Business Context and Reporting Period
Company: First Horizon Corporation (FHN)
Filing Type: Form 10-Q (Quarterly Report)
Reporting Period: Quarter and nine months ended September 30, 2025
Business Overview: FHN is a financial holding company headquartered in Memphis, Tennessee, with its principal subsidiary being First Horizon Bank. The company operates through three reportable segments: Commercial, Consumer & Wealth; Wholesale; and Corporate. As of September 30, 2025, FHN operated over 450 business locations in 24 states.
Key Financial Metrics
| Metric | Q3 2025 | Q3 2024 | 9M 2025 | 9M 2024 |
|---|---|---|---|---|
| Net Interest Income | $674 million | $627 million | $1,946 million | $1,881 million |
| Net Interest Margin (NIM) | 3.55% | 3.31% | 3.46% | 3.35% |
| Noninterest Income | $215 million | $200 million | $585 million | $581 million |
| Noninterest Expense | $550 million | $511 million | $1,529 million | $1,527 million |
| Provision for Credit Losses | ($5) million (Credit) | $35 million | $65 million | $140 million |
| Net Income (GAAP) | $266 million | $223 million | $732 million | $624 million |
| Net Income Available to Common Shareholders | $254 million | $213 million | $699 million | $581 million |
| Diluted EPS | $0.50 | $0.40 | $1.36 | $1.06 |
| Total Assets | $83.19 billion | $82.15 billion (Dec 31, 2024) | N/A | N/A |
| Total Loans and Leases | $63.06 billion | $62.57 billion (Dec 31, 2024) | N/A | N/A |
| Total Deposits | $65.53 billion | $65.58 billion (Dec 31, 2024) | N/A | N/A |
| Allowance for Loan and Lease Losses (ALLL) | $777 million | $815 million (Dec 31, 2024) | N/A | N/A |
| Common Equity Tier 1 Ratio | 10.96% | 11.20% (Dec 31, 2024) | N/A | N/A |
Material Changes vs. Prior Period
- Profitability Growth: Net income available to common shareholders increased 19% year-over-year in Q3 2025 ($254 million vs. $213 million) and 20% for the nine-month period ($699 million vs. $581 million). This was driven by higher net interest income and a significant reduction in the provision for credit losses.
- Net Interest Income: NII increased $47 million in Q3 2025 compared to Q3 2024. This was primarily due to lower interest-bearing deposit costs, investment portfolio repositioning in late 2024, and increased accretion from the Main Street Lending Program, partially offset by lower loan yields.
- Provision for Credit Losses: The provision turned into a credit of $5 million in Q3 2025, compared to an expense of $35 million in Q3 2024. Year-to-date provision decreased $75 million to $65 million, reflecting improved economic scenario weighting and lower specific reserves.
- Noninterest Expense: Expenses increased $39 million in Q3 2025 vs. Q3 2024, largely driven by a $20 million contribution to the First Horizon Foundation and higher personnel expenses. Year-to-date expenses remained relatively flat ($2 million increase).
- Asset Quality: Nonperforming loans (NPLs) increased slightly to $605 million (0.96% of total loans) from $602 million at year-end 2024. Net charge-offs were $26 million in Q3 2025 (17 bps annualized).
- Capital Actions: FHN redeemed all outstanding shares of its Series B Preferred Stock ($80 million liquidation preference) on August 1, 2025. The company also repurchased $191 million of common stock in Q3 2025 under its $1 billion program.
Guidance, Outlook, Risks, and Unusual Items
- Management Commentary: Management highlighted improved market conditions for fixed income revenues and mortgage banking income. The yield curve has steepened, supporting NIM expansion. The company expects capital ratios to remain above well-capitalized standards plus the conservation buffer for the remainder of 2025 and into 2026.
- Unusual Items:
- Charitable Contribution: A $20 million contribution to the First Horizon Foundation in Q3 2025 significantly impacted noninterest expense.
- Visa Derivative Valuation: $10 million in Visa derivative valuation expense was recorded in Q3 2025.
- Preferred Stock Redemption: The redemption of Series B Preferred Stock resulted in $3 million in deemed dividends included in net income available to common shareholders.
- Risks and Contingencies:
- Government Shutdown: The ongoing U.S. federal government shutdown (as of early November 2025) poses risks to economic conditions and FHN's operations.
- Climate Disclosure Rules: Implementation of SEC Climate Disclosure Rules remains uncertain due to ongoing litigation and the SEC's decision to end its defense of the rules.
- Interest Rate Risk: While the yield curve has steepened, FHN remains exposed to interest rate volatility. Simulation analysis indicates NII sensitivity to rate shocks (e.g., -6.0% change in NII for a -200 bps shock).
- Repurchase Liability: FHN maintains a repurchase and foreclosure liability of $14 million related to pre-2009 mortgage origination activities.
Investor Verification Checklist
- Capital Ratios: Verify the Common Equity Tier 1 ratio of 10.96% and ensure it remains above the well-capitalized threshold plus the capital conservation buffer.
- Loan Growth vs. Quality: Confirm the 1% growth in total loans ($63.1 billion) is sustainable while monitoring the slight increase in nonperforming loans to $605 million.
- Expense Volatility: Assess the impact of the $20 million charitable contribution and $10 million Visa derivative expense on future noninterest expense trends.
- Preferred Stock Status: Note the reduction in preferred stock obligations following the Series B redemption and the remaining preferred stock dividends (Series C, E, F).
- Share Repurchases: Track the remaining authorization under the $1 billion common stock purchase program (approx. $312 million remaining as of Sept 30, 2025) and the new $1.2 billion program announced in October 2025.
- Regulatory Environment: Monitor the status of the SEC Climate Disclosure Rules and potential impacts of the ongoing government shutdown on the company's southern U.S. markets.