First Horizon Corp: Form 10-Q for the period ended Sep 30, 2025

Analysis of Financial Condition and Results of Operations

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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 September 30, 2025, FHN had over 450 business locations in 24 states, including over 400 banking centers

in 12 states, and employed approximately 7,300 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 2024 Annual Report on Form 10-K.

Executive Overview

Significant Events and Transactions

On August 1, 2025, FHN redeemed all outstanding shares of its Series B Preferred Stock with a carrying value of $77 million. Prior to the redemption, the Series B 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

Third Quarter 2025 Highlights

FHN reported third quarter 2025 net income available to common shareholders of $254 million, or $0.50 per diluted share, compared to $233 million, or $0.45 per diluted share, in second quarter 2025 and $213 million, or $0.40 per diluted share, in third quarter 2024.

Net interest income of $674 million increased $33 million compared to second quarter 2025, driven by average balance growth in higher yielding assets and cash basis income, as well as increased accretion of $12 million related to the Main Street Lending Program. Net interest income increased $47 million compared to third quarter 2024, largely driven by increased accretion of $15 million related to the Main Street Lending Program, lower interest-bearing deposit costs and the impact of the investment portfolio repositioning in fourth quarter 2024, partially offset by lower loan yields.

Provision for credit losses was a credit of $5 million for third quarter 2025 compared to an expense of $30 million for second quarter 2025 and an expense of $35 million for third quarter 2024. Net charge-offs were $26 million, or 17 basis points, compared to $34 million, or 22 basis points, in second quarter 2025, and $24 million, or 15 basis points, in third quarter 2024.

Noninterest income of $215 million increased $26 million compared to second quarter 2025, largely driven by improvement in the counter-cyclical businesses, as fixed income revenues increased $15 million and mortgage banking revenues increased $5 million. Noninterest income for third quarter 2025 increased $15 million, compared to third quarter 2024, largely driven by higher

fixed income revenues of $10 million and higher mortgage banking revenues of $6 million.

Noninterest expense of $550 million increased $59 million from second quarter 2025, largely reflecting a $20 million contribution to the First Horizon Foundation, $10 million in Visa derivative valuation expense, and increases in outside services and incentive-based compensation expense. Compared with third quarter 2024, noninterest expense increased $39 million, largely driven by a $20 million contribution to the First Horizon Foundation and higher personnel expense of $14 million.

Year-to-Date and Period End Highlights

For the nine months ended September 30, 2025, net income available to common shareholders was $699 million, or $1.36 per diluted share, compared to $581 million, or $1.06 per diluted share, for the nine months ended September 30, 2024.

Net interest income increased $65 million, largely driven by lower funding costs and the impact of the investment portfolio repositioning in fourth quarter 2024, partially offset by lower loan yields. Interest income and net interest margin also benefited from increased accretion of $18 million related to the Main Street Lending Program.

Provision for credit losses of $65 million decreased $75 million for the year-to-date period of 2025 compared to the same period of 2024. Net charge-offs of $89 million declined $9 million for the year-to-date period of 2025 compared to the same period of 2024. Nonperforming loans of $605 million increased $3 million from December 31, 2024 as increases in C&I and consumer real estate were partially offset by a reduction in CRE. The ACL to

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total loans and leases ratio decreased 5 basis points to 1.38% as of September 30, 2025 compared to December 31, 2024, largely driven by economic scenario weighting changes, lower specific reserves and lower CRE loan balances.

Noninterest income for the year-to-date period increased $4 million, or 1%, largely from higher fixed income and mortgage banking revenues, partially offset by lower deposit transactions and cash management fees.

Noninterest expense for the year-to-date period increased $2 million as increases in contributions, computer software and net occupancy expenses were offset by declines in deposit insurance, contract employment and outsourcing, and other expenses.

Period-end loans and leases of $63.1 billion increased $493 million, or 1%, from December 31, 2024. Commercial

loans increased $227 million, driven by an increase of $973 million in the C&I portfolio, partially offset by a $746 million decline in the CRE portfolio. Growth in loans to mortgage companies contributed $455 million of the increase in the C&I portfolio. Consumer loan growth was $266 million for the year-to-date period.

Period-end deposits were $65.5 billion compared to $65.6 billion as of December 31, 2024, as interest-bearing deposits decreased $58 million and noninterest-bearing deposits increased $2 million.

The Common Equity Tier 1 ratio was 10.96% at September 30, 2025 compared to 11.20% at December 31, 2024. Tier 1 risk-based capital and total risk-based capital ratios at September 30, 2025 were 11.86% and 13.77%, compared to 12.22% and 14.25% at December 31, 2024.

Table I.2.1

KEY PERFORMANCE INDICATORS

(Dollars in millions, except per share data)

(a) Represents a non-GAAP measure which is reconciled in the non-GAAP to GAAP reconciliation in Table I.2.26.

(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).

The following portions of this MD&A focus in more detail on the results of operations for the three and nine months ended September 30, 2025, the three months ended June 30, 2025, and the three and nine months ended September 30, 2024 and on information about FHN's financial condition, loan and lease portfolio, liquidity, funding sources, capital and other matters.

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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.

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Table I.2.2

QUARTER-TO-DATE AVERAGE BALANCES, NET INTEREST INCOME & YIELDS/RATES

(Dollars in millions)

(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.

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Third Quarter 2025 versus Second Quarter 2025

Net interest income of $674 million in third quarter 2025 increased $33 million from second quarter 2025, and the net interest margin increased 15 basis points to 3.55%. Interest income and net interest margin benefited from increased accretion of $12 million related to the Main Street Lending Program. In addition, loan yields improved due to average balance growth in higher yielding portfolios and cash basis income. Loan yield increased 14 basis points, and the cost of interest-bearing deposits increased 2 basis points.

Average earning assets of $76.0 billion in third quarter 2025 increased $145 million from second quarter 2025, largely driven by a $236 million increase in average loans and leases. Average interest-bearing liabilities increased $5 million, reflecting a $1.2 billion increase in average interest-bearing deposits, partially offset by a $946 million decrease in average short-term borrowings and a $221 million decrease in average term borrowings.

Third Quarter 2025 versus Third Quarter 2024

Net interest income increased $47 million from third quarter 2024 and the net interest margin increased 24 basis points to 3.55% in third quarter 2025. Interest income and net interest margin benefited from increased accretion of $15 million related to the Main Street Lending Program. Increases were also largely driven by lower interest-bearing deposit costs and the impact of the investment portfolio repositioning in fourth quarter 2024, partially offset by lower loan yields. Yields on earning assets decreased 23 basis points while funding costs decreased 65 basis points.

Average earning assets decreased $89 million from third quarter 2024, largely driven by a $469 million decrease in average interest-bearing deposits with banks, partially offset by a $374 million increase in average loans and leases. Average interest-bearing liabilities increased $34 million, driven by a $147 million increase in average term borrowings, partially offset by a $89 million decrease in average interest-bearing deposits and a $24 million decrease in average short-term borrowings.

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Table I.2.3

YEAR-TO-DATE AVERAGE BALANCES, NET INTEREST INCOME & YIELDS/RATES

(Dollars in millions)

(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.

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For the nine months ended September 30, 2025, net interest income of $1.9 billion increased $65 million from the same period one year ago, largely driven by lower funding costs and the impact of the investment portfolio repositioning in fourth quarter 2024, partially offset by lower loan yields. Interest income and net interest margin also benefited from increased accretion of $18 million related to the Main Street Lending Program.

Total average earning assets increased $192 million for the nine months ended September 30, 2025 compared to the same period in 2024, largely driven by average loan growth of $465 million and higher average trading securities balances of $198 million, partially offset by declines of $396 million in interest-bearing cash and $130 million in investment securities.

The year-to-date net interest margin of 3.46% increased 11 basis points compared to 3.35% for the same period of 2024 as improvements in the rate paid on interest-bearing deposits and yields on the investment portfolio were partially offset by lower loan yields. The cost of interest-bearing liabilities decreased 57 basis points and earning asset yields decreased 28 basis points.

Noninterest Income

The following table presents the significant components of noninterest income for each of the periods presented.

Table I.2.4

NONINTEREST INCOME

(Dollars in millions)

Third Quarter 2025 versus Second Quarter 2025

Noninterest income of $215 million increased $26 million, or 14%, compared to the prior quarter.

Fixed income of $57 million increased $15 million from the prior quarter as average daily revenue improved 40% to $771 thousand, reflecting more favorable market conditions.

Mortgage banking income of $15 million increased $5 million, largely driven by a $5 million pre-tax gain from a sale of mortgage servicing rights during the quarter.

Other income increased $4 million, in line with normal quarterly fluctuations.

Third Quarter 2025 versus Third Quarter 2024

Noninterest income for third quarter 2025 increased $15 million, or 8%, compared to third quarter 2024.

Fixed income of $57 million increased $10 million compared to third quarter 2024. Fixed income average daily revenue of $771 thousand increased $178 thousand, or 30%, compared to the same quarter of 2024, reflecting more favorable market conditions.

Mortgage banking income of $15 million increased $6 million, largely driven by a $5 million pre-tax gain from a sale of mortgage servicing rights during the quarter.

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The following table presents the significant components of noninterest income for the nine months ended September 30, 2025 and 2024.

Table I.2.5

NONINTEREST INCOME

(Dollars in millions)

For the nine months ended September 30, 2025, noninterest income of $585 million increased $4 million, or 1%, compared to the same period of 2024.

Fixed income increased $11 million for the nine months ended September 30, 2025, compared to the same period of 2024. Fixed income product revenue of $119 million increased $6 million largely driven by more favorable market conditions. Revenue from other products of $30 million increased $5 million primarily driven by increases in revenues from loan sales.

Deposit transactions and cash management fees decreased $9 million, largely attributable to lower overdraft fees.

Mortgage banking income of $33 million increased $5 million, largely driven by a $5 million pre-tax gain from a sale of mortgage servicing rights during the third quarter.

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Noninterest Expense

The following table presents the significant components of noninterest expense for each of the periods presented.

Table I.2.6

NONINTEREST EXPENSE

(Dollars in millions)

NM - Not meaningful

Third Quarter 2025 versus Second Quarter 2025

Noninterest expense of $550 million increased $59 million, or 12%, compared to the prior quarter.

Personnel expense of $296 million increased $14 million from the prior quarter, largely reflecting higher incentive-based compensation expense of $6 million and higher deferred compensation expense of $5 million. The increase in incentive-based compensation was driven by higher variable compensation within the fixed income business. The increase in deferred compensation expense reflects the impact of a $4 million expense credit in the second quarter for an accrual release related to a business unit divested over a decade ago.

Legal and professional fees and contract employment and outsourcing increased $7 million and $3 million, respectively, largely reflecting project expenses in technology and risk.

Contributions expense increased $22 million, largely driven by a $20 million contribution to the First Horizon Foundation in the third quarter.

Advertising and public relations expense decreased $2 million compared to the prior quarter, largely from seasonal declines in advertising campaign costs.

Other expense increased $15 million, largely attributable to $10 million in Visa derivative valuation expense in the third quarter.

Third Quarter 2025 versus Third Quarter 2024

Noninterest expense of $550 million increased $39 million, or 8%, compared to third quarter 2024.

Personnel expense increased $14 million compared to third quarter 2024, largely reflecting higher salaries and benefits of $10 million and higher incentive-based compensation expense of $3 million.

Computer software expense increased $4 million, largely attributable to increased spend related to technology projects.

Legal and professional fees increased $9 million, largely reflecting project expenses in technology and risk.

Contributions expense increased $19 million, largely driven by a $20 million contribution to the First Horizon Foundation during the third quarter of 2025.

The $4 million decline in other expense was largely attributable to lower Visa derivative valuation expense of $5 million when comparing the periods.

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The following table presents the significant components of noninterest expense for the nine months ended September 30, 2025 and 2024.

Table I.2.7

NONINTEREST EXPENSE

(Dollars in millions)

For the nine months ended September 30, 2025, noninterest expense increased $2 million compared to the same period of 2024.

Personnel expense of $856 million decreased $6 million, reflecting lower deferred compensation expense and incentive-based compensation expense, partially offset by higher salaries expense.

Net occupancy expense increased $10 million for the year-to-date period, largely attributable to increased spending tied to property management services as well as various other maintenance projects.

Computer software expense increased $11 million for the year-to-date period, largely from increased spending related to technology projects.

Legal and professional fees increased $7 million, largely reflecting project expenses in technology and risk.

Deposit insurance expense of $36 million decreased $15 million, largely attributable to lower FDIC special assessment expense.

Contract employment and outsourcing decreased $13 million, primarily due to expense reductions related to recently completed technology projects.

Contributions expense increased $19 million, largely driven by a $20 million contribution to the First Horizon Foundation in the third quarter of 2025.

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 a $5 million credit for the third quarter 2025, compared to a $30 million expense for the second quarter 2025 and a $35 million expense for

third quarter 2024. Net charge-offs in third quarter 2025 were $26 million, or 17 basis points, compared to $34 million, or 22 basis points, in the prior quarter, and $24 million, or 15 basis points, in third quarter 2024.

The ACL to total loans and leases ratio decreased 5 basis points from second quarter 2025 to 1.38%, largely driven by reductions in criticized and classified graded credits and favorable portfolio mix. For additional information about the allowance for credit losses and general asset quality trends, refer to the Asset Quality section in this MD&A.

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Income Taxes

FHN recorded income tax expense of $78 million in third quarter 2025, compared to $64 million in second quarter 2025 and $58 million in third quarter 2024. For the nine months ended September 30, 2025 and 2024, FHN recorded income tax expense of $205 million and $171 million, respectively.

The effective tax rate was approximately 22.7%, 20.8%, and 20.6% for the three months ended September 30, 2025, June 30, 2025, and September 30, 2024, respectively. The effective tax rate was approximately 21.8% and 21.5% for the nine months ended September 30, 2025 and 2024, respectively.

FHN’s effective tax rate is favorably affected by recurring items such as tax credits and other tax benefits from tax credit investments, tax-exempt income, and bank-owned life insurance. The effective rate is unfavorably affected by the non-deductible portions of FDIC premium and executive compensation. FHN’s effective tax rate also may be affected by items that may occur in any given period but are not consistent from period to period, such as changes in unrecognized tax benefits. The rate also may be affected by items resulting from business combinations.

A deferred tax asset ("DTA") or deferred tax liability ("DTL") is recognized for the tax consequences of temporary differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. The tax consequence is calculated by applying current enacted statutory tax rates to these temporary differences in future years. As of September 30, 2025, FHN’s gross DTA and gross DTL were $637 million and $552 million, respectively, resulting in a net DTA of $85 million at September 30, 2025, compared with a net DTA of $227 million at December 31, 2024.

As of September 30, 2025, FHN had DTA balances related to federal and state income tax carryforwards of $25 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.

Federal Tax Legislation

On July 4, 2025, federal legislation commonly referred to as the “One Big Beautiful Bill Act” was enacted, resulting in changes to U.S. federal income tax law. The legislation includes several provisions that may impact the timing and magnitude of certain tax deductions and tax credits. FHN anticipates that the accelerated federal tax deductions for bonus depreciation and research or experimental expenditures will reduce its federal tax liability starting in 2025. Since these provisions solely reflect differences in timing for tax deductions they will not affect the recorded amounts of income tax expense. FHN does not expect a significant impact from provisions that sunset certain Section 48E Clean Electricity Tax Credits on its future financial results. FHN applies the deferral method to all Section 48E credits, resulting in offset of the credit amount against the related loan/lease and amortization of the credit to interest income over the life of the loan/lease, which typically have long durations. Provisions limiting the deductibility of annual corporate charitable deductions to amounts in excess of 1% of taxable income may affect the timing and amount of charitable donations.

Business Segment Results

During fourth quarter 2024, FHN reorganized its internal management structure and, accordingly, its segment reporting structure. Prior to the restructure, FHN's reportable segments were Regional Banking, Specialty Banking, and Corporate. As a result of the restructure, FHN revised its reportable segments to include: (1) Commercial, Consumer & Wealth, (2) Wholesale, and (3) Corporate. Segment results for periods prior to fourth quarter 2024 have been recast to adjust for the realignment of the segment reporting structure. 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

The Commercial, Consumer & Wealth segment generated pre-tax income of $410 million for third quarter 2025, an

increase of $31 million compared to second quarter 2025. Net interest income of $660 million increased $27 million, driven in part by the benefit of increased accretion of $12 million related to the Main Street Lending Program. Provision for credit losses of $2 million decreased $11 million from the prior quarter. Noninterest income increased $4 million compared to the prior quarter, largely driven by increases in deposit transactions and cash management and trust services and investment management. Noninterest expense increased $11 million compared to second quarter 2025, largely due to increased personnel expense and higher marketing and technology expenses allocated to the Commercial, Consumer & Wealth segment compared to the previous quarter.

Pre-tax income for third quarter 2025 increased $51 million to $410 million, compared to $359 million for

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third quarter 2024, driven by a $24 million increase in total revenue and a $40 million decrease in the provision for credit losses, partly offset by a $13 million increase in noninterest expense. Total revenue increased $24 million as net interest income increased $26 million and noninterest income decreased $2 million compared to third quarter 2024. The increase in net interest income was largely driven by lower rates paid on interest-bearing deposits. Noninterest expense increased $13 million compared to third quarter 2024, largely due to higher operations expenses and technology expenses allocated to the segment compared to the prior year.

Pre-tax income of $1.1 billion for the nine months ended September 30, 2025 increased $98 million compared to the same period of 2024, largely from a $91 million decrease in the provision for credit losses. Total revenue increased $14 million, largely driven by a $19 million increase in net interest income. The increase in net interest income was largely driven by improvement in the cost of interest-bearing deposits. Noninterest expense increased $7 million, largely attributable to higher operations and marketing expenses allocated to the segment in the current year, partially offset by lower other expenses.

Wholesale

Pre-tax income in the Wholesale segment of $51 million for third quarter 2025 increased $22 million compared to second quarter 2025, reflecting a $22 million increase in revenue and a $7 million decrease in the provision for credit losses, offset by a $7 million increase in noninterest expense.

The increase in revenue was primarily driven by a $20 million increase in noninterest income. Fixed income of $57 million increased $15 million from the prior quarter, as average daily revenue improved 40% reflecting more favorable market conditions. Mortgage banking income of $15 million increased $5 million compared to the prior quarter, largely driven by a $5 million pre-tax gain from a sale of mortgage servicing rights.

The increase in noninterest expense was largely attributable to higher personnel expense of $5 million tied to higher incentive-based compensation from the fixed income increase.

Pre-tax income in the Wholesale segment increased $11 million compared to third quarter 2024. Revenue increased $25 million, as net interest income increased $8 million and noninterest income increased $17 million compared to the same quarter of 2024. The increase in noninterest income was largely driven by a $10 million increase in fixed income and a $7 million increase in mortgage banking income. Provision for credit losses increased $6 million compared to third quarter 2024. Noninterest expense increased $8 million, largely driven by higher personnel expense tied to the increase in incentive-based compensation.

Pre-tax income of $111 million for the nine months ended September 30, 2025 increased $24 million from the same period of 2024, largely reflecting a $44 million increase in revenue partially offset by a $12 million increase in noninterest expense and an $8 million increase in the provision for credit losses. The increase in revenue was largely a result of higher net interest income of $29 million, largely driven by growth in loans to mortgage companies. Noninterest income also increased $15 million, driven by higher fixed income of $11 million and higher mortgage banking income of $6 million. The increase in noninterest expense was largely attributable to higher personnel expense tied to the increase in incentive-based compensation from the improvement in fixed income.

Corporate

Pre-tax loss for the Corporate segment was $117 million for third quarter 2025 compared to $99 million for second quarter 2025. The higher pre-tax loss for third quarter 2025 largely reflected a $41 million increase in noninterest expense, partially offset by a $17 million decrease in the provision for credit losses and a $4 million decrease in net interest expense compared to second quarter 2025. The increase in noninterest expense was largely attributable to a $20 million contribution to the First Horizon Foundation and $10 million in Visa derivative valuation expense.

Pre-tax loss for the Corporate segment was $117 million for third quarter 2025 compared to $118 million for third quarter 2024, largely reflecting a $13 million decrease in net interest expense, a $18 million increase in noninterest expense, and a $6 million decrease in the provision for credit losses. The increase in noninterest expense was largely attributable to a $20 million contribution to the First Horizon Foundation in third quarter 2025.

Pre-tax loss of $315 million for the nine months ended September 30, 2025 compared to $335 million for the same period of 2024. The decrease in loss was driven by lower noninterest expense of $17 million and lower net interest expense of $17 million, partially offset by an increase in provision for credit losses of $8 million. The decline in noninterest expense was largely attributable to an FDIC special assessment of $12 million in the prior year, lower contract employment and outsourcing expense of $13 million, and $10 million in restructuring costs incurred during the prior year, partially offset by a $20 million contribution to the First Horizon Foundation in the current year. The increase in revenue was driven by higher net interest income of $17 million offset by lower noninterest income of $6 million.

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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 $63.1 billion as of September 30, 2025 increased $493 million, or 1%, compared to December 31, 2024. Commercial loans and leases increased $227 million, driven by growth in loans to mortgage companies and other C&I loans, partially offset

by a decrease in commercial real estate loans. Consumer loans increased $266 million, primarily from growth in real estate installment loans, partially offset by declines in consumer construction and other consumer loans.

The following table provides details regarding FHN's loans and leases as of September 30, 2025 and December 31, 2024.

Table I.2.8

LOANS & LEASES

(Dollars in millions)

(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 September 30, 2025 and December 31, 2024, loans HFS were $501 million and $551 million, respectively. Held-for-sale consumer mortgage loans secured by residential real estate in process of foreclosure totaled $2 million and $1 million as of September 30, 2025 and December 31, 2024, respectively.

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 and leases 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.

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FHN had a concentration of residential real estate loans of 23% of total loans as of both September 30, 2025 and December 31, 2024. 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, 2024 in the Asset Quality section within the Analysis of Financial Condition discussion. FHN’s credit underwriting guidelines and loan product offerings as of September 30, 2025 are generally consistent with those reported and disclosed in FHN’s Form 10-K for the year ended December 31, 2024.

Commercial Loan and Lease Portfolios

C&I

C&I loans are the largest component of the loan and lease portfolio, comprising 54% and 53% of the total portfolio as of September 30, 2025 and December 31, 2024, respectively. The C&I portfolio is comprised of loans and leases 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 $973 million to $34.4 billion as of September 30, 2025, compared to December 31, 2024, which included growth in loans to mortgage companies of $455 million. The largest

geographical concentrations of balances in the C&I portfolio as of September 30, 2025 were in Tennessee (20%), Florida (12%), Texas (11%), North Carolina (6%), California (6%), and Louisiana (6%). No other state represented more than 5% of the portfolio. This mix was generally consistent with December 31, 2024.

The following table provides the composition of the C&I portfolio by industry as of September 30, 2025 and December 31, 2024. 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

(Dollars in millions)

(a) Leasing, rental of real estate, equipment, and goods.

(b) Each industry in this category makes up less than 5% of the total.

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 borrowers in the finance and insurance industry and loans to mortgage companies were 22% of FHN’s C&I loan portfolio as of September 30, 2025 and 21% as of December 31, 2024, and as a result could be affected by events that uniquely impact the financial services industry. Loans to borrowers in the real estate and rental and

leasing industry were 12% of FHN's C&I portfolio as of both September 30, 2025 and December 31, 2024. As of September 30, 2025, FHN did not have any other concentrations of C&I loans in any single industry of 10% or more of total loans.

Real Estate and Rental and Leasing

Loans to borrowers in the real estate and rental and leasing industry were 12% of FHN's C&I portfolio as of both September 30, 2025 and December 31, 2024. This portfolio primarily consists of equipment financing loans and leases to clients across FHN's footprint in a broad

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range of industries and asset types. This portfolio also includes a smaller balance of loans and leases for solar and wind generating facilities.

Loans to Mortgage Companies

Loans to mortgage companies were 11% and 10% of the C&I portfolio as of September 30, 2025 and December 31, 2024, respectively. This portfolio includes 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. These are typically structured as short-duration lines of credit that are subject to extension or renewal. 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 third quarter 2025, 76% of the loan originations were home purchases and 24% were refinance transactions.

Finance and Insurance

The finance and insurance component represented 11% of the C&I portfolio as of both September 30, 2025 and December 31, 2024, 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 September 30, 2025, asset-based lending to consumer finance companies represented approximately $1.6 billion of the finance and insurance component.

Commercial Real Estate

The CRE portfolio decreased to $13.7 billion as of September 30, 2025 compared to $14.4 billion as of December 31, 2024, largely attributable to paydowns as stabilized projects moved to permanent markets. 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 loan balances as of September 30, 2025 were in Florida (26%), Texas (13%), North Carolina (13%), Georgia (9%), Tennessee (8%), and Louisiana (8%). No other state represented more than 5% of the portfolio. The mix was generally consistent with December 31, 2024.

The following table represents subcategories of CRE loans by property type.

Table I.2.10

CRE PORTFOLIO BY PROPERTY TYPE

(Dollars in millions)

(a) Property types in this category each comprise less than 5%.

Consumer Loan Portfolios

Consumer Real Estate

The consumer real estate portfolio is primarily composed of home equity lines and installment loans. This portfolio totaled $14.4 billion and $14.0 billion as of September 30, 2025 and December 31, 2024, respectively. The largest geographical concentrations of balances as of September 30, 2025 were in Florida (29%), Tennessee (21%), Texas (12%), Louisiana (8%), North Carolina (7%), and Georgia (6%). No other state represented more than

5% of the portfolio. The mix was generally consistent with December 31, 2024.

As of September 30, 2025, approximately 89% of the consumer real estate portfolio was in a first lien position. At origination, the weighted average FICO score of this portfolio was 759, and the refreshed FICO scores averaged 780 as of September 30, 2025, compared to FICO scores of 759 and 756 as of December 31, 2024. Generally, performance of this portfolio is affected by life events that affect borrowers’ finances, the level of unemployment, and home prices.

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As of both September 30, 2025 and December 31, 2024, FHN had held-to-maturity consumer mortgage loans secured by real estate totaling $26 million that were in the process of foreclosure.

HELOCs comprised $2.1 billion of the consumer real estate portfolio as of both September 30, 2025 and December 31, 2024. 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 frozen 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 September 30, 2025, approximately 95% of FHN's HELOCs were in the draw period, which was consistent with December 31, 2024. It is expected that $609 million, or 30%, of HELOCs currently in the draw period will enter the repayment period during the next 60 months, based on current terms. Generally, delinquencies for HELOCs that have entered the repayment period are initially higher than HELOCs still in the draw period because of the increased minimum payment requirement. However, over time, performance of these loans usually begins to stabilize. HELOCs nearing the end of the draw period are closely monitored.

The following table presents HELOCs currently in the draw period, broken down by months remaining in the draw period.

Table I.2.11

HELOC DRAW TO REPAYMENT SCHEDULE

(Dollars in millions)

Credit Card and Other

The credit card and other consumer loan portfolio totaled $579 million as of September 30, 2025 and $669 million as of December 31, 2024. This portfolio primarily consists of consumer-related credits, including home equity and other personal consumer loans, credit card receivables, and automobile loans. The $90 million decrease was primarily driven by net repayments in the overall portfolio.

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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 2024 Form 10-K.

The ALLL totaled $777 million as of September 30, 2025 compared to $815 million as of December 31, 2024. The

decline in the ALLL balance as of September 30, 2025 was largely driven by economic scenario weighting changes, lower specific reserves and lower CRE loan balances. The ALLL to total loans and leases ratio decreased 7 basis points to 1.23% as of September 30, 2025 compared to 1.30% as of December 31, 2024. The ACL to total loans and leases ratio was 1.38% and 1.43% as of September 30, 2025 and December 31, 2024, respectively.

Consolidated Net Charge-offs

Net charge-offs in third quarter 2025 were $26 million, or an annualized 17 basis points of total loans and leases, compared to net charge-offs of $13 million, or 8 basis

points, in fourth quarter 2024, and $24 million, or 15 basis points, in third quarter 2024.

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Table I.2.12

ANALYSIS OF ALLOWANCE FOR CREDIT LOSSES AND CHARGE-OFFS

(Dollars in millions)

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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 and OREO.

Total NPAs (including NPLs HFS) increased to $621 million as of September 30, 2025 from $608 million as of

December 31, 2024. Nonperforming loans and leases (excluding HFS) increased $3 million, largely driven by an increase in nonaccrual C&I and consumer real estate loans, partially offset by a decline in nonaccrual CRE loans. The increase in nonaccrual C&I loans was largely driven by loans in the finance and insurance industry and the wholesale trade industry, partially offset by loans in the construction industry. These portfolios continue to maintain strong underwriting and client selection. The vast majority of NPLs have individual impairment reviews with no specific reserve required. The nonperforming loans and leases ratio remained steady at 0.96% as of both September 30, 2025 and December 31, 2024.

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Table I.2.13

NONPERFORMING ASSETS

(Dollars in millions)

(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.

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The following table provides nonperforming assets by business segment.

Table I.2.14

NONPERFORMING ASSETS BY SEGMENT

(Dollars in millions)

(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 $9 million as of September 30, 2025, compared to $21 million as of December 31, 2024. Loans 30 to 89 days past due

and still accruing increased to $112 million as of September 30, 2025, compared to $89 million as of December 31, 2024, driven by increases in past due C&I and CRE loans, partially offset by a decrease in past due consumer real estate loans.

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Table I.2.15

ACCRUING DELINQUENCIES & OTHER CREDIT DISCLOSURES

(Dollars in millions)

(a) Excludes loans classified as held for sale.

(b) Amounts are not included in nonperforming/nonaccrual loans.

(c) Amounts are also included in accruing loans and leases 30+ days past due.

(d) Guaranteed loans include FHA, VA, and GNMA loans repurchased through the GNMA buyout program.

Potential problem assets represent those assets where information about possible credit problems of borrowers has caused management to have serious doubts about the borrower’s ability to comply with present repayment terms and includes loans past due 90 days or more and still accruing. This definition is believed to be substantially consistent with the standards established by Federal banking regulators for loans classified as substandard. Potential problem assets in the loan portfolio totaled $2.0 billion as of September 30, 2025 compared to $1.9 billion as of December 31, 2024. 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.

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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 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 collateral dependent, the carrying amount of a loan is written down to the net realizable value of the 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 $9.3 billion and $9.2 billion on September 30, 2025 and December 31, 2024, respectively, representing 11% of total assets for both periods. For more information about the securities portfolio, see Note 2 - Investment Securities to the Consolidated Financial Statements in Part I, Item 1 of this report.

Deposits

Total deposits were $65.5 billion as of September 30, 2025 compared to $65.6 billion as of December 31, 2024, as

interest-bearing deposits decreased $58 million and noninterest-bearing deposits increased $2 million.

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FHN continues to maintain a well-diversified and stable funding mix across its footprint and specialty lines of business. At September 30, 2025, commercial deposits were $37.4 billion, or 57% of total deposits, and consumer deposits were $28.1 billion, or 43% of total deposits. At December 31, 2024, commercial deposits were $36.2 billion, or 55% of total deposits, and consumer deposits were $29.4 billion, or 45% of total deposits.

At September 30, 2025, 35% of deposits were associated with Tennessee, 17% with Florida, 12% with North Carolina, and 12% with Louisiana, with no other state above 10%. This mix remained consistent with December 31, 2024.

Total estimated uninsured deposits were $27.2 billion as of September 30, 2025 and $26.7 billion as of

December 31, 2024, representing 42% and 41% of total deposits, respectively. Of the uninsured deposits as of September 30, 2025, $4.5 billion, or 7% of total deposits, were collateralized. As of December 31, 2024, collateralized deposits were $4.7 billion, or 7% 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.

The following table summarizes the major components of deposits as of September 30, 2025 and December 31, 2024.

Table I.2.16

DEPOSITS

(Dollars in millions)

Short-Term Borrowings

Short-term borrowings include federal funds purchased, securities sold under agreements to repurchase, trading liabilities, and other short-term borrowings. Total short-term borrowings increased to $4.9 billion as of September 30, 2025 compared to $4.0 billion as of December 31, 2024. Federal funds purchased and securities sold under agreements to repurchase increased $321 million. Trading liabilities increased $111 million and other short-term borrowings increased $551 million, primarily reflecting a $780 million increase in FHLB borrowings.

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 increased to $1.3 billion as of September 30, 2025 from $1.2 billion as of December 31, 2024. This increase primarily reflects the issuance of $500 million of senior notes during first quarter 2025, partially

offset by the retirement of $350 million in senior notes during second quarter 2025.

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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 $9.2 billion and $9.1 billion at September 30, 2025 and December 31, 2024, respectively. Significant changes included net income of $732 million and an increase of $279 million in AOCI, offset by

$583 million in common stock repurchases, $252 million in common and preferred dividends, and $80 million from the Series B Preferred Stock redemption.

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)

Table I.2.18

REGULATORY RATIOS & AMOUNTS

(Dollars in millions)

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(a) The modified CECL transitional amount includes the impact to retained earnings from the initial adoption of CECL plus 25% of the change in the adjusted allowance for credit losses since FHN’s initial adoption of CECL through December 31, 2021. For December 31, 2024, 25% of the full amount was phased out and not included in Common Equity Tier 1 capital.

(b) 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.2.26.

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 September 30, 2025, both FHN and First Horizon Bank had sufficient capital to qualify as well-capitalized

institutions and to meet the capital conservation buffer requirement. For December 31, 2024, capital ratios for both FHN and First Horizon Bank were calculated under the final rule issued by the banking regulators in 2020 to delay the effects of CECL on regulatory capital for two years, followed by a three-year transition period.

For FHN, the risk-based regulatory capital and Tier 1 leverage ratios decreased at the end of third quarter 2025 relative to year-end 2024 primarily from the impact of common share repurchases and the Series B Preferred Stock redemption, partially offset by net income less dividends. For First Horizon Bank, the risk-based regulatory capital ratios increased from year-end 2024 largely from the impact of net income less dividends. The Tier 1 leverage ratio for First Horizon Bank increased from year-end 2024 largely from the impact of net income less dividends and a decrease in average assets.

For the remainder of 2025 and in 2026, capital ratios are expected to remain above well-capitalized standards plus the required capital conservation buffer.

Common Stock Purchase Programs

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 programs described below. FHN’s Board has not authorized a preferred stock purchase program.

October 2024 General Purchase Program

On October 29, 2024, FHN announced that its Board of Directors had approved a new $1.0 billion common share purchase program to replace the $650 million January 2024 program. The October 2024 program was scheduled to expire on January 31, 2026. Purchases under this program could 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 were at the discretion of senior management and were 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 September 30, 2025, $688 million in purchases had been made life-to-date under the October 2024 program at an average price per share of $20.84, or $20.82 excluding commissions. Program purchases made during the quarter ended September 30, 2025 are summarized in the following table.

Table I.2.19

COMMON STOCK PURCHASES—OCTOBER 2024 PROGRAM

(Dollar values and volume in thousands, except per share data)

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(a) Represents total costs including commissions paid. Average price paid does not reflect the one percent excise tax charged on public company share repurchases.

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, effective immediately, to replace the October 2024 program discussed above. The new 2025 program is scheduled to expire on January 31, 2027. The October 2024 program discussed above, which had approximately $180 million of remaining authorization, was terminated effective the close of business on October 27, 2025. Purchases under the new 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.

Stock Award Purchases

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 September 30, 2025 are summarized in the following table.

Table I.2.20

COMMON STOCK PURCHASES—TAX WITHHOLDING FOR STOCK AWARDS

(Dollar values and volume in thousands, except per share data)

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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 2024 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 that reflects a 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

(Dollars in millions)

(Dollars in millions)

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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

(Dollars in millions)

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 nine months ended September 30, 2025 and year ended December 31, 2024, 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.

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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 September 30, 2025, NII exposures over the next 12 months, assuming rate shocks of plus/minus 25 basis points, plus/minus 50 basis points, plus/minus 100 basis points, and plus/minus 200 basis points, are estimated to have variances as shown in the table below.

Table I.2.23

INTEREST RATE SENSITIVITY

A steepening yield curve scenario, where long-term rates increase by 50 basis points and short-term rates are static, results in a favorable NII variance of 0.3%. A flattening yield curve scenario, where long-term rates decrease by

50 basis points and short-term rates are static, results in an unfavorable NII variance of 0.4%. These hypothetical scenarios are used to create a risk measurement framework, and do not necessarily represent management’s current view of future interest rates or market developments.

Short-term interest rates had reached their highest levels in 15 years before a series of rate cuts began in September 2024, starting with a 50 basis point reduction. This followed significant market disruption tied to high-profile bank failures in 2023, which, combined with the elevated interest rate environment, continues to drive increased competition for client deposits.

The yield curve was inverted for much of the second half of 2022, throughout 2023, and through the first eight months of 2024. After the initial September 2024 rate cut, the Federal Reserve implemented additional 25 basis point cuts in both November and December 2024. In both September and October 2025, there were further 25 basis point cuts. The market consensus anticipates one additional rate reduction over the remainder of this year, depending on inflation and economic conditions.

FHN continues to closely monitor economic developments and assess potential exposures.

For additional information, see Yield Curve within Market Uncertainties and Prospective Trends below.

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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, robust 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 September 30, 2025, 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 September 30, 2025.

Table I.2.24

AVAILABLE LIQUIDITY

as of September 30, 2025

(Dollars in millions)

(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 September 30, 2025 and 95% as of December 31, 2024.

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. During first quarter 2025, FHN issued $500 million of Fixed Rate/Floating Rate Senior Notes. FHN retired $350 million in senior notes during second quarter 2025. As of September 30, 2025, FHN had outstanding $946 million in senior and subordinated unsecured debt and $349 million in non-cumulative perpetual preferred stock. FHN redeemed all outstanding shares of its Series B Non-Cumulative Perpetual Preferred Stock effective August 1, 2025. Refer to Note 7 — Preferred Stock for additional information. As of September 30, 2025, 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 $869 million as of October 1, 2025.

First Horizon Bank declared and paid common dividends to the parent company in the amount of $115 million in first quarter 2025, $230 million in second quarter 2025, $200 million in third quarter 2025, and $460 million in fourth quarter 2025. Total common dividends of $1.1 billion were declared and paid to the parent company in 2024. First Horizon Bank declared and paid preferred dividends in the first three quarters of 2025 and in each quarter of 2024. Additionally, First Horizon Bank declared preferred dividends in fourth quarter 2025, payable in January 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

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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 $0.15 per common share on October 1, 2025. FHN paid cash dividends of $1,625 per Series E preferred share and $1,175 per Series F preferred share on October 10, 2025 and $165 per Series C preferred share on November 3, 2025. In addition, in October 2025, the Board approved cash dividends per share in the following amounts:

Table I.2.25

CASH DIVIDENDS

APPROVED BUT NOT PAID

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.

Repurchase Obligations

Prior to September 2008, legacy First Horizon originated loans through its pre-2009 mortgage business, primarily first lien home loans, with the intention of selling them. FHN's principal remaining exposures for those activities relate to (i) indemnification claims by underwriters, loan purchasers, and other parties which assert that FHN-originated loans caused or contributed to losses which FHN is legally obliged to indemnify, and (ii) indemnification or other claims related to FHN's servicing of pre-2009 mortgage loans.

FHN’s approach for determining the adequacy of the repurchase and foreclosure reserve has evolved, sometimes substantially, based on changes in information available. Repurchase/make-whole rates vary based on purchaser, vintage, and claim type. For those loans repurchased or covered by a make-whole payment, cumulative average loss severities range between 50 and 60 percent of the UPB.

Repurchase Accrual Approach

In determining potential loss content, claims are analyzed by purchaser, vintage, and claim type. FHN considers various inputs including claim rate estimates, historical average repurchase and loss severity rates, mortgage insurance cancellations, and mortgage insurance curtailment requests. Inputs are applied to claims in the

active pipeline, as well as to historical average inflows to estimate loss content related to potential future inflows. Management also evaluates the nature of claims from purchasers and/or servicers of loans sold to determine if qualitative adjustments are appropriate.

Repurchase and Foreclosure Liability

As discussed in Note 10 - Contingencies and Other Disclosures to the Consolidated Financial Statements in Part I, Item 1 of this report, FHN’s repurchase and foreclosure liability, primarily related to its pre-2009 mortgage origination, sale, securitization, and servicing businesses, is comprised of accruals to cover estimated

loss content in the active pipeline, estimated future inflows, and estimated loss content related to certain known claims not currently included in the active pipeline. The active pipeline consists of mortgage loan repurchase and make-whole demands from loan purchasers or securitization participants, foreclosure/servicing demands

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from borrowers, and certain related exposures. The liability contemplates repurchase/make-whole and damages obligations and estimates for probable incurred losses associated with loan populations excluded from the settlements with the GSEs, as well as other whole loans sold, mortgage insurance cancellation rescissions, and loans included in bulk servicing sales effected prior to the settlements with the GSEs. FHN compares the estimated probable incurred losses determined under the applicable

loss estimation approaches for the respective periods with current reserve levels. Changes in the estimated required liability levels are recorded as necessary through the repurchase and foreclosure provision. The total repurchase and foreclosure liability, which includes both the legacy pre-2009 business and the current mortgage business, was $14 million and $15 million as of September 30, 2025 and December 31, 2024, respectively.

Market Uncertainties and Prospective Trends

FHN’s future results could be affected both positively and negatively by several known trends. Key among those are changes in the U.S. and global economy and outlook, government actions affecting interest rates, and government actions and proposals which could have positive or negative impacts on the economy at large or on certain businesses, industries, or sectors, including changes in fiscal policy and changes in trade policy, such as the imposition of tariffs and related retaliatory responses. Additional risks relate to political uncertainty,

changes in federal policies (including those publicly discussed, formally proposed, or recently implemented) and the potential impacts of those changes on our businesses and clients, and whether FHN’s strategic initiatives will succeed.

In addition to trends and events noted elsewhere in this MD&A, FHN believes the following trends and events are noteworthy at this time.

Federal Reserve Policy, the Yield Curve, Recession, Fiscal & Trade Policy, Other Events

Federal Reserve and Rates

The Federal Reserve raised short-term rates several times in 2022 and 2023 to contain strong inflation which began in 2021 and peaked in 2022. The rise in short-term interest rates by the Federal Reserve in 2022 was both rapid and substantial, taking the overnight Fed Funds rate from 0.20% in March 2022 to 5.33% by the fall of 2023. As a result of Federal Reserve rate cuts of 50 basis points in September 2024 and cuts of 25 basis points in both November and December, the overnight Fed Funds fell back to 4.33% by the end of 2024. But despite the Federal Reserve's rapid and vigorous tightening of monetary policy in 2022 and 2023 and limited rate cuts in 2024, measures of inflation still generally remain higher than the Federal Reserve's stated goal of 2%.

In both September and October of 2025, the Federal Reserve announced 25 basis point cuts in the Fed Funds rate, lowering the target range to 3.75% to 4.00%. In its statement announcing the October rate cut, the Federal Reserve noted that inflation has moved up since earlier in the year and remains elevated, but it cited downside risks to employment and uncertainty about the economic outlook as reasons for the cut. FHN cannot predict when or how much short-term rates will be changed, how market-driven long-term rates will behave, or how those actions may affect economic or business conditions or financial markets.

Yield Curve

Unusual yield curve effects, including inversion, are common when monetary policy changes. A traditional

measure of inversion occurs when the two-year U.S. Treasury rate is higher than the ten-year rate. Traditional inversion was sustained continuously from the summer of 2022 until September 2024, an unusually long period. The degree of inversion varied during that period, but often was much deeper than is typical. Sustained traditional yield curve inversion is viewed, with statistical support, as a harbinger of economic recession, but recession did not occur.

Since the fall of 2024, the yield curve has continued to modestly steepen as declines in short-term rates have outpaced declines in longer-term rates. FHN cannot predict whether this trend will continue.

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 over the last three calendar years, with fluctuations. During each of the first three quarters of 2025, net interest margin has consistently exceeded 2024 levels, as the yield curve has maintained its more typical upward slope, while fixed income bond trading revenues have fluctuated with changing market conditions. For the third quarter of 2025, net interest margin expanded by 15 basis points compared to the second quarter, driven in part by the steepening yield curve, and fixed income bond trading revenues increased due to improved market conditions. Refer to Interest Rate & Yield Curve Risks, located in Item 1A. Risk Factors of FHN's Annual Report on Form 10-K for the year ended December 31, 2024, for a

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discussion of the risks to FHN associated with flattening and inversion.

Recession

The U.S. economy contracted (experienced negative growth) during the first two quarters of 2022, in both cases modestly. Although the occurrence of two consecutive quarters of contraction often coincides with recession, in 2022, it did not. The economy has expanded in each quarter since then, except for a slight decline in the first quarter of 2025 before expansion resumed in the second quarter of 2025. The expansion rate has varied without a sustained trend.

Recession expectations have moderated significantly since 2023, before reemerging in early 2025 due to uncertainties with respect to anticipated changes in trade and fiscal policies.

Fiscal Policy

Fiscal policy (spending and taxation) directly affects U.S. government annual deficits or surpluses, along with the size and trajectory of the national debt. Fiscal policy often has a significant impact on the U.S. economy. The changes in the executive and legislative branches of government in 2025 have resulted in significant changes in U.S. fiscal policy, including through the enactment on July 4, 2025 of federal legislation commonly referred to as the "One Big Beautiful Bill Act." This legislation may have a significant impact on general economic and business conditions and, accordingly, could materially affect FHN's financial condition and results of operations. Refer to the Income Taxes section of this MD&A for additional information regarding the impact of this legislation on FHN.

Trade Policy

In 2025, the U.S. government announced new tariffs on a variety of goods and services. As of early November 2025, the timing, scope and duration of tariffs, as well as 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.

2023 Banking Crisis

In 2023, three large regional U.S. banks failed after sudden large deposit outflows. In the aftermath of these failures, bank investors and clients across the U.S. became more focused on deposit mix, funding risk management, and other safety-soundness concerns. Most U.S. banks saw abrupt net outflows of deposits in the spring of 2023 following the failures. Most have since recouped those deposits, mainly by offering higher interest rates. In 2024, competition for deposits was quite intense. Increased competition for deposits has continued during the first three quarters of 2025 and could continue throughout the remainder of 2025 and in 2026.

October 2025 Government Shutdown

On October 1, 2025, the U.S. federal government began a shutdown as a result of congressional failure to pass appropriations legislation for the 2026 fiscal year. As of early November 2025, the government shutdown remains ongoing. The shutdown has resulted in the furlough of hundreds of thousands of U.S. government employees and the interruption or impairment of numerous government functions. Especially if prolonged, the shutdown could have a significant impact on general economic and business conditions and, accordingly, could materially affect FHN's financial condition and results of operations.

Impacts on FHN

In 2022, FHN benefited significantly from rising rates as the rise in lending rates outpaced the rise in deposit and other funding rates. In the first quarter of 2023, that outpacing ended, and FHN's net interest margin ("NIM") started to compress. FHN was able to somewhat relieve the compression during 2023, in part by using increased deposits and capital to reduce more-expensive borrowings, so that NIM in 2023 improved over 2022. NIM for the entire year 2024 was flat, declining very modestly from 2023, as improvements in loan yields were largely offset by higher funding costs, especially for deposits. However, during the first quarter of 2025 NIM expanded, with declines in deposit rates more than offsetting declines in loan yields. NIM expansion over 2024 levels continued in the second and third quarters of 2025, though NIM declined in the second quarter by 2 basis points as compared with the first quarter of 2025, as increased deposit rates exceeded increases in loan yields. NIM expansion resumed in the third quarter of 2025.

In addition, some of FHN's businesses were negatively impacted by rate actions in 2022, 2023, and 2024 and by the unusual yield curve. Rate increases pushed home mortgage rates in the U.S. much higher in 2022 and 2023, reducing demand. FHN's direct mortgage lending and lending to mortgage companies saw business decline significantly in 2022 and 2023. Mortgage rates have modestly abated since 2023 and FHN's mortgage business has seen improvement, but rates have remained elevated. However, the negative impacts of these higher rates have been offset by gains in market share. Similarly, FHN's revenues from bond trading and related activities fell significantly in 2022 and 2023 due to rising rates coupled with elevated market volatility. In 2024, bond trading revenues improved markedly, but with significant volatility quarter-to-quarter due to changing market expectations about rate moves, among other things. The quarter-to-quarter volatility in bond trading revenue that marked 2024 has continued in 2025. For the first and third quarters of 2025 revenues from bond trading and related activities continued to show the improvement that marked 2024, but those revenues declined in second quarter due to less favorable market conditions.

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Other Regulatory Proposals

In 2023, the Board of Governors of the Federal Reserve and other regulators proposed regulatory changes that would, if implemented, significantly increase regulatory constraints and costs on all U.S. banks with assets over $100 billion, but those regulations appear unlikely to be adopted in the form originally proposed. A few new requirements would apply to banks, like FHN, with assets over $50 billion, but by far the main impacts would fall on banks greater than $100 billion in assets.

The proposals touch upon many regulatory requirements, including debt and equity capital requirements, credit risk standards, and asset risk-weighting. The increased requirements also would entail additional compliance costs.

Greenhouse Gas (GHG) Reporting Regimes

In October 2023, the state of California enacted laws which, taken together, will require most larger companies doing business in California to annually report their greenhouse gas ("GHG") emissions, with an external assurance requirement, and to biennially report their climate-related financial risks and risk-mitigation measures. The California laws include multi-year phase in periods and encompass Scope 1, Scope 2, and Scope 3 GHG emissions. As currently enacted, the laws require reporting for Scopes 1 and 2 GHG emissions to begin in 2026 for the 2025 fiscal year. The California laws, especially the application of those laws to companies outside of California, have been challenged in court. While the federal court overseeing the principal litigation contesting California's climate disclosure laws has dismissed certain challenges, others remain pending and, with appeals, these challenges could take many years to resolve. A motion for a preliminary injunction barring implementation of California's GHG regulations was denied in August 2025, but the plaintiffs have appealed the denial to the U.S. Court of Appeals for the Ninth Circuit. Pending resolution of the appeal, as well as other litigation challenging California's GHG laws, those laws remain on track for reporting to begin in 2026. Other states, including New York, New Jersey, and Illinois, are considering climate-related reporting measures similar to California's.

In March 2024, the U.S. Securities and Exchange Commission ("SEC") adopted final rules, “The Enhancement and Standardization of Climate-Related Disclosures for Investors” (the “SEC Climate Disclosures Rules”). These Rules 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. Refer to "Accounting Changes" below for additional information. The SEC Climate Disclosures Rules also have a lengthy phase-in period. There is considerable uncertainty as to

whether the SEC's Climate Disclosures Rules will be implemented as adopted, both because the SEC has suspended effectiveness of those rules while legal challenges are pending and because the shifts in the executive and legislative branches of government could lead the SEC to withdraw or significantly alter those rules. In March 2025, the SEC voted to end its defense of its Climate Disclosure Rules in the pending legal action, but the SEC has not withdrawn or modified its Climate Disclosure Rules nor has the legal challenge to those rules been dismissed. In a July 23, 2025 court filing, the SEC stated it did not intend to review or reconsider its Climate Disclosure Rules prior to the court ruling on the pending petitions challenging those rules. On September 12, 2025, the U.S. Court of Appeals for the Eighth Circuit ordered the litigation to be held in abeyance until the SEC reconsiders its Climate Disclosures Rules through formal notice-and-comment rulemaking or renews its defense of the rules. As a result of the SEC's and the Court's actions, the actual timing of any implementation of the Climate Disclosures Rules, and the form of the rules if implemented, remains uncertain.

Potential Business Impacts

Direct compliance costs related to the SEC's and California's GHG reporting regimes, if implemented, will include creating systems to measure or estimate and capture relevant data, staffing, and engagement of vendors, including a firm to provide required assurances (somewhat analogous to a financial statement auditor).

In addition, if FHN is required to support Scope 3 reporting by obtaining GHG-related information from customers, effectively FHN would be required to impose costs and/or inconveniences on its customers. Other banks in FHN's markets, particularly those that are private and not doing business in California, could provide financial services without those requirements, putting FHN at a competitive disadvantage.

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

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growth rate for the U.S. as a whole. That population growth generally has been accompanied by economic growth.

Many of FHN's fastest growing markets, including most significantly those in Florida, can be impacted significantly by hurricanes and other severe coastal weather events. As those markets grow, FHN's economic commitment to them grows, as does FHN's financial exposure to those events.

Especially since 2022, it has been widely reported that the economic costs of hurricane and other severe weather 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 badly. In Florida, for example, some smaller carriers failed, some larger carriers left markets, and other carriers significantly increased the premiums of hurricane-related insurance, narrowed coverage, or both, resulting in numerous proposals for legislative and regulatory reform.

The availability, reliability, and cost of adequate property insurance is a significant concern for FHN as well as FHN's clients in affected markets. Instability in property insurance has made, and continues to make, FHN's business decisions more difficult. That instability increases FHN's risks of loan loss and business downturn.

More fundamentally, elevated insurance and casualty costs blunt a key factor driving growth in many of these high-growth markets: lower costs of living. If market growth slows, FHN's business could be impacted.

Critical Accounting Policies and Estimates

FHN has made no significant changes in its critical accounting policies and estimates from those disclosed in its 2024 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 a detail of accounting changes adopted in the current year and accounting changes issued but not currently effective, which section is incorporated into MD&A by this reference.

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Non-GAAP Information

Table I.2.26

NON-GAAP TO GAAP RECONCILIATION

(Dollars in millions; shares in thousands)

(a) Included in total equity on the Consolidated Balance Sheets.

(b) Includes goodwill and other intangible assets, net of amortization.

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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 101 of this report and the subsections entitled “Market Risk Management” beginning on page 101 and “Interest Rate Risk Management” beginning on page 103 of this report, and

(b) Note 14 to the Consolidated Financial Statements appearing on pages 49-55 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 to FHN’s Annual Report on Form 10-K for the year ended December 31, 2024, including in particular the section entitled “Risk Management” beginning on page 86 of that report and the subsections entitled “Market Risk Management” beginning on page 87 and “Interest Rate Risk Management” beginning on page 89 of that report; and Note 21 to the Consolidated Financial Statements appearing on pages 185-191 of Item 8 of that report.

(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 third fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Material changes from risk factor disclosures in FHN's Annual Report on Form 10-K for the year ended December 31, 2024:

Not applicable.