.62 | % | |||||||||||||
| CRE | 1.36 | 1.76 | |||||||||||||||
| Consumer real estate | 1.02 | 0.99 | |||||||||||||||
| Credit card and other | 0.13 | 0.16 | |||||||||||||||
| Total NPL % | 0.81 | % | 0.94 | % | |||||||||||||
| ALLL / NPLs (b) | |||||||||||||||||
| C&I | 171 | % | 150 | % | |||||||||||||
| CRE | 81 | 74 | |||||||||||||||
| Consumer real estate | 135 | 147 | |||||||||||||||
| Credit card and other | 2,617 | 2,096 | |||||||||||||||
| Total ALLL / NPLs | 133 | % | 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.
| 89 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A) | ||||||||
Table of Contents | ||||||||
The following table presents nonperforming assets by business segment.
Table I.2.14
NONPERFORMING ASSETS BY SEGMENT
| (Dollars in millions) | |||||||||||||||||
| Nonperforming loans and leases (a) (b) | June 30, 2026 | December 31, 2025 | |||||||||||||||
| Commercial, Consumer & Wealth | $ | 508 | $ | 587 | |||||||||||||
| Wholesale | 16 | 8 | |||||||||||||||
| Corporate | 7 | 9 | |||||||||||||||
| Consolidated | $ | 531 | $ | 604 | |||||||||||||
| Foreclosed real estate | |||||||||||||||||
| Commercial, Consumer & Wealth | $ | 1 | $ | — | |||||||||||||
| Wholesale | 1 | 2 | |||||||||||||||
| Corporate | — | 1 | |||||||||||||||
| Consolidated | $ | 2 | $ | 3 | |||||||||||||
| Nonperforming Assets (a) (b) | |||||||||||||||||
| Commercial, Consumer & Wealth | $ | 509 | $ | 587 | |||||||||||||
| Wholesale | 17 | 10 | |||||||||||||||
| Corporate | 7 | 10 | |||||||||||||||
| Consolidated | $ | 533 | $ | 607 | |||||||||||||
| Nonperforming loans and leases to loans and leases (b) | |||||||||||||||||
| Commercial, Consumer & Wealth | 0.88 | % | 1.04 | % | |||||||||||||
| Wholesale | 0.22 | 0.11 | |||||||||||||||
| Corporate | 3.58 | 1.84 | |||||||||||||||
| Consolidated | 0.81 | % | 0.94 | % | |||||||||||||
| NPA % (b) (c) | |||||||||||||||||
| Commercial, Consumer & Wealth | 0.88 | % | 1.04 | % | |||||||||||||
| Wholesale | 0.23 | 0.14 | |||||||||||||||
| Corporate | 3.58 | 1.98 | |||||||||||||||
| Consolidated | 0.82 | % | 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 $2 million as of June 30, 2026, compared to $8 million as of
December 31, 2025. Loans 30 to 89 days past due and still accruing increased to $91 million as of June 30, 2026, compared to $83 million as of December 31, 2025, largely driven by an increase in past due CRE loans.
| 90 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A) | ||||||||
Table of Contents | ||||||||
Table I.2.15
ACCRUING DELINQUENCIES & OTHER CREDIT DISCLOSURES
| (Dollars in millions) | ||||||||||||||
| Accruing loans and leases 30+ days past due (a) | June 30, 2026 | December 31, 2025 | ||||||||||||
| C&I | $ | 34 | $ | 35 | ||||||||||
| CRE | 11 | 3 | ||||||||||||
| Consumer real estate | 42 | 47 | ||||||||||||
| Credit card and other | 6 | 6 | ||||||||||||
| Total accruing loans and leases 30+ days past due | $ | 93 | $ | 91 | ||||||||||
| Accruing loans and leases 30+ days past due % (a) | ||||||||||||||
| C&I | 0.09 | % | 0.10 | % | ||||||||||
| CRE | 0.08 | 0.02 | ||||||||||||
| Consumer real estate | 0.31 | 0.33 | ||||||||||||
| Credit card and other | 0.98 | 1.05 | ||||||||||||
| Total accruing loans and leases 30+ days past due % | 0.14 | % | 0.14 | % | ||||||||||
| Accruing loans and leases 90+ days past due (a) (b) (c) | ||||||||||||||
| C&I | $ | 1 | $ | 1 | ||||||||||
| Consumer real estate | — | 6 | ||||||||||||
| Credit card and other | 1 | 1 | ||||||||||||
| Total accruing loans and leases 90+ days past due | $ | 2 | $ | 8 | ||||||||||
| Loans held for sale | ||||||||||||||
| 30 to 89 days past due (b) | $ | 4 | $ | 3 | ||||||||||
| 30 to 89 days past due - guaranteed portion (b) (d) | 1 | — | ||||||||||||
| 90+ days past due (b) | — | — | ||||||||||||
| 90+ days past due - guaranteed portion (b) (d) | — | — | ||||||||||||
(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 include 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 June 30, 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.
| 91 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A) | ||||||||
Table of Contents | ||||||||
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 $9.1 billion as of June 30, 2026 compared to $9.4 billion as of 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.
| 92 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A) | ||||||||
Table of Contents | ||||||||
Deposits
The following table summarizes deposits by type and insured status as of June 30, 2026 and December 31, 2025.
Table I.2.16
DEPOSITS
| June 30, 2026 | December 31, 2025 | |||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | Amount | Percent of total | Amount | Percent of total | Change | Percent | ||||||||||||||||||||||||||||||||
| Deposits by type: | ||||||||||||||||||||||||||||||||||||||
| Savings | $ | 25,552 | 38 | % | $ | 26,010 | 39 | % | $ | (458) | (2) | % | ||||||||||||||||||||||||||
| Time deposits | 10,018 | 15 | 6,485 | 10 | 3,533 | 54 | ||||||||||||||||||||||||||||||||
| Other interest-bearing deposits | 16,508 | 24 | 19,158 | 28 | (2,650) | (14) | ||||||||||||||||||||||||||||||||
| Total interest-bearing deposits | 52,078 | 77 | 51,653 | 77 | 425 | 1 | ||||||||||||||||||||||||||||||||
| Noninterest-bearing deposits | 15,994 | 23 | 15,823 | 23 | 171 | 1 | ||||||||||||||||||||||||||||||||
| Total deposits | $ | 68,072 | 100 | % | $ | 67,476 | 100 | % | $ | 596 | 1 | % | ||||||||||||||||||||||||||
| Deposits by insured status: | ||||||||||||||||||||||||||||||||||||||
| Insured | $ | 40,328 | 59 | % | $ | 39,422 | 58 | % | $ | 906 | 2 | % | ||||||||||||||||||||||||||
| Uninsured and uncollateralized | 22,686 | 33 | 22,817 | 34 | (131) | (1) | ||||||||||||||||||||||||||||||||
| Uninsured and collateralized | 5,058 | 8 | 5,237 | 8 | (179) | (3) | ||||||||||||||||||||||||||||||||
| Total uninsured | 27,744 | 41 | 28,054 | 42 | (310) | (1) | ||||||||||||||||||||||||||||||||
| Total deposits | $ | 68,072 | 100 | % | $ | 67,476 | 100 | % | $ | 596 | 1 | % | ||||||||||||||||||||||||||
Total deposits increased 1% to $68.1 billion as of June 30, 2026 compared to $67.5 billion as of December 31, 2025, as interest-bearing deposits increased $425 million and noninterest-bearing deposits increased $171 million. The increase in time deposits was partially offset by a decline in other interest-bearing deposits, as brokered deposit balances fluctuated between money market deposits and time deposits. Total brokered deposits increased to $7.8 billion as of June 30, 2026, compared to $6.0 billion as of December 31, 2025.
FHN continues to maintain a well-diversified and stable funding mix across its footprint and specialty lines of
business. At June 30, 2026, commercial deposits were $41.1 billion, or 60% of total deposits, and consumer deposits were $27.0 billion, or 40% 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.
See Tables I.2.2 and I.2.3 - Average Balances, Net Interest Income and Yields/Rates in this report for information on average deposits, including average rates paid.
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 decreased to $3.5 billion as of June 30, 2026 compared to $3.9 billion as of December 31, 2025. Federal funds purchased and securities sold under agreements to repurchase decreased $852 million and trading liabilities decreased $74 million, while FHLB borrowings increased $550 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 June 30, 2026 and December 31, 2025.
| 93 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A) | ||||||||
Table of Contents | ||||||||
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 June 30, 2026 and December 31, 2025, respectively. Significant changes included net income of $541 million and $392 million from the Series H preferred stock issuance, offset by $356 million in common stock repurchases, $183
million in common and preferred dividends, $57 million from the Series C preferred stock redemption, and a $36 million decrease 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.2.17
REGULATORY CAPITAL DATA
| (Dollars in millions) | June 30, 2026 | December 31, 2025 | ||||||||||||
| FHN shareholders’ equity | $ | 9,168 | $ | 8,847 | ||||||||||
| FHN non-cumulative perpetual preferred stock | (682) | (349) | ||||||||||||
| Common equity tier 1 before regulatory adjustments | $ | 8,486 | $ | 8,498 | ||||||||||
| Regulatory adjustments: | ||||||||||||||
| Disallowed goodwill and other intangibles | $ | (1,532) | $ | (1,548) | ||||||||||
| Net unrealized (gains) losses on securities available for sale | 535 | 512 | ||||||||||||
| Net unrealized (gains) losses on pension and other postretirement plans | 252 | 256 | ||||||||||||
| Net unrealized (gains) losses on cash flow hedges | 59 | 42 | ||||||||||||
| Common equity tier 1 | $ | 7,800 | $ | 7,760 | ||||||||||
| FHN non-cumulative perpetual preferred stock | 682 | 349 | ||||||||||||
| Qualifying noncontrolling interest— First Horizon Bank preferred stock | 295 | 295 | ||||||||||||
| Tier 1 capital | $ | 8,777 | $ | 8,404 | ||||||||||
| Tier 2 capital | 1,210 | 1,344 | ||||||||||||
| Total regulatory capital | $ | 9,987 | $ | 9,748 | ||||||||||
| Risk-Weighted Assets | ||||||||||||||
| First Horizon Corporation | $ | 74,589 | $ | 73,036 | ||||||||||
| First Horizon Bank | 73,760 | 72,283 | ||||||||||||
| Average Assets for Leverage | ||||||||||||||
| First Horizon Corporation | $ | 83,516 | $ | 82,492 | ||||||||||
| First Horizon Bank | 82,721 | 81,560 | ||||||||||||
Table I.2.18
REGULATORY RATIOS & AMOUNTS
| June 30, 2026 | December 31, 2025 | |||||||||||||||||||||||||
(Dollars in millions) | Ratio | Amount | Ratio | Amount | ||||||||||||||||||||||
| Common Equity Tier 1 | ||||||||||||||||||||||||||
| First Horizon Corporation | 10.46 | % | $ | 7,800 | 10.63 | % | $ | 7,760 | ||||||||||||||||||
| First Horizon Bank | 11.18 | 8,245 | 10.98 | 7,934 | ||||||||||||||||||||||
| Tier 1 | ||||||||||||||||||||||||||
| First Horizon Corporation | 11.77 | 8,777 | 11.51 | 8,404 | ||||||||||||||||||||||
| First Horizon Bank | 11.58 | 8,539 | 11.38 | 8,229 | ||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||
| First Horizon Corporation | 13.39 | 9,987 | 13.35 | 9,748 | ||||||||||||||||||||||
| First Horizon Bank | 13.02 | 9,601 | 13.04 | 9,425 | ||||||||||||||||||||||
| Tier 1 Leverage | ||||||||||||||||||||||||||
| First Horizon Corporation | 10.51 | 8,777 | 10.19 | 8,404 | ||||||||||||||||||||||
| First Horizon Bank | 10.32 | 8,539 | 10.09 | 8,229 | ||||||||||||||||||||||
| Other Capital Ratios | ||||||||||||||||||||||||||
| Total period-end equity to period-end assets | 11.21 | 10.90 | ||||||||||||||||||||||||
| Tangible common equity to tangible assets (a) | 8.31 | 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.2.28.
| 94 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A) | ||||||||
Table of Contents | ||||||||
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 June 30, 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 second 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 and the Series C Preferred Stock redemption. FHN's CET 1 ratio decreased largely due to an increase in risk-weighted assets.
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 June 30, 2026, $535 million in purchases had been made life-to-date under the October 2025 program at an average price per share of $23.42, or $23.40 excluding commissions. Program purchases made during the quarter ended June 30, 2026 are summarized in the following table.
Table I.2.19
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 | ||||||||||||||||||||||||||
| April 1 to April 30 | 1,250 | $ | 24.57 | 1,250 | $ | 733,986 | ||||||||||||||||||||
| May 1 to May 31 | 1,930 | 24.34 | 1,930 | 687,012 | ||||||||||||||||||||||
| June 1 to June 30 | 900 | 24.83 | 900 | 664,663 | ||||||||||||||||||||||
| Total | 4,080 | $ | 24.52 | 4,080 | ||||||||||||||||||||||
(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 June 30, 2026 are summarized in the following table.
| 95 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A) | ||||||||
Table of Contents | ||||||||
Table I.2.20
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 | ||||||||||||||||||||||||||
| April 1 to April 30 | 2 | $ | 23.28 | N/A | N/A | |||||||||||||||||||||
| May 1 to May 31 | 870 | 23.90 | N/A | N/A | ||||||||||||||||||||||
| June 1 to June 30 | 3 | 24.16 | N/A | N/A | ||||||||||||||||||||||
| Total | 875 | $ | 23.90 | |||||||||||||||||||||||
| 96 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A) | ||||||||
Table of Contents | ||||||||
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.2.21
VaR & SVaR MEASURES
| Three Months Ended June 30, 2026 | Six Months Ended June 30, 2026 | As of June 30, 2026 | ||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | Mean | High | Low | Mean | High | Low | ||||||||||||||||||||||||||||||||||||||
| 1-day | ||||||||||||||||||||||||||||||||||||||||||||
| VaR | $ | 2 | $ | 2 | $ | 1 | $ | 2 | $ | 3 | $ | 1 | $ | 2 | ||||||||||||||||||||||||||||||
| SVaR | 7 | 9 | 5 | 7 | 9 | 5 | 8 | |||||||||||||||||||||||||||||||||||||
| 10-day | ||||||||||||||||||||||||||||||||||||||||||||
| VaR | 4 | 6 | 3 | 6 | 8 | 3 | 4 | |||||||||||||||||||||||||||||||||||||
| SVaR | 40 | 48 | 29 | 40 | 50 | 29 | 43 | |||||||||||||||||||||||||||||||||||||
| Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | As of June 30, 2025 | ||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | Mean | High | Low | Mean | High | Low | ||||||||||||||||||||||||||||||||||||||
| 1-day | ||||||||||||||||||||||||||||||||||||||||||||
| VaR | $ | 2 | $ | 3 | $ | 2 | $ | 2 | $ | 3 | $ | 1 | $ | 2 | ||||||||||||||||||||||||||||||
| SVaR | 7 | 8 | 6 | 7 | 8 | 6 | 6 | |||||||||||||||||||||||||||||||||||||
| 10-day | ||||||||||||||||||||||||||||||||||||||||||||
| VaR | 6 | 7 | 3 | 5 | 7 | 3 | 6 | |||||||||||||||||||||||||||||||||||||
| SVaR | 35 | 39 | 29 | 35 | 42 | 28 | 33 | |||||||||||||||||||||||||||||||||||||
| 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 | ||||||||||||||||||||||
| 97 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A) | ||||||||
Table of Contents | ||||||||
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.2.22
SCHEDULE OF RISKS INCLUDED IN VaR
| As of June 30, 2026 | As of June 30, 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 | $ | 3 | $ | 1 | $ | 2 | $ | 1 | $ | 2 | ||||||||||||||||||||||||||
| Credit spread risk | — | 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 and six months ended June 30, 2026, and the 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.
| 98 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A) | ||||||||
Table of Contents | ||||||||
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 June 30, 2026, NII exposures over the next 12 months, assuming rate shocks of plus/minus 100 basis points and plus/minus 200 basis points, are estimated to have variances as shown in Table I.2.23.
Table I.2.23
INTEREST RATE SENSITIVITY
| Shifts in Interest Rates (in bps) | % Change in Projected Net Interest Income | |||||||
| -200 | (6.7)% | |||||||
| -100 | (3.3)% | |||||||
| +100 | 2.9% | |||||||
| +200 | 5.4% | |||||||
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 0.4%. 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.2.24
INTEREST RATE DERIVATIVES DESIGNATED AS CASH FLOW HEDGES
| June 30, 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 | $ | (48) | 2.0 | 2.78 | % | ||||||||||
| Floors | 3,000 | 2 | 1.9 | 1.88 | % | ||||||||||||
| Total | $ | 5,000 | $ | (46) | |||||||||||||
| 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) | |||||||||||||
| 99 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A) | ||||||||
Table of Contents | ||||||||
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 June 30, 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 June 30, 2026.
Table I.2.25
AVAILABLE LIQUIDITY
as of June 30, 2026
| (Dollars in millions) | Total Capacity | Outstanding Borrowings | Available Liquidity | |||||||||||||||||
| Cash on deposit with FRB (a) | $ | 1,060 | $ | — | $ | 1,060 | ||||||||||||||
| FHLB | 9,128 | 600 | 8,528 | |||||||||||||||||
| Discount Window | 22,216 | — | 22,216 | |||||||||||||||||
| Unencumbered securities (b) | 1,647 | — | 1,647 | |||||||||||||||||
Total available liquidity | $ | 33,451 | ||||||||||||||||||
(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 96% as of June 30, 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 June 30, 2026, FHN had outstanding $946 million in senior and subordinated unsecured debt. During first quarter 2026, FHN issued $400 million of Series H Non-Cumulative Perpetual Preferred Stock. FHN redeemed all outstanding shares of its Series C Non-Cumulative Perpetual Preferred Stock, effective May 1, 2026. As a result, FHN had $682 million in non-cumulative perpetual preferred stock outstanding as of June 30, 2026. Refer to Note 7 — Preferred Stock in the Consolidated Financial Statements in Part I, Item 1 of this report for additional information. As of June 30, 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 $345 million as of July 1, 2026.
First Horizon Bank declared and paid common dividends to the parent company in the amount of $50 million in first quarter 2026, $270 million in second quarter 2026, and $240 million in third quarter 2026. 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 and second quarter 2026 and in each quarter of 2025. Additionally, First Horizon Bank declared preferred dividends in third quarter 2026, payable in October 2026.
Payment of a dividend to shareholders of FHN is dependent on several factors which are considered by the Board. These factors include FHN’s current and
| 100 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A) | ||||||||
Table of Contents | ||||||||
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 July 1, 2026. FHN paid cash dividends of $1,625 per Series E preferred share, $1,175 per Series F preferred share, and $2,212.50 per Series H preferred share on July 10, 2026. In addition, in July 2026, the Board approved cash dividends per share in the following amounts:
Table I.2.26
CASH DIVIDENDS
APPROVED BUT NOT PAID
| Dividend/Share | Record Date | Payment Date | ||||||||||||||||||
| Common Stock | $ | 0.17 | 09/11/2026 | 10/01/2026 | ||||||||||||||||
| Preferred Stock | ||||||||||||||||||||
| Series E | $ | 1,625.00 | 09/28/2026 | 10/13/2026 | ||||||||||||||||
| Series F | $ | 1,175.00 | 09/28/2026 | 10/13/2026 | ||||||||||||||||
| Series H | $ | 1,687.50 | 09/28/2026 | 10/13/2026 | ||||||||||||||||
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 geopolitical instability
and conflict, 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, Trade Policy, Other Events
Federal Reserve and Rates
The Federal Reserve began to reduce short-term rates in the third quarter of 2024. 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 a target range of 4.25% - 4.50% by the end of 2024 after peaking at a range of 5.25% to 5.50% in the summer and fall of 2023.
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% – 3.75%, but throughout 2026 the Federal Reserve has held the target range steady. In its statement announcing its July 2026 decision to maintain the target range of 3.50% –
3.75%, the Federal Reserve noted that, while economic activity has been expanding at a solid pace despite elevated uncertainty due, in part, to conflict in the Middle East, inflation remains elevated relative to the Federal Reserve's 2% goal, in part reflecting price shocks in certain sectors, including energy.
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.
| 101 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A) | ||||||||
Table of Contents | ||||||||
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 exhibit a positive, upward slope.
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. Since the first quarter of 2025, net interest margin has, in each quarter, exceeded the level of the comparable quarter in 2024, as the yield curve has maintained its more typical upward slope, while fixed income bond trading revenues have fluctuated due to changing market conditions.
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 market share gains in lending to mortgage companies. Changes in interest rates and interest rate policy could continue to have a material impact on our mortgage lending and lending to mortgage companies.
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 Emergency 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 partially stayed while the CBP develops and implements a refund process. In response to the U.S. Supreme Court ruling mentioned above, the U.S. administration announced new tariffs under alternative sources of statutory authority, including sections 122 and 301 of the Trade Act of 1974. As of early August 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 remain uncertain, as does the impact of tariffs on economic growth, inflation rates, and employment rates. Any significant change in economic conditions related to tariffs could materially affect our financial condition and results of operations.
Conflict in the Middle East
During the first half of 2026, military conflict involving Iran and the United States, together with related disruptions in the Middle East, contributed to increased volatility in global energy markets, commodity prices and financial markets. While energy prices have moderated during periods of de-escalation, geopolitical tensions remain elevated, and additional disruptions could contribute to higher inflation, slower economic growth, continued market volatility and changes in monetary policy expectations. These conditions could result in higher funding costs, reduced loan demand, increased credit stress in certain industries and continued uncertainty regarding the path of interest rates. FHN continues to monitor these developments, although the ultimate magnitude and duration of any economic effects remain uncertain.
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 for 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 notice-and-comment period for the 2026 proposal closed on June 18, 2026, and regulators are now reviewing the comments received. FHN is currently evaluating the potential impact of these proposed changes on its regulatory capital ratios and overall capital management strategy.
| 102 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A) | ||||||||
Table of Contents | ||||||||
Greenhouse Gas (GHG) Reporting Regimes
Regulatory Enactments and 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, with the first reports of Scope 1 and Scope 2 GHG emissions required by November 10, 2026. The California laws have been challenged in court and certain of those challenges remain pending.
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. Those rules, however, have yet to come into effect because the SEC suspended their effectiveness in April 2024 pending the resolution of legal challenges. In May 2026, the SEC issued a proposed rule to rescind its Climate Disclosure Rules. The SEC has not yet taken final action on that proposal.
Potential Business Impacts
Direct compliance costs related to California's GHG reporting regime and to the SEC's Climate Disclosure Rules, if implemented, will include creating systems to measure or estimate and capture relevant data, staffing, and engaging 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 hurricanes and other severe coastal weather events in the southeastern U.S. have been rising significantly.
This reported increase in casualty risks and costs is being reflected in property insurance practices which currently are in significant flux. The insurance industry and insurance regulators are being forced to revise their risk assessment and premium pricing policies in coastal and other impacted areas as loss experience has deviated from earlier predictions, sometimes substantially. In Florida, for example, some smaller carriers failed, some larger carriers left markets, and other carriers significantly increased the premiums of hurricane-related insurance, narrowed coverage, or both, resulting in numerous proposals for legislative and regulatory reform.
The availability, reliability, and cost of adequate property insurance are significant concerns for FHN and FHN's clients in affected markets. Although legislative reforms
and other developments in insurance markets have stabilized market conditions compared to recent years, instability in property insurance markets 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.
| 103 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A) | ||||||||
Table of Contents | ||||||||
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.2.27
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. | ||||||
| 104 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A) | ||||||||
Table of Contents | ||||||||
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.
These rules have yet to come into effect because the SEC suspended their effectiveness in April 2024, pending the resolution of legal challenges. In May 2026, the SEC issued a proposed rule to rescind the Climate Disclosures Rules. The SEC has not yet taken final action on that proposal.
| 105 | 2Q26 FORM 10-Q REPORT | ||||||
| PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A) | ||||||||
Table of Contents | ||||||||
Non-GAAP Information
Table I.2.28
NON-GAAP TO GAAP RECONCILIATION
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
| (Dollars in millions; shares in thousands) | June 30, 2026 | June 30, 2025 | June 30, 2026 | June 30, 2025 | ||||||||||||||||||||||
| Pre-provision Net Revenue (Non-GAAP) | ||||||||||||||||||||||||||
| Net interest income (GAAP) | $ | 676 | $ | 641 | $ | 1,344 | $ | 1,272 | ||||||||||||||||||
| Plus: Noninterest income (GAAP) | 211 | 189 | 405 | 370 | ||||||||||||||||||||||
| Total revenues (GAAP) | 887 | 830 | 1,749 | 1,642 | ||||||||||||||||||||||
| Less: Noninterest expense (GAAP) | 532 | 491 | 1,036 | 978 | ||||||||||||||||||||||
| Pre-provision net revenue (Non-GAAP) | $ | 355 | $ | 339 | $ | 713 | $ | 664 | ||||||||||||||||||
| Tangible Common Equity (Non-GAAP) | ||||||||||||||||||||||||||
| (A) Total equity (GAAP) | $ | 9,463 | $ | 9,257 | $ | 9,463 | $ | 9,257 | ||||||||||||||||||
| Less: Noncontrolling interest (a) | 295 | 295 | 295 | 295 | ||||||||||||||||||||||
| Less: Preferred stock (a) | 682 | 426 | 682 | 426 | ||||||||||||||||||||||
| (B) Total common equity | 8,486 | 8,536 | 8,486 | 8,536 | ||||||||||||||||||||||
| Less: Goodwill and other intangible assets (GAAP)(b) | 1,599 | 1,633 | 1,599 | 1,633 | ||||||||||||||||||||||
| (C) Tangible common equity (Non-GAAP) | $ | 6,887 | $ | 6,903 | $ | 6,887 | $ | 6,903 | ||||||||||||||||||
| Tangible Assets (Non-GAAP) | ||||||||||||||||||||||||||
| (D) Total assets (GAAP) | $ | 84,437 | $ | 82,084 | $ | 84,437 | $ | 82,084 | ||||||||||||||||||
| Less: Goodwill and other intangible assets (GAAP) (b) | 1,599 | 1,633 | 1,599 | 1,633 | ||||||||||||||||||||||
| (E) Tangible assets (Non-GAAP) | $ | 82,838 | $ | 80,451 | $ | 82,838 | $ | 80,451 | ||||||||||||||||||
| Average Tangible Common Equity (Non-GAAP) | ||||||||||||||||||||||||||
| Average total equity (GAAP) | $ | 9,445 | $ | 9,097 | $ | 9,346 | $ | 9,104 | ||||||||||||||||||
| Less: Average noncontrolling interest (a) | 295 | 295 | 295 | 295 | ||||||||||||||||||||||
| Less: Average preferred stock (a) | 682 | 426 | 560 | 426 | ||||||||||||||||||||||
| (F) Total average common equity | 8,468 | 8,376 | 8,491 | 8,383 | ||||||||||||||||||||||
| Less: Average goodwill and other intangible assets (GAAP) (b) | 1,603 | 1,638 | 1,607 | 1,643 | ||||||||||||||||||||||
| (G) Average tangible common equity (Non-GAAP) | $ | 6,865 | $ | 6,738 | $ | 6,884 | $ | 6,740 | ||||||||||||||||||
| Net Income Available to Common Shareholders | ||||||||||||||||||||||||||
| (H) Net income available to common shareholders (annualized) (GAAP) | $ | 1,044 | $ | 933 | $ | 1,044 | $ | 898 | ||||||||||||||||||
| Period-end Shares Outstanding | ||||||||||||||||||||||||||
| (I) Period-end shares outstanding | 473,920 | 508,836 | 473,920 | 508,836 | ||||||||||||||||||||||
| Ratios | ||||||||||||||||||||||||||
| (A)/(D) Total period-end equity to period-end assets (GAAP) | 11.21 | % | 11.28 | % | 11.21 | % | 11.28 | % | ||||||||||||||||||
| (C)/(E) Tangible common equity to tangible assets (Non-GAAP) | 8.31 | 8.58 | 8.31 | 8.58 | ||||||||||||||||||||||
| (H)/(F) Return on average common equity (GAAP) | 12.33 | 11.14 | 12.30 | 10.72 | ||||||||||||||||||||||
| (H)/(G) Return on average tangible common equity (Non-GAAP) | 15.21 | 13.85 | 15.17 | 13.33 | ||||||||||||||||||||||
| (B)/(I) Book value per common share (GAAP) | $ | 17.91 | $ | 16.78 | $ | 17.91 | $ | 16.78 | ||||||||||||||||||
| (C)/(I) Tangible book value per common share (Non-GAAP) | $ | 14.53 | $ | 13.57 | $ | 14.53 | $ | 13.57 | ||||||||||||||||||
(a) Included in total equity on the Consolidated Balance Sheets.
(b) Includes goodwill and other intangible assets, net of amortization.
| 106 | 2Q26 FORM 10-Q REPORT | ||||||
PART I, ITEM 3. DISCLOSURES ABOUT MARKET RISK AND ITEM 4. CONTROLS & PROCEDURES | ||||||||
Table of Contents | ||||||||
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The information called for by this item is contained in
(a) Management’s Discussion and Analysis of Financial Condition and Results of Operations included as Item 2 of Part I of this report, including in particular the section entitled “Risk Management” beginning on page 97 of this report and the subsections entitled “Market Risk Management” beginning on page 97 and “Interest Rate Risk Management” beginning on page 99 of this report, and
(b) Note 14 to the Consolidated Financial Statements appearing on pages 46-52 of this report, all of which materials are incorporated herein by reference.
For additional information concerning market risk and our management of it, refer to: Management’s Discussion and Analysis of Financial Condition and Results of Operations appearing in Item 7 of FHN’s Annual Report on Form 10-K for the year ended December 31, 2025, including in particular the section entitled “Risk Management” beginning on page 67 of that report and the subsections entitled “Market Risk Management” beginning on page 68 and “Interest Rate Risk Management” beginning on page 70 of that report; and Note 21 to the Consolidated Financial Statements appearing on pages 160-166 of Item 8 of that report.
Item 4. Controls and Procedures
(a)Evaluation of Disclosure Controls and Procedures. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) as of the end of the period covered by this quarterly report. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that our disclosure controls and procedures
were effective as of the end of the period covered by this report.
(b)Changes in Internal Control over Financial Reporting. There have not been any changes in our internal control over financial reporting during the second fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
| 107 | 2Q26 FORM 10-Q REPORT | ||||||
| PART II—OTHER INFORMATION, ITEMS 1. THROUGH 5. | ||||||||
Table of Contents | ||||||||
PART II. OTHER INFORMATION | ||
Item 1. Legal Proceedings
The “Contingencies” section of Note 10 to the Consolidated Financial Statements beginning on page 33 of this report is incorporated into this Item by reference.
Item 1A. Risk Factors
Material changes from risk factor disclosures in FHN's Annual Report on Form 10-K for the year ended December 31, 2025:
Not applicable.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
(a) Unregistered Equity Securities Sold
Not applicable
(b) Use of Proceeds If Rule 463 is Applicable
Not applicable
(c) Equity Repurchases
The "Common Stock Purchase Program” section including tables I.2.19 and I.2.20 and explanatory discussions
included in Item 2 of Part I of this report under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” beginning on page 95 of this report, is incorporated herein by reference.
Items 3. and 4.
Not applicable
| 108 | 2Q26 FORM 10-Q REPORT | ||||||
| PART II—OTHER INFORMATION, ITEMS 1. THROUGH 5. | ||||||||
Table of Contents | ||||||||
Item 5. Other Information
(a) Previously Unreported 8-K Disclosures
Not applicable
(b) Change in Nomination Procedures
Not applicable
(c) Trading Arrangement Disclosures
During the second quarter of 2026, the following directors or executive officers (those officers who are required to file stock ownership reports on SEC Forms 3, 4, and 5) adopted, modified, or terminated the Rule 10b5-1 trading arrangements and the non-Rule 10b5-1 trading arrangements shown in Table II.5c below.
Unless otherwise explicitly indicated in a footnote to the Table, each arrangement marked in the Table as "10b5-1" under the "Arrangement Type" column is intended by its maker, as reported to FHN, to satisfy the affirmative defense requirements of SEC Rule 10b5-1(c).
If "Not applicable" appears in the Table, then for the second quarter of 2026 no director or executive officer of FHN adopted terminated
Table II.5c
TRADING ARRANGEMENTS CREATED, MODIFIED, OR TERMINATED MOST RECENT QUARTER
| Arrangement Type | Type of Action Taken During Quarter | Date Action Taken | Duration or Expiration Date | Total Shares to be | ||||||||||||||||||||||||||||||||||||||||
| Name & Title | 10b5-1 | non-10b5-1 | Bought | Sold | ||||||||||||||||||||||||||||||||||||||||
| Not applicable | ||||||||||||||||||||||||||||||||||||||||||||
Item 6. Exhibits
(a)Exhibits
In the Exhibit Table: the “Filed Here” column denotes each exhibit which is filed or furnished (as applicable) with this report; the “Mngt. Exh.” column denotes each exhibit that represents a management contract or compensatory plan or arrangement required to be identified as such; and the “Furnished” column denotes each exhibit that is “furnished” pursuant to 18 U.S.C. Section 1350 or otherwise, and is not “filed” as part of this report or as a separate disclosure document.
In many agreements filed as exhibits, each party makes representations and warranties to other parties. Those representations and warranties are made only to and for the benefit of those other parties in the context of a business contract. Exceptions to such representations and warranties may be partially or fully waived by such parties, or not enforced by such parties, in their discretion. No such representation or warranty may be relied upon by any other person for any purpose.
10-Q EXHIBIT TABLE
| Exh. No. | Description of Exhibit to this Report | Filed Here | Mngt. Exh. | Furnished | Incorporated by Reference to | ||||||||||||||||||
| Form | Exh. No. | Filing Date | |||||||||||||||||||||
| 3.1 | Amended and Restated Charter of First Horizon Corporation [2024] | 8-K | 3.1 | 7/24/2024 | |||||||||||||||||||
3.2 | Articles of Amendment to the Amended and Restated Charter, of the Company, related to the Series H Preferred Stock | 8-K | 3.1 | 3/12/2026 | |||||||||||||||||||
3.3 | Bylaws of First Horizon Corporation, as amended and restated effective July 27, 2026 | 8-K | 3.1 | 7/28/2026 | |||||||||||||||||||
| 4.1 | FHN agrees to furnish to the Securities and Exchange Commission upon request a copy of each instrument defining the rights of the holders of the senior and subordinated long-term debt of FHN and its consolidated subsidiaries | ||||||||||||||||||||||
| 10.1 | Director Compensation Policy | X | X | ||||||||||||||||||||
| 109 | 2Q26 FORM 10-Q REPORT | ||||||
| PART II—OTHER INFORMATION, ITEM 6. EXHIBITS | ||||||||
Table of Contents | ||||||||
| Exh. No. | Description of Exhibit to this Report | Filed Here | Mngt. Exh. | Furnished | Incorporated by Reference to | ||||||||||||||||||
| Form | Exh. No. | Filing Date | |||||||||||||||||||||
| 31(a) | Rule 13a-14(a) Certifications of CEO (pursuant to Section 302 of the Sarbanes-Oxley Act of 2002) | X | |||||||||||||||||||||
| 31(b) | Rule 13a-14(a) Certifications of CFO (pursuant to Section 302 of the Sarbanes-Oxley Act of 2002) | X | |||||||||||||||||||||
| 32(a) | 18 USC 1350 Certifications of CEO (pursuant to Section 906 of the Sarbanes-Oxley Act of 2002) | X | X | ||||||||||||||||||||
| 32(b) | 18 USC 1350 Certifications of CFO (pursuant to Section 906 of the Sarbanes-Oxley Act of 2002) | X | X | ||||||||||||||||||||
| XBRL Exhibits | |||||||||||||||||||||||
| 101 | The following financial information from First Horizon Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2026, formatted in Inline XBRL: (i) Consolidated Balance Sheets at June 30, 2026 and December 31, 2025; (ii) Consolidated Statements of Income for the Three and Six Months Ended June 30, 2026 and 2025; (iii) Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2026 and 2025; (iv) Consolidated Statements of Changes in Equity for the Three and Six Months Ended June 30, 2026 and 2025; (v) Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2026 and 2025; and (vi) Notes to the Consolidated Financial Statements. | X | |||||||||||||||||||||
| 101. INS | XBRL Instance Document -- the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | ||||||||||||||||||||||
| 101. SCH | Inline XBRL Taxonomy Extension Schema | X | |||||||||||||||||||||
| 101. CAL | Inline XBRL Taxonomy Extension Calculation Linkbase | X | |||||||||||||||||||||
| 101. LAB | Inline XBRL Taxonomy Extension Label Linkbase | X | |||||||||||||||||||||
| 101. PRE | Inline XBRL Taxonomy Extension Presentation Linkbase | X | |||||||||||||||||||||
| 101. DEF | Inline XBRL Taxonomy Extension Definition Linkbase | X | |||||||||||||||||||||
| 104 | Cover Page Interactive Data File, formatted in Inline XBRL (included in Exhibit 101) | X | |||||||||||||||||||||
| 110 | 2Q26 FORM 10-Q REPORT | ||||||
| SIGNATURES | ||||||||
Table of Contents | ||||||||
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
FIRST HORIZON CORPORATION (Registrant) | ||||||||||||||
| Date: August 6, 2026 | By: | /s/ Hope Dmuchowski | ||||||||||||
| Name: | Hope Dmuchowski | |||||||||||||
| Title: | Senior Executive Vice President and Chief Financial Officer | |||||||||||||
| (Duly Authorized Officer and Principal Financial Officer) | ||||||||||||||
| 111 | 2Q26 FORM 10-Q REPORT | ||||||