First Horizon Corporation Depositary Shs Repr 1/4000th Non Cum Perp Pfd Registered Shs H

Company Overview

Business Model: First Horizon Corporation is a bank holding company and financial holding company that provides a comprehensive suite of financial services. These include commercial, private banking, consumer, small business, wealth and trust management, retail brokerage, capital markets, fixed income, and mortgage banking services. The core of its operations is conducted through its wholly-owned subsidiary, First Horizon Bank. The company's operational philosophy is articulated as "Big Bank Muscle, Small Bank Hustle."

Market Position: As of June 30, 2025, First Horizon Bank held approximately 13% of total deposits in insured depository institutions in Tennessee, indicating a significant regional presence. The company operates over 450 business locations across 23 U.S. states, with a strong concentration of 412 banking centers in southern states. The competitive landscape is intense, encompassing traditional banks, non-traditional financial institutions, and emerging fintech firms, digital-asset providers, and private credit firms.

Recent Strategic Developments:

• Merger & Acquisition Activity: In July 2020, First Horizon Corporation completed a merger of equals with IBERIABANK Corporation and acquired 30 branches from Truist Bank. A subsequent agreement for The Toronto-Dominion Bank to acquire First Horizon Corporation was terminated on May 4, 2023, due to a lack of necessary regulatory approvals.
• Strategic Focus Areas (2025): The company prioritized Quality and Execution (optimizing processes, technology investments), Clients (premium service, relationship banking), and Associates (talent investment, performance assessment, engagement).
• Technology Investments: A multi-year technology plan is underway to build an Enterprise Data Hub, modernize digital account opening, enhance payments, strengthen authentication, improve fraud prevention, elevate the mobile experience, establish scalable architecture, and introduce new product capabilities.
• Client Experience Initiatives: A senior executive role for consumer client experience was created, and new service methods were developed to enhance client engagement.
• Human Capital Development: A new associate framework was implemented, alongside strategic hiring and the launch of HorizonU, a centralized learning, performance, and career development platform.

Geographic Footprint: First Horizon Corporation's operations span 23 U.S. states, with a primary focus on the southern and southeastern United United States, including major gulf coast and southern Atlantic seacoast markets.

• Banking Center Concentration: 412 banking centers are located in southern states, with significant presence in Tennessee (137), North Carolina (78), Florida (74), and Louisiana (55).
• Loan Origination: A significant majority of loans originate from Florida, Tennessee, Texas, North Carolina, and Louisiana.
• Deposit Concentration: Deposits are concentrated in Tennessee (34%), Florida (16%), North Carolina (12%), and Louisiana (12%).
• International Exposure: The company holds international assets, primarily in the form of loans and letters of credit.

Financial Performance

Revenue Analysis

Profitability Metrics:

• Gross Margin: N/A
• Operating Margin: 39.34% (2025), 36.21% (2024)
• Net Margin: 29.19% (2025), 24.89% (2024)
• Return on average assets: 1.22% (2025), 0.97% (2024)
• Return on average common equity: 11.30% (2025), 8.80% (2024)
• Return on average tangible common equity: 14.01% (2025), 10.99% (2024)
• Net interest margin: 3.47% (2025), 3.35% (2024)
• Noninterest income to total revenue: 23.30% (2025), 23.44% (2024)
• Efficiency ratio: 60.66% (2025), 62.06% (2024)

Investment in Growth:

• R&D Expenditure (Computer software expense): $138 million (4.04% of revenue)
• Capital Expenditures (Purchases of premises and equipment): $33 million
• Strategic Investments: A multi-year technology plan focusing on an Enterprise Data Hub, digital account opening modernization, payments enhancement, authentication strengthening, fraud prevention, mobile experience elevation, scalable architecture, and new product capabilities.

Business Segment Analysis

Commercial, Consumer & Wealth

Financial Performance:

• Revenue: $3.033 billion (+1.37% YoY)
• Pre-tax income: $1.540 billion (up $123 million YoY)
• Operating Margin: 52.42%
• Key Growth Drivers: Strong net interest income growth of $38 million, a significant decrease in provision for credit losses by $108 million, and a modest increase in noninterest income by $3 million.

Product Portfolio: This segment offers commercial banking, business banking, consumer banking, private client investment, wealth management, financial planning, trust and asset management services, asset-based lending, commercial real estate, equipment finance/leasing, energy finance, international banking, healthcare finance, transportation and logistics finance, treasury management solutions, loan syndications, and corporate banking services.

Market Dynamics: Primarily serves commercial and consumer clients across the southern U.S. and other selected markets.

Wholesale

Financial Performance:

• Revenue: $489 million (+15.33% YoY)
• Pre-tax income: $157 million (up $35 million YoY)
• Operating Margin: 34.56%
• Key Growth Drivers: Robust growth in net interest income by $39 million, an increase in fixed income revenue by $19 million, and a rise in mortgage banking income by $8 million (including a $5 million gain on MSR sale).

Product Portfolio: This segment includes fixed income securities sales, trading, underwriting, and strategies for institutional clients; loan sales; portfolio advisory services; derivative sales; mortgage warehouse lending; franchise finance; correspondent banking; and mortgage origination.

Market Dynamics: Serves a diverse institutional client base, including depositories (banks, thrifts, credit unions) and non-depositories (money managers, insurance companies, governmental units, public funds, pension funds, hedge funds).

Corporate

Financial Performance:

• Pre-tax loss: $417 million (an improvement from a $534 million loss in 2024)
• Net interest income (expense): Improved by $34 million (from $(214) million in 2024 to $(180) million in 2025)
• Noninterest income: Increased by $89 million (from $(12) million in 2024 to $77 million in 2025), primarily due to the absence of $91 million net securities losses incurred in 2024.
• Noninterest expense: Decreased by $8 million to $311 million.
• Restructuring expenses: Immaterial in 2025, down from $14 million in 2024.
• Key Growth Drivers: The improved financial performance was driven by better net interest expense management and a significant recovery in noninterest income.

Product Portfolio: This segment encompasses corporate support functions such as risk management, audit, accounting, finance, executive office, and corporate communications. It also manages centralized capital and funding, and oversees run-off businesses including pre-2009 mortgage banking, run-off consumer and trust preferred loan portfolios, and other exited businesses.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: First Horizon Corporation repurchased $918 million worth of common stock (43,442,126 shares) in 2025.
  • An October 2024 General Purchase Program authorized $1.0 billion, with $820 million purchased life-to-date at an average price of $20.80 per share before its termination on October 27, 2025.
  • A new $1.2 billion General Purchase Program was authorized in October 2025, expiring January 31, 2027, under which $203 million has been purchased life-to-date at an average price of $21.80 per share.
• Dividend Payments: Cash dividends declared per common share were $0.60 in both 2025 and 2024.
  • Specific dividend payments for common and preferred shares were made or approved for early 2026.
• Future Capital Return Commitments: As of January 2026, approved but unpaid dividends include $0.17 per common share (payable April 1, 2026), $165.00 per Series C preferred share (payable May 1, 2026), $1,625.00 per Series E preferred share (payable April 10, 2026), and $1,175.00 per Series F preferred share (payable April 10, 2026).

Balance Sheet Position:

• Cash and Equivalents (Cash and due from banks): $961 million (2025)
• Total Debt (Short-term + Term Borrowings): $5.175 billion (2025)
• Net Cash Position: $(4.214) billion (2025)
• Credit Rating (as of December 31, 2025):
  • First Horizon Corporation: Moody's: Baa3/--/Positive (Long-term/Short-term/Outlook); S&P: BBB+/F2/Stable (Long-term/Short-term/Outlook).
  • First Horizon Bank: Moody's: Baa3/P-2/Positive; S&P: BBB+/F2/Stable.
• Debt Maturity Profile (as of December 31, 2025): Short-term borrowings of $3.861 billion are due within 1 year. Term borrowings total $1.339 billion, with $450 million due in 3-5 years and $889 million due after 5 years.

Cash Flow Generation:

• Operating Cash Flow (Net cash provided by operating activities): $628 million (2025)
• Free Cash Flow: Not explicitly stated, but operating cash flow less capital expenditures was approximately $595 million in 2025.
• Cash Conversion Metrics: Not explicitly stated.

Operational Excellence

Production & Service Model: First Horizon Corporation delivers a broad spectrum of commercial, private banking, consumer, small business, wealth and trust management, retail brokerage, capital markets, fixed income, and mortgage banking services. These services are accessible through over 450 business locations, including 412 banking centers, and via digital platforms such as online and mobile banking. The company's operational philosophy is characterized by its "Big Bank Muscle, Small Bank Hustle" approach.

Supply Chain Architecture: The company relies on third-party service providers for specific bank functions and engages third-party vendors for regular cybersecurity reviews. A dedicated Third-Party Risk Management (TPRM) department is responsible for overseeing these vendor relationships.

Key Suppliers & Partners:

• Third-Party Service Providers: Engaged for various bank functions.
• Cybersecurity Firms: Partnered with for cybersecurity reviews and intelligence sharing.

Facility Network:

• Headquarters: Located at 165 Madison Avenue in Memphis, Tennessee.
• Operational & Administrative Offices: Situated in multiple cities that also host banking centers.
• Banking Centers: A network of 412 banking centers, predominantly in southern states.
• Suitability: All physical properties are considered suitable and adequate for current operations as of December 31, 2025.

Operational Metrics:

• Efficiency ratio: 60.66% in 2025, an improvement from 62.06% in 2024.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Banking Centers: Services are delivered through a network of over 450 business locations, including 412 banking centers.
• Digital Platforms: The company utilizes online and mobile banking platforms to provide remote access to its services.

Customer Portfolio: Enterprise Customers:

• Institutional Clients: The Wholesale segment serves institutional clients such as depositories (banks, thrifts, credit unions) and non-depositories (money managers, insurance companies, governmental units, public funds, pension funds, hedge funds).
• Commercial Clients: The Commercial, Consumer & Wealth segment caters to commercial and business banking clients. Customer Concentration:
• Commercial deposits constituted $39.4 billion (58% of total deposits) as of December 31, 2025.
• Consumer deposits accounted for $28.1 billion (42% of total deposits) as of December 31, 2025.

Geographic Revenue Distribution:

• Primary Operational Regions: The company's main operational footprint is concentrated in the southern and southeastern United States, including key markets along the Gulf Coast and Southern Atlantic seacoast.
• Key States: Tennessee, Florida, Texas, North Carolina, and Louisiana are central to its banking centers, loan originations, and deposit base.
• International Exposure: International assets, primarily loans and letters of credit, contribute to the company's revenue distribution.

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The financial services industry is characterized by intense competition and rapid technological advancements, particularly with the proliferation of artificial intelligence. These dynamics are continuously reshaping the industry, introducing new competitive challenges.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors:

• Traditional Banks: Bank of America N.A., Fifth Third Bank National Association, First-Citizens Bank & Trust Company, Hancock Whitney Bank, Huntington National Bank, JPMorgan Chase Bank National Association, Regions Bank, Pinnacle Bank, PNC Bank National Association, Truist Bank, and Wells Fargo Bank N.A. These institutions compete across First Horizon Corporation's core service offerings and geographic markets.

Emerging Competitive Threats:

• Financial Technology Firms: Offering innovative digital banking services.
• Digital-Asset Providers: Including exchanges, blockchain-based payment networks, stablecoin issuers, and digital-asset lending/financing platforms.
• Private Credit Firms: Providing direct lending solutions that bypass traditional banking channels.

Competitive Response Strategy: First Horizon Corporation's strategy to maintain its competitive advantage involves increasing investments in its digital platforms, making strategic equity investments, and leveraging vendor solutions. This approach is centered on delivering a differentiated client experience and adapting to technological innovation.

Risk Assessment Framework

Strategic & Market Risks

Market Dynamics:

• Economic Conditions: Exposure to global, national, and local economic conditions, including recessionary pressures and volatility in residential housing and commercial real estate markets.
• Interest Rate Risk: Significant exposure from borrowing, lending, and investing activities, with flat or inverted yield curves potentially reducing net interest margin.
• Market Fluctuations: Business performance is impacted by market fluctuations and the financial health of borrowers and counterparties. Technology Disruption:
• Innovation & AI: Rapid technological innovation and the increasing use of AI introduce new competitive challenges and risks, including potential issues with flawed algorithms, biased data, and transparency. Customer Concentration:
• Loan Portfolio Concentrations: Concentrations in Commercial & Industrial (financial services, real estate/rental/leasing), Commercial Real Estate (multi-family, office, retail, industrial), and consumer real estate (Florida, Tennessee, Texas) increase sensitivity to specific industry and geographic economic impacts.

Operational & Execution Risks

Supply Chain Vulnerabilities:

• Supplier Dependency: Reliance on third-party service providers for critical bank functions creates risks of operational disruption, data security breaches, and regulatory non-compliance. Capacity Constraints:
• Operational Infrastructure: The business depends on developing, maintaining, and evolving its operational and organizational infrastructure, managing expenses, and attracting/retaining talent. Failures in infrastructure or disaster preparedness could lead to service interruptions, legal actions, and non-compliance. Fraud Risk:
• Increasing Fraud: Fraud, including deposit fraud, loan fraud, and client-directed deception, is a major and growing operational risk, exacerbated by new technologies like AI. Cybersecurity Risks:
• Sophisticated Threats: Significant operational risk from cyber fraud, theft, vandalism, ransom, data/system security breaches, and unauthorized incursions, with increasing sophistication from organized crime and nation-states. Talent Competition:
• Hiring & Retention Costs: Substantial and increasing competition for talent, particularly in specialized areas, leads to higher hiring and retention costs. Expense Management:
• Challenges: Managing expenses is challenging due to business changes, structural reorganization, evolving strategies, and increased regulatory compliance costs as assets approach the $100 billion threshold.

Financial & Regulatory Risks

Market & Financial Risks:

• Demand Volatility: Economic downturns typically lead to increased credit losses, reduced demand for products/services, and deterioration in loan portfolio quality.
• Liquidity & Funding: Adequate and cost-effective liquidity is essential; deposit trends can shift abruptly due to economic conditions or public perception of risk.
• Credit Ratings: Credit ratings directly influence the availability and cost of unsecured funding. Downgrades could lead to reduced counterparty relationships, forced derivative settlements, or demands for additional collateral.
• Hedging Ineffectiveness: Hedging activities may be ineffective or inadequate and are subject to counterparty credit risk.
• Mortgage Business Sensitivity: The mortgage origination and lending to mortgage companies businesses are highly sensitive to interest rates and rate cycles. Regulatory & Compliance Risks:
• Industry Regulation: Operating in a heavily regulated industry, changes in statutes, rules, policies, or interpretations can result in additional costs, service limitations, enforcement actions, and penalties.
• Enhanced Prudential Standards: Approaching the $100 billion asset threshold would trigger Category IV enhanced prudential standards and increased compliance costs.
• Export Controls: The Bank must comply with Office of Foreign Assets Control (OFAC) regulations, including blocking accounts and transactions with sanctioned entities and reporting blocked transactions.

Geopolitical & External Risks

Geopolitical Exposure:

• Geographic Dependencies: The banking business is exposed to economic, regulatory, and natural disaster risks primarily within the southeastern and south-central U.S.
• Coastal Market Risks: Growth prospects in major gulf coast and southern Atlantic seacoast markets are vulnerable to hurricanes and severe weather events, leading to rising economic costs and property insurance instability.
• International Exposure: International assets (loans, letters of credit) carry risks related to taxes, fees, prohibitions, currency exchange rate movements, and limited legal recourse.
• Political Volatility: Political volatility within the federal government can cause abrupt policy shifts and government shutdowns (e.g., October 2025, February 2026), impacting business and clients.
• Trade Relations: New tariffs announced by the U.S. government in 2025 create uncertainty regarding economic growth, inflation, and employment rates.

Innovation & Technology Leadership

Research & Development Focus: Core Technology Areas:

• Enterprise Data Hub: Strategic focus on building an Enterprise Data Hub to serve as the enterprise data backbone.
• Client Experience Improvement: Significant investment in modernizing digital account opening, enhancing payments capabilities, strengthening authentication, improving fraud prevention, and elevating the mobile experience.
• Scalable Architecture: Developing a scalable and modular future-state architecture to advance cloud maturity and an API-first approach.
• New Product Capabilities: Introducing new product and banking capabilities designed to serve complex business needs, attract new clients, and position the company for future growth. Innovation Pipeline: The company's multi-year technology plan outlines a clear roadmap for digital transformation and the development of new banking products and services.

Intellectual Property Portfolio:

• Patent Strategy: Not explicitly mentioned.
• Licensing Programs: Not explicitly mentioned.
• IP Litigation: Not explicitly mentioned.

Technology Partnerships:

• Strategic Alliances: First Horizon Corporation actively engages in partnerships with leading cybersecurity firms to enhance security measures.
• Research Collaborations: The company participates in industry groups to foster intelligence sharing and collaborative security enhancements.

Leadership & Governance

Executive Leadership Team

Leadership Continuity: D. Bryan Jordan's employment agreement as President and Chief Executive Officer extends until August 3, 2028, with a waiver of the mandatory retirement policy for this term.

Board Composition: The Board of Directors, through its Risk and Audit Committees, is responsible for establishing the company's risk appetite and overseeing risk management functions, including operational and cybersecurity risks. The Chief Risk Officer provides quarterly updates to these committees. The Board includes Jeffrey J. Brown, Velia Carboni, John C. Compton, Wendy P. Davidson, John W. Dietrich, D. Bryan Jordan, J. Michael Kemp, Sr., Rick E. Maples, Sital K. Mody, Michael L. Moehn, Vicki R. Palmer, Colin V. Reed (not nominated for re-election at 2026 Annual Meeting), Cecelia D. Stewart, and R. Eugene Taylor (not nominated for re-election at 2026 Annual Meeting).

Human Capital Strategy

Workforce Composition:

• Total Employees: As of December 31, 2025, First Horizon Corporation had 7,404 associates, comprising 7,277 full-time and 127 part-time employees.
• Full-time-equivalent associates: 7,338.
• Geographic Distribution: Not explicitly detailed beyond general operational regions.
• Skill Mix: Not explicitly detailed.

Talent Management: Acquisition & Retention:

• Hiring Strategy: The company prioritizes attracting and retaining top talent.
• Retention Metrics: Not explicitly stated, but retention strategies include offering competitive health care benefits, wellness programs, and parental and caregiver support.
• Employee Value Proposition: Focuses on competitive compensation, comprehensive benefits, professional development opportunities, and a supportive culture.

Diversity & Development:

• Diversity Metrics: Not explicitly stated.
• Development Programs: Provides professional development opportunities through mentoring and career development programs, alongside associate resource groups.
• Culture & Engagement: An enhanced performance management process was implemented in 2025. In January 2026, HorizonU, a new centralized learning, performance, and career development platform, was launched to support associate development.

Environmental & Social Impact

Environmental Commitments: Climate Strategy:

• Emissions Targets: First Horizon Corporation acknowledges public expectations and recent state (California, 2023) and federal (SEC, March 2024) laws/rules regarding Greenhouse Gas (GHG) emissions reporting. The company notes that these rules, if implemented, could impose significant direct and indirect compliance costs, though their timing and form remain uncertain due to legal challenges and regulatory actions. Supply Chain Sustainability:
• Supplier Engagement: Not explicitly mentioned beyond general third-party risk management.
• Responsible Sourcing: Not explicitly mentioned.

Social Impact Initiatives:

• Community Investment: First Horizon Bank received "High Satisfactory" ratings in Lending and Service, and an "Outstanding" rating in Investment, for its 2024 Community Reinvestment Act (CRA) assessment, resulting in an overall "Satisfactory" rating.
• Philanthropic Contributions: Contributions expense increased by $8 million in 2025, largely driven by a $20 million contribution to the First Horizon Foundation, compared to $10 million in 2024.
• Product Impact: Not explicitly mentioned.

Business Cyclicality & Seasonality

Demand Patterns:

• Seasonal Trends: Loans to mortgage companies exhibit fluctuations tied to mortgage rates and seasonal factors, with originations generally increasing when rates decline and decreasing when rates rise.
• Economic Sensitivity: Economic downturns typically lead to increased credit losses, reduced demand for products and services, and a deterioration in the credit quality of the loan portfolio. Bank stock prices are sensitive to perceived economic downturns.
• Industry Cycles: The U.S. economy experienced contraction in Q1 and Q2 2022, followed by expansion until a slight decline in Q1 2025, resuming expansion in Q2 2025. The possibility of a recession remains. Intense deposit competition was observed in 2024 and continued into 2025, following the 2023 banking crisis.

Planning & Forecasting: Not explicitly detailed beyond general economic sensitivity.

Regulatory Environment & Compliance

Regulatory Framework: Industry-Specific Regulations:

• Bank Holding Company Regulation: First Horizon Corporation is regulated by the Federal Reserve as both a bank holding company and a financial holding company.
• Bank Regulation: First Horizon Bank is subject to regulation by the Tennessee Department of Financial Institutions, the Federal Reserve, the FDIC, and the Consumer Financial Protection Bureau (CFPB).
• Securities Regulation: First Horizon Corporation is under the jurisdiction of the SEC and adheres to NYSE rules.
• Regulatory Purpose: The overarching regulatory framework is designed to protect depositors, safeguard the Federal Deposit Insurance Fund, and ensure the stability of the financial system.
• Compliance Costs: As the company approaches the $100 billion asset threshold, it anticipates triggering Category IV enhanced prudential standards, which will lead to increased compliance costs. Trade & Export Controls:
• OFAC Compliance: First Horizon Bank is responsible for complying with Office of Foreign Assets Control (OFAC) regulations, which include blocking accounts and transactions with sanctioned entities and reporting blocked transactions.

Legal Proceedings: The company faces ongoing litigation risks from various parties, including clients, associates, vendors, contractual partners, and regulators. As of December 31, 2025, the aggregate liability established for all loss contingency matters was $1 million. Estimable reasonably possible losses in future periods, exceeding currently established liabilities, are projected to aggregate in a range from zero to less than $1 million.

Tax Strategy & Considerations

Tax Profile:

• Effective Tax Rate: The effective tax rate was 22.1% in 2025, up from 21.0% in 2024.
• Geographic Tax Planning: State and local income taxes in Tennessee, Florida, and California accounted for the majority of the tax effect in 2025.
• Tax Reform Impact: The "One Big Beautiful Bill Act," enacted on July 4, 2025, introduced provisions for 100% first-year depreciation for qualified property and immediate deduction of domestic research or experimental expenditures. These changes resulted in a $34 million reduction to the Deferred Tax Asset (DTA) as of the enactment date, without impacting the effective tax rate. The act also limits the deductibility of annual corporate charitable deductions to amounts exceeding 1% of taxable income.
• DTA Balances: The net deferred tax asset stood at $92 million as of December 31, 2025, compared to $227 million at December 31, 2024. Federal income tax carryforwards were $36 million, and state income tax carryforwards were $4 million in 2025.

Insurance & Risk Transfer

Risk Management Framework:

• Insurance Coverage: First Horizon Corporation employs various insurance policies, including property and casualty insurance, mortgage default insurance, and bank-owned life insurance (BOLI), to mitigate risks such as property damage, legal liability, and cyber incidents.
• Risk Transfer Mechanisms: The company acknowledges risks associated with inadequate coverage, insurer default, and fluctuations in BOLI policy values. Liquidation of BOLI policies is subject to contractual limitations, regulations, and potential tax penalties.
• Hedging Strategies: Derivatives are utilized for client transactions and risk management purposes, specifically for managing interest rate risk and cash flow exposures.