Business Context and Reporting Period
Company: First Horizon Corporation (FHN)
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal year ended December 31, 2025
Headquarters: Memphis, Tennessee
Business Overview: FHN is a bank holding company operating primarily through its subsidiary, First Horizon Bank. It provides commercial, consumer, wealth management, and wholesale banking services across 23 U.S. states, with a significant footprint in the Southeast. The company operates through three reportable segments: Commercial, Consumer & Wealth; Wholesale; and Corporate.
Key Financial Metrics (2025 vs. 2024)
| Metric | 2025 | 2024 | Change |
|---|---|---|---|
| Net Income (Common Shareholders) | $956 million | $738 million | +$218 million |
| Diluted EPS | $1.87 | $1.36 | +$0.51 |
| Total Assets | $83.9 billion | $82.2 billion | +$1.7 billion |
| Total Loans & Leases | $64.2 billion | $62.6 billion | +$1.6 billion |
| Total Deposits | $67.5 billion | $65.6 billion | +$1.9 billion |
| Net Interest Income | $2.62 billion | $2.51 billion | +$111 million |
| Net Interest Margin (NIM) | 3.47% | 3.35% | +12 bps |
| Noninterest Income | $797 million | $679 million | +$118 million |
| Noninterest Expense | $2.07 billion | $2.04 billion | +$39 million |
| Provision for Credit Losses | $65 million | $150 million | -$85 million |
| Return on Average Assets (ROAA) | 1.22% | 0.97% | +25 bps |
| Return on Average Common Equity (ROAE) | 11.30% | 8.80% | +250 bps |
| Efficiency Ratio | 60.66% | 62.06% | -1.40% |
| Common Equity Tier 1 (CET1) Ratio | 10.63% | 11.20% | -57 bps |
Material Changes and Drivers
- Profitability Growth: Net income increased 29.5% year-over-year, driven by a 57% reduction in the provision for credit losses and a 12 basis point expansion in net interest margin.
- Net Interest Income: NII grew $111 million due to lower deposit pricing (cost of interest-bearing liabilities decreased 57 bps) and higher loan balances, particularly in high-yielding loans to mortgage companies. This offset a 26 bps decrease in earning asset yields.
- Noninterest Income: Increased $118 million (17%), largely due to the absence of a $91 million net securities loss recorded in 2024 during a portfolio restructuring. Fixed income and mortgage banking income also improved.
- Expense Management: Noninterest expenses rose 2% to $2.1 billion, primarily due to higher personnel costs from talent additions and increased spending on software, occupancy, and legal fees. This was partially offset by a $22 million decrease in deposit insurance expense.
- Asset Quality: Net charge-offs were $120 million (19 bps of average loans), slightly higher than 2024's $112 million. However, the Allowance for Loan and Lease Losses (ALLL) to total loans ratio decreased to 1.15% from 1.30%, reflecting a favorable portfolio mix and resolution of criticized loans.
- Capital Actions: The company repurchased $918 million of common stock and redeemed $80 million of Series B Preferred Stock during 2025. A new $1.2 billion share repurchase program was authorized in October 2025.
Outlook, Risks, and Management Commentary
- Strategic Priorities: Management continues to focus on "Quality and Execution," "Clients," and "Associates." Key initiatives include consolidating processes, enhancing digital capabilities (Enterprise Data Hub), and investing in talent.
- Interest Rate Environment: The Federal Reserve cut rates in late 2024 and throughout 2025. Management notes that while the yield curve has steepened, improving NIM, future rate cuts remain uncertain. A flat or inverted yield curve remains a risk to NIM and fixed income revenues.
- Regulatory Thresholds: FHN is approaching the $100 billion asset threshold. Crossing this threshold could subject the company to Category IV enhanced prudential standards, including liquidity coverage ratios and stress testing, which would increase compliance costs.
- Key Risks:
- Credit Risk: Concentrations in the financial services industry (25% of C&I loans) and commercial real estate (CRE) remain key monitoring areas. The CRE portfolio decreased 6% year-over-year.
- Geographic Risk: Significant exposure to coastal markets (Florida, Gulf Coast) exposes the bank to hurricane-related property insurance instability and potential loan losses.
- Cybersecurity: Identified as a major operational risk, with ongoing threats from ransomware and fraud.
- Regulatory Changes: Uncertainty regarding the implementation of SEC climate disclosure rules and potential changes to the Community Reinvestment Act (CRA).
- Dividends: The company paid a quarterly common dividend of $0.15 per share in January 2026. The Board approved a quarterly dividend of $0.17 per share for payment in April 2026.
Investor Verification Checklist
- Asset Growth vs. Regulatory Tier: Verify the trajectory of total assets relative to the $100 billion threshold and the potential impact on future compliance costs and liquidity requirements.
- Deposit Mix Stability: Confirm the stability of core deposits versus uninsured deposits, particularly in light of the 2023 regional banking stress and current competitive rate environment.
- C&I Concentration: Review the specific performance of the "Loans to mortgage companies" and "Finance and insurance" sub-segments, which comprise 25% of the C&I portfolio.
- CRE Portfolio Health: Monitor the nonperforming asset (NPA) ratios within the Commercial Real Estate portfolio, specifically the office and multi-family sectors.
- Share Repurchase Execution: Track the utilization of the new $1.2 billion share repurchase program authorized in October 2025.
- Climate Disclosure Compliance: Assess the potential financial impact of pending SEC and state-level climate-related disclosure rules on operating expenses.