UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2024

- or -

☐	TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition period from __________ to__________

Commission File Number: 001-15185

(Exact name of registrant as specified in its charter)

TN			62-0803242
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
165 Madison Avenue
Memphis,	Tennessee		38103
(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code:  901-523-4444

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
$.625 Par Value Common Capital Stock	FHN	New York Stock Exchange LLC
Depositary Shares, each representing a 1/400th interest in a share of Non-Cumulative Perpetual Preferred Stock, Series B	FHN PR B	New York Stock Exchange LLC
Depositary Shares, each representing a 1/400th interest in a share of Non-Cumulative Perpetual Preferred Stock, Series C	FHN PR C	New York Stock Exchange LLC
Depositary Shares, each representing a 1/4,000th interest in a share of Non-Cumulative Perpetual Preferred Stock, Series E	FHN PR E	New York Stock Exchange LLC
Depositary Shares, each representing a 1/4,000th interest in a share of Non-Cumulative Perpetual Preferred Stock, Series F	FHN PR F	New York Stock Exchange LLC

Securities registered pursuant to Section 12(g) of the Act:  None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

☒ Yes ☐ No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. 

☐ Yes ☒ No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities

Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such

reports), and (2) has been subject to such filing requirements for the past 90 days.  ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted

pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period

that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller

reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller

reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. 

Large accelerated filer	☒		Accelerated filer	☐		Non-accelerated filer	☐
Smaller reporting company	☐		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for

complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the

effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b))

by the registered public accounting firm that prepared or issued its audit report. ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the

registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-

based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to

§240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

At June 30, 2024, the aggregate market value of registrant common stock held by non-affiliates of the registrant was

approximately $8.4 billion based on the closing stock price reported for that date.

At January 31, 2025, the registrant had 521,769,746 shares of common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE:

Portions of the Proxy Statement to be furnished to shareholders in connection with the Annual Meeting of shareholders

scheduled for April 29, 2025 or provided in an amendment to this Annual Report: Part III of this Report

Auditor Name:KPMG LLPAuditor Location:  Memphis, TNAuditor Firm ID: 185

   

	1	2024 FORM 10-K ANNUAL REPORT

TABLE OF CONTENTS and GLOSSARY

Table of Contents

		Page
Glossary		2
Executive Summary of Principal Investment Risks		4
Forward-Looking Statements		6
Part I
Item 1.	Business	8
Item 1A.	Risk Factors	31
Item 1B.	Unresolved Staff Comments	52
Item 1C.	Cybersecurity	52
Item 2.	Properties	52
Item 3.	Legal Proceedings	52
Item 4.	Mine Safety Disclosures	52
Supplemental Part I Information		53
Part II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	55
Item 6.	[Reserved]	56
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	57
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	104
Item 8.	Financial Statements and Supplementary Data	105
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	211
Item 9A.	Controls and Procedures	211
Item 9B.	Other Information	211
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	211
Part III
Item 10.	Directors, Executive Officers and Corporate Governance	212
Item 11.	Executive Compensation	214
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	215
Item 13.	Certain Relationships and Related Transactions, and Director Independence	217
Item 14.	Principal Accountant Fees and Services	217
Part IV
Item 15.	Exhibits and Financial Statement Schedules	218
Item 16.	Form 10-K Summary	222
Signatures		223

MD&A and Financial Statement References:

In this report: "2024 MD&A" and "2024 MD&A (Item 7)" generally refer to Management’s Discussion and Analysis of Financial

Condition and Results of Operations appearing in Item 7 within Part II of this report; and, "2024 Financial Statements" and

"2024 Financial Statements (Item 8)" generally refer to our Consolidated Balance Sheets, our Consolidated Statements of

Income, our Consolidated Statements of Comprehensive Income, our Consolidated Statements of Changes in Equity, our

Consolidated Statements of Cash Flows, and the Notes to the Consolidated Financial Statements, all appearing in Item 8

within Part II of this report.

   

	2	2024 FORM 10-K ANNUAL REPORT

TABLE OF CONTENTS and GLOSSARY

Glossary

The following is a list of common acronyms and terms used throughout this report:

ACL	Allowance for credit losses
AFS	Available for sale
AIR	Accrued interest receivable
ALCO	Asset/Liability Committee
ALLL	Allowance for loan and lease losses
ALM	Asset/liability management
AOCI	Accumulated other comprehensive income
ASC	FASB Accounting Standards Codification
Associate	Person employed by FHN
ASU	Accounting Standards Update
ATM	Automated teller machine
Bank	First Horizon Bank
BHCA	Bank Holding Company Act of 1956
BOLI	Bank-owned life insurance
C&I	Commercial, financial, and industrial loan portfolio
CAS	Credit Assurance Services
CBF	Capital Bank Financial
CCAR	Comprehensive Capital Analysis and Review
CECL	Current expected credit loss
CEO	Chief Executive Officer
CFPB	Consumer Financial Protection Bureau
CIO	Chief Information Officer
CME	Chicago Mercantile Exchange
CMO	Collateralized mortgage obligations
CODM	Chief Operating Decision-Maker
Company	First Horizon Corporation
Corporation	First Horizon Corporation
CRA	Community Reinvestment Act
CRE	Commercial Real Estate
CRMC	Credit Risk Management Committee
CSIRP	Computer Security Incident Response Plan
DIF	Deposit Insurance Fund
DTA	Deferred tax asset
DTL	Deferred tax liability
EAD	Exposure at default
ECP	Equity Compensation Plan
EPS	Earnings per share
Fannie Mae	Federal National Mortgage Association
FASB	Financial Accounting Standards Board
FDIC	Federal Deposit Insurance Corporation
Federal Reserve	Federal Reserve Board

Fed	Federal Reserve Board
FHA	Federal Housing Administration
FHLB	Federal Home Loan Bank
FHN	First Horizon Corporation
FHNF	FHN Financial; FHN's fixed income division
FICO	Fair Isaac Corporation
First Horizon	First Horizon Corporation
FRB	Federal Reserve Bank or the Federal Reserve Board
Freddie Mac	Federal Home Loan Mortgage Corporation
FTE	Fully taxable equivalent
FTP	Funds transfer pricing
FTRESC	FT Real Estate Securities Company, Inc.
GAAP	Generally accepted accounting principles (U.S.)
GHG	Greenhouse Gas
GNMA	Government National Mortgage Association or Ginnie Mae
GSE	Government sponsored enterprises, in this filing references Fannie Mae and Freddie Mac
HELOC	Home equity line of credit
HFS	Held for sale
HR	Human Resources
HTM	Held to maturity
IBKC	IBERIABANK Corporation
IBKC merger	FHN's merger of equals with IBKC that closed July 2020
ISDA	International Swap and Derivatives Association
IRS	Internal Revenue Service
LCR	Liquidity coverage ratio
LGD	Loss given default
LIBOR	London Inter-Bank Offered Rate
LIHTC	Low Income Housing Tax Credit
LLC	Limited Liability Company
LMC	Loans to mortgage companies
LMI	Low- and moderate-income
LOCOM	Lower of cost or market
LTV	Loan-to-value
MBS	Mortgage-backed securities
MD&A	Management’s Discussion and Analysis of Financial Condition and Results of Operations
NAICS	North American Industry Classification System
NII	Net interest income

   

	3	2024 FORM 10-K ANNUAL REPORT

TABLE OF CONTENTS and GLOSSARY

NIM	Net interest margin
NM	Not meaningful
NMTC	New Market Tax Credit
NOL	Net operating loss
NPA	Nonperforming asset
NPL	Nonperforming loan
NYSE	New York Stock Exchange
OCI	Other comprehensive income
OREO	Other Real Estate Owned
PAM	Proportional amortization method
PCA	Prompt corrective action
PCAOB	Public Company Accounting Oversight Board
PCD	Purchased credit deteriorated financial assets
PCI-DSS	Payment Card Industry Data Security Standard
PD	Probability of default
PM	Portfolio managers
PPNR	Pre-provision net revenue
PPP	Paycheck Protection Program
PSU	Performance Stock Unit
PTNI	Pre-tax net income
RE	Real estate
RM	Relationship managers
ROU	Right-of-use
SAD	Special Assets Department
SBA	Small Business Administration
SEC	Securities and Exchange Commission
SOFR	Secure Overnight Funding Rate
SOX	Sarbanes-Oxley Act of 2002
SVaR	Stressed Value-at-Risk
TD	The Toronto-Dominion Bank
TD Merger Agreement	Merger agreement between FHN, TD, and certain TD subsidiaries, which the parties mutually terminated on May 4, 2023
TD Transaction	The acquisition of FHN by TD contemplated by the TD Merger Agreement
TDFI	Tennessee Department of Financial Institutions
TDR	Troubled Debt Restructuring
TPRM	Third-Party Risk Management
TRUP	Trust preferred loan
UPB	Unpaid principal balance
USDA	United States Department of Agriculture
VaR	Value-at-Risk
VIE	Variable Interest Entities
we/us/our	First Horizon Corporation

   

	4	2024 FORM 10-K ANNUAL REPORT

EXECUTIVE SUMMARY OF PRINCIPAL INVESTMENT RISKS
Table of Contents

Executive Summary of Principal Investment

Risks

This section provides an executive summary of the

principal risks associated with an investment in our equity

or debt securities. Our businesses are complex, and so are

the risks associated with them. This summary is not a

complete statement of risks a prospective or current

investor should consider.

• The Economy. Our businesses and our industry are

heavily entwined with the U.S. economy. We tend to

perform better when economic conditions are

favorable, and our performance tends to be weaker

when the economy is weaker. That relationship can be

quite strong, which can make our income and other key

performance measures volatile, especially when

compared with companies in many other industries. The

economy tends to rise and fall in roughly a cyclical

manner which is difficult to predict, which in turn makes

our performance difficult to predict. For additional

information, see the Cyclicality discussion within Other

Business Information, which begins on page 19, and

Risks from Economic Downturns and Changes which

begins on page 36.

• Credit Loss. Our lending business—a major source of

our revenues—is dependent on our clients being able to

pay us back. That ability often depends on economic

conditions, but many individual factors can be critical as

well. If a client defaults on a loan, generally we will

experience a financial loss. Even if the loan is secured,

our loss from a default often is only reduced, not

eliminated, by collateral supporting the loan.

Accounting rules require us to evaluate current

expected credit loss (CECL) each quarter, booking losses

based on our expectations. That process can result in a

highly volatile pattern of recognizing credit loss each

quarter. For additional information, see: the discussion

captioned CECL Accounting and COVID-19 within the

Significant Business Developments Over Past Five Years

section of Item 1, which begins on page 12; and Credit

Risks beginning on page 38.

• Loan Loss vs Loan Profit. Lending generally is a high-

volume, low-margin business. This means that we often

need the profits from many loans to make up for losses

from one loan. For our earnings to be strong, we need

to hold loan losses to a very low level, which makes our

management of credit quality a critical function for us.

This imbalance between loss and profit can amplify the

potential for volatility in our earnings. For additional

information, see Credit Risks beginning on page 38.

• Interest Rate Conditions. Interest rates and, especially,

the shape of the yield curve, are critical drivers of our

profit margin from lending. If the yield curve is flat—

with long-term rates only slightly higher than short-term

rates—our lending margins shrink, and so does our net

interest income. Interest rate policy is controlled by

federal agencies and by market forces, not by us, and

can change significantly and abruptly, as occurred in

2022 and 2023, when the key agency in the U.S. shifted

to strong tightening policy, raising short-term interest

rates multiple times. Tightening ended in 2023 and

interest rates began to decline in the last half of 2024.

2022's aggressive policy shift caused short-term rates to

rise substantially, and to exceed long-term rates (a so-

called yield curve inversion) many times in 2022 and

during all of 2023 and the first half of 2024. Over half of

our loan portfolio bears variable interest rates

associated with short-term reference rates, which

reacted fairly quickly to the shifts in environment. For

additional information, see: the Monetary Policy Shifts

discussion within Significant Business Developments

Over Past Five Years, which begins on page 12 ; the

Cyclicality discussion within Other Business Information,

which begins on page 19; Risks Associated with

Monetary Events beginning on page 37; Interest Rate

and Yield Curve Risks beginning on page 46; and

discussion under the caption Inflation, Recession, and

Federal Reserve Policy within the Market Uncertainties

and Prospective Trends section of our 2024 MD&A (Item

7), which begins on page 97.

• Funding Balance. In our lending business, we aggregate

money from deposits and borrowings and lend it out at

rates which more than cover our costs. We constantly

must optimize the mix of our deposits and borrowings

to minimize our funding costs.  In addition, we must

balance our overall funding sources (deposits and

borrowings) with our funding needs (lending).

Imbalances tend to hurt our earnings.  If sources are

larger than our lending needs, generally we can cut back

short-term borrowing or invest excess funds in

securities, but our margins can be weaker as a result. If

sources become too small, we might have to forego

profitable lending or increase funding by selling

investments or increasing deposit or borrowing volumes

and costs, or, most likely, we might have to take some

combination of those actions. For additional

information, see Liquidity and Funding Risks beginning

on page 44.

• Deposit Instability. A large portion of bank deposits can

be removed by depositors very quickly. Public

confidence in banks therefore is a key foundation for

the banking business. If deposits are removed quickly by

a large cohort of depositors at the same time due to a

sudden loss of confidence, the resulting "run on the

bank" can cause the bank to become insolvent, as

occurred in 2023 when three large regional U.S. banks

   

	5	2024 FORM 10-K ANNUAL REPORT

EXECUTIVE SUMMARY OF PRINCIPAL INVESTMENT RISKS
Table of Contents

failed after very substantial runs on their deposits. 

Most other regional banks, including our Bank,

experienced significant deposit outflows during this

period, which we countered with a successful deposit

campaign, as public confidence in all but the largest

banks was shaken. While the aftermath of the 2023

bank failures has seen a restoration of public

confidence, future runs always are possible.  For

additional information, see Liquidity and Funding Risks

beginning on page 44.

• Competition. Competition for clients and talent in our

industry is intense and unlikely to abate. Competition

for clients pressures us to make interest rate and other

concessions on lending and on deposits, which reduce

our margins. Competition for revenue-producing talent

is a key method of obtaining new client relationships in

many parts of our industry, and pressures us to increase

compensation expense. For additional information, see

Competition beginning on page 16, and Traditional

Competition Risks beginning on page 31.

• Banking Consolidation. Since the advent of nation-wide

branching in the 1980s, the banking industry has

experienced several waves of substantial consolidation.

In the past twenty years, increasingly sophisticated

technological systems have allowed institutions to

become extremely large while maintaining adequate

client service, and, due to cost efficiencies associated

with scalable technology, have rewarded the largest

institutions disproportionately. These rewards have

incented U.S. banks to grow larger, faster. Consolidation

can abruptly change the competitive environment in

our markets. In addition, when we participate in

consolidating actions, as we did in 2020, typically it

creates internal disruption and expense for a time while

we integrate systems, consolidate branches, and take

other consolidation-related actions. Moreover, in our

industry, the market tends to discount, for a time, the

stock price of banks that engage in major mergers, in

part due to the transaction and integration expenses

associated with those transactions coupled with the risk

that the combination may not achieve management’s

strategic or tactical objectives. For additional

information, see: Significant Business Developments

Over Past Five Years beginning on page 12; the Strategic

Transactions discussion within the Other Business

Information section which begins on page 19; and

Traditional Strategic Risks beginning on page 32.

• Industry Disruption. Technological innovation, and the

associated changes in client preferences, are radically

transforming our industry and how financial services are

delivered to clients. Being a consistent innovation

leader is practically impossible for a bank our size, while

keeping pace is expensive and difficult. Moreover, rapid

innovation has the potential to be destructive of

traditional business models and companies in our

industry, as it has done and is doing in other industries.

For additional information, see Industry Disruption

beginning on page 33.

• Regulated Industry. Our principal businesses are heavily

regulated. Our two primary banking regulators can

examine us, cause us to change our business operations,

and significantly restrict our ability to pursue lines of

business, in ways not applicable to companies in most

other industries. We also have several secondary

regulators, each with significant though less-

encompassing powers. The primary missions of the

regulators are to protect the banking system as a whole,

to protect clients, and to protect the federal

government’s deposit insurance fund and program;

none exists to protect or enhance our profitability or

protect or promote the interests of our investors.

Moreover, regulators are government agencies, and as

such can experience significant policy changes when the

elected branches of government experience such

changes. These policy shifts could result in changes in

our costs and earnings. For additional information, see

Regulatory, Legislative, and Legal Risks beginning on

page 40.

• Security & Technology. Fraud and theft have always

been significant risks for banks; we experience fraud

and theft loss every year. Technology has allowed fraud

and theft risks to grow substantially. Bad actors can

impact us from around the world, day or night, both

directly and through our clients or vendors.

Unfortunately, it is not practical to emphasize security

to the exclusion of other business needs. Typically, the

more a system is built to be robustly secure, the less

that system can be flexible and adaptable. Moreover, a

high-security system can be associated with sub-optimal

user experience (client frustration). For additional

information, see Operational Risks beginning on page 34

and Cybersecurity Risks beginning on page 35.

• Expense Control. Banks in the U.S. are focused on

reducing operating costs as much as possible while

maintaining competitive or superior service. Expense

control is viewed as crucial for long-term success. For

additional information, see Operational Risks beginning

on page 34, and Risks of Expense Control beginning on

page 42.

For a more complete discussion of the risks associated

with our businesses and operations and investment in our

securities, see Item 1A—Risk Factors, beginning on page

31.

   

	6	2024 FORM 10-K ANNUAL REPORT

FORWARD-LOOKING STATEMENTS
Table of Contents

Forward-Looking Statements

This report, including materials incorporated into it,

contains forward-looking statements within the meaning

of the Private Securities Litigation Reform Act of 1995,

Section 27A of the Securities Act of 1933, as amended,

and Section 21E of the Securities Exchange Act of 1934, as

amended, with respect to FHN's beliefs, plans, goals,

expectations, and estimates. Forward-looking statements

are not a representation of historical information, but

instead pertain to future operations, strategies, financial

results or other developments. Forward-looking

statements often use words such as “believe,” “expect,”

“anticipate,” “intend,” “estimate,” “should,” “is likely,”

“will,” “going forward,” and other similar expressions that

indicate future events and trends.

Forward-looking statements are necessarily based upon

estimates and assumptions that are inherently subject to

significant business, operational, economic, and

competitive uncertainties and contingencies, many of

which are beyond our control, and many of which, with

respect to future business decisions and actions (including

acquisitions and divestitures), are subject to change and

could cause our actual future results and outcomes to

differ materially from those contemplated by forward-

looking statements or historical performance. While there

is no assurance that any list of uncertainties and

contingencies is complete, examples of factors which

could cause actual results to differ from those

contemplated by forward-looking statements or historical

performance include:

• global, national, and local economic and business

conditions, including economic recession or

depression;

• the stability or volatility of values and activity in the

residential housing and commercial real estate

markets;

• expectations of and actual timing and amount of

interest rate movements, including the slope and

shape of the yield curve, which can have a significant

impact on a financial services institution;

• market and monetary fluctuations, including

fluctuations in mortgage markets;

• the financial condition of borrowers and other

counterparties;

• the financial condition and stability of major financial

and market participants, including private financial

institutions as well as governments and governmental

agencies;

• competition within and outside the financial services

industry;

• the occurrence of natural or man-made disasters,

pandemics, conflicts, or terrorist attacks, or other

adverse external events;

• effectiveness and cost-efficiency of FHN’s hedging

practices;

• fraud, theft, or other incursions through conventional,

electronic, or other means directly or indirectly

affecting FHN or its clients, business counterparties,

or competitors;

• the ability to adapt products and services to changing

industry standards and client preferences;

• risks inherent in originating, selling, servicing, and

holding loans and loan-based assets, including

prepayment risks, pricing concessions, fluctuation in

U.S. housing and other real estate prices, fluctuation

of collateral values, and changes in client profiles;

• changes in the regulation of the U.S. financial services

industry;

• changes in laws, regulations, and administrative

actions, including executive orders, whether or not

specific to the financial services industry;

• potential claims alleging mortgage servicing failures,

individually, on a class basis, or as master servicer of

securitized loans;

• potential claims relating to participation in

government programs, especially lending or other

financial services programs;

• potential requirements for FHN to repurchase, or

compensate for losses from, previously sold or

securitized mortgages or securities based on such

mortgages;

• changes in accounting policies, standards, and

interpretations;

• evolving capital and liquidity standards under

applicable regulatory rules;

• accounting policies and processes that require

management to make estimates about matters that

are uncertain;

• reputational risk and potential adverse reactions or

changes to business or associate relationships; and

• other factors that may affect future results of FHN.

Any forward-looking statements made by or on behalf of

FHN speak only as of the date they are made, and FHN

assumes no obligation to update or revise any forward-

looking statements that are made in this report or in any

other statement, release, report, or filing from time to

time. Actual results could differ and expectations could

change, possibly materially, because of one or more

factors, including those factors listed above or presented

elsewhere in this report, those factors listed in material

incorporated by reference into this report, and other

factors not listed. In evaluating forward-looking

statements and assessing our prospects, readers of this

report should carefully consider the factors mentioned

   

	7	2024 FORM 10-K ANNUAL REPORT

FORWARD-LOOKING STATEMENTS
Table of Contents

above along with the additional risks and factors discussed

in Items 1, 1A, and 7 of this report, among others. Readers

should also consult any further disclosures of a forward-

looking nature in any subsequent Annual Reports on Form

10-K, Quarterly Reports on Form 10-Q, or Current Reports

on Form 8-K.

   

	8	2024 FORM 10-K ANNUAL REPORT

ITEM 1. BUSINESS
Table of Contents

PART  I

Item 1.Business

Our Businesses

Overview

First Horizon Corporation is a Tennessee corporation. We

incorporated in 1968, and are headquartered in Memphis,

Tennessee. We are a bank holding company under the

Bank Holding Company Act, and a financial holding

company under the Gramm-Leach-Bliley Act. Our common

stock is listed on the New York Stock Exchange under the

symbol “FHN.” At December 31, 2024, we had total

consolidated assets of $82 billion. We provide diversified

financial services through our subsidiaries, principally First

Horizon Bank. The Bank is a Tennessee banking

corporation headquartered in Memphis, Tennessee.

During 2024 approximately 21% of our consolidated

revenues were provided by fee and other noninterest

income, and approximately 79% of revenues were

provided by net interest income.

As a financial holding company, we coordinate the

financial resources of the consolidated enterprise and

maintain systems of financial, operational, and

administrative control intended to coordinate selected

policies and activities, including as described in Item 9A of

Part II.

The Bank

The Bank was founded in 1864 as First National Bank of

Memphis. During 2024, through its various business lines,

including consolidated subsidiaries, the Bank reported

revenues (net interest income plus noninterest income) of

approximately $3 billion. The Bank generated a substantial

majority of First Horizon’s consolidated revenue. At

December 31, 2024, the Bank had $82 billion in total

assets, $66 billion in total deposits, and $63 billion in total

loans (including certain leases, before considering the

allowance for loan and lease losses).

Principal Businesses, Brands, & Locations

Our principal brands at year-end 2024 are summarized in

Table 1.1.

Table 1.1

Principal Businesses & Brands at Year-End

Businesses	Principal Brands
Banking & financial services generally	First Horizon & First Horizon Bank
Fixed income / capital markets	FHN Financial
Mortgage lending	First Horizon Bank
Insurance brokerage & management services	First Horizon Advisors
Wealth management & brokerage services	First Horizon Advisors

At December 31, 2024, First Horizon’s subsidiaries had

over 450 business locations in 24 U.S. states, excluding

off-premises ATMs. Most of those locations were banking

centers. At year-end, the Bank had 416 retail banking

centers in 12 states, as shown in Table 1.2.

Table 1.2

Retail Banking Centers at Year-End

State	#		State	#
Tennessee	137		Arkansas	12
North Carolina	79		South Carolina	10
Florida	76		Virginia	8
Louisiana	56		Texas	7
Alabama	13		Mississippi	4
Georgia	13		New York	1

Many banking centers contain special-service areas such

as wealth management and mortgage lending.

At year-end 2024, First Horizon also had over fifty client-

service offices not physically within banking centers,

including fixed income, home mortgage, wealth

management, and commercial loan offices. The largest

groups of those offices were 25 fixed income offices in 17

states across the U.S. and 7 stand-alone mortgage lending

offices in 5 states. First Horizon also has operational and

administrative offices.

   

	9	2024 FORM 10-K ANNUAL REPORT

ITEM 1. BUSINESS
Table of Contents

Loans

Loan Portfolios

Lending is a major source of revenue for us, and loans are

our largest asset type. Table 1.3 shows our total loans

(including certain leases) at year-end 2024, along with

some details regarding the composition of our loans. Most

of our loans are commercial.

As shown in Table 1.3, our loans are broken into two

major types: commercial and consumer. Each type is

broken into portfolios. Our three major portfolios are:

traditional, unsecured commercial, and financial and

industrial (“C&I”) loans; secured commercial real estate

(“CRE”) loans; and secured consumer real estate loans. A

fourth portfolio consists of consumer credit card and

other consumer debt.

Table 1.3

Loan Types & Portfolios1

Commercial	$48 B	76%
Consumer	15 B	24
Total Loans	$63 B	100%
Commercial Portfolios	% of Type	% of Total
C&I	70%	53%
CRE	30	23
Consumer Portfolios	% of Type	% of Total
Consumer real estate	95%	23%
Credit card/other	5	1

1Dollars and percentages at December 31, 2024.

Geographic Mix

Geographically, a significant majority of our loans

originate from five states: Florida, Tennessee, Texas,

North Carolina, and Louisiana. The geographic dispersion

of our loans varies considerably among our three major

loan portfolios, as shown in Table 1.4.

Table 1.4

Major Loan Portfolios1 by Geography

C&I ($33B)			CRE ($14B)			Cons. RE ($14B)
Tennessee	20%		Florida	26%		Florida	29%
Florida	12		Texas	13		Tennessee	22
Texas	11		N. Carolina	13		Texas	12
N. Carolina	7		Georgia	10		Louisiana	8
California	6		Tennessee	9		N. Carolina	7
Louisiana	6		Louisiana	7		Georgia	6
Georgia	4		All other	22		New York	5
All other	34					All other	11

1Dollars and percentages at December 31, 2024 .

C&I Loans

The C&I portfolio, our largest portfolio by far, was $33

billion at December 31, 2024. Our C&I portfolio has an

industry concentration: about 21% of C&I loans are to

businesses in the financial services industry, which

includes finance and insurance companies and mortgage

lending companies, while 12% of our C&I loans are to

borrowers in the real estate and rental and leasing

industry. The rest of C&I covers a wide range of industries,

as shown in Table 1.5a.

Table 1.5a

C&I Loans1 by Industry/Line of Business

Real estate and rental and leasing (a)	12%
Finance and insurance	11
Loans to mortgage companies	10
Health care and social assistance	8
Wholesale trade	7
Manufacturing	7
Accommodation and food service	7
Retail trade	5
Transportation and warehousing	5
Energy	4
Other C&I	24

  1 Percentages of C&I portfolio at December 31, 2024.

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

CRE Loans

The CRE portfolio was $14 billion at December 31, 2024.

The largest property type within CRE is multi-family, as

shown in Table 1.5b. The next three largest property types

were office, retail, and industrial. At year-end, nearly half

of the office loans were for medical industry office space.

Table 1.5b

CRE Loans1 by Property Type

Multi-family	36%
Office	19
Retail	15
Industrial	15
Hospitality	9
Land/land development	2
Other CRE	4

1 Percentages of CRE portfolio at December 31, 2024.

   

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Consumer Loans

Consumer loans totaled $15 billion at December 31, 2024,

as shown in Table 1.3 above. A substantial majority of

consumer loans consists of home equity loans, mortgages,

and other secured consumer real estate loans.

Further information regarding our loans is provided in

Note 3 beginning on page 135 appearing in our 2024

Financial Statements (Item 8), and under the captions

Analysis of Financial Condition and Asset Quality,

beginning on pages 67 and 70, respectively, of our 2024

MD&A (Item 7).

Deposits

Deposits comprise our largest resource to fund lending.

Deposits overall also tend to be our lowest-cost funding

source. At year-end 2024, we had total deposits of $66

billion. Most of our deposits are held in our commercial,

consumer & wealth banking segment. Table 1.6 provides a

deposit overview at December 31, 2024.

Further information regarding deposits is provided: in

Note 8 beginning on page 152 appearing in our 2024

Financial Statements (Item 8); under the caption Deposits

beginning on page 81 appearing in our 2024 MD&A (Item

7); and in other parts of this report referenced under

Deposits.

Table 1.6

Deposit1 Overview

Client Types	% of Total		Acct Types	% of Total		FDIC Insured Status	% of Total		Source	% of Total
Commercial	55%		Savings	41%		Estimated Insured	59%		Tennessee	37%
Consumer	45		Time deposits	10		Est. Uninsured - Total	41		Florida	18
			Other interest	25		Est. Uninsured - Collateralized	7		N. Carolina	13
			Noninterest	24					Louisiana	12
									All other	20

1Percentages of deposits at December 31, 2024.

Business Segments

Segment Overview

Our financial results of operations are reported through

operational business segments which are not closely

related to the legal structure of our subsidiaries. During

2024, we reorganized our internal management structure

and, accordingly, reclassified our reportable business

segments. Prior to the 2024 reclassification, we operated

through three business segments: (1) regional, (2)

specialty, and (3) corporate. As a result of the 2024

reclassification, our reportable business segments now

include: (1) commercial, consumer & wealth, (2)

wholesale, and (3) corporate. In this report, segment

information for prior periods has been reclassified to

conform with our current segments.

Financial and other additional information concerning our

segments—including information concerning assets,

revenues, and financial results—appears in our 2024

MD&A (Item 7) and in our 2024 Financial Statements

(Item 8), especially in Note 19—Business Segment

Information. Note 19 begins on page 175.

Commercial, Consumer & Wealth and Wholesale

Banking Segments

By far most of our loans and deposits are in the

commercial, consumer & wealth and wholesale banking

segments. Similarly, those segments are the sources of

most of our revenues and expenses. The two segments

create and use financial resources differently, and the

revenues they generate have a very different mix of net

interest income vs. noninterest income. In addition,

commercial, consumer & wealth banking is larger than

wholesale banking by many financial measures. Table 1.7

provides high-level financial information for each of those

two segments, highlighting these points.

Table 1.7

Commercial, Consumer & Wealth (CCW) vs

Wholesale Banking Snapshot

(Dollars in millions)	CCW		Wholesale
2024 Average assets	$59,402		$8,209
2024 Net interest income	2,543		194
2024 Noninterest income	461		230
2024 Pre-tax income	1,429		122

Commercial, Consumer & Wealth and Wholesale Lines

of Business

The principal lines of business in the commercial,

consumer & wealth banking segment are:

• commercial banking (larger business enterprises)

• business banking (smaller business enterprises)

• consumer banking

• private client and wealth management

   

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• asset-based lending

• professional commercial real estate (Prof-CRE)

• equipment finance

• energy finance

• international banking

• healthcare finance

• trucking and transportation finance

• corporate banking

The principal lines of business in the wholesale banking

segment are:

• fixed income/capital markets

• mortgage warehouse lending

• franchise finance

• correspondent banking

• mortgage origination

Geographically, commercial, consumer & wealth banking's

traditional lending and deposit taking activities mainly

serve commercial and consumer clients located in markets

associated with our banking center footprint. Many of the

businesses within wholesale banking, as well as several

specialty lines of business within commercial, consumer &

wealth banking, have much broader geographic reach. For

example, our fixed income business has offices from

Hawaii to Massachusetts and California is listed in Table

1.4 primarily because of wholesale banking's franchise

finance business line.

Revenues and earnings from three of the business lines in

the wholesale banking segment are significantly more

volatile over time than our traditional lending and deposit

taking activities. In addition to being sensitive to economic

conditions generally, those wholesale business lines can

be very strongly impacted or benefited by changes in

interest rates or in the shape of the yield curve. Those

business lines are fixed income/capital markets, mortgage

warehouse lending, and mortgage origination. Because

they can perform well when other business lines are

subdued, and vice-versa, we sometimes refer to these as

our counter-cyclical businesses. While 2023 overall was a

subdued year for these counter-cyclical businesses as

interest rates continued to rise before leveling, and the

yield curve was inverted for the entire year, 2024 saw

improvement as the yield curve flattened in the fourth

quarter and mortgage rates modestly abated from 2023

highs.

Services We Provide

At December 31, 2024, we provided the following services

through our subsidiaries and divisions:

• general banking services for consumers, businesses,

financial institutions, and governments

• fixed income sales and trading; underwriting of bank-

eligible securities and other fixed-income securities

eligible for underwriting by financial subsidiaries; loan

sales; advisory services; and derivative sales

• mortgage banking services

• brokerage services

• correspondent banking

• transaction processing: nationwide check clearing

services and remittance processing

• trust, fiduciary, and agency services

• credit card products 

• equipment finance services

• investment and financial advisory services

• mutual fund sales as agent

• retail insurance sales as agent

Information about the net interest income and

noninterest income we obtained from our largest

categories of products and services appears under the

caption Results of Operations—2024 Compared to 2023

beginning on page 59 of our 2024 MD&A (Item 7).

   

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ITEM 1. BUSINESS
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Significant Business Developments Over Past Five Years

Selected Financial Data Past Five Years

Table 1.8 provides selected data concerning revenues, expenses, assets, liabilities, shareholders’ equity, and certain other

metrics for the past five years.

Table 1.8

SELECTED CONSOLIDATED FINANCIAL DATA

(Dollars in millions; financial condition data shown period-end, as of December 31)

		2024	2023	2022	2021	2020
Net interest income		$2,511	$2,540	$2,392	$1,994	$1,662
Noninterest income		679	927	815	1,076	1,492
Net income available to common shareholders		738	865	868	962	822
Total loans and leases		62,565	61,292	58,102	54,859	58,232
Provision (benefit) for credit losses		150	260	95	(310)	503
Net Charge-offs		112	170	59	2	120
Net interest margin		3.35%	3.42%	3.10%	2.48%	2.86%
Total assets		82,152	81,661	78,953	89,092	84,209
Total deposits		65,581	65,780	63,489	74,895	69,982
Total term borrowings		1,195	1,150	1,597	1,590	1,670
Total liabilities		73,041	72,370	70,406	80,598	75,902
Preferred stock		426	520	1,014	520	470
Total shareholders’ equity (financial statement)		9,111	9,291	8,547	8,494	8,307
Common Equity Tier 1 Capital (regulatory)		7,967	8,104	7,032	6,367	6,110

Priorities & Developments

Over the past five years, our strategic priorities have

focused on:

• targeted and opportunistic expansion of consumer

and commercial banking products and markets;

• targeted and opportunistic expansion of commercial

lending, mainly through strategic and tactical

transactions, talent development, and talent

acquisitions;

• rigorous expense management with continued

investment in revenue generating initiatives;

• managing business units and products with a strong

emphasis on risk-adjusted returns on invested capital;

• providing exceptional client service and experience as

a primary means to differentiate us from competitors;

and

• investment in scalable technology and other

infrastructure to attract and retain clients and to

support expansion.

Examples of our implementation of these priorities

include:

• In July 2020, we completed a merger of equals

transaction with IBERIABANK Corporation and

purchased 30 branches from Truist Bank, making

2020 a transformative year. See IBKC Merger of

Equals in 2020 and 30-Branch Acquisition in 2020 in

this Item below for additional information. In

February 2022, we completed the principal systems

conversion work related to that merger.

• As shown in Table 1.8, the COVID-19 pandemic

caused us to recognize substantial provision for credit

losses in 2020 and reduced our transaction volume

and revenues. See the discussion captioned CECL

Accounting and COVID-19 within Events Impacting

Year-to-Year Comparisons, immediately below. In

2021, a large portion of that 2020 provision expense

was effectively reversed, resulting in a provision

credit for the year.

• The pandemic also resulted in strong deposit growth

in 2020 and 2021, despite interest rates being

extremely low. We believe federal assistance and

stimulus programs in 2020 and early 2021 significantly

bolstered deposits in both years. The Federal Reserve

began quantitative tightening in mid-2022, which

reduced the level of liquidity in the banking system.

This resulted in a smaller deposit base for us and for

the industry as a whole. This development, coupled

with the regional bank crisis in the spring of 2023,

prompted us to launch a successful deposit-gathering

campaign in the second quarter of 2023.

• We have made key talent hires in critical areas

throughout our company, with the main focus on

   

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organically growing economically profitable business

lines inside and outside our traditional markets.

• Throughout this period, we have pruned and adapted

our physical banking center network to reflect long-

term trends in client usage of banking centers and are

making more efficient use of other physical facilities.

Correspondingly, we have expanded and enhanced

our digital banking products and services. These

activities were significantly paused during the period

when the TD Transaction was pending.

• In 2022 interest rates rose aggressively. This improved

our lending margins during the year as we were able

to raise average lending rates faster than average

funding rates. In 2023 the rates and amounts we paid

for deposits rose appreciably, but the impact was

moderated by continued increases in lending rates

along with a decrease in our borrowings. In 2024 both

lending rates and deposit costs began to decline, but

the decline in deposit costs lagged the decline in

lending rates, resulting in a modest decline in our

2024 net interest margin.

• Until 2022, when interest rates in the U.S. began to

rise significantly, lending was strong in certain

wholesale areas, such as loans to mortgage

companies, where demand was strongly stimulated

by low interest rates. Mortgage-related lending and

services fell significantly in 2022 and 2023, driven by

the divestiture of our title services business in the

third quarter of 2022 and continued high interest

rates throughout the period.  This downward trend in

mortgage lending reversed in 2024 as mortgage rates

modestly abated from 2023 highs, even while longer-

term rates remained well above the lows of a few

years ago.

• Similarly, 2022's rising rate environment and

significant financial market volatility negatively

impacted our fixed income and capital markets

business compared to earlier years in this period. That

adverse environment continued throughout 2023. 

Like our mortgage-related businesses, our fixed

income and capital markets business rebounded in

2024, as interest rates declined and the yield curve

flattened after having been inverted throughout 2023

and the first half of 2024.

Events Impacting Year-to-Year Comparisons

Securities Portfolio Restructuring in 2024

In the fourth quarter of 2024, we engaged in a

restructuring of a portion of our investment securities

portfolio, resulting in a $91 million pre-tax loss. While this

action reduced income in 2024, it will improve our

investment portfolio returns over the next few years.

TD Transaction 2022-2023

In February 2022, we agreed to be acquired by TD in a

merger transaction. Our shareholders approved the TD

Transaction in May 2022. In May 2023, after TD failed to

obtain timely regulatory approval, we and TD agreed to

terminate the transaction. See Toronto-Dominion

Transaction below for further information.

Preparation for the consummation of the TD Transaction

resulted in significant noninterest expense in 2022 and

2023 unrelated to the ordinary course of business. TD paid

us a termination fee of $225 million which substantially

increased 2023 noninterest income.  We used $50 million

of that fee to support the communities we serve.

As part of the TD Transaction, in 2022 TD paid us $494

million to purchase shares of our Series G convertible

preferred stock. After the transaction terminated, the

Series G stock was converted into our common stock in

2023 at a conversion price of $25 per common share.

Regional Bank Failures in 2023

Over the weekend of March 11, 2023, the FDIC closed two

large regional banks that had experienced a run on their

deposits. On May 1, 2023, the FDIC closed a third large

regional bank after a slower but extended run on its

deposits. During this period most regional bank stock

prices fell significantly and experienced substantial

volatility.

Although stock price drops and fluctuations do not directly

impact our financial results or position, we took action to

maintain client confidence in our financial stability when

the TD Transaction terminated just a few days after the

third bank failure. Those actions included a significant

deposit-acquisition campaign and a rapid uptick in

marketing efforts. Also, a special FDIC assessment,

prompted by the bank failures and applied to all large and

regional banks in the U.S., was recognized by us as a

significant expense item in 2023.

Stock Purchase Moratorium in 2022-2023

After announcing the TD Transaction in 2022, we halted

our stock purchase program except for tax withholding

related to stock awards. When the TD Transaction

terminated in the midst of market turmoil surrounding

three U.S. regional bank failures, and facing the prospect

of possible new regulatory requirements (stemming from

those failures) which would directly affect our capital, we

continued the moratorium for all of 2023. The moratorium

ended in first quarter 2024.

Gain on Sale of Business

In third quarter of 2022, we sold our title services

business, recognizing a $22 million pre-tax gain.

   

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IBKC Merger of Equals in 2020

In July 2020, we closed our merger of equals with

IBERIABANK Corporation (“IBKC”). IBKC was the parent

company of IBERIABANK based in Lafayette, Louisiana. At

year-end 2019, IBKC had $31.7 billion of total assets—

nearly 75% of our size at that time—and operated over

190 banking centers in 11 states: Louisiana, Texas,

Arkansas, Tennessee, Mississippi, Alabama, Georgia,

Florida, North and South Carolina, and New York. IBKC’s

largest concentrations of banking centers were in

Louisiana and Florida. We and IBKC offered many of the

same financial services before the merger, but IBKC

exceeded us in several areas, most notably in equipment

financing, mortgage, and title services. IBKC shareholders

collectively were issued 243 million First Horizon common

shares (on a net basis).

Under applicable accounting guidance, none of the

income or expense recognized by IBKC prior to the merger

was included in our income or expense for 2020. As a

result, our 2020 operating results consisted of

approximately two quarters of legacy First Horizon alone

plus approximately two quarters of combined First

Horizon and IBKC. In addition, operating results in 2020

were significantly affected by merger-related expenses

and by two significant accounting impacts, described in

Large Accounting Impacts from IBKC Merger below.

30-Branch Acquisition in 2020

In July 2020, we purchased 30 branches in North Carolina

(20), Virginia (8), and Georgia (2) from SunTrust Bank (now

Truist Bank). Those branches are in markets which we did

not serve previously, or in which we did not have a leading

market position. Along with the branch facilities, we

acquired $0.4 billion of related loans and assumed $2.2

billion of deposits.

Large Accounting Impacts from IBKC Merger

Under applicable accounting guidance, closing the IBKC

merger in July 2020 created two substantial impacts on

our operating results for 2020. First, although we were

required to record IBKC’s loans at fair value on the closing

date, we also were required to recognize, as a provision

for credit losses, an estimate of current expected credit

losses for certain acquired loans. A similar process, with

much smaller numbers, occurred for the loans associated

with the 30-branch purchase. The overall incremental

expense, recorded in third quarter 2020, was $147 million.

Moreover, we were required to record, on a preliminary

basis, a nontaxable purchase accounting gain from the

merger of $533 million, driven by the stock market decline

in 2020 associated with the COVID-19 pandemic. The net

result of those two impacts was a $386 million uplift to

our pre-tax income in 2020 unrelated to the ordinary

operation of our businesses.

Expenses related to IBKC Merger

Closing the IBKC merger, integrating the business

operations and systems, and making the changes

necessary to achieve intended cost and other synergies

resulted in substantial noninterest expense, especially in

2020 and 2021.

Low Credit Loss Rates

During this period, our provision expense and net charge-

offs have, for the most part, been lower than historical

norms. Provision expense spiked in 2020 when the very

sudden COVID recession triggered significant upward

revisions in our expected credit losses, and provision

expense was negative in 2021 when a sizeable portion of

the 2020 loss reserves were released as loss expectations

moderated substantially. Net charge-offs during those

years similarly were higher in 2020 and lower in 2021,

though the deviations from the norm were much less

severe. If 2020 and 2021 are viewed together as a single

period, annual provision expense and net charge-offs

were similar to levels in 2022. When loan losses are low,

differences from year to year can be idiosyncratic, driven

by just one or a few clients. In 2023, loss levels increased

but continued to be low in general; however, a single

commercial loan default drove an uptick in provision

expense and net charge-offs for the year.

CECL Accounting and COVID-19

Starting in 2020, accounting guidance changed, requiring

us to recognize “current expected credit loss” on all loans.

The new guidance had the effect of accelerating,

compared to prior guidance, the recognition of provision

expense at times when general economic conditions

deteriorate in a rapid manner. Also in 2020, government

and public reaction to the COVID-19 pandemic caused

substantial and rapid, and previously unexpected,

business disruption and economic deterioration. Those

events substantially changed our expectations for future

credit loss and, accordingly, our provision was significantly

elevated in 2020.

In 2021, we recognized net provision credit (negative

expense) in the year overall, as a portion of credit loss

accrued in 2020 was effectively reversed and underlying

credit loss trends remained modest in most portfolios. In

2022 our provision expense and underlying credit loss

trends returned to a more normal pattern.

PPP

In 2020, the U.S. government created a temporary

Paycheck Protection Program, or PPP, in response to the

COVID-19 pandemic. The PPP allowed qualifying

employers to take out qualifying bank loans that were

guaranteed by the federal government. The loans later

were forgiven, often within a year, with the bank made

whole by the program. The program ended in 2021. Our

PPP revenues were approximately $122 million in 2021,

but only $21 million in 2022.

   

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Fixed Income Volatility

In 2020 and 2021 moderate market volatility and the

downward direction of interest rates resulted in much

higher trading volume and noninterest income in our fixed

income business. During most of 2022 the Federal Reserve

aggressively raised rates, resulting in a significant fall-off in

fixed income revenues, which continued in 2023. In 2024,

the Federal Reserve began reducing interest rates, cutting

rates by 50 basis points in September and by 25 basis

points in both November and December. This reduction in

rates resulted in increased trading volume and noninterest

income in our fixed income business for 2024. See the

Fixed Income discussion under Cyclicality within the Other

Business Information section of this Item, which begins on

page 19, for additional information.

Monetary Policy Shifts

Interest rates were low by historical standards in the first

two years of this five-year period and generally fell during

those years. This environment lowered our net interest

margin in 2020 and 2021. Net interest margin is a measure

of the profit we make on loans and other earning assets in

relation to our cost of deposits and other funding sources.

Because funding costs cannot realistically fall below zero,

the very low rate environment during 2020-21 resulted in

historically low net interest margin levels for us.

During much of 2021, the Federal Reserve kept short-term

rates low and maintained an asset-buying program

intended to put downward pressure on long-term rates. In

2022, the Federal Reserve began to raise short-term rates

in large (as much as 75 basis point) moves and ceased its

asset-buying program. This was in reaction to price

inflation experienced in the U.S. during much of 2021 and

in 2022. In 2023 short-term rate increases slowed

substantially and then stopped entirely, while long-term

rates rose and then fluctuated.  The Federal Reserve

began reducing short-term rates in the second half of

2024, but despite these reductions, long-term rates have

remained well above the lows of a few years ago.

During the last half of 2022, all of 2023 and the first half

2024, the traditional two-year/ten-year yield curve for

U.S. Treasury debt was inverted, meaning the two-year

rate exceeded the ten-year. Historically, inversion is not

common, and extended periods of inversion are quite

rare. Although several factors likely contributed to the 

inversion during this period, we believe a key factor in this

instance, especially in 2023 and the first half of 2024, was

that markets tried to anticipate when, and how

aggressively, the Federal Reserve would start cutting

short-term rates in order to avoid or mitigate a recession.

The yield curve steepened by the end of 2024 as the

Federal Reserve began reducing short-term rates in the

latter portion of the year.  Our net interest margin

improved in 2022 and, despite the inversion, improved

again in 2023, but declined modestly in 2024.

Additional information concerning monetary policy and

changes to it appears: within the Effect of Governmental

Policies and Proposals section of Item 1 beginning on page

30; under the caption Risks Associated with Monetary

Events beginning on page 37 within Item 1A; and under

the caption Inflation, Recession, and Federal Reserve

Policy within the Market Uncertainties and Prospective

Trends section of 2024 MD&A (Item 7), which begins on

page 97.

Mortgage-Related Businesses

We lend to mortgage lending companies, we originate

mortgage loans, and (until 2022) we provided title and

related services, all of which depend significantly on new

and refinanced home mortgage activity. Lending to

mortgage companies has been a significant business for us

in all five years shown in Table 1.8; title and related

services were significant for us in 2020, 2021, and 2022.

All three mortgage-related businesses benefited

substantially from the low interest rate environment that

ended in 2022. All our remaining mortgage-related

businesses were adversely impacted when rates rose in

2022. Mortgage-related businesses rebounded in 2024, as

those businesses attracted new clients, existing clients

increased their lines of credit, and peers exited the

business.

Significant Trends Past Five Years

Noteworthy trends during these five years included:

• Net interest margin declined from 2020 to 2021,

though net interest income rose in 2021 as a result of

increased average loan balances following the 2020

IBERIABANK merger. Net interest income expanded

again in 2022 and 2023 as margins improved with the

rising-rate environment, and loan growth continued. 

Both net interest income and net interest margin

declined modestly in 2024, driven largely by increased

deposit costs for the first 7 months of the year.

• Noninterest income declined in 2021 largely driven by

a $533 million nontaxable purchase accounting gain

from the IBERIABANK merger which was included in

2020 noninterest income, partially offset by a

substantial increase in noninterest income following

the merger, especially in relation to consumer

mortgage originations and related services, and by

strong fixed income revenues. The rising rates in 2022

negatively impacted mortgage and fixed income

revenues in 2022 and in 2023. The uptick in 2023's

noninterest income was driven by the fee paid to FHN

when the TD Transaction terminated.  Noninterest

income declined in 2024 due to the merger

termination fee included in 2023 and a pre-tax loss

related to the restructuring of our investment

   

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securities portfolio, partially offset by increased fixed

income and mortgage revenues related to interest

rate declines in the last half of 2024.

• Deposit growth in 2021 was driven by deposits of

proceeds of PPP loans and expansive monetary policy,

as well as by organic growth in deposits from core

banking clients. Deposits in 2022 fell as the PPP

impact receded and competitive pricing (rate)

pressures increased. Deposits grew again in 2023 as a

result of a successful deposit acquisition campaign,

but leveled off in 2024 as deposit campaign

promotional rates expired and short-term interest

rates declined.

Toronto-Dominion Transaction

On February 27, 2022, FHN entered into an Agreement

and Plan of Merger (the “TD Merger Agreement”) with

The Toronto-Dominion Bank, a Canadian chartered bank

(“TD”) and certain TD subsidiaries. Under that agreement,

TD was to acquire FHN for an all-cash purchase price of

$25 per FHN common share, with the price modestly

increasing if the transaction closed later than a certain

date.

On February 9, 2023, FHN and TD agreed to extend the

outside date for the transaction to close until May 27,

2023. Subsequent to the extension, TD informed FHN that

TD did not expect the necessary regulatory approvals to

be received in time to complete the transaction by May

27, 2023. On May 4, 2023, FHN and TD agreed to

terminate the transaction. 

Exited Businesses

Over the past five years, we have focused primarily on

traditional lending and deposit taking to commercial and

consumer clients and on the specialty lines of businesses

within our commercial, consumer & wealth and wholesale

banking segments. We have partially or fully exited some

smaller businesses during those years. Exited businesses

are managed in our corporate segment.

Competition

In all aspects of the businesses in which we engage, we

face substantial competition from banks doing business in

our markets as well as from savings and loan associations,

credit unions, other financial institutions, consumer

finance companies, trust companies, investment

counseling firms, money market and other mutual funds,

insurance companies and agencies, securities firms,

mortgage banking companies, hedge funds, and other

firms offering financial products or services.

Banking Competition

Our traditional lending and deposit taking businesses

primarily compete in those areas within the southern U.S.

where we have banking center locations, summarized in

Table 1.2. However, competition in our industry is

trending away from the traditional geographic footprint

model. That trend is happening throughout the industry,

but the rate of change is highly uneven among different

types of clients, products, and services. In our company,

that trend is most evident in the specialty lines of business

that comprise our wholesale banking business, as well as

the specialty lines included in commercial, consumer &

wealth banking (such as asset-based lending, commercial

real estate, and equipment finance).

Our specialty lines of business serve both consumer and

commercial clients. The consumer businesses remain

strongly linked to our physical banking center locations,

even as our delivery of financial services to consumers is

increasingly focused on popular non-physical delivery

methods, such as online and mobile banking. Online and

mobile banking have contributed to a decline in banking

center usage, but not (so far) an erosion of the link

between banking center versus consumer client location.

Increasingly, however, consumers are able to manage,

through a single institution, their financial accounts at

multiple institutions. Cross-institutional management

features may contribute to a de-linking of consumers to

physical banking center networks.

Our commercial businesses, especially our specialty lines

of business, also have a geographic linkage, but it is

weaker. Some areas of specialty lending, such as franchise

finance, mortgage warehouse lending, asset-based

lending, and certain other specialty businesses (see Fixed

Income Competition below) are multi-regional or national

in scope rather than being heavily centered on banking

center locations.

Key traditional competitors in many of our markets

include Bank of America N.A., Fifth Third Bank National

Association, First-Citizens Bank & Trust Company ( dba

First Citizens Bank), Hancock Whitney Bank, Huntington

National Bank, JPMorgan Chase Bank National Association,

Regions Bank, Pinnacle Bank, PNC Bank National

   

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Association, Synovus Bank, Truist Bank, and Wells Fargo

Bank N.A., among many others including many community

banks and credit unions.

A number of recent technologies created or operated by

non-banks have been integrated into the financial systems

used by traditional banks, such as the evolution of ATM

cards into debit/credit cards and the evolution of debit/

credit cards into smart phones. These sorts of

incrementally evolutionary technologies often have

expanded the market for banking services overall while

siphoning a portion of the revenues from those services

away from banks. Prior methods of delivering those

services were disrupted, but often at a pace which all but

the weakest banks could accommodate.

Recently, some evolutionary pressures have arisen which

may prove to be less incremental and more disruptive. For

example, in financial planning and wealth management,

companies that are not traditional banks, including both

long-established firms and new ones, have developed

highly interactive systems and applications. These services

compete directly with traditional banks in offering

personal financial advice. The low-cost, high-speed nature

of these “robo-advisor” services can be especially

attractive to younger, less-affluent clients and potential

clients. We and other traditional banks offer similar

services, but doing so risks cannibalizing traditional

business models for these services.

In recent years, certain financial companies or their

affiliates that traditionally were not banks have been able

to compete more directly with the Bank for deposits and

other traditional banking services and products. The trend

of increasing fluidity across traditional boundaries is likely

to continue. Non-traditional companies competing with us

for traditional banking products and services include

investment banks, brokerage firms, insurance company

affiliates, peer-to-peer lending arrangers, non-bank

deposit acceptors, companies offering payment

facilitation services, and extremely short-term consumer

loan companies.

Competition for clients related to traditional and specialty

banking products and services is most pronounced in rate

pricing (loan rates, loan spreads, and deposit rates),

services pricing, scope of services offered, quality of

service, convenience, and ease of use for self-service areas

such as online and mobile banking. Since 2022, rate

pricing competition for deposits has been more intense

than had been true in recent earlier years.

Fixed Income Competition

Our fixed income business, which is part of our wholesale

banking segment, serves institutional clients, broadly

segregated into depositories (including banks, thrifts, and

credit unions) and non-depositories (including money

managers, insurance companies, governmental units and

agencies, public funds, pension funds, and hedge funds).

Both client groups are widely dispersed geographically,

predominantly within the U.S. We have many competitors

within both groups, including major U.S. and international

securities firms as well as numerous regional and local

firms.

Additional Information About Competition

For additional information on the competitive position of

FHN and the Bank, refer to the General subsection above

within this Item 1. Also, refer to the subsections entitled

Supervision and Regulation and Effect of Governmental

Policies, both of which are relevant to an analysis of our

competitors. Due to the intense competition in the

financial services industry, we can make no representation

that our competitive position has or will remain constant,

nor can we predict how it may change in the future.

   

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Human Resources Management

Firstpower Culture

Our 160-year history is rooted in our people-focused

culture, centered around teamwork and collaboration to

achieve best in class results. Everything we do is aligned

with our Purpose, Core Values and Commitment, holding

ourselves to the highest standards of ethical conduct and

operational excellence.

Our Purpose: To help our clients unlock their full potential

with capital and counsel.

Our Core Values:

• Put Clients First – Go above and beyond to listen,

understand and solve the client’s needs. Follow through

and exceed expectations every step of the way.

• Care About People – Treat others with respect and

dignity. Foster a culture of collaboration. Demonstrate

kindness and empathy for all.

• Commit to Excellence in Everything We Do – Conduct

business with professionalism and dignity. Embody a

“can do” spirit that gets results for our clients.

• Expand Access—Make it easy to work and invest with

us.

• Foster Team Success – Measure wins in terms of “we”

not “me.” Take pride in company success. Be invested in

a shared vision for future growth.

Commitment: As teammates and as individuals, we must

own the moment.  We listen, understand and deliver.

Continuously adapting to the changing needs and

expectations of our workforce remains a priority to ensure

we attract and retain top talent, have a highly engaged

workforce and are well positioned to serve our associates,

clients and communities and shareholders.

We strive to offer a workplace in which our associates feel

valued, motivated and empowered to grow and excel.  In

addition to competitive health care benefits, wellness

programs and parental and care-giver support, we offer

professional development opportunities through

mentoring and career development programs. Associates

can actively engage with their colleagues at work and be

involved in the community in a variety of ways, including

through volunteerism and by participating in our

numerous associate resource groups.

We regularly communicate through a variety of channels

and seek input through formal surveys and through the

Firstpower Council, a group of associates representing

various areas of the company that provide direct feedback

on opportunities to enhance our culture and

organizational effectiveness. In 2024, we launched HR

Help, a new associate self-service platform, providing

detailed information designed to broaden the knowledge

and support of the total health of every associate.

Year-End Statistical Information

At December 31, 2024*:

• First Horizon had 7,252 associates, or 7,155 full-time-

equivalent associates and 97 part-time equivalent

associates, not including contract labor for certain

services:

◦ 65% white, 20% African American, 9% Hispanic, 3%

Asian, and 2% other races or ethnicities

◦ 62% female and 38% male

◦ 4% had disabilities

• Of those, First Horizon had 1,230 corporate managers:

◦ 74% white, 14% African American, 7% Hispanic, 2%

Asian, and 2% other races or ethnicities

◦ 54% female and 46% male

◦ 2% had disabilities

• 37 members of the CEO's Operating Committee

(composed of the CEO and leaders from across the

organization):

◦ 84% white, 11% African American, 0% Hispanic, 5%

Asian, and 0% other races or ethnicities

◦ 46% female and 54% male

__________

*Data compiled from information provided by associates. Percentages

may not add to 100% due to rounding.

   

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Other Business Information

Strategic Transactions

An element of our business strategy is to consider

acquisitions and divestitures that would enhance long-

term shareholder value. Significant acquisitions and

divestitures which closed during the past five years are

described in Significant Developments over the Past Five

Years beginning on page 12 of this report.

The most significant transactions in the past five years are

our merger of equals with IBKC and our 30-branch

purchase from Truist, both in 2020. IBKC’s assets

comprised roughly three-sevenths of our combined assets

immediately after closing in July 2020. We completed

systems integration for the IBKC merger in February 2022.

Subsidiaries

FHN’s consolidated operating subsidiaries at

December 31, 2024 are listed in Exhibit 21. Technical and

regulatory details follow:

• The Bank is supervised and regulated as described in

Supervision and Regulation in this Item below.

• The Bank is a government securities dealer. The FHN

Financial division of the Bank is registered with the

SEC as a municipal securities dealer. The FHN

Financial Municipal Advisors division of the Bank is

registered with the SEC as a municipal adviser.

• Martin & Company, Inc. and First Horizon Advisors,

Inc. are registered with the SEC as investment

advisers.

• First Horizon Advisors, Inc. and FHN Financial

Securities Corp. are registered as broker-dealers with

the SEC and all states where they conduct business

for which registration is required.

• First Horizon Insurance Services, Inc. and FHIS, Inc. are

licensed as insurance agencies in all states where they

do business for which licensing is required.

• First Horizon Advisors, Inc. is licensed as an insurance

agency in the states where it does business for which

licensing is required for the sale of annuity products.

• Our financial subsidiaries under the Gramm-Leach-

Bliley Act are: FHIS, Inc.; FHN Financial Securities

Corp.; First Horizon Advisors, Inc.; First Horizon

Insurance Agency, Inc.; and First Horizon Insurance

Services, Inc.

Client Concentration

Neither we nor any of our significant subsidiaries is dependent upon a single client or very few clients.

Calendar-Year Seasonality

We do not experience material seasonality. We do

experience seasonal variation in certain revenues,

expenses, and credit trends. Historically, these variations

have somewhat increased certain expenses and

diminished certain revenues for the consumer,

commercial & wealth and wholesale banking segments,

principally in the first quarter each year. In addition, we

experience seasonal variation in certain asset and liability

balances, principally in the fourth quarter (consumer

mortgages, commercial lending related to consumer

mortgages, and certain associate-related reserves) and

first quarter (consumer mortgages and commercial

lending related to consumer mortgages).

Cyclicality

Banking

Financial services facilitate commercial and consumer

economic activities in critical ways. In many key respects,

modern financial services make modern types and

volumes of economic activity possible. Put simply, we do

well when our clients do well, and vice-versa. As a result,

our banking business is broadly and strongly dependent

on the size and strength of the U.S. economy.

Generally, when the U.S. economy is in an expansionary

phase of the business cycle, our loan balances rise, income

from lending tends to rise (assuming static interest rates

and margins), credit losses tend to fall, and fee income

tends to increase. In a contracting phase, those patterns

tend to reverse. The impact of those factors on our

operating results can be substantial, especially if they

consistently move up or down at the same time.

Our traditional banking businesses are highly dependent

on the level of interest rates, whether federal monetary

policy is easing or tightening, and on the shape of the

interest rate yield curve. These factors also are cyclical,

   

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and are related in complex ways with the business cycle

mentioned above.

These factors, and their impacts on us, often are mixed

rather than consistently positive or negative. For example:

low interest rates reduce the interest income we earn,

reduce our costs of funding, tend to stimulate economic

activity and loan growth, and, through lower debt service,

tend to ease financial pressure on clients, reducing default

risk. If the yield curve remains relatively steep, with long-

term interest rates noticeably higher than short-term

rates, our net interest margin will tend not to be

significantly compressed by the lower rate environment,

since lower short rates will keep our funding costs down

while higher long rates will support the rates we can

charge on lending. But if rates fall low enough (as they did

in 2020-21), the yield curve will flatten and our margins

will suffer. Moreover, the Federal Reserve tends to lower

rates in response to, or to avoid, a weakening economy.

Economic weakness tends to diminish client borrowing

and other activities which benefit our performance.

Further information on these topics is presented: within

Item 1A (which begins on page 31), in Risk from Economic

Downturns and Changes, Risks Associated with Monetary

Events, Liquidity and Funding Risks, and Interest Rate and

Yield Curve Risks; and, within 2024 MD&A (Item 7),

Interest Rate Risk Management (page 89), and Market

Uncertainties and Prospective Trends (page 97).

Fixed Income

Our fixed income and capital markets business, reported

as part of our wholesale banking segment, is significantly

affected by interest rate cycles which, in turn, are affected

by general economic and business cycles.

In broad terms, the typical impact of Federal Reserve

interest and monetary policy on our fixed income business

is summarized in Table 1.9.

Table 1.9

Typical Impact of Fed Policy on

Fixed Income Performance

	Federal Reserve Policy Phase
	Tightening	Neutral	Easing
Fixed Income Performance Tends to be	Weaker	Average	Stronger

“Tightening” can include actions by the Federal Reserve to

raise short-term interest rates, push long-term rates up,

tighten credit, shrink the money supply, and decelerate

economic activity. “Easing” can include actions by the

Federal Reserve to lower short-term interest rates, push

long-term rates down, loosen credit, expand the money

supply, and accelerate economic activity. Expectations of

policy actions can have impacts similar to the actions

themselves.

In terms of tightening vs. easing, the Federal Reserve

policy phase sometimes is clearly known, but sometimes is

not. Although Federal Reserve actions at a given time can

consistently support one phase, often they are a mix. For

example, the Federal Reserve may want to flatten the

yield curve by raising short-term rates while pushing long-

term rates down, or steepen the curve by taking the

opposite actions. Complicating any forecast, the Federal

Reserve can directly affect short-term rates but can only

influence long-term rates, which are market-driven and

which can defy the Federal Reserve's intentions. Also,

major exogenous factors, such as the COVID-19 pandemic,

can significantly impact the capital markets and the

performance of our fixed income business. In broad terms,

these relationships are summarized in Table 1.10.

Table 1.10

Key Drivers of

Fixed Income Performance

Driver	If Driver Is:	FI Revenues Tend to Be:
Interest rates	Rising/up	Lower
	Falling/down	Higher
Market volatility	Extreme (low or high)	Lower
	Moderate	Higher
Yield curve	Flat or Inverted	Lower
	Steep	Higher
Credit spreads	Tighter	Lower
	Wider	Higher
Depository Liquidity	Lower	Lower
	Greater	Higher
Economy outlook	Positive	Lower
	Negative	Higher

In many circumstances these drivers deliver mixed

impacts on fixed income performance, with some pushing

higher while others push lower, or with some drivers

pushing weakly while others are stronger. If most or all

drivers strongly push in the same direction at the same

time, fixed income performance usually is strongly

impacted. Revenue levels in a strongly “higher” year can

be more than double what they are in a strongly “lower”

year. As a result, fixed income performance can be highly

variable from year to year.

Mortgage-Related Businesses

The strength or weakness of consumer mortgage lending

activity in the U.S. impacts two businesses of ours:

mortgage origination and related services, and

commercial lending to other mortgage lenders.

Mortgage lending activity is strongly linked to interest rate

cycles. Activity tends to be inversely related to prevailing

mortgage rates: when rates are high, home-buying and

refinancing decrease, and when rates are low, home-

buying and refinancing increase. Moreover, expectations

about near-term future mortgage rates can accelerate or

   

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ITEM 1. BUSINESS
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delay those impacts, as borrowers rush to avoid future

rate increases or wait for future rate decreases.

Market Outlook

The most important market factors in 2025 for FHN likely

will be (i) whether U.S. economic growth accelerates in

2025, and (ii) whether the Federal Reserve continues

implementing short-term rate decreases, and, if so, the

number, timing and magnitude of any rate decreases.

Resumption of rising prices could prompt the Federal

Reserve to resume short-term rate increases which, in

turn, could decrease economic growth or increase the risk

of a recession.

Additional information concerning market uncertainties

and trends appears in Market Uncertainties and

Prospective Trends within 2024 MD&A (Item 7) beginning

on page 97, especially under the caption Inflation,

Recession, and Federal Reserve Policy.

Other Business Information Associated with this Report

For additional information concerning our business, refer to 2024 MD&A (Item 7) beginning on page 57.

Business Information External to this Report

Our current primary internet address is

www.firsthorizon.com . A link to the Investor Relations

section of our internet website appears near the bottom

of the home page of our website. Near the top of the

Investor Relations homepage there is a "SEC Filings" link in

the banner. Clicking that link makes available to the

public, free of charge, our annual reports on Form 10-K,

quarterly reports on Form 10-Q, current reports on Form

8-K, proxy statements, and amendments thereto as soon

as reasonably practicable after we file such material with,

or furnish such material to, the Securities and Exchange

Commission. Additional information regarding materials

available on our website is provided in Item 10 of this

report beginning on page 212. No information external to

this report and its exhibits, unless specifically noted

otherwise, is incorporated into this report.

Supervision and Regulation

Scope of this Section

This section describes certain of the material elements of

the regulatory framework applicable to bank and financial

holding companies and their subsidiaries, and to

companies engaged in securities and insurance activities.

It also provides certain specific information about us. To

the extent that the following information describes

statutory and regulatory provisions, it is qualified in its

entirety by express reference to each of the particular

statutory and regulatory provisions. A change in applicable

statutes, regulations, or regulatory policy may have a

material effect on our business.

Overview

The Corporation

First Horizon Corporation is a bank holding company and

financial holding company within the meaning of the Bank

Holding Company Act of 1956, as amended (the “BHCA”),

and is registered with the Federal Reserve. We are subject

to the regulation and supervision of, and to examination

by, the Federal Reserve under the BHCA. We are required

to file with the Federal Reserve annual reports and such

additional information as the Federal Reserve may require

pursuant to the BHCA.

A bank holding company that is not a financial holding

company is limited to engaging in “banking” and activities

found by the Federal Reserve to be “closely related to

banking.” Eligible bank holding companies that elect to

become financial holding companies may affiliate with

securities firms and insurance companies and engage in a

broader range of activities that are “financial in nature.” 

See Financial Activities other than Banking within this

Supervision and Regulation discussion below.

The Federal Reserve may approve an application by a bank

holding company to acquire a bank located outside the

acquirer’s principal state of operations without regard to

whether the transaction is prohibited under state law,

although state law may still impose certain requirements.

See Interstate Branching and Mergers and Community

Reinvestment Act (“CRA”), both within this Supervision

and Regulation discussion below.

The Tennessee Bank Structure Act of 1974, among other

things, prohibits (subject to certain exceptions) a bank

holding company from acquiring a bank for which the

home state is Tennessee (a “Tennessee bank”) if, upon

consummation, the company would directly or indirectly

control 30% or more of the total deposits in insured

depository institutions in Tennessee. As of June 30, 2024,

   

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the FDIC reports that the Bank held approximately 13% of

such deposits.

The Bank

First Horizon Bank, our most significant subsidiary, is a

Tennessee banking corporation subject to the regulation

and supervision of, and to examination by, the TDFI. In

addition to general supervision and examination powers,

the TDFI has the power to approve mergers with the Bank,

the Bank’s issuance of preferred stock or capital notes, the

establishment of banking centers, and many other

corporate actions.

The Bank has chosen to be a member of the Federal

Reserve.  As a result, the Federal Reserve is the Bank’s

primary federal regulator. As a member, the Bank must

buy and hold stock in its district Federal Reserve Bank

equal to 6% of the Bank’s capital stock and surplus. The

Bank is paid a dividend on its investment at a rate which

varies with ten-year U.S. Treasury rates, capped at 6%.

The Bank cannot sell its investment in Federal Reserve

Bank stock, and the investment provides the Bank with no

control over the Federal Reserve System.

Tennessee law requires the Bank, as a member of the

Federal Reserve, to comply with federal capital and many

other regulatory requirements in lieu of, or sometimes in

addition to, state requirements. For that reason, this

Supervision and Regulation section focuses on federal

requirements for many topics related to the Bank,

mentioning state requirements only where significant.

The Bank is insured by, and subject to regulation by, the

FDIC and is subject to regulation in certain respects by the

CFPB. The Bank is also subject to various requirements

and restrictions under federal and state law, including

requirements to maintain reserves against deposits,

restrictions on the types and amounts of loans that may

be made and the interest that may be charged, limitations

on the types of investments that may be made, activities

that may be engaged in, and types of services that may be

offered. Various consumer laws and regulations also affect

the operations of the Bank. In addition, several of the

Bank’s subsidiaries are regulated separately, as discussed

in Subsidiaries within this Item 1 under the Other Business

Information discussion above, which begins on page 19 .

In addition to the impact of regulation, commercial banks

are affected significantly by the actions of the Federal

Reserve as it attempts to control interest rates, money

supply, and credit availability in order to influence the

economy. Also, the Bank and certain of its subsidiaries are

prohibited from engaging in certain tie-in arrangements in

connection with extensions of credit, leases or sales of

property, or furnishing products or services.

The regulatory framework governing banks and the

financial industry is intended primarily to protect

depositors, the Federal Deposit Insurance Fund, and the

stability of the financial system, not to protect our Bank or

our security holders.

Regulatory Tiers Based on Asset Size

Many rules dealing with critical regulatory topics divide

banks into tiers based largely or entirely on asset size.

Different topics have different cut-off points for the tiers.

Within each topic, different rules apply to the different

tiers.

Cut-off points vary significantly. However, as a rough

generalization, for many regulatory topics the critical cut-

off points are $10 billion, $100 billion, $250 billion, and

$700 billion. Companies with less than $10 billion are less

regulated in several important ways than we are, and

companies with $250 billion or more are regulated much

more severely in many important ways than we are. As a

result, under current law, compliance requirements, costs,

and restrictions grow with size. While compliance

requirements tend to change abruptly as a company

crosses to the next tier, companies in the middle tiers, like

FHN, may incur growing portions of the costs related to

the next compliance tier, as they near the next regulatory

threshold.

The remainder of this Supervision and Regulation

discussion focuses primarily on rules which apply to FHN

based on our current asset size.

Large-Bank Supervision Risk Categories

Federal regulators have established four risk-based

categories for applying enhanced prudential standards

(enhanced for larger banks). Category I applies to the

global systemically important companies. Categories II, III,

and IV apply (with certain exceptions) to institutions with

total consolidated assets of at least $700 billion, $250

billion, and $100 billion, respectively. Currently, we and

the Bank are below Category IV’s floor and therefore,

generally, we are not subject to enhanced prudential

standards.

As a practical matter, as we approach $100 billion, we

have to prepare for Category IV compliance. Doing that

requires us to invest in systems and staffing. As a result, a

portion of the compliance costs associated with Category

IV status are borne even before we reach the Category IV

threshold.

   

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Also, Category IV compliance requirements are proposed

to be expanded, but whether those proposals will be

adopted, or their final form if adopted, remains uncertain.

If adopted, compliance costs and restrictions would

increase substantially.

Payment of Dividends

First Horizon Corporation is a legal entity separate and

distinct from First Horizon Bank and other subsidiaries.

Our principal source of cash flow, including cash flow to

pay dividends on our stock or to pay principal (including

premium, if any) and interest on debt securities, is

dividends from the Bank. There are statutory and

regulatory limitations on the payment of dividends by the

Bank to us, as well as by us to our shareholders.

The Corporation

Under Tennessee corporate law, we are not permitted to

pay cash dividends if, after giving effect to such payment,

we would not be able to pay our debts as they become

due in the usual course of business or our total assets

would be less than the sum of our total liabilities plus any

amounts needed to satisfy any preferential rights if we

were dissolving. In addition, in deciding whether or not to

declare a dividend of any particular size, our Board must

consider our current and prospective capital, liquidity, and

other needs, including the needs of the Bank which we are

obligated to support.

The Bank

Under Tennessee corporate law, the Bank (like the

Corporation, discussed above) may not pay a dividend if

the Bank would not be able to pay its debts when due or if

the Bank’s assets would be inadequate, in a dissolution, to

pay liabilities and preferential rights. Similarly, the Bank’s

Board must consider current and prospective needs in

making a decision to declare a dividend.

In addition, in order to pay cash dividends, the Bank must

obtain the prior approval of the Federal Reserve and the

TDFI Commissioner if the total of all dividends declared by

the Bank’s board of directors in any calendar year exceeds

the total of (i) the Bank’s retained net income for that year

plus (ii) the Bank’s retained net income for the preceding

two years, less certain required capital transfers, as

applicable. Below that ceiling, approval generally is not

required (but see Other Factors Affecting Dividends

immediately following this discussion). Applying the

dividend restrictions imposed under applicable federal

and state rules, the Bank’s total amount available for

dividends, without obtaining regulatory approval, was

$374 million at January 1, 2025. The application of those

restrictions to the Bank is discussed in more detail in the

following sections, all of which is incorporated into this

Item 1 by reference: under the caption Liquidity Risk

Management in our 2024 MD&A (Item 7) beginning on

page 93 of this report; and under the caption Restrictions

on dividends in Note 12—Regulatory Capital and

Restrictions of our 2024 Financial Statements (Item 8),

beginning on page 157.

Other Factors Affecting Dividends

If, in the opinion of the Federal Reserve, we or the Bank

are engaged in or about to engage in an unsafe or

unsound practice (which, depending on the financial

condition of FHN or the Bank, could include the payment

of dividends), the Federal Reserve may require us or the

Bank to cease and desist from that practice. The federal

banking agencies have indicated that paying dividends

that deplete a depository institution’s or holding

company’s capital base to an inadequate level would be

an unsafe and unsound banking practice.

In addition, under the Federal Deposit Insurance Act, an

FDIC-insured depository institution (such as the Bank) may

not make any capital distributions, pay any management

fees to its holding company, or pay any dividend if it is

undercapitalized or if such payment would cause it to

become undercapitalized.

The payment of cash dividends by us or by the Bank also

may be affected or limited by other factors, such as the

requirement to maintain adequate capital above

regulatory guidelines and requirements imposed by debt

covenants. For example, as discussed under Capital

Adequacy within this Supervision and Regulation

discussion below, our ability to pay dividends would be

restricted if our capital ratios fell below minimum

regulatory requirements plus a capital conservation

buffer.

The Federal Reserve generally requires insured banks and

bank holding companies to pay dividends only out of

current operating earnings. The Federal Reserve has

released a supervisory letter advising, among other things,

that a bank holding company should inform the Federal

Reserve and should eliminate, defer, or significantly

reduce its dividends if (i) the bank holding company’s net

income available to shareholders for the past four

quarters, net of dividends previously paid during that

period, is not sufficient to fully fund the dividends; (ii) the

bank holding company’s prospective rate of earnings is

not consistent with the bank holding company’s capital

needs and overall current and prospective financial

condition; or (iii) the bank holding company will not meet,

or is in danger of not meeting, its minimum regulatory

capital adequacy ratios.

   

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ITEM 1. BUSINESS
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Transactions with Affiliates

The Bank’s ability to lend or extend credit to us or our

other affiliates is restricted. The Bank and its subsidiaries

generally may not extend credit to us or to any other

affiliate of ours in an amount which exceeds 10% of the

Bank’s capital stock and surplus and may not extend credit

in the aggregate to us and all such affiliates in an amount

which exceeds 20% of the Bank's capital stock and surplus.

Extensions of credit and other transactions between the

Bank and us or such other affiliates must be on terms and

under circumstances, including credit standards, that are

substantially the same or at least as favorable to the Bank

as those prevailing at the time for comparable

transactions with non-affiliated companies. Further, the

type, amount, and quality of collateral which must secure

such extensions of credit is regulated.

There are similar legal restrictions on: the Bank’s

purchases of or investments in the securities of and

purchases of assets from us or other affiliates; the Bank’s

loans or extensions of credit to third parties collateralized

by the securities or obligations of us or other affiliates; the

issuance of guaranties, acceptances, and letters of credit

on behalf of us or other affiliates; and certain Bank

transactions with us or other affiliates, or with respect to

which we or other affiliates act as agent, participate, or

have a financial interest.

Capital Adequacy

Federal financial industry regulators require that regulated

institutions maintain minimum capital levels. The capital

rules in the U.S. are based on international standards

known as “Basel III.” Those U.S. rules require the

following:

• Common Equity Tier 1 Capital Ratio. For all supervised

financial institutions, including us and the Bank, the

ratio of Common Equity Tier 1 Capital to risk-

weighted assets (“Common Equity Tier 1 Capital

ratio”) must be at least 4.5%. To be “well capitalized”

the Common Equity Tier 1 Capital ratio must be at

least 6.5%. Common Equity Tier 1 Capital consists of

core components of Tier 1 Capital. The core

components consist of common stock plus retained

earnings net of goodwill, other intangible assets, and

certain other required deduction items. At

December 31, 2024, our Common Equity Tier 1

Capital Ratio was 11.20% and the Bank’s was 11.12%.

• Tier 1 Capital Ratio. For all supervised financial

institutions, including us and the Bank, the ratio of

Tier 1 Capital to risk-weighted assets must be at least

6%. To be “well capitalized” the Tier 1 Capital ratio

must be at least 8%. Tier 1 Capital consists of the Tier

1 core components discussed in the bulleted

paragraph immediately above, plus non-cumulative

perpetual preferred stock, a limited amount of

minority interests in the equity accounts of

consolidated subsidiaries, and a limited amount of

cumulative perpetual preferred stock, net of goodwill,

other intangible assets, and certain other required

deduction items. At December 31, 2024, our Tier 1

Capital Ratio was 12.22% and the Bank’s was 11.54%.

• Total Capital Ratio. For all supervised financial

institutions, including us and the Bank, the ratio of

Total Capital to risk-weighted assets must be at least

8%. To be “well capitalized” the Total Capital ratios

must be at least 10%. At December 31, 2024, our

Total Capital Ratio was 13.87% and the Bank’s was

13.00%.

• Capital Conservation Buffer. If a capital conservation

buffer of an additional 2.5% above the minimum

required Common Equity Tier 1 Capital ratio, Tier 1

Capital ratio, and Total Capital ratio is not maintained,

special restrictions would apply to capital

distributions, such as dividends and stock

repurchases, and on certain compensatory bonuses.

• Leverage Ratio—Base. For all supervised financial

institutions, including us or the Bank, the Leverage

ratio must be at least 4%. To be “well capitalized” the

Leverage ratio must be at least 5%. The Leverage ratio

is Tier 1 Capital divided by quarterly average assets

net of goodwill, certain other intangible assets, and

certain required deduction items. At December 31,

2024, our Leverage ratio was 10.64% and the Bank’s

was 10.06%.

• Leverage Ratio—Supplemental. For the largest

internationally active supervised financial institutions,

not including us or the Bank, a minimum

supplementary Leverage ratio must be maintained

that takes into account certain off-balance sheet

exposures.

Federal regulators have incorporated market and interest-

rate risk components into its risk-based capital standards.

Those standards explicitly identify concentration of credit

risk and certain risks arising from non-traditional activities,

and the management of such risks, as important

qualitative factors to consider in assessing an institution’s

overall capital adequacy.

Federal regulators’ market risk rules are applicable to

covered institutions—those with aggregate trading assets

and trading liabilities of at least 10% of their total assets

or at least $1 billion. We and the Bank are covered

institutions under the rule. The rules specify the

methodology for calculating the amount of risk-weighted

assets related to trading assets and include, among other

things, the addition of a component for stressed value at

   

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ITEM 1. BUSINESS
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risk. In addition, an 8% capital surcharge applies to certain

covered institutions, not including us or the Bank.

The Federal Reserve has indicated that it considers a

“Tangible Tier 1 Capital Leverage Ratio” (deducting all

intangibles) and other indicators of capital strength in

evaluating proposals for expansion or new activities.

Failure to meet capital guidelines could subject a bank to a

variety of enforcement remedies, including the

termination of deposit insurance by the FDIC, and to

certain restrictions on its business and in certain

circumstances to the appointment of a conservator or

receiver. See Prompt Corrective Action (PCA) immediately

below for additional information.

In addition, the Bank is required to have a capital structure

that the TDFI determines is adequate, based on TDFI’s

assessment of the Bank’s businesses and risks. The TDFI

may require the Bank to increase its capital, if found to be

inadequate.

Prompt Corrective Action (PCA)

Federal banking regulators must take “prompt corrective

action” regarding FDIC-insured depository institutions

(such as the Bank) that do not meet minimum capital

requirements. For this purpose, insured depository

institutions are divided into five capital categories. The

specific requirements applicable to our Bank are

summarized in Table 1.11.

Table 1.11

REQUIREMENTS FOR PCA CAPITALIZATION CATEGORIES

Well capitalized	• Common Equity Tier 1 Capital ratio of at least 6.5% • Tier 1 Capital ratio of at least 8% • Total Capital ratio of at least 10% • Leverage ratio of at least 5% • Not subject to a directive, order, or written agreement to meet and maintain specific capital levels
Adequately capitalized	• Common Equity Tier 1 Capital ratio of at least 4.5% • Tier 1 Capital ratio of at least 6% • Total Capital ratio of at least 8% • Leverage ratio of at least 4% • Not subject to a directive, order, or written agreement to meet and maintain specific capital levels
Undercapitalized	Failure to maintain any requirement to be adequately capitalized
Significantly Undercapitalized	Failure to maintain Common Equity Tier 1 Capital ratio of at least 3%, Tier 1 Capital ratio of at least 4%, Total Capital ratio of at least 6%, or a Leverage ratio of at least 3%
Critically Undercapitalized	Failure to maintain a level of tangible equity equal to at least 2% of total assets

At December 31, 2024, the Bank had sufficient capital to

qualify as “well capitalized” under the regulatory capital

requirements discussed above. An institution may be

deemed to be in a capitalization category that is lower

than is indicated by its actual capital position if it receives

an unsatisfactory examination rating. Institutions

generally are not allowed to publicly disclose examination

results.

An FDIC-insured depository institution generally is

prohibited from making any capital distribution (including

payment of dividends) or paying any management fee to

its holding company if the depository institution would

thereafter be undercapitalized. Undercapitalized

depository institutions are subject to restrictions on

borrowing from the Federal Reserve System. In addition,

undercapitalized depository institutions are subject to

growth limitations and are required to submit capital

restoration plans. An insured depository institution’s

holding company must guarantee the capital plan, up to

an amount equal to the lesser of 5% of the depository

institution’s assets at the time it becomes

undercapitalized or the amount of the capital deficiency

when the institution fails to comply with the plan, for the

plan to be accepted by the applicable federal regulatory

authority. The federal banking agencies may not accept a

capital plan without determining, among other things,

that the plan is based on realistic assumptions and is likely

to succeed in restoring the depository institution’s capital.

If a depository institution fails to submit an acceptable

plan, it is treated as if it were significantly

undercapitalized.

Significantly undercapitalized depository institutions may

be subject to a number of requirements and restrictions,

including orders to sell sufficient voting stock to become

adequately capitalized, requirements to reduce total

assets, and cessation of receipt of deposits from

correspondent banks.

Critically undercapitalized depository institutions are

subject to appointment of a receiver or conservator,

   

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ITEM 1. BUSINESS
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generally within 90 days of the date on which they

become critically undercapitalized.

Liquidity Coverage Ratio

The liquidity coverage ratio, or LCR, refers to the amount

of high quality liquid assets (such as Federal Reserve

balances and readily saleable government-guaranteed or

investment grade debt) banks are required to keep on

hand to meet a hypothetically projected total net cash

outflow over a forward-looking 30-day period of stress.

The stressed outflow estimate is based on a standard set

of hypothetical assumptions set forth in regulatory

requirements. The LCR is designed to ensure banks hold a

buffer of high-quality liquid assets so that they can meet

their short-term liquidity needs and remain stable and

strong in a stressed environment. Liquid assets generally

provide low income levels compared to other

investments, so a higher LCR requirement can negatively

impact a bank's earnings.

The LCR requirement does not apply to institutions with

assets of less than $100 billion, and so does not apply to

us or the Bank currently. For larger institutions, the

minimum LCR requirement increases based on a bank’s

asset size. Category IV banks, with at least $100 billion in

assets, are not subject to LCR requirements unless they

have at least $50 billion in weighted short-term wholesale

funding.

Holding Company Structure and Support of Subsidiary Banks

Because we are a holding company, our right to

participate in the assets of any subsidiary upon the latter’s

liquidation or reorganization will be subject to the prior

claims of the subsidiary’s creditors (including depositors in

the case of the Bank), except to the extent that we may be

a creditor with recognized claims against the subsidiary. In

addition, depositors of a bank, and the FDIC as their

subrogee, would be entitled to priority over other

creditors in the event of liquidation of the bank.

Under Federal Reserve policy we are expected to act as a

source of financial strength to, and to commit resources to

support, the Bank. This support may be required at times

even if, absent such Federal Reserve policy, we might not

wish to provide it. In addition, any capital loans by a bank

holding company to any of its subsidiary banks are

subordinate in right of payment to deposits and to certain

other indebtedness of the subsidiary bank. In the event of

a bank holding company’s bankruptcy, any commitment

by the bank holding company to a federal bank regulatory

agency to maintain the capital of a subsidiary bank will be

assumed by the bankruptcy trustee and entitled to a

priority of payment.

Cross-Guarantee Liability

A depository institution insured by the FDIC can be held

liable for any loss incurred by, or reasonably expected to

be incurred by, the FDIC in connection with (i) the default

of a commonly controlled FDIC-insured depository

institution or (ii) any assistance provided by the FDIC to

any commonly controlled FDIC-insured depository

institution “in danger of default.”  “Default” is defined

generally as the appointment of a conservator or receiver

and “in danger of default” is defined generally as the

existence of certain conditions indicating that a default is

likely to occur in the absence of regulatory assistance. The

FDIC’s claim for damages is superior to claims of

shareholders of the insured depository institution or its

holding company but is subordinate to claims of

depositors, secured creditors, and holders of subordinated

debt (other than affiliates) of the commonly controlled

insured depository institution.

Currently the Bank is our only depository institution

subsidiary. If we were to own or operate another

depository institution, any loss suffered by the FDIC in

respect of one subsidiary bank would likely result in

assertion of the cross-guarantee provisions, the

assessment of estimated losses against our other

subsidiary bank(s), and a potential loss of our investment

in our subsidiary banks.

Interstate Branching & Mergers

As mentioned above, the Bank generally must have TDFI’s

approval to establish a new banking center (technically, a

“branch”). For a new banking center located outside of

Tennessee, Tennessee law requires the Bank to comply

with branching laws applicable to the state where the new

banking center will be located. Federal law allows the

Bank to establish or acquire a branch in another state to

the same extent as a bank chartered in that other state

would be allowed to establish or acquire a branch in

Tennessee.

For an interstate merger or acquisition:  the acquiring

bank must be well-capitalized and well-managed;

concentration limits on liabilities and deposits may not be

exceeded; regulators must assess the transaction for

incremental systemic risk; and the acquiring bank must

   

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ITEM 1. BUSINESS
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have at least “satisfactory” standing under the federal

Community Reinvestment Act (discussed immediately

below). Moreover, mergers and acquisitions that are large

enough are subject to anti-trust review by the U.S.

Department of Justice.

Once a bank has established branches in a state through

de novo or acquired branching or through an interstate

merger transaction, the bank may then establish or

acquire additional branches within that state to the same

extent that a bank chartered in that state is allowed to

establish or acquire branches within the state.

Community Reinvestment Act (“CRA”)

The CRA requires each U.S. bank, consistent with safe and

sound operation, to help meet the credit needs of each

community where the bank accepts deposits, including

low- and moderate-income (“LMI”) communities. The

Federal Reserve assesses the Bank periodically for CRA

compliance, and that assessment is made public. The

Bank’s LMI operations and activities traditionally are

critical focal points in those assessments.

A CRA rating below “Satisfactory” can slow or halt a bank’s

plans to expand by branching, acquisition, or merger, and

can prevent a bank holding company from becoming a

financial holding company. In its most recent publicly

reported CRA assessment, for 2020, the Bank received

ratings of "High Satisfactory" in Lending and in Service,

"Outstanding" in Investment, and "Satisfactory" overall.

Our 2024 CRA assessment recently has been completed

and we expect the results to be published in the Federal

Register in 2025.

In 2023, federal banking agencies adopted final rules

establishing a revised framework for applying the CRA.

The new rules, which could include assessment of a bank's

impact on credit needs of communities beyond those in

which the bank accepts deposits, were preliminarily

enjoined by a federal district court in 2024.

Financial Activities other than Banking

Federal Law

Federal law generally allows financial holding companies

broad authority to engage in activities that are financial in

nature or incidental to a financial activity. These include:

insurance underwriting and brokerage; merchant banking;

securities underwriting, dealing, and market-making; real

estate development; and such additional activities as the

Federal Reserve in consultation with the Secretary of the

Treasury determines to be financial in nature or

incidental. A bank holding company may engage in these

activities directly or through subsidiaries by qualifying as a

“financial holding company.” To qualify as a financial

holding company, a bank holding company must file an

initial declaration with the Federal Reserve, certifying that

all of its subsidiary depository institutions are well-

managed and well-capitalized.

Federal law also permits banks to engage in certain of

these activities through financial subsidiaries. To control

or hold an interest in a financial subsidiary, a bank must

meet the following requirements:

(1)The bank must receive approval from its primary

federal regulator for the financial subsidiary to

engage in the activities.

(2)The bank and its depository institution affiliates must

each be well-capitalized and well-managed.

(3)The aggregate consolidated total assets of all of the

bank’s financial subsidiaries must not exceed the

lesser of 45% of the bank’s consolidated total assets,

or $50 billion (subject to indexing for inflation).

(4)The bank must have in place adequate policies and

procedures to identify and manage financial and

operational risks and to preserve the separate

identities and limited liability of the bank and the

financial subsidiary.

(5)If the bank is among the 100 largest banks, the bank

must meet the creditworthiness or other criteria

adopted by the Federal Reserve and the U.S.

Secretary of the Treasury from time to time. If this

fifth requirement ceases to be met after a bank

controls or holds an interest in a financial subsidiary,

the bank cannot invest additional capital in that

subsidiary until the requirement again is met.

No new activity may be commenced unless the bank and

all of its depository institution affiliates have at least

“satisfactory” CRA ratings. Certain restrictions apply if the

bank holding company or the bank fails to continue to

meet one or more of the requirements listed above.

In addition, federal law contains a number of other

provisions that may affect the Bank’s operations, including

limitations on the use and disclosure to third parties of

client information.

At December 31, 2024, we are a financial holding

company and the Bank has a number of financial

subsidiaries, as discussed in Subsidiaries within this Item 1

under the Other Business Information discussion, which

begins on page 19.

   

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ITEM 1. BUSINESS
Table of Contents

Tennessee Law

Tennessee law does not expressly restrict the activities of

a bank holding company or its non-bank affiliates.

However, no Tennessee bank may maintain a branch

office on the premises of an affiliate if the affiliate is

engaged in activities that are not permissible for a bank

holding company, a financial holding company, a national

bank, or a national bank subsidiary under federal law.

Tennessee law permits Tennessee banks to establish

subsidiaries and to engage in any activities permissible for

a national bank located in Tennessee, subject to

compliance with Tennessee regulations relating to the

conduct of such activities for the purpose of maintaining

bank safety and soundness.

Interchange Fee Restrictions

Regulations severely cap interchange fees which the Bank

may charge merchants for debit card transactions.

Regulatory changes proposed in 2023, if adopted, would

lower that cap. In early 2025, these proposed changes

remained pending.

Volcker Rule

The so-called Volcker rule (1) generally prohibits banks

from engaging in proprietary trading, which is engaging as

principal (for the bank’s own account) in any purchase or

sale of one or more of certain types of financial

instruments, and (2) limits banks’ ability to invest in or

sponsor hedge funds or private equity funds.

Consumer Regulation by the CFPB

The CFPB adopts and administers significant rules

affecting consumer lending and consumer financial

services. Key rules for the Bank include detailed regulation

of mortgage servicing practices and detailed regulation of

mortgage origination and underwriting practices. The

latter rules, among other things, establish the definition of

a “qualified mortgage” using traditional underwriting

practices involving down payments, credit history, income

levels and verification, and so forth. The rules do not

prohibit, but do tend to discourage, lenders from

originating non-qualified mortgages. The future of CFPB

regulation remains uncertain.

Data Security & Portability

Security & Privacy

Federal law requires banks to implement a comprehensive

information security program that includes administrative,

technical, and physical safeguards. Banks are required to

have appropriate data governance practices and risk

management processes as key functions supporting their

operational resilience.

Data privacy and protection increasingly is a significant

legislative, regulatory, and societal concern. The concern

is driven by major technological and societal shifts in the

past 20 years, led by relatively unregulated firms such as

Alphabet (Google), Amazon.com, and Meta Platforms

(Facebook) and their many clients worldwide. Those firms

have gathered large amounts of personal details about

millions of people, and today have the ability to analyze

that data and act on that analysis very quickly. The firms

seek to understand enough about a person to know what

a person wants before the person does.

Banks (as mentioned above) already are subject to

significant privacy regulations. Probably for that reason,

the banking industry is not at the political center of these

concerns currently. Even so, banks are likely to be affected

by broader legislative and regulatory responses to the

perceived problems. Two prominent responses include

the European Union General Data Protection Regulation

and the California Data Privacy Protection Act. Neither is a

banking industry regulation, but both apply to banks in

relation to certain clients and data. To date, neither has

had a material impact on the Bank.

Portability & Client Control

Federal law restricts the Bank’s ability to share certain

information with affiliates and non-affiliates for marketing

and/or non-marketing purposes, or to contact clients with

marketing offers. Affiliate and non-affiliate sharing

initiated by the Bank generally is permitted unless the

client elects not to permit sharing.

Increasingly, banks are being required to permit, enable,

and support client control of client data, including the

sharing of client data with Bank affiliates and with outside

organizations. These requirements, which still are

evolving, are intended to foster data portability for clients

and greater competition among financial services firms.

However, they also significantly increase data security

risks because they create additional access channels for

bad actors to try to exploit, or they make accessing

existing channels easier or faster.

Most notably, the CFPB adopted a new "Personal Financial

Data Rights" rule in 2024.  Under the CFPB rule, banks will

be required to make client data available upon request to

the client and authorized third parties in a secure and

reliable manner without charge. The CFPB will implement

its data portability rule in phases, with banks that hold at

   

	29	2024 FORM 10-K ANNUAL REPORT

ITEM 1. BUSINESS
Table of Contents

least $10 billion in total assets, but less than $250 billion,

required to comply by April 1, 2027.

The future of CFPB regulation remains uncertain.

FDIC Insurance Assessments; DIFA

U.S. bank deposits generally are insured by the Deposit

Insurance Fund (“DIF”), administered by the FDIC. The

system of FDIC insurance premium rates charged consists

of a rate grid structure in which base rates range from 5 to

32 basis points annually, with fully adjusted rates ranging

from 2.5 to 42 basis points annually. (A basis point is equal

to 0.01%.) These rates reflect a temporary increase

generally equal to 2 basis points implemented by the FDIC

in 2023. Also, for eight quarters starting in 2024, the FDIC

has imposed a special assessment, of 3.36 basis points per

quarter, intended to replenish the DIF in the aftermath of

three large regional bank failures that occurred in March

and May of 2023.  As of early 2025, the FDIC projected

that the special assessment will be collected for an

additional two quarters beyond the initial eight-quarter

collection period, but at a lower rate.

Key factors in the grid include:  the institution’s risk

category (I to IV); whether the institution is deemed large

and highly complex; whether the institution qualifies for

an unsecured debt adjustment; and whether the

institution is burdened with a brokered deposit

adjustment. Other factors can impact the base against

which the applicable rate is applied, including (for

example) whether a net loss is realized.

Insurance of deposits may be terminated by the FDIC

upon a finding that the institution has engaged in unsafe

and unsound practices, is in an unsafe or unsound

condition to continue operations, or has violated any

applicable law, regulation, rule, order, or condition

imposed by a federal bank regulatory agency.

Depositor Preference

Federal law provides that deposits and certain claims for

administrative expenses and associate compensation

against an insured depository institution would be

afforded a priority over other general unsecured claims

against such an institution, including federal funds and

letters of credit, in the “liquidation or other resolution” of

such an institution by any receiver.

Securities Regulation

Certain of our subsidiaries are subject to various securities

laws and regulations and capital adequacy requirements

promulgated by the regulatory and exchange authorities

of the jurisdictions in which they operate.

Our registered broker-dealer subsidiaries are subject to

the SEC’s net capital rule, Rule 15c3-1. That rule requires

the maintenance of minimum net capital and limits the

ability of the broker-dealer to transfer large amounts of

capital to a parent company or affiliate. Compliance with

the rule could limit operations that require intensive use

of capital, such as underwriting and trading.

Two of our subsidiaries are registered investment advisers

which are regulated under the Investment Advisers Act of

1940. Advisory contracts with clients automatically

terminate under these laws upon an assignment of the

contract by the investment adviser unless appropriate

consents are obtained.

Insurance Activities

Certain of our subsidiaries sell various types of insurance

as agent in a number of states. Insurance activities are

subject to regulation by the states in which such business

is transacted. Although most of such regulation focuses on

insurance companies and their insurance products,

insurance agents and their activities are also subject to

regulation by the states, including, among other things,

licensing and marketing and sales practices.

Compensation & Risk Management

The Federal Reserve has issued guidance intended to

ensure that incentive compensation arrangements at

financial organizations take into account risk and are

consistent with safe and sound practices. The guidance is

based on three “key principles” calling for incentive

compensation plans to:  appropriately balance risks and

rewards; be compatible with effective controls and risk

management; and be backed up by strong corporate

governance. In response: we operate an enhanced risk

management process for assessing risk in incentive

compensation plans; several key incentive programs use a

net profit approach rather than a revenues-only approach;

and mandatory deferral features are used in several key

programs, including an executive program.

   

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ITEM 1. BUSINESS
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In 2016 federal agencies proposed rules which could

significantly change the regulation of incentive

compensation programs at financial institutions. The

proposal would create four tiers of institutions based on

asset size. Institutions in the top two tiers would be

subject to rules much more detailed and proscriptive than

are currently in effect. If interpreted aggressively by the

regulators, the proposed rules could be used to prevent,

as a practical matter, larger institutions from engaging in

certain lines of business where substantial commission

and bonus pool arrangements are the norm. In the 2016

proposal, the top two tiers included institutions with more

than $50 billion of assets. We and the Bank currently

would fall into the lower of those top two tiers. However,

prompted by post-2016 legislation which significantly

raised several statutory asset-size tiers, if this proposal

were finalized today, the $50 billion floor might be raised,

allowing us to remain in the third tier.

Four of the six federal agencies who proposed the 2016

rules, but not the Federal Reserve, re-proposed those

rules in 2024. We cannot predict what final rules may be

adopted, nor how they may be implemented.

Effect of Government Policies & Proposals

The Bank is affected by the policies of regulatory

authorities, including the Federal Reserve, the TDFI, and

the CFPB. See Supervision and Regulation beginning on

page 21 for additional information.

The Federal Reserve also sets and manages monetary

policy for the U.S. In this latter role, the Federal Reserve’s

mandate from Congress is to pursue price stability and full

employment.

Among the instruments of monetary policy used by the

Federal Reserve are: purchases and sales of U.S.

government and other securities in the marketplace;

changes in the discount rate, which is the rate any

depository institution must pay to borrow from the

Federal Reserve; changes in the reserve requirements of

depository institutions; changes in the rate paid on banks’

required and excess reserve deposits at the Federal

Reserve; and changes in the federal funds rate, which is

the rate at which depository institutions lend balances to

each other overnight. These instruments are intended to

influence economic and monetary growth, interest rate

levels, and inflation.

The monetary policies of the Federal Reserve and other

governmental policies have had a significant effect on the

operating results of commercial banks in the past and are

expected to continue to do so in the future. Because of

changing conditions in the national and international

economies and in the money markets, as well as the result

of actions by monetary and fiscal authorities, it is not

possible to predict with certainty future changes in

interest rates, deposit levels, loan demand, or the

business and results of our operations, or whether

changing economic conditions will have a positive or

negative effect on operations and earnings. Additional

information concerning monetary policy changes appears: 

under the caption Monetary Policy Shifts within the

Significant Business Developments section of Item 1,

which begins on page 12; under the caption Risks

Associated with Monetary Events beginning on page 37

within Item 1A; and under the caption Inflation, Recession,

and Federal Reserve Policy within the Market

Uncertainties and Prospective Trends section of our 2024

MD&A (Item 7), which begins on page 97.

Bills occasionally are introduced in the United States

Congress, the Tennessee General Assembly and other

state legislatures, and regulations occasionally are

proposed by our regulatory agencies, any of which could

affect our businesses, financial results, and financial

condition.

We are not able to predict what, if any, changes that

Congress, state legislatures, or the regulatory agencies will

enact or implement in the future, nor the impact that

those actions will have upon us.

Sources & Availability of Funds

Information concerning the sources and availability of

funds for our businesses can be found in our 2024 MD&A

(Item 7), including the subsection entitled Liquidity Risk

Management beginning on page 93, which material is

incorporated herein by reference.

   

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Item 1A.Risk Factors

This Item outlines specific risks that could affect the ability

of our various businesses to compete, change our risk

profile, or materially impact our operating results or

financial condition. Our operating environment continues

to evolve and new risks continue to emerge. To address

that challenge we have a risk management governance

structure that oversees processes for monitoring evolving

risks and oversees various initiatives designed to manage

and control our potential exposure.

This Item highlights risks that could impact us in material

ways by causing future results to differ materially from

past results, by causing future results to differ materially

from current expectations, or by causing material changes

in our financial condition. In this Item we have outlined

risks that we believe are important to us at the present

time. However, other risks may prove to be important in

the future, and new risks may emerge at any time. We

cannot predict all potential developments that could

materially affect our financial performance or condition.

TABLE OF ITEM 1A TOPICS

Topic	Page			Topic	Page
Traditional Competition Risks	31			Risks of Expense Control	42
Traditional Strategic Risks	32			Geographic Risks	43
Industry Disruption	33			Insurance	44
Operational Risks	34			Liquidity & Funding Risks	44
Cybersecurity Risks	35			Credit Ratings	46
Risks from Economic Downturns & Changes	36			Interest Rate & Yield Curve Risks	46
Risks Associated with Monetary Events	37			Asset Inventories & Market Risks	47
Risks Related to Businesses We May Exit	38			Mortgage Business Risks	48
Reputation Risks	38			Pre-2009 Mortgage Business Risks	48
Credit Risks	38			Accounting Risks	49
Service Risks	40			Share Owning & Governance Risks	50
Regulatory, Legislative, and Legal Risks	40

Traditional Competition Risks

We are subject to intense competition for clients, and

the nature of that competition is changing quickly. Our

primary areas of competition include: consumer and

commercial deposits, commercial loans, consumer loans

including home mortgages and lines of credit, financial

planning and wealth management, fixed income products

and services, and other consumer and commercial

financial products and services. Our competitors in these

areas include national, state, and non-US banks, savings

and loan associations, credit unions, consumer finance

companies, trust companies, investment counseling firms,

money market and other mutual funds, insurance

companies and agencies, securities firms, mortgage

banking companies, hedge funds, and other financial

services companies that serve in our markets. The

emergence of non-traditional, disruptive service providers

(see Industry Disruption within this Item 1A beginning on

page 33 ) has intensified the competitive environment.

Some competitors are traditional banks, subject to the

same regulatory framework as we are, while others are

not banks and in many cases experience a significantly

different or reduced degree of regulation. Examples of

less-regulated activities include private credit from non-

bank lenders, check-cashing services, independent ATM

services, and “peer-to-peer” lending, where investors

provide debt financing or other capital directly to

borrowers.

Competitive pressures shift with the business and rate

environment. Over much of 2020 and 2021, with deposits

relatively abundant, the competitive focus on lending and

fee-based services was relatively high. In 2023 and 2024,

after the major market transitions in 2022 discussed in

Risks Associated with Monetary Events starting on page

37 , competition for deposits became much more

significant.

   

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We expect that competition will continue to be intense

with respect to most of our products and services.

Heightened competition tends to put downward pressure

on revenues from affected items, upward pressure on

marketing and other promotional costs, or both. For

additional information regarding competition for clients,

refer to Competition within Item 1 beginning on page 16

of this report.

We compete for talent. Our most significant competitors

for clients also tend to be our most significant competitors

for top talent. See Operational Risks below within this

Item 1A for additional information concerning this risk.

We compete to raise capital in the equity and debt

markets. See Liquidity and Funding Risks beginning on

page 44 of this Item 1A for additional information

concerning this risk.

Traditional Strategic Risks

We may be unable to successfully implement our

strategies to operate and grow our commercial,

consumer & wealth and wholesale banking businesses.

Although our current strategies are expected to evolve as

business conditions change, currently our primary

strategies are to (1) invest resources in our banking

businesses, (2) seek to exploit growth opportunities,

especially within the markets we serve, and (3) seek to

exploit opportunities to cut costs without significant

revenue impact. Organic growth is expected to be

coordinated with a focus on strong and stable returns on

capital.

To foster organic growth, we have engaged in targeted

hiring and marketing in our traditional commercial and

consumer banking markets, and we have invested

resources in specialty commercial lending and private

client banking. In the future more generally, we expect to

continue to nurture profitable organic growth. We may

pursue acquisitions or strategic transactions if appropriate

opportunities, within or outside of our current markets,

present themselves.

Failure to achieve one or more key elements needed for

successful organic growth would adversely affect our

business and earnings. We believe that the successful

execution of organic growth depends upon a number of

key elements, including:

• our ability to attract and retain clients in our

commercial and consumer banking market areas and

in our specialty banking markets;

• our ability to achieve and maintain growth in our

earnings while pursuing new business opportunities;

• our ability to maintain a high level of client service

while optimizing our physical banking center count

due to changing client demand, all while expanding

our remote banking services and expanding or

enhancing our information processing, technology,

compliance, and other operational infrastructures

effectively and efficiently;

• our ability to manage the liquidity and capital

requirements associated with growth, especially

organic growth and cash-funded acquisitions; and

• our ability to manage effectively and efficiently the

changes and adaptations necessitated by a complex,

burdensome, and evolving regulatory environment.

We have in place strategies designed to achieve those

elements that we believe are significant to us at present.

Our challenge is to execute those strategies and adjust

them, or adopt new strategies, as conditions change.

Failure to achieve one or more key elements needed for

successful business acquisitions would adversely affect

our business and earnings. To the extent we engage in

future bank or non-bank business acquisitions, we face

various additional risks, including:

• our ability to realize planned strategic and tactical

objectives, including operating efficiencies and

revenue synergies, within a reasonable time period

after closing the transaction;

• our ability to identify, analyze, and correctly assess

the execution, credit, contingency, and other risks in

the acquisition and to price the transaction

appropriately;

• our ability to properly evaluate loss inherent in the

target business’ loan portfolios;

• our ability to integrate the acquired business’

operations, clients, and properties quickly and cost-

effectively;

• our ability to manage cultural assimilation risks

associated with growth through acquisitions, which

can be an often-overlooked and often-critical failure

point in mergers;

• our ability to combine the franchise values of the two

companies without significant loss from re-branding

and other similar changes; and

• our ability to retain core clients and key associates.

A type of strategic acquisition—a so-called “merger of

equals” where the company we nominally acquire has

similar size, operating contribution, or value—presents

unique opportunities but also unique risks. Those special

risks include:

• the potential for elevated and duplicative operating

expenses if we are unable to integrate the two

   

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companies efficiently in a reasonable amount of time;

and

• the potential for a significant increase in the time

horizon that may be needed before substantial

economies of scale can be realized or substantial

revenue synergies can be developed effectively.

The IBKC merger in 2020 presented those risks. In fact, the

completion of systems integration was delayed several

months, resulting in increased integration expense.

Although the proximate reason for the delay was a 2021

hurricane event impacting key markets, the overall length

of the integration period likely would have been

significantly less if we had merely been integrating a small

bank's systems with ours.

Industry Disruption

Through technological innovations and changes in client

habits, the manner in which clients use financial services

continues to change at a rapid pace. We provide a large

number of services remotely (online and mobile), and

physical banking center utilization has been in long-term

decline throughout the industry for many years.

Technology has helped us reduce costs and improve

service, but also has weakened traditional geographic and

relationship ties and has allowed disruptors to enter

traditional banking areas.

Through digital marketing and service platforms, many

banks are making client inroads unrelated to physical

presence. This competitive risk is especially pronounced

from the largest U.S. banks, and from online-only banks,

due in part to the investments they are able to sustain in

their digital platforms.

Companies as disparate as PayPal (an online payment

clearinghouse) and Starbucks (a large chain of cafes)

provide payment and exchange services which compete

directly with banks in ways not possible traditionally.

We seek to meet these competitive challenges through

increased investments in our own digital platforms, and

through strategic equity investments, but there can be no

assurance that these efforts will be successful.

The nature of technology-driven disruption to our

industry is changing, in some cases seeking to displace

traditional financial service providers rather than merely

enhance traditional services or their delivery. A number

of recent technologies have worked with the existing

financial system and traditional banks, such as the

evolution of ATM cards into debit/credit cards and the

evolution of debit/credit cards into smart phones. These

sorts of technologies often have expanded the market for

banking services overall while siphoning a portion of the

revenues from those services away from banks and

disrupting prior methods of delivering those services. But

some recent innovations may tend to replace traditional

banks as financial service providers rather than merely

augment those services.

For example, companies which claim to offer applications

and services based on artificial intelligence compete much

more directly with traditional financial services companies

in areas involving personal advice, including high-margin

services such as financial planning and wealth

management. The low-cost, high-speed nature of these

“robo-advisor” services can be especially attractive to

younger, less-affluent clients and potential clients, as well

as persons interested in “self-service” investment

management. Other industry changes, such as zero-

commission securities trading offered by certain large

firms, may amplify this trend.

Other technologies, services, and systems based wholly or

in part on artificial intelligence and machine learning are

proliferating within our industry and among many of our

commercial clients, resulting in an environment which is

changing rapidly. These technologies are subject to risks

that algorithms and datasets may be flawed or insufficient

or contain biased information, risks that are exacerbated

because models and processes related to artificial

intelligence and machine learning are not always

transparent.  Our challenge is to maintain critical stability

and security while also being nimble enough to adapt

quickly to changing circumstances and client demands.

We believe that, over the course of the technology-

driven evolution of our industry which is well underway,

the “winners” will be those institutions which can know

their clients and make those clients feel they are known,

even when many clients increasingly do not visit banking

centers or have face-to-face live interaction. Two keys to

achieving a psychological connection with such clients are

(1) data management and analytics, using artificial

intelligence processes, which allow an institution to

provide a differentiated, personalized experience for the

client at the point of interaction, and (2) seamless

integration of real-time client contact with a human being

through voice, chat, or other means.

A critical factor in successful data analytics, allowing real-

time differentiated interaction with clients, is how

traditionally uncaptured, unstructured, or siloed data is

acquired, managed, and accessed. While many banks are

attempting to address this business need in various ways,

it remains unclear which approaches will be successful in

the long run. In addition, external vendors are developing

processes to provide solutions. A basic challenge for all

these efforts is how to integrate analysis of extremely

disparate forms of data and utilize that analysis in each

client contact in a manner which most clients not only

   

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accept, but value, and which aligns with regulatory and

compliance expectations.

Developing workable proprietary solutions to the data

analytics challenges ahead of competitors requires

substantial investment in information technology

systems and innovation. Even with a substantial IT

budget, we cannot outspend, or even come close to

matching, the largest U.S. banking institutions. Therefore,

like most U.S. banks, our strategy must be focused on

leveraging products and solutions which are within our

means, including those developed by external vendors.

Our goal must be to keep pace with industry

developments with a focus on improving the client’s

differentiated experience with us by recognizing and

responding to client needs.

Technological innovation has tended to reduce barriers to

entry based on cost. Put another way, once someone finds

a new, better method to accomplish a task in our industry,

often others are able to replicate or improve on that

method, sometimes quite rapidly. Key risks for us,

therefore, are whether we will be able: to catch up to

breakthroughs quickly enough to avoid client attrition; to

adopt and enhance breakthroughs frequently enough, and

without significant technical failures, to attract clients

from competitors; and, if we are able to truly innovate, to

press our advantage quickly before competitors adopt it.

To thrive as our industry is disrupted, we will need to

continue to embrace some of the attitudes of a

technology company and shed some of the traditional

attitudes often associated with banking. This has

required, and will continue to require, an evolution in our

corporate culture which, in turn, creates implementation

risk. In this evolutionary process it is critical that we not

lose sight of how our clients experience working with us

and our systems, including those clients who still want

traditionally-delivered services, those who seek and

embrace the latest innovations, and those who mainly

want services to be convenient, personalized, and

understandable.

Just as disruptive business changes driven by new

technologies and new client preferences can adversely

impact us and our entire industry, similar events can

adversely impact our commercial clients. In time, a major

business disruption can cause dominant businesses to fail

and can shrink or even end entire lines of business. An

example of this is the business failure of the Blockbuster

video distribution chain and most other video distribution

stores, and the rise of Netflix and similar services. Many

other examples of this kind of process are ongoing today

in many industries, including publishing, retail sales, news,

and the creation as well as distribution of audio and video

entertainment. To the extent disruptions impact our

clients, we may experience elevated loan losses and loss

of ongoing business which we may not be able to

recapture with new clients.

Operational Risks

Fraud is a major, and increasing, operational risk for us

and all banks. Two traditional areas—deposit fraud (check

forging, check kiting, wire fraud, etc.) and loan fraud—

continue to be major sources of fraud attempts and actual

loss. Fraud directed against clients—generally using

deception to persuade clients to transfer funds—has

emerged as a third large source of fraud loss. The methods

used to perpetrate and combat fraud continue to evolve

as technology changes. In addition to cybersecurity risk

(discussed below), new technologies—including the use of

artificial intelligence—have made it easier for bad actors

to obtain and use client personal information, mimic

communications to or from clients, mimic signatures, and

otherwise create false instructions and documents that

appear genuine.

Our anti-fraud actions are both preventive (anticipating

lines of attack, educating associates and clients, etc.) and

responsive (detecting, halting, and remediating actual

attacks). Our regulators require us to report actual and

suspected fraud promptly, and regulators often advise

banks of new schemes so that the entire industry can

adapt as quickly as possible. However, some level of fraud

loss is unavoidable, and the risk of a major loss cannot be

eliminated.

Our ability to conduct and grow our businesses is

dependent in part upon our ability to create, maintain,

expand, and evolve an appropriate operational and

organizational infrastructure, manage expenses, and

recruit and retain personnel with the ability to manage a

complex business. Operational risk can arise in many

ways, including:  errors related to failed or inadequate

physical, operational, information technology, or other

processes; faulty or disabled computer or other

technology systems; fraud, theft, physical security

breaches, electronic data and related security breaches

(see Cybersecurity Risks below), or other criminal conduct

by associates or third parties; and exposure to other

external events. Inadequacies may present themselves in

myriad ways. Actions taken to manage one risk may be

ineffective against others. For example, information

technology systems may be insufficiently redundant to

withstand a fire, incursion, malware, or other major

casualty, and they may be insufficiently adaptable to new

business conditions or opportunities. Efforts to make

systems more robust may make them less adaptable, and

vice-versa. Also, our efforts to control expenses, which is a

significant priority for us, increase our operational

challenges as we strive to maintain client service and

compliance at high quality and low cost.

   

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We expect to make significant investments over the next

several years in operational systems that are unlikely to

result in significant immediate returns. In 2021 we

started to invest significantly in new platforms and

processes to modernize operations, provide a better client

experience, reduce ongoing operating costs or otherwise

improve efficiencies, and support future growth. We

expect significant investments of that sort to grow over

the next several years as we prepare for business growth

and increased regulatory demands. Investments of that

sort are expensive. Although we believe they are

necessary for our future and are appropriate for our

company at this time, the financial returns on these

investments will be highly uncertain and, at best, likely to

occur only over a long time horizon. In addition,

investments of this sort lay the foundation for growth; if

growth does not materialize, many of these investments

may have little practical value.

Failure to build and maintain, or outsource, the

necessary operational infrastructure, failure of that

infrastructure to perform its functions, or failure of our

disaster preparedness plans if primary infrastructure

components suffer damage, can lead to risk of loss of

service to clients, legal actions, and noncompliance with

applicable regulatory requirements. Additional

information concerning operational risks and our

management of them, all of which is incorporated into

this Item 1A by this reference, appears under the caption

Operational Risk Management beginning on page 90 of

our 2024 MD&A (Item 7).

The delivery of financial services to clients and others

increasingly depends upon technologies, systems, and

multi-party infrastructures which are new, creating or

exacerbating several risks discussed elsewhere. Examples

of the risks created or compounded by the widespread

and rapid adoption of relatively untested technologies

include: security incursions; operational malfunctions or

other disruptions; and legal claims of patent or other

intellectual property infringement. A prominent

illustration, the distribution of a faulty update by a major

security software provider in 2024 triggered internet

outages across industries (including in banking and

financial services) and around the world, rendering

websites and mobile applications inaccessible for

extended periods.

Competition for talent is substantial and increasing.

Moreover, revenue retention and growth in some

business lines depends substantially upon top talent. In

recent years the cost to us of hiring and retaining top

revenue-producing talent, especially in specialty areas, 

has increased, and that trend is likely to continue. The

primary tools we use to attract and retain talent are: 

salaries; commission, incentive, and retention

compensation programs; retirement benefits; change in

control severance benefits; health and other welfare

benefits; and our corporate culture. To the extent we are

unable to use these tools effectively, we face the risk that,

over time, our best talent will leave us and we will be

unable to replace those persons effectively.

Incentives might operate poorly or have unintended

adverse effects. Incentive programs are difficult to design

well, and even if well-designed, often must be updated to

address changes in our business. A poorly designed

incentive program—where goals are too difficult, too

easy, or not well related to desired outcomes—could

provide little useful motivation to key associates, could

increase turnover, and could impact client retention.

Moreover, even where those pitfalls are avoided,

incentive programs may create unintended adverse

consequences. For example, a program focused entirely

on revenue production, without proper controls, may

result in costs growing faster than revenues.

Cybersecurity Risks

An information technology security (cybersecurity)

breach or other similar incident is a major type of

operational risk. A cybersecurity incident can cause

significant damage, and can be difficult to detect even

after it occurs. Among other things, that damage can

occur due to outright theft, loss or extortion of our funds

or our clients’ funds, fraud or identity theft perpetrated on

clients, loss of confidential or proprietary information,

business disruption, or adverse publicity associated with a

breach or incident and its potential effects. Perpetrators

potentially can be associates, clients, third parties, and

certain vendors, all of whom legitimately have access to

some portion of our systems, as well as outsiders with no

legitimate access.

Cybersecurity incidents happen frequently; they are an

unavoidable part of doing business. Often, but not

always, we detect and block the attempt. Often, but not

always, the number of clients impacted is modest and our

loss is minimal or none. However, even with significant

loss prevention and mitigation systems, the risk of a

financially or reputationally significant incursion cannot be

eliminated. Given the high volume of daily transactions in

modern banking, the question is not whether we will

experience a significant and costly incursion, but when.

For that reason, the key goals of our processes are: block

or prevent as many incursions as is practical, and detect

and mitigate rapidly those that get through. The

difference between a minor and a major incursion often

comes down to how quickly it is detected and countered.

Common categories of cybersecurity incidents relevant to

us, as a bank, include: account takeover, client spoofing,

and payment fraud; ransomware and other malware;

client interface attacks (attempts to shut down or slow

down our website or mobile app); and cloud (remote

   

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server) incursions. Common vulnerabilities include: clients

and associates that fall victim to malicious "phishing"

emails or other communications and inappropriately share

credentials allowing access to accounts or systems; older

software or systems that do not have up-to-date security

and are not sufficiently isolated from other systems; third-

party software vulnerabilities; and third-party systems

vulnerabilities. We believe the bad actors have a range of

motivations, including: illegal profit; politically or

geopolitically motivated disruption; and vandalism. Bad

actors can range from amateurs to criminal organizations

to nation-states.

Cybersecurity risks for banks and other financial

institutions have increased significantly in recent years in

part because of the proliferation of technology-based

products and services and the increased sophistication

and activities of organized crime, hackers, terrorists,

nation-states, nation state-supported actors, activists and

other external parties. This increase is expected to

continue and further intensify. The techniques used by

cyber criminals change frequently, may not be recognized

until launched (or may evade detection for considerable

time), can be initiated from a variety of sources, including

terrorist organizations and hostile foreign governments,

and may see their frequency increased, and effectiveness

enhanced, by the use of artificial intelligence.

Because of the potential for very serious consequences

associated with cybersecurity risks, our electronic systems

and their upgrades need to address internal and external

security concerns to a high degree, and our systems must

comply with applicable banking and other regulations

pertaining to bank safety and client protection. Although

many of our defenses are systemic and highly technical,

others are much older and more basic. For example,

periodically we train all our associates to recognize red

flags associated with fraud, theft, "phishing," and other

electronic crimes.  In addition, we educate our clients as

well through regular and episodic security-oriented

communications. We expect our systems and regulatory

requirements will continue to evolve as technology and

criminal techniques also continue to evolve.

Additional information concerning cybersecurity risks and

our management of them, all of which is incorporated into

this Item 1A by this reference, appears under the caption

Cybersecurity Risk Management beginning on page 91 of

our 2024 MD&A (Item 7).

The operational functions we outsource to third parties

may experience similar disruptions that could adversely

impact us and over which we may have limited control

and, in some cases, limited ability to obtain an alternate

vendor quickly. To the extent we rely on third party

vendors to perform or assist operational functions, the

challenge of managing the associated risks may become

more difficult. We manage this risk by assessing the

adequacy of cybersecurity prevention and detection

systems and programs of critical vendors.

The operational functions of business counterparties, or

businesses with which we have no relationship, may

experience disruptions that could adversely impact us

and over which we may have limited or no control.

Although these events cannot be predicted individually,

over time and in the aggregate they happen as surely as

loan losses. For example, when a major U.S. consumer-

oriented firm experiences a data systems incursion

resulting in the theft of credit and debit card information,

online account information, and other data, it impacts

thousands or sometimes millions of people. Frequently,

many of those affected are our clients. Although our

systems are not breached by these third-party incursions,

they can increase fraud impacting accounts at our Bank

and can cause us to take costly steps to avoid significant

theft loss to our Bank and to our clients. Our ability to

recoup our losses may be limited legally or practically in

many situations. Possible points of incursion or disruption

not within our control include retailers, utilities, insurers,

health care service providers, internet service and

electronic mail providers, social media portals, distant-

server (“cloud”) service providers, electronic data security

providers, telecommunications companies, and smart

phone manufacturers.

Risks from Economic Downturns & Changes

Generally, in an economic downturn, our realized credit

losses increase, demand for our products and services

declines, and the credit quality of our loan portfolio

declines. Delinquencies and realized credit losses

generally increase during economic downturns due to an

increase in liquidity problems for clients and downward

pressure on collateral values. Likewise, demand for loans

(at a given level of creditworthiness), deposit and other

products, and financial services may decline during an

economic downturn, and may be adversely affected by

other national, regional, or local economic factors that

impact demand for loans and other financial products and

services. Such factors include, for example, changes in

employment rates, interest rates, real estate prices, or

expectations concerning rates or prices and changes in

government policy or the regulatory environment.

Accordingly, an economic downturn or other adverse

economic change (local, regional, national, or global) can

hurt our financial performance in the form of higher loan

losses, lower loan production levels, lower deposit levels,

compression of our net interest margin, and lower fees

from transactions and services. Those effects can continue

for many years after the downturn technically ends.

   

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Because all banks are sensitive to the risk of downturns,

the stock prices of all banks typically decline, sometimes

substantially, if the market believes that a downturn has

become more likely or is imminent. This effect can and

often does occur indiscriminately, initially without much

regard to different risk postures of different banks.

Risks Associated with Monetary Events

In recent years, the Federal Reserve has implemented,

reversed, and reversed again significant economic

strategies that have impacted interest rates, inflation,

asset values, and the shape of the yield curve. These

strategies have had, and will continue to have, a

significant impact on our business and on many of our

clients. To illustrate: in response to the recession in

2008-09 and the following uneven recovery, the Federal

Reserve implemented a series of domestic monetary

initiatives designed to lower rates and make credit easier

to obtain. The Federal Reserve changed course in 2015,

raising rates several times through 2018. The last raise in

2018 was accompanied by a substantial and broad stock

market decline. In 2019, the Federal Reserve began to

lower rates. In 2020, in response to economic disruption

associated with the COVID-19 pandemic, the Federal

Reserve quickly reduced short-term rates to extremely

low levels and acted to influence the markets to reduce

long-term rates as well. During 2021, the Federal Reserve

significantly reduced its "easing" actions that held down

long-term rates. During 2022, the Federal Reserve

switched to a tightening policy. It raised short term rates

significantly and rapidly over most of the year. Those

actions triggered a significant decline in the values of most

categories of U.S. stocks and bonds; significantly raised

recessionary expectations for the U.S.; and inverted the

yield curve in the U.S. Short-term rate rises in 2023 were

few and modest and ended mid-year. Long-term rates

rose during 2023 but slowly and unevenly. The 2022 yield

curve inversion continued until September 2024, when

Federal Reserve began reducing short-term rates and yield

curve flattened.  Although the yield curve has returned to

a gradual upward slope in early 2025, there can be no

assurance that this trend will continue or that the yield

curve's upward slope will increase.

Additional information concerning monetary policy risks is

presented: under the caption Cyclicality within the Other

Business Information section of Item 1, which starts on

page 19; within the Effect of Governmental Policies and

Proposals section of Item 1 beginning on page 30; in

Interest Rate and Yield Curve Risks beginning on page 46;

and under the caption Inflation, Recession, and Federal

Reserve Policy within the Market Uncertainties and

Prospective Trends section of our 2024 MD&A (Item 7),

beginning on page 97.

Federal Reserve strategies can, and often are intended

to, affect the domestic money supply, inflation, interest

rates, and the shape of the yield curve. Effects on the

yield curve often are most pronounced at the short end of

the curve, which is of particular importance to us and

other banks. Among other things, easing strategies are

intended to lower interest rates, encourage borrowing,

expand the money supply, and stimulate economic

activity, while tightening strategies are intended to

increase interest rates, discourage borrowing, tighten the

money supply, and restrain economic activity. However,

as noted above, in 2022 short term rates rose faster than

long term rates to the point that the yield curve inverted

for much of the final two quarters of the year; that

inversion continued through September 2024, when the

Federal Reserve began reducing interest rates and the

yield curve began to return to its more typical upward

slope.

Many external factors may interfere with the effects of

the Federal Reserve's plans or cause them to be changed,

perhaps quickly. Such factors include significant economic

trends or events as well as significant international

monetary policies and events. Such strategies also can

affect the U.S. and world-wide financial systems in ways

that may be difficult to predict. Risks associated with

interest rates and the yield curve are discussed in this

Item 1A under the caption Interest Rate and Yield Curve

Risks beginning on page 46.

We may be adversely affected by economic and political

situations outside the U.S. The U.S. economy, and the

businesses of many of our clients, are linked significantly

to economic and market conditions outside the U.S.,

especially in North and Central America, Europe, and Asia,

and increasingly in South America. Although our direct

exposure to non-US-dollar-denominated assets or non-US

sovereign debt is insignificant, in the future major adverse

events outside the U.S. could have a substantial indirect

adverse impact upon us. Key potential events which could

have such an impact include (1) sovereign debt default

(default by one or more governments in their borrowings),

(2) bank and/or corporate debt default, (3) market and

other liquidity disruptions, and, if stresses become

especially severe, (4) the collapse of governments,

alliances, or currencies, and (5) military conflicts. The

methods by which such events could adversely affect us

are highly varied but broadly include the following:  an

increase in our cost of borrowed funds or, in a worst case,

the unavailability of borrowed funds through conventional

markets; impacts upon our hedging and other

counterparties; impacts upon our clients; impacts upon

the U.S. economy, especially in the areas of employment

rates, real estate values, interest rates, and inflation rates;

and impacts upon us from substantial and unpredictable

shifts in our regulatory environment from possible

political responses to major financial disruptions.

   

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Risks Related to Businesses We May Exit

We may be unable to successfully implement a

disposition or wind-down of businesses or units which no

longer fit our strategic plans. We consider possible

closures and divestitures as we continue to adapt to a

changing business and regulatory environment. Actions of

this sort typically are elevated in the first few years after a

significant merger. For example, in 2021 we closed or

consolidated several dozen banking locations in the wake

of the 2020 IBKC merger, and we divested our title

insurance business in 2022. Other dispositions have

occurred in recent years and likely will continue in the

future. Key risks associated with exiting a business include:

• our ability to price a sale transaction appropriately

and otherwise negotiate acceptable terms;

• our ability to identify and implement key client,

personnel, technology systems, and other transition

actions to avoid or minimize negative effects on

retained businesses;

• our ability to mitigate the loss of any pre-tax income

that the exited business produced;

• our ability to assess and manage any loss of synergies

that the exited business had with our retained

businesses; and

• our ability to manage capital, liquidity, and other

challenges that may arise if an exit results in

significant legacy cash expenditures or financial loss.

Reputation Risks

Our ability to conduct and grow our businesses, and to

obtain and retain clients, is highly dependent upon

external perceptions of our business practices and

financial stability. Our reputation is, therefore, a key asset

for us. Our reputation is affected principally by our

business practices and how those practices are perceived

and understood by others. Adverse perceptions regarding

the practices of our competitors, or our industry as a

whole, also may adversely impact our reputation. In

addition, negative perceptions relating to parties with

whom we have important relationships may adversely

impact our reputation. Senior management oversees

processes for reputation risk monitoring, assessment, and

management.

Damage to our reputation could hinder our ability to

access the capital markets or otherwise impact our

liquidity, could hamper our ability to attract new clients

and retain existing ones, could impact the market value of

our stock, could create or aggravate regulatory difficulties,

and could undermine our ability to attract and retain

talented associates, among other things. Adverse impacts

on our reputation, or the reputation of our industry, also

may result in greater regulatory and/or legislative

scrutiny, which may lead to laws or regulations that

change or constrain our business or operations. Events

that result in damage to our reputation also may increase

our litigation risk.

Political and social fragmentation in the U.S., combined

with access to social media platforms, can increase

reputation risk in ways that might not be easily avoided

by traditional means. The predominant culture within the

banking industry remains traditional: in order to preserve

their business reputations, banks generally tend to avoid

direct, public involvement in political or social

controversy. Increasingly, though, certain groups—having

highly specific political or social agendas and with the

ability to communicate their views effectively using social

media platforms—have made it more difficult to maintain

a traditional approach.  While the potential for interest

group pressure has always existed, special interest groups

today, using social media platforms, are more able and

willing to publicize their criticisms. Those criticisms, in

turn, ultimately may be acted upon by legislators or

regulators.

Credit Risks

We face the risk that our clients may not repay their

loans or make payments on their leases and that the

realizable value of collateral and other credit support

may be insufficient to avoid a charge-off. We also face

risks that other counterparties, in a wide range of

situations, may fail to honor their obligations to pay us. In

our business some level of credit charge-offs is

unavoidable and overall levels of credit charge-offs can

vary substantially over time. For example, net charge-offs

were $13 million in 2017 and remained historically very

low through 2019. In 2020, net charge-offs unexpectedly

rose to $120 million, driven strongly by the COVID-induced

recession starting in March. Net charge-offs in 2021 fell

sharply to $2 million, a very low level historically. We

believe this favorable outcome was substantially affected

by our client selection and underwriting processes, along

with our willingness to work with borrowers throughout

the pandemic. Net charge-offs rose in 2022 to a more

normal, but still low, $59 million. In 2023 they rose again

to $170 million, driven partly by continuing normalization

but also, significantly, by a single commercial credit loss,

before falling back to $112 million in 2024.  It is extremely

   

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ITEM 1A. RISK FACTORS
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difficult for banks, and for investors, to know when an

upturn or downturn in credit loss is merely idiosyncratic or

instead portends a major credit cycle change.

Our ability to manage credit risks depends primarily upon

our ability to assess the creditworthiness of loan and lease

clients and other counterparties and the value of any

collateral, including real estate, among other things. We

further manage credit risk by diversifying our loan and

lease portfolio, by managing its granularity, by following

per-relationship lending limits, and by recording and

managing an allowance for loan and lease losses based on

the factors mentioned above and in accordance with

applicable accounting rules. We further manage other

counterparty credit risk in a variety of ways, some of

which are discussed in other parts of this Item 1A and all

of which have as a primary goal the avoidance of having

too much risk concentrated with any single counterparty.

We record loan and lease charge-offs in accordance with

accounting and regulatory guidelines and rules. As

indicated in this Item 1A under the caption Accounting

Risks beginning on page 49, these guidelines and rules

could change and cause provision expense or charge-offs

to be more volatile, or to be recognized on an accelerated

basis, for reasons not always related to the underlying

performance of our portfolio. In fact, starting in 2020,

such an accounting change was made and, when the

COVID recession occurred starting in March, provision for

credit losses significantly increased. Moreover, the SEC or

PCAOB could take accounting positions applicable to our

holding company that may be inconsistent with those

taken by the Federal Reserve or other banking regulators.

Our credit and other loan-management models could be

wrong, or could become wrong if external factors

change. A significant challenge for us is to keep the credit

and other models and approaches we use to originate and

manage loans updated to take into account changes in the

competitive environment, in real estate prices and other

collateral values, in the economy, and in the regulatory

environment, among other things, based on our

experience originating loans and servicing loan portfolios.

Changes in modeling could have significant impacts upon

our reported financial results and condition. In addition,

we use those models and approaches to manage our loan

portfolios and lending businesses. To the extent our

models and approaches are not consistent with underlying

real-world conditions, our management decisions could be

misguided or otherwise affected with substantial adverse

consequences to us.

We must balance the desire for higher income or yield

with taking on greater risk. This challenge applies not only

to credit risk in lending activities but also to default and

interest rate risks regarding investments. Even if less acute

today because short term rates are higher, that traditional

risk-versus-yield challenge remains in place.

As interest rates rise, default risk generally also rises. As

borrowers’ obligations to pay interest increases, financial

weaknesses generally become more evident. Initially this

results in lower consumer credit scores and deteriorating

commercial loan grading, and later results in higher

default rates. Although interest rates began to decline in

last half of 2024, the full effects of the 2022-23 rate hikes

may not yet be fully reflected in loan default rates.  In

addition, there be no assurance that the recent decline in

interest rates will persist.

The composition of our loans inherently increases our

sensitivity to certain credit risks. At December 31, 2024,

approximately 53% of total loans and leases consisted of

the commercial, financial, and industrial (C&I) portfolio,

approximately 23% of total loans and leases consisted of

the commercial real estate (CRE) portfolio, and

approximately 23% consisted of the consumer real estate

portfolio.

Two large components of the C&I portfolio at year end

were loans to finance and insurance companies and loans

to mortgage companies. Taken together, approximately

21% of the C&I portfolio was sensitive to impacts on the

financial services industry. As discussed elsewhere in this

Item 1A with respect to our company, the financial

services industry is more sensitive to interest rate and

yield curve changes, monetary policy, regulatory policy,

changes in real estate and other asset values, and changes

in general economic conditions, than many other

industries. Negative impacts on the industry could

dampen new lending in these lines of business and could

create credit impacts for the loans in our portfolio.

The stability and value of the CRE portfolio depends

substantially upon the financial health of the underlying

real estate assets and upon commercial real estate market

values generally. Many CRE assets are rental properties,

and for those occupancy and vacancy rates are critical

factors along with business trends that impact tenants.

Most of the remainder are owner-occupied, significantly

dependent on the financial health of the borrower. Part of

our rental CRE consists of traditional office space. The

COVID pandemic disrupted traditional office space

demand and utilization. It is highly uncertain what

demand and utilization will be once that disruption fully

ends.

The consumer real estate portfolio contains a number of

concentrations which affect credit risk assessment of the

portfolio.

• Product concentration. The consumer real estate

portfolio consists primarily of consumer installment

loans, and much of the remainder consists of home

equity lines of credit.

• Collateral concentration. This entire category is

secured by residential real estate. Approximately 89%

of the consumer real estate portfolio consists of loans

secured on a first-lien basis.

   

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• Geographic concentration. At year end, about 63% of

the consumer real estate portfolio related to clients in

three states: Florida, Tennessee, and Texas.

The consumer real estate category is highly sensitive to

economic impacts on consumer clients and on residential

real estate values. Job loss or downward job migration, as

well as significant life events such as divorce, death, or

disability, can significantly impact credit evaluations of the

portfolio. Also, regulatory changes, discussed above and

elsewhere in this Item 1A, are more likely to affect the

consumer category and our accounting estimates of credit

loss than other loan types.

Volatility in the oil and gas industry can impact us. At

year-end, approximately 2% of our total loans were

directly related to the oil and gas industry. In addition to

general credit and other risks mentioned elsewhere in this

Item 1A, these businesses and their related assets are

sensitive to a number of factors specific to that industry.

Key among those is global demand for energy and other

products from oil and gas in relation to supply. The

shifting balance between demand and supply is expressed

most simply in prices. Significant oil-price volatility, such

as that experienced in 2020-22, can and often does impact

our overall business in this industry by increasing

provisioning and charge-offs, and by reducing demand for

loans. Another set of risks specific to that industry relate

to environmental concerns, including the risks of

increased regulation or other governmental intervention,

and the risks of adverse changes in consumption habits or

public perceptions generally.

Additional information concerning credit risks and our

management of them is set forth under the caption Asset

Quality beginning on page 70 of our 2024 MD&A (Item 7).

Service Risks

We provide a wide range of services to clients, and the

provision of these services may create claims against us

that we provided them in a manner that harmed the

client or a third party, or was not compliant with

applicable laws or rules. Our services include lending,

loan servicing, fiduciary, custodial, depositary, funds

management, insurance, and advisory services, among

others. We manage these risks primarily through training

programs, compliance programs, and supervision

processes. Additional information concerning these risks

and our management of them, all of which is incorporated

into this Item 1A by this reference, appears under the

captions Operational Risk Management and Compliance

Risk Management , beginning on page 90 of our 2024

MD&A (Item 7).

Regulatory, Legislative, & Legal Risks

The regulatory environment continues to be challenging.

We operate in a heavily regulated industry. Our regulatory

burdens, including both operating restrictions and ongoing

compliance costs, are substantial.

We are subject to many banking, deposit, insurance,

securities brokerage and underwriting, investment

management, and consumer lending regulations in

addition to the rules applicable to all companies publicly

traded in the U.S. securities markets and, in particular, on

the New York Stock Exchange. Failure to comply with

applicable regulations could result in financial, structural,

and operational penalties. In addition, efforts to comply

with applicable regulations may increase our costs and/or

limit our ability to pursue certain business opportunities.

See Supervision and Regulation within Item 1 of this

report, beginning on page 21, for additional information

concerning financial industry regulations. Federal and

state regulations significantly limit the types of activities in

which we, as a financial institution, may engage. In

addition, we are subject to a wide array of other

regulations that govern other aspects of how we conduct

our business, such as in the areas of employment and

intellectual property. In addition, changes in federal and

state laws and regulations are always possible. New laws

and regulations could further limit the amount of interest

or fees we can charge, could further restrict our ability to

collect loans or realize on collateral, could affect the terms

or profitability of the products and services we offer, and

could materially affect us in other ways.

The following paragraphs highlight certain specific

important risk areas related to regulatory matters

currently. These paragraphs do not describe these risks

exhaustively, and they do not describe all such risks that

we face currently. Moreover, the importance of specific

risks will grow or diminish as circumstances change.

We and our Bank both are required to maintain certain

regulatory capital levels and ratios. U.S. capital standards

are discussed in Item 1 of this report, in tabular and

narrative form, under the caption Capital Adequacy within

the Supervision & Regulation section of Item 1 which

starts on page 21. Pressures to maintain appropriate

capital levels and address business needs in a changing

economy may lead to actions that could be dilutive or

otherwise adverse to our shareholders. Such actions could

include:  reduction or elimination of dividends; the

issuance of common or preferred stock, or securities

convertible into stock; or the issuance of any class of stock

   

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ITEM 1A. RISK FACTORS
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having rights that are adverse to those of the holders of

our existing classes of common or preferred stock.

Additional information concerning these risks and our

management of them, all of which is incorporated into

this Item 1A by this reference, appears: under the captions

Capital Adequacy and Prompt Corrective Action (PCA)

within the Supervision & Regulation section of Item 1

which starts on page 21; under the captions Capital,

Capital Risk Management and Adequacy, and Market

Uncertainties and Prospective Trends beginning on pages

82, 90, and 97, respectively, of our 2024 MD&A (Item);

and under the caption Regulatory Capital in Note 12—

Regulatory Capital and Restrictions, beginning on page

157 of our 2024 Financial Statements (Item 8).

Regulation of banks is tiered based on asset size; we are

close to reaching $100 billion, which is the next tier

above us. Regulatory restrictions and costs tend to

increase based on asset tier. For us, significant impacts of

crossing the $100 billion threshold include becoming

subject to Category IV enhanced prudential standards and

becoming at-risk for being subject to a liquidity coverage

ratio requirement. Compliance costs associated with those

and other over-$100-billion regulations are expected to be

significant. New regulations proposed in 2023 would

substantially increase capital and other requirements,

various restrictions, and costs, but whether those

regulations will be adopted, or their final form if adopted,

remains uncertain. With or without new regulations, we

expect that a significant portion of those compliance costs

will need to be borne as we approach the $100 billion tier,

rather than commence abruptly when we enter the tier. 

Indeed, we are already incurring a portion of these costs

as we proceed with upgrading compliance systems,

processes, and staffing before these steps are required.

Additional information concerning these risks, which is

incorporated into this Item 1A by this reference, appears

in: the Supervision & Regulation section of Item 1 which

starts on page 21; and under the caption Other Regulatory

Proposals within the section captioned Market

Uncertainties and Prospective Trends beginning on page

97 of our 2024 MD&A (Item 7).

Legal disputes are an unavoidable part of business, and

the outcome of pending or threatened litigation cannot

be predicted with any certainty. We face the risk of

litigation from clients, associates, vendors, contractual

parties, and other persons, either singly or in class actions,

and from federal or state regulators. Matters of that sort

are pending currently. It is unlikely we will ever experience

a time when no litigation matter is outstanding. We

manage litigation risks through internal controls,

personnel training, insurance, litigation management, our

compliance and ethics processes, and other means.

However, the commencement, outcome, and magnitude

of litigation cannot be predicted or controlled with any

certainty.

Typically, we are unable to estimate our loss exposure

from legal claims until relatively late in the litigation

process, which can make our financial recognition of loss

from litigation unpredictable and highly uneven from

one period to the next. Financial accounting guidance

requires that litigation loss be both estimable and

probable before a reserve may be established (recorded

as a liability on our balance sheet). Under that guidance,

reserves typically are not established for most litigation

matters until after preliminary motions to dismiss or to

narrow the case are resolved, after discovery is

substantially in process, and (in many cases) after

preliminary overtures regarding settlement have

occurred. Potentially significant cases often are pending

for years before any loss is recognized and a reserve is

established. Moreover, many cases experience relatively

little progress toward resolution for a long period followed

by a brief period of rapid development. Lastly, although

most cases are resolved with little or no loss to us, for the

others our loss typically is recognized either all at once

(near the time of resolution) or very unevenly over the life

of the case.

Additional information concerning litigation risks and our

management of them, all of which is incorporated into

this Item 1A by this reference, appears: under the caption

Pre-2009 Mortgage Business Risks beginning on page 48;

under the captions Repurchase Obligations, Market

Uncertainties and Prospective Trends, and Contingent

Liabilities beginning on pages 96, 97, and 102,

respectively, of our 2024 MD&A (Item 7); and under the

caption Contingencies in Note 16—Contingencies and

Other Disclosures, beginning on page 165 of our 2024

Financial Statements (Item 8).

Political volatility within the federal government, both at

the regulatory and Congressional levels, creates

significant potential for major and abrupt shifts in federal

policy regarding bank regulation, taxes, and the

economy, any of which could have significant impacts on

our business and financial performance, as well as that of

our commercial clients. Moreover, political conflict within

and among branches of government, and within and

among government agencies, can rise to a level where

day-to-day functions could be interrupted or impaired,

including as a result of government shutdowns.

Data privacy is becoming a major political concern. The

laws governing it are new and are likely to evolve and

expand. Many non-regulated, non-banking companies

have gathered large amounts of personal details about

millions of people and have the ability to analyze that data

and act on that analysis very quickly. This situation has

prompted governmental responses. Two prominent

responses are the European Union General Data

Protection Regulation and the California Consumer Privacy

Act. Neither is a banking industry regulation, but both

apply to banks in relation to certain clients. Further

general regulation to protect data privacy appears likely.

   

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Banks in the U.S. already operate under privacy-protection

laws and rules, but banking industry regulations in this

area might be enlarged in response to this concern.

Public expectations concerning corporate controls on

emissions of carbon dioxide, methane, and other

greenhouse gases could increase our operating costs in

the future without a corresponding increase in revenue,

could curtail some aspects of our business, or both. At

present, federal environmental regulations do not require

us to monitor the direct or indirect greenhouse gas

emissions associated with building, operating, or

maintaining our physical facilities, nor are we taxed or

fined in relation to those emissions, because such gases

generally are not considered to be pollutants under U.S.

federal law. Changing expectations could pressure us to

physically measure, monitor, and curtail direct emissions

and to estimate indirect emissions or impacts, and

eventually could result in legal requirements to take those

actions or to pay for measured or estimated emissions.

For example, we engage a third party to estimate our

Scope 1 and 2 location-based emissions, even though not

legally required. Whether or not legally required, any such

actions that we take increase our operating costs. In

addition, such expectations could pressure us to re-

evaluate business relationships with certain clients, or

groups of clients, that have suboptimal reputations for

emissions.

Recent state laws and federal disclosure rules concerning

greenhouse gas (GHG) emissions could impose significant

additional costs upon us.  In 2023 the state of California

enacted two laws which, taken together, will require most

larger companies doing business in California to report

annually their greenhouse gas ("GHG") emissions, with an

external assurance requirement, and to report biennially

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

implementing regulations to be adopted by July 1, 2025

and reporting for Scopes 1 and 2 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. These

challenges could take many years to resolve.

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.  There is

considerable uncertainty as to whether the SEC's Climate

Disclosure Rules will be implemented as adopted, both

because the SEC has suspended effectiveness of those

rules while legal challenges are pending and because shifts

in executive and legislative branches of government could

lead the SEC to withdraw or significantly alter those rules.

Direct compliance costs related to these state and federal

requirements, should they become effective, 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 we are required by California law to support

Scope 3 reporting by obtaining GHG-related information

from customers, effectively we would be required to

impose costs and/or inconveniences on our customers.

Other banks in our markets, particularly those that are

both private and not doing business in California, could

provide financial services without those requirements,

putting us at a competitive disadvantage.

Additional information concerning these risks, which is

incorporated into this Item 1A by this reference, appears

under the caption Greenhouse Gas (GHG) Reporting

Regimes within the section captioned Market

Uncertainties and Prospective Trends beginning on page

97 of our 2024 MD&A (Item 7).

General regulation of greenhouse gas emissions, carbon

taxation schemes, government subsidies for "green"

industries over carbon-intensive ones, and other such

political/governmental actions could substantially and

directly impact us or our clients. Even if we are not

directly impacted in any significant manner by such

actions, impacts on clients could have a significant impact

on us.

Risks of Expense Control

Our ability to successfully manage expenses is important

to our long-term success, but in part is subject to risks

beyond our control. Many factors can influence the

amount of our expenses, as well as how quickly they grow.

As our businesses change—whether by acquisition,

expansion, or contraction—additional expenses can arise

from asset purchases, structural reorganization, evolving

business strategies, and changing regulations, among

other things.

We manage controllable expenses and risk through a

variety of means, including selectively outsourcing or

multi-sourcing various functions and procurement

coordination and processes. In recent years we have

actively sought to make strategic businesses more

efficient primarily by investing in technology, re-thinking

and right-sizing our physical facilities, and re-thinking and

right-sizing our workforce and incentive programs. These

efforts usually entail additional near-term expenses in the

   

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form of technology purchases and implementation, facility

closure or renovation costs, and severance costs, while

expected benefits typically are realized with some

uncertainty in the future.

We have also focused on the economic profit generated

by our business activities and prospects. Economic profit

analysis attempts to relate ordinary profit to the capital

employed to create that profit with the goal of achieving

higher risk-adjusted (more efficient) returns on capital

employed overall. Activities with higher capital usage bear

a greater burden in economic profit analysis. The process

is intended to allow us to more efficiently manage

investment and utilization of resources. Economic profit

analysis involves judgment regarding capital allocation and

risk. Errors in those judgments could result in less efficient

allocations of resources and could impact long-term

profitability.

Despite our efforts, our costs could rise due to adverse

structural changes, market shifts, or inflationary

pressures. For example: in 2021 and 2022, compensation

costs rose markedly due to high-demand/low-supply

circumstances beyond our control.

Regulatory compliance expense will increase

substantially when we reach $100 billion in assets, which

is the next regulatory tier above us now. Moreover, we

expect such costs to increase significantly as we

approach that size. Additional information concerning

these expenses appears in Regulatory, Legislative, and

Legal Risks within this Item 1A beginning on page 40.

Geographic Risks

We are subject to risks of operating in various

jurisdictions. To a significant degree our banking business

is exposed to economic, regulatory, natural disaster, and

other risks that primarily impact the southeastern and

south-central U.S. states where we do most of our

traditional lending and deposit taking  business. If those

regions of the U.S. were to experience adversity not

shared by other parts of the country, we would be likely to

experience adversity to a degree not shared by those

competitors which have a broader or different regional

footprint. Examples of these kinds of risks include:

earthquakes in Memphis; hurricanes in Florida, Louisiana,

the Carolina coasts, the Texas coast, and other parts of

our geographic footprint, including the inland areas of

Georgia and North Carolina impacted by Hurricane

Helene; a major change in national health insurance laws

impacting our healthcare-industry clients in middle

Tennessee; and automotive industry plant closures.

Significant cost increases and uncertainties impacting

clients and communities in our coastal markets may

jeopardize the substantial growth trends of those

markets. A significant part of our growth prospects are

concentrated in the major gulf coast markets and several

markets on the southern Atlantic seacoast of the U.S.

Many of our 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, our economic commitment to them

grows, as does our financial exposure to those events.

In 2023 and 2024 it has been widely reported that the

economic costs of hurricane events in the U.S. gulf and

southern Atlantic coastal areas have been rising

significantly. We believe that rising costs are directly

related to growth in those areas.

For example, much of the growth in Florida has been

along the coasts moving out from older cities. A gulf coast

hurricane 50 or 60 years ago had a fair chance of making

landfall in a relatively unpopulated area. Now, the chances

of directly hitting a population center are much higher,

the average population in that center is much higher, and

the average value per building is much higher.

The reported significant increase in casualty risks and

costs is being reflected in property insurance practices

which currently are in significant flux. The insurance

industry is being forced to revise its risk assessment and

premium pricing practices in coastal areas as loss

experience has deviated from earlier predictions,

sometimes badly. In Florida, for example, some smaller

carriers have failed, some larger carriers have left markets,

and remaining carriers have significantly increased the

premiums of hurricane-related insurance, narrowed

coverage, or both.

Coastal states such as Florida and Louisiana have created

last-resort insurance pools for residents who cannot

obtain or afford private property insurance. However, as

the costs borne by those pools increase, either the

premiums will have to rise or general taxation will have to

cover the difference. In addition, those programs

generally do not help business clients.

State and local building and water-control codes are being

revised, but often unevenly and often not retroactive to

pre-existing structures and developments. The current

transition period could be lengthy.

The availability, reliability, and cost of adequate property

insurance is a significant concern for us as well as our

clients in affected markets. Instability in property

insurance has made, and will continue to make, our

business decisions more difficult. That instability increases

our 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, our business will be impacted.

   

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Additional information concerning these risks, which is

incorporated into this Item 1A by this reference, appears

under the caption Coastal Market Growth and Rising Costs

within the section captioned Market Uncertainties and

Prospective Trends beginning on page 97 of our 2024

MD&A (Item 7).

We have international assets, mainly in the form of loans

and letters of credit. Holding non-U.S. assets creates a

number of risks: the risk that taxes, fees, prohibitions, and

other barriers and constraints may be created or

increased by the U.S. or other countries that would impact

our holdings; the risk that currency exchange rates could

move unfavorably so as to diminish the U.S. dollar value of

assets, or to enlarge the U.S. dollar value of liabilities; and

the risk that legal recourse against foreign counterparties

may be limited in unexpected ways. Our ability to manage

those and other risks depends upon a number of factors,

including: our ability to recognize and anticipate

differences in legal, cultural, and other expectations

applicable to clients, regulators, vendors, and other

business partners and counterparties; and our ability to

recognize and manage any exchange rate risks to which

we are exposed.

Insurance

Our property and casualty insurance may not cover, or

may be inadequate to fully cover, the risks that we face,

and we may be adversely affected by a default by

insurers. We use insurance to manage a number of risks,

including damage or destruction of property as well as

legal and other liability. Not all such risks are insured, in

any given insured situation our insurance may be

inadequate to cover all loss, and many risks we face are

uninsurable. For those risks that are insured, we also face

the risks that the insurer may default on its obligations or

that the insurer may refuse to honor them. We treat the

risk of default as a type of credit risk, which we manage by

reviewing the insurers that we use and by striving to use

more than one insurer when practical. The risk of refusal,

whether due to honest disagreement or bad faith, is

inherent in any contractual situation.

A portion of our consumer loan portfolio involves

mortgage default insurance. If a default insurer were to

experience a significant credit downgrade or were to

become insolvent, that could adversely affect the carrying

value of loans insured by that company, which could result

in an immediate increase in our loan loss provision or

write-down of the carrying value of those loans on our

balance sheet and, in either case, a corresponding impact

on our financial results. If many default insurers were to

experience downgrades or insolvency at the same time,

the risk of a financial impact would be amplified.

We own certain bank-owned life insurance policies as

assets on our balance sheet. Some of those policies are

“general account” and others are “separate account.” The

general account policies are subject to the risk that the

carrier might experience a significant downgrade or

become insolvent. The separate account policies are less

susceptible to carrier risk, but do carry a higher risk of

value fluctuations in securities which underlie those

policies. Both risks are managed through periodic reviews

of the carriers and the underlying security values.

However, particularly for the general account policies, our

ability to liquidate a policy in anticipation of an adverse

carrier event is significantly limited by applicable

insurance contracts and regulations as well as by a

substantial tax penalty which could be levied upon early

policy termination.

When we self-insure certain exposures, our estimates of

future expenditures may be inadequate for the actual

expenditures that occur. For example, we self-insure our

associate health-insurance benefit program. We estimate

future expenditures and establish accruals (reserves)

based on the estimates. If actual expenditures were to

exceed our estimates in a future period, our future

expenses could be adversely and unexpectedly increased.

Liquidity & Funding Risks

Liquidity is essential to our business model and a lack of

liquidity, or an increase in the cost of liquidity, may

materially and adversely affect our businesses, results of

operations, financial condition, and cash flows. In

general, the costs of our funding directly impact our costs

of doing business and, therefore, can positively or

negatively affect our financial results. Our funding

requirements in 2024 were met principally by deposits, by

financing from other financial institutions, and by funds

obtained from the capital markets.

Deposits traditionally have provided our most affordable

funds and deposits by far are the largest portion of our

funding. However, deposit trends can shift with

economic conditions and with public perception of risk in

the banking industry or of risk in our Bank in particular.

That shift can be sudden and extreme. If public

confidence fails, deposit levels in our Bank could fall,

perhaps fairly quickly if a tipping point is reached, as

depositors seek safety and are able to move their funds

rapidly. In the mildest version of this scenario, we could be

   

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forced to raise interest we pay on our deposits, raising

costs appreciably. In a severe case, deposit flight could

render the Bank insolvent.

In the first half of 2023, actual events resulted in many of

these impacts. Three large U.S. regional banks failed,

largely as a result of massive deposit run-off. Along with

most other regional banks, we experienced significant but

much more modest levels of run-off, which we

successfully countered with a significant deposit

campaign. We believe significant portions of the outgoing

deposits transferred either to a few of the very largest

U.S. banks or to money market funds which, though not

FDIC insured, are supported by U.S. Treasury debt.

In the aftermath of the 2023 bank failures, the following

factors appear to have been key to institutional risk:

deposits not insured by FDIC insurance were much more

likely to depart rapidly when risk perceptions changed

suddenly; deposit clients who were not traditional clients

with primary banking relationships were much more likely

to depart rapidly; and deposits concentrated in fewer,

high-balance accounts (with FDIC insurance coverage on

only a small portion of the balances) were much more

likely to depart rapidly than deposits spread among many

more-typical clients and accounts. All but the very largest

banks, including our Bank, faced all three of these factors

to an extent. Banks with higher-than-usual levels of one or

more of these factors tended to be more strongly

impacted by the banking crisis events in the first half of

2023.

Deposit levels may be affected, fairly quickly, by changes

in monetary policy. The Federal Reserve began reducing

short-term rates in the last half of 2024 based on

economic events during the year, including reduced

inflationary pressures, employment data, and overall

economic activity. Whether, and to what extent, economic

conditions will support continued short-term rate

reductions in 2025 remains uncertain. Additional

information concerning monetary policy changes appears

under the caption Risks Associated with Monetary Events

beginning on page 37 within this Item 1A, and under the

caption Inflation, Recession, and Federal Reserve Policy

within the Market Uncertainties and Prospective Trends

section of 2024 MD&A (Item 7), which begins on page 97.

Loss of deposits or a change in deposit mix could increase

our funding costs. Deposits generally are a low cost and

stable source of funding.  We compete with banks and

other financial institutions for deposits and as a result, we

could lose deposits in the future, clients may shift their

deposits into high cost products, or we may need to raise

interest rates to avoid deposit attrition.  Funding costs

may also increase if deposits lost are replaced with

wholesale funding.  Higher funding costs reduce our net

interest margin, net interest income, and net income. 

The market among banks for deposits may be impacted

by regulatory funding and liquidity requirements.

Regulatory rules generally provide favorable treatment for

core deposits. Institutions with less than $100 billion of

assets are not required to maintain a minimum Liquidity

Coverage ratio. At or above $100 billion, the requirement

increases with size and certain activities. The largest

banks, which must maintain the highest minimum ratio,

may be incented to compete for core deposits vigorously.

Although mid-sized banks, like ours, are only lightly

impacted by this rule, if some large banks in our markets

take aggressive actions we could lose deposit share or be

compelled to adjust our deposit pricing and practices in

ways that could increase our costs.

Continued availability of funding from the Federal Home

Loan Bank and discount window at the Federal Reserve

depends on policies set by federal agencies, the federal

government and, ultimately, by the U.S. Congress; for

that reason, long-term continuation of current programs

is beyond our control. We have and use credit facilities

with one of the Federal Home Loan Banks. Those facilities

provide funding quickly when we need it, up to program

limits.  Program limits are based, in part, on the fair value

of potential collateral we can provide, which fluctuates

with market conditions.  We also have and use access to

the discount window at the Federal Reserve. Although we

do not view borrowing at the Federal Home Loan Bank or

at the discount window at the Federal Reserve as a

primary source of liquidity, the curtailment or elimination

of our access to these funding sources would significantly

alter how we plan for and manage routine and

contingency funding situations.

We also depend upon financing from private institutional

or other investors by means of the capital markets. In

2020 we issued and sold $150 million of preferred stock,

along with a total of $1.3 billion of senior and

subordinated notes. In 2021, we issued and sold another

$150 million of preferred stock. We believe we could

access the capital markets again if we desired to do so.

Risk remains, however, that capital markets may become

unavailable to us for reasons beyond our control.

A number of more general factors could make funding

more difficult, more expensive, or unavailable on

affordable terms. These include, but are not limited to,

our financial results, organizational or political changes,

adverse impacts on our reputation, changes in the

activities of our business partners, disruptions in the

capital markets, specific events that adversely impact the

financial services industry, counterparty availability,

changes affecting our loan portfolio or other assets,

changes affecting our corporate and regulatory structure,

interest rate fluctuations, ratings agency actions, general

economic conditions, and the legal, regulatory,

accounting, and tax environments governing our funding

transactions. In addition, our ability to raise funds is

strongly affected by the general state of the U.S. and

   

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world economies and financial markets as well as the

policies and capabilities of the U.S. government and its

agencies, and may remain or become increasingly difficult

due to economic and other factors beyond our control.

For additional information concerning these risks, see

Interest Rate and Yield Curve Risks beginning on page 46.

Events affecting interest rates, markets, and other

factors may adversely affect the demand for our

products and services in our fixed income business. As a

result, disruptions in those areas may adversely impact

our earnings in that business unit.

Credit Ratings

Our credit ratings directly affect the availability and cost

of our unsecured funding. Our holding company (the

Corporation) and our Bank currently receive ratings from

rating agencies for unsecured borrowings. A rating below

investment grade typically reduces availability and

increases the cost of market-based funding. A debt rating

of Baa3 or higher by Moody’s Investors Service, or BBB- or

higher by Fitch Ratings, is considered investment grade for

many purposes. At December 31, 2024, both rating

agencies rated the unsecured senior debt of the

Corporation and of the Bank as investment grade. To the

extent that in the future we depend on institutional

borrowing and the capital markets for funding and capital,

we could experience reduced liquidity and increased cost

of unsecured funding if our debt ratings were lowered,

particularly if lowered below investment grade. In

addition, other actions by ratings agencies can create

uncertainty about our ratings in the future and thus can

adversely affect the cost and availability of funding,

including placing us on negative outlook or on watchlist.

Please note that a credit rating is not a recommendation

to buy, sell, or hold securities, is subject to revision or

withdrawal at any time, and should be evaluated

independently of any other rating.

Reductions in our credit ratings could result in

counterparties reducing or terminating their

relationships with us. Some parties with whom we do

business have internal policies restricting the business

that can be done with financial institutions, such as the

Bank, that have credit ratings lower than a certain

threshold.

Reductions in our credit ratings could allow some

counterparties to terminate and immediately force us to

settle certain derivatives agreements, and could force us

to provide additional collateral with respect to certain

derivatives agreements. Under our margin agreements,

we are required to post collateral in the amount of our

derivative liability positions with derivative

counterparties. FHN could be asked to post collateral of an

undetermined amount based on changes in credit ratings

and derivative value.

Interest Rate & Yield Curve Risks

We are subject to interest rate risk because a significant

portion of our business involves borrowing and lending

money and investing in financial instruments. A

considerable portion of our funding comes from short-

term and demand deposits, while a sizeable portion of our

lending and investing is in medium-term and long-term

instruments. Changes in interest rates directly impact our

revenues and expenses and could expand or compress our

net interest margin. We actively manage our balance

sheet to control the risks of a reduction in net interest

margin brought about by ordinary fluctuations in rates. In

addition, our fixed income business tends to perform

better when rates decline or markets are moderately

volatile, which tends to partially offset net interest margin

compression.

A flat or inverted yield curve may reduce our net interest

margin and adversely affect our lending and fixed income

businesses. The yield curve is a reflection of interest rates,

at various maturities, applicable to assets and liabilities.

The yield curve is steep when short-term rates are much

lower than long-term rates; it is flat when short-term rates

and long-term rates are nearly the same; and it is inverted

when short-term rates exceed long-term rates.

Historically, the yield curve is usually upward sloping

(higher rates for longer terms). However, the yield curve

can be relatively flat or inverted (downward sloping).

Inversion normally is rare, but has happened several times

in the past few years. In fact, inversion was continuous

from the second half of 2022 through September 2024,

when the Federal Reserve began to reduce short-term

interest rates and the yield curve flattened. A flat or

inverted yield curve tends to decrease net interest margin,

which would adversely impact our lending businesses, and

it tends to reduce demand for long-term debt securities,

which would adversely impact the revenues of our fixed

income business. During late 2022 our net interest margin

overall did not compress, but actually expanded, as we

were able to increase average loan rates faster than

average funding rates. In 2023, our net interest margin

compressed throughout much of the year as funding costs

accelerated, but still expanded on a full year basis

compared to 2022.  Although compression eased late in

2023 and in 2024 as short-term interest rate increases

ended and reductions began, net interest margin for 2024

declined from 2023 as the yield curve remained inverted

for much of 2024. Compression continued to ease in the

fourth quarter of 2024, with net interest margin

   

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expanding as compared with both the third quarter of

2024 and the fourth quarter of 2023.

Market-indexed deposit products are very sensitive to

changes in short-term rates, and our use of them

increases our exposure to such changes. If market rates

rise, an increase in those deposit rates may be necessary

before we are able to effect similar increases in loan rates.

Generally, we try to moderate our use of these products

when rates are rising.

Expectations by the market regarding the direction of

future interest rate movements can impact the demand

for and value of our fixed income investments and can

impact the revenues of our fixed income business. This

risk is most apparent during times when strong

expectations have not yet been reflected in market rates,

or when expectations are especially weak or uncertain. 

Over a business cycle period of many years, there are

typically "up" parts of the cycle in which revenues increase

and "down" parts of the cycle in which revenues decrease,

with each being driven principally by changes in the

operating environment.  The most recent "down" part of

the cycle started in 2022 and continued through 2023. 

The improvement in the shape of the yield curve in the

second half of 2024 and the resulting increase in fixed

income revenues from 2023 to 2024 could signal a shift

toward the "up" part of the cycle.

Asset Inventories & Market Risks

The trading securities inventories and loans held for sale

in our fixed income business are subject to market and

credit risks. In the course of that business we hold trading

securities inventory and loan positions for purposes of

distribution to clients, and we are exposed to certain

market risks attributable principally to interest rate risk

and credit risk associated with those assets. We manage

the risks of holding inventories of securities and loans

through certain market risk management policies and

procedures, including, for example, hedging activities and

Value-at-Risk (“VaR”) limits, trading policies, modeling,

and stress analyses. Average fixed income trading

securities (long positions) were $1.4 billion for 2024 and

$1.2 billion for 2023. Average fixed income trading

liabilities (short positions) were $555 million and $301

million for 2024 and 2023, respectively. Average loans

held for sale in our fixed income business were

$347 million and $552 million for 2024 and 2023,

respectively. Additional information concerning these risks

and our management of them, all of which is incorporated

into this Item 1A by this reference, appears under the

caption Market Risk Management beginning on page 87 of

our 2024 MD&A (Item 7).

Declines, disruptions, or precipitous changes in markets

or market prices can adversely affect our fees and other

income sources. We earn fees and other income related

to our brokerage business and our management of assets

for clients. Declines, disruptions, or precipitous changes in

markets or market prices can adversely affect those

revenue sources.

Significant changes to the securities market’s

performance can have a material impact upon our assets,

liabilities, and financial results. We have a number of

assets and obligations that are linked, directly or

indirectly, to major securities markets. Significant changes

in market performance can have a material impact upon

our assets, liabilities, and financial results.

An example of that linkage is our obligation to fund our

pension plan so that it may satisfy benefit claims in the

future. Our pension funding obligations generally depend

upon actuarial estimates of benefits claims, the discount

rate used to estimate the present values of those claims,

and estimates of plan asset values. Our obligations to fund

the plan can be affected by changes in any of those three

factors. Accordingly, our obligations diminish if the plan’s

investments perform better than expectations or if

estimates are changed anticipating better performance,

and can grow if those investments perform poorly or if

expectations worsen. A rise in interest rates is likely to

negatively impact the values of fixed income assets held in

the plan, but would also result in an increase in the

discount rate used to measure the present value of future

benefit payments. Similarly, our obligations can be

impacted by changes in mortality tables or other actuarial

inputs.  We manage the risk of rate changes by investing

plan assets in fixed income securities having maturities

aligned with the expected timing of payouts. Because

there are no new participants, the actuarial-input risk

should slowly diminish over time.

Changes in our funding obligation generally translate into

positive or negative changes in our pension expense over

time, which in turn affects our financial performance. Our

obligations and expenses relative to the plan can be

affected by many other things, including changes in our

participating associate population and changes to the plan

itself. Although we have taken actions intended to

moderate future volatility in this area, risk of some level of

volatility is unavoidable.

Our hedging activities may be ineffective, may not

adequately hedge our risks, and are subject to credit risk.

In the normal course of our businesses we attempt to

create partial or full economic hedges of various, though

not all, financial risks. For example: our fixed income unit

manages interest rate risk on a portion of its trading

portfolio with short positions, futures, and options

contracts; we hedge the risk of interest rate movements

related to the gap between the time we originate

mortgage loans and the time we sell them; and we use

derivatives, including swaps, swaptions, caps, forward

contracts, options, and collars, that are designed to

moderate the impact on earnings as interest rates change.

   

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Generally, in the last example these hedged items include

certain term borrowings and certain held-to-maturity

loans.

Hedging creates certain risks for us, including the risk that

the other party to the hedge transaction will fail to

perform (counterparty risk, which is a type of credit risk),

and the risk that the hedge will not fully protect us from

loss as intended (hedge failure risk). Unexpected

counterparty failure or hedge failure could have a

significant adverse effect on our liquidity and earnings.

Mortgage Business Risks

Two of our mortgage-related businesses—mortgage

origination and lending to mortgage companies—are

highly sensitive to interest rates and rate cycles. When

rates are higher, client activity (and our related income)

tends to be muted. Lower rates tend to foster higher

activity. The U.S. experienced extremely low interest rates

for several years, ending in early 2022. Rising rates in 2022

substantially curtailed our income from these businesses.

For example, by late 2022 consumer mortgage

refinancings fell to extremely low levels. These impacts

largely continued throughout 2023 and 2024, but

modestly abated in the second half of 2024 as the Federal

Reserve began reducing short-term rates. Although lower

mortgage rates in the future, if and when they occur,

should moderate these impacts, it is very unlikely that the

low rate environment of 2020-21 will return. Additional

information concerning rates and their impacts upon us is

presented: under the caption Cyclicality within the Other

Business Information section of Item 1, which starts on

page 19; in Risks Associated with Monetary Events

beginning on page 37; in Interest Rate and Yield Curve

Risks beginning on page 46; and under the caption

Inflation, Recession, and Federal Reserve Policy within the

Market Uncertainties and Prospective Trends section of

our 2024 MD&A (Item 7), beginning on page 97.

We have contractual risks from our mortgage business.

Our traditional mortgage business primarily consists of

helping clients obtain home mortgages which we sell,

rather than hold, or which qualify for a government-

guarantee program. The mortgage terms conform to the

requirements of the mortgage buyers or government

agencies, and we make representations to those buyers or

agencies concerning conformity of each mortgage at

origination. Although the buyers and agencies generally

take the risk that a mortgage defaults, we retain the risk

that our representations were materially incorrect. In such

a case, the buyer or agency generally has the power to

force us to take the loan back for its face value, or to make

the buyer or agency whole for its loss.

Some government mortgage programs could impose

penalties on us for misrepresentations at the time of

obtaining benefits under the program. Penalties can be

severe, up to three times the agency’s loss. As a result,

mortgage origination processes need to emphasize being

thorough and correct, in compliance with all agency

standards. Those processes tend to slow the mortgage

lending process for clients and increase the complexity of

the paperwork.

The mortgage servicing business creates regulatory risks. 

Servicing requires continual interaction with consumer

clients. Federal, state, and sometimes local laws regulate

when and how we interact with consumer clients. The

requirements can be complex and difficult for us to

administer, especially if a client experiences difficulty with

the mortgage loan. Failure to follow the applicable rules

can result in significant penalties or other loss for us.

Pre-2009 Mortgage Business Risks

We have risks from the mortgage-related businesses that

legacy First Horizon exited in 2008, including mortgage

loan repurchase and loss-reimbursement risk, and claims

of non-compliance with contractual and regulatory

requirements. In 2008 we exited our national mortgage

and related lending businesses. We retain the risk of

liability to clients and contractual parties with whom we

dealt in the course of operating those businesses.

Additional information concerning risks related to our

former mortgage businesses and our management of

them, all of which is incorporated into this Item 1A by this

reference, is set forth: under the captions Repurchase

Obligations beginning on page 96, and Contingent

Liabilities beginning on page 102, of our 2024 MD&A (Item

7); and under the caption Mortgage Loan Repurchase and

Foreclosure Liability, within Note 16—Contingencies and

Other Disclosures of our 2024 Financial Statements (Item

8), which Note begins on page 165.

   

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Accounting Risks

The preparation of our consolidated financial statements

in conformity with U.S. generally accepted accounting

principles requires management to make significant

estimates that affect the financial statements. The

estimate that is consistently one of our most critical is the

level of the allowance for credit losses. However, other

estimates can be highly significant at discrete times or

during periods of varying length, for example the

valuation (or impairment) of our deferred tax assets.

Estimates are made at specific points in time. As actual

events unfold, estimates are adjusted accordingly. Due to

the inherently uncertain nature of these estimates, it is

possible that, at some time in the future, we may

significantly increase the allowance for credit losses and/

or sustain credit losses that are significantly higher than

the provided allowance, or we may recognize a significant

provision for impairment of assets, or we may make some

other adjustment that will differ materially from the

estimates that we make today. Moreover, in some cases,

especially concerning litigation and other contingency

matters where critical information is inadequate, often we

are unable to make estimates until fairly late in a lengthy

process.

A significant merger or acquisition requires us to make

many estimates, including the fair values of acquired

assets and liabilities. With larger transactions, fair value

and other estimations can take up to four quarters to

finalize. These estimates, and their revisions, can have a

substantial effect on the presentation of our financial

condition and operating results after the transaction

closes. In addition, the excess of the value “paid” by us in

the merger or acquisition over the fair value of the assets

acquired, net of liabilities assumed, is recorded as

goodwill. Goodwill is subject to periodic impairment

assessment, a process that can result in impairment

expense which may be significant and sudden.

Changes in accounting rules can significantly affect how

we record and report assets, liabilities, revenues,

expenses, and earnings. Although such changes generally

affect all companies in a given industry, in practice

changes sometimes have a disparate impact due to

differences in the circumstances or business operations of

companies within the same industry.

One such accounting change, ASU 2016-13,

“Measurement of Credit Losses on Financial

Instruments,” substantially impacts the measurement

and recognition of credit losses for certain assets,

including most loans. Under ASU 2016-13, when we

make or acquire a new loan, we are required to recognize

immediately the “current expected credit loss,” or “CECL,”

of that loan. We will also re-evaluate CECL each quarter

that the loan is outstanding. CECL is the difference

between our cost and the net amount we expect to collect

over the life of the loan using certain estimation methods

that incorporate macroeconomic forecasts and our

experience with other, similar loans. In contrast, the

pre-2020 accounting standard delayed recognition until

loss was “probable” (very likely). We adopted ASU

2016-13 and CECL accounting starting in 2020, with the

impact on regulatory capital having a phase-in period.

Starting in 2020, recognition of estimated credit loss was

significantly accelerated compared to pre-CECL practice,

which was aggravated by the actual and projected effects

of the pandemic. That acceleration could happen again,

especially if a recession occurs or is expected to occur.

Additional information concerning ASU 2016-13 appears

in Item 1 under the caption CECL Accounting and

COVID-19 within the section entitled Significant Business

Developments Over Past Five Years, which begins on page

12, all of which information is incorporated into this Item

1A by reference.

In comparison with former (pre-2020) standards, CECL

accounting tends to: result in a significant increase in our

provision for credit losses (expense) and allowance

(reserve) during any period of loan growth, including

organic growth and growth created by acquisition or

merger; through increased provision, adversely impact

our earnings and, correspondingly, our regulatory capital

levels; and enhance volatility in loan loss provision and

allowance levels from quarter to quarter and year to

year, especially during times when the economy is in

transition or experiencing significant volatility. Moreover,

CECL creates an incentive for banks to reduce new lending

in the “down” part of the economic cycle in order to

reduce loss recognition and conserve regulatory capital.

That perverse incentive could, nationwide, prolong a

down cycle in the economy and delay a recovery.

Changes in regulatory rules can create significant

accounting impacts for us. Because we operate in a

regulated industry, we prepare regulatory financial

reports based on regulatory accounting standards.

Changes in those standards can have significant impacts

upon us in terms of regulatory compliance. In addition,

such changes can impact our ordinary financial reporting,

and uncertainties related to regulatory changes can create

uncertainties in our financial reporting.

Our controls and procedures may fail or be

circumvented. Internal controls, disclosure controls and

procedures, and corporate governance policies and

procedures (“controls and procedures”) must be effective

in order to provide assurance that financial reports are

materially accurate. A failure or circumvention of our

controls and procedures or failure to comply with

regulations related to controls and procedures could have

a material adverse effect on our business, financial

condition and results of operations.

   

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Share Owning & Governance Risks

The principal source of cash flow to pay dividends on our

stock, as well as service our debt, is dividends and

distributions from the Bank, and the Bank may become

unable to pay dividends to us without regulatory

approval. First Horizon Corporation primarily depends

upon common dividends from the Bank for cash to fund

dividends we pay to our common and preferred

shareholders, and to service our outstanding debt.

Regulatory constraints might constrain or prevent the

Bank from declaring and paying dividends to us in future

years without regulatory approval. Applying the dividend

restrictions imposed under applicable federal and state

rules, the Bank’s total amount available for dividends,

without obtaining regulatory approval, was $374 million at

January 1, 2025.

Also, we are required to provide financial support to the

Bank. Accordingly, at any given time a portion of our funds

may need to be used for that purpose and therefore

would be unavailable for dividends.

Furthermore, the Federal Reserve has issued policy

statements generally requiring insured banks and bank

holding companies only to pay dividends out of current

operating earnings. The Federal Reserve has released a

supervisory letter advising bank holding companies,

among other things, that as a general matter a bank

holding company should inform the Federal Reserve and

should eliminate, defer or significantly reduce its

dividends if (i) the bank holding company’s net income

available to shareholders for the past four quarters, net of

dividends previously paid during that period, is not

sufficient to fully fund the dividends; (ii) the bank holding

company’s prospective rate of earnings is not consistent

with the bank holding company’s capital needs and overall

current and prospective financial condition; or (iii) the

bank holding company will not meet, or is in danger of not

meeting, its minimum regulatory capital adequacy ratios.

Our shareholders may suffer dilution if we raise capital

through public or private equity financings to fund our

operations, to increase our capital, or to expand. If we

raise funds by issuing equity securities or instruments that

are convertible into equity securities, the percentage

ownership of our current common shareholders will be

reduced, the new equity securities may have rights and

preferences superior to those of our common or

outstanding preferred stock, and any additional issuances

could be at a sales price which is dilutive to current

shareholders. We may also issue equity securities directly

as consideration for acquisitions we may make that would

be dilutive to shareholders in terms of voting power and

share-of-ownership, and could be dilutive financially or

economically.

The IBKC merger, for example, resulted in a significant

increase in our outstanding shares. In 2020, we issued to

former IBKC shareholders common shares representing

about 44% of our post-closing outstanding shares.

Our issuance of ordinary preferred stock raises

regulatory capital without issuing or diluting common

shares, but creates or expands our general obligation to

pay all preferred dividends ahead of any common

dividends. Currently we have five series of preferred stock

outstanding, one issued by the Bank and four by First

Horizon Corporation. Subject to capital needs and market

conditions, additional series may be issued in the future.

Provisions of Tennessee law, and certain provisions of

our charter and bylaws, could make it more difficult for a

third party to acquire control of us or could have the

effect of discouraging a third party from attempting to

acquire control of us. These provisions could make it

more difficult for a third party to acquire us even if an

acquisition might be at a price attractive to many of our

shareholders. In addition, federal banking laws prohibit

non-financial-industry companies from owning a bank and

require regulatory approval of any change in control of a

bank.

Certain legal rights of holders of our common stock and

of depositary shares related to our preferred stock to

pursue claims against us or the depositary, as applicable,

are limited by our bylaws and by the terms of the deposit

agreements. Our bylaws provide that, unless we consent

in writing to an alternative forum, a state or federal court

located within Shelby County in the State of Tennessee

will be the sole and exclusive forum for (i) any derivative

action or proceeding brought in our right or name, (ii) any

action asserting a claim of breach of a fiduciary duty owed

by any director, officer or other associate of ours to us or

our shareholders, (iii) any action asserting a claim against

us or any director, officer or other associate of ours arising

pursuant to any provision of the Tennessee Business

Corporation Act or our charter or bylaws or (iv) any action

asserting a claim against us or any director, officer or

other associate of ours that is governed by the internal

affairs doctrine. In addition, each deposit agreement

between us and the depositary, which governs the rights

of the depositary shares related to our Series B and C

preferred stock (respectively), provides that any action or

proceeding arising out of or relating in any way to the

deposit agreement may only be brought in a state court

located in the State of New York or in the United States

District Court for the Southern District of New York.

The foregoing exclusive forum clauses may have the effect

of discouraging lawsuits against us or our directors,

officers or other associates, or against the depositary, as

applicable. Exclusive forum clauses may also lead to

increased costs to bring a claim or may limit the ability of

holders of our common stock or depositary shares to bring

a claim in a judicial forum they find favorable.

   

	51	2024 FORM 10-K ANNUAL REPORT

ITEM 1A. RISK FACTORS
Table of Contents

In addition, the exclusive forum clauses in our bylaws and

deposit agreements could apply to actions or proceedings

that may arise under the federal securities laws,

depending on the nature of the claim alleged. To the

extent these exclusive forum clauses restrict the courts in

which holders of our common stock or depositary shares

may bring claims arising under the federal securities laws,

there is uncertainty as to whether a court would enforce

such provisions. These exclusive forum provisions do not

mean that holders of our common stock or depositary

shares have waived our obligations to comply with the

federal securities laws and the rules and regulations

thereunder.

   

	52	2024 FORM 10-K ANNUAL REPORT

ITEM 1B. UNRESOLVED STAFF COMMENTS THROUGH  ITEM 4. MINE SAFETY DISCLOSURES
Table of Contents

Item 1B.Unresolved Staff Comments

Not applicable.

Item 1C.Cybersecurity

The Cybersecurity Risk Management section within our 2024 MD&A (Item 7), beginning on page 91 of this report, is

incorporated herein by reference.

Item 2.Properties

We own or lease no single physical property that we

consider to be materially important to our financial

condition or results from operations.

Our banking centers, our fixed income and capital markets

offices, our wealth management offices, and our loan

origination, processing, and other physical offices, in the

aggregate, remain important to our ability to deliver

financial services to a large portion of our clients. For

many years, banking center usage by clients has slowly

declined, and for many years we have consolidated

banking center locations in response to changing

utilization patterns. We expect that long-term trend to

continue. Information concerning our business locations,

including banking center and other client-facing facilities,

at year-end 2024 is provided under the caption Principal

Businesses, Brands, & Locations within the Our Businesses

section of Item 1 of this report, which begins on page 8;

that information is incorporated into this Item 2 by this

reference.

In addition to the banking centers and other offices

mentioned in Item 1, we own or lease other offices and

office buildings, such as our headquarters building at 165

Madison Avenue in downtown Memphis, Tennessee.

Although some of these other offices contain banking

centers or other client-facing offices, primarily they are

used for operational and administrative functions. Our

operational and administrative offices are located in

several cities where we have banking centers.

At December 31, 2024, we believe our physical properties

are suitable and adequate for the businesses we conduct.

Item 3.Legal Proceedings

The Contingencies section from Note 16—Contingencies and Other Disclosures, beginning on page 165 of this report within

our 2024 Financial Statements (Item 8), is incorporated herein by reference.

Item 4.Mine Safety Disclosures

Not applicable.

   

	53	2024 FORM 10-K ANNUAL REPORT

SUPPLEMENTAL PART I INFORMATION
Table of Contents

Supplemental Part I Information

Executive Officers of the Registrant

The following is a list of our executive officers, as defined

by Securities and Exchange Commission rules, along with

certain supplemental information, all presented as of

February 20, 2025. The executive officers generally are

elected at the April meeting of our Board of Directors for a

term of one year and until their successors are elected

and qualified.

Mr. Jordan has an Employment Agreement with us. Under

it, Mr. Jordan will continue to be employed as President

and Chief Executive Officer for a term expiring August 3,

2028. Mr. Jordan’s employment will terminate when that

term expires unless the parties mutually agree later to

extend the term. Our mandatory retirement policy is

waived during the Employment Agreement's term.

Name & Age	Current (Year First Elected to Office) and Recent Offices & Positions
Elizabeth A. Ardoin Age: 55	Senior Executive Vice President—Chief Communications Officer of First Horizon & the Bank (2020) Following the closing of the merger of equals between First Horizon and IBKC, Ms. Ardoin assumed the role of Senior Executive Vice President—Chief Communications Officer of First Horizon and the Bank. Prior to the merger, she had several roles with IBERIABANK Corporation and IBERIABANK starting in 2002, the most recent of which was Senior Executive Vice President and Director of Communications (2002-2020), which included marketing, public relations, human resources, and corporate real estate, and she served as chief of staff to the CEO.
Ashley W. Argo Age: 46	Senior Executive Vice President—Chief Risk Officer of First Horizon & the Bank (2025) Mrs. Argo assumed the role of Senior Executive Vice President – Chief Risk Officer of First Horizon & the Bank in January 2025, after serving as Deputy Chief Risk Officer since 2024. Previously, starting in 2004, Mrs. Argo served in several roles with First Horizon and the Bank, including (prior to her role as Deputy Chief Risk Officer) Director of Credit and Financial Risk (2020-2024).
Hope Dmuchowski Age: 46 Principal Financial Officer	Senior Executive Vice President—Chief Financial Officer of First Horizon & the Bank (2021) Ms. Dmuchowski was elected to her current position in November 2021. Previously, she was Executive Vice President, Head of Financial Planning and Analysis and Management Reporting for Truist Financial Corp. (Sept.-Nov. 2021); Executive Vice President, Chief Financial Officer Corporate Banking, Commercial Banking and Corporate Groups for Truist (2019-2021); Executive Vice President, Chief Financial Officer Group Director for BB&T Corp. (2017-2019); and Sr. Vice President, Chief Financial and Operations Officer—Enterprise Operations Services for BB&T (2013-2017). Her career with BB&T, a predecessor of Truist, started in 2007.
Jeff L. Fleming Age: 63 Principal Accounting Officer	Executive Vice President—Chief Accounting Officer and Corporate Controller of First Horizon & the Bank (2012) Mr. Fleming assumed the role of Executive Vice President—Chief Accounting Officer and Corporate Controller in 2012. Previously, starting in 1984, he held several positions with us, most recently (before his current role) Executive Vice President—Corporate Controller (2010-2011).
Tanya L. Hart Age: 55	Senior Executive Vice President—Chief Human Resources Officer of First Horizon & the Bank (2024) Mrs. Hart assumed the role of Senior Executive Vice President—Chief Human Resources Officer of First Horizon & the Bank in October 2024, after serving as Executive Vice President—Chief Human Resources Officer since November 2021.  Previously, starting in 1991, Mrs. Hart served in several roles with First Horizon and the Bank, most recently (before her current role) Executive Vice President, Total Rewards, Executive Vice President (2016-2021)
Thomas Hung Age: 43	Senior Executive Vice President—Chief Credit Officer of First Horizon & the Bank (2024) Mr. Hung assumed the role of Senior Executive Vice President – Chief Credit Officer of First Horizon & the Bank in 2024. Previously, starting in 2019, he served the Bank in several roles, the most recent of which (before his current role) was Executive Vice President – Deputy Chief Credit Officer (2024).  Prior to that, he served as Executive Vice President – Franchise Finance (2022-2024) and before that, Senior Vice President – Franchise Finance (2019-2022).

   

	54	2024 FORM 10-K ANNUAL REPORT

SUPPLEMENTAL PART I INFORMATION
Table of Contents

Name & Age	Current (Year First Elected to Office) and Recent Offices & Positions
D. Bryan Jordan Age: 63 Principal Executive Officer	President & Chief Executive Officer (2008) and Chairman of the Board (2012-2020 and since 2022) of First Horizon & the Bank Mr. Jordan became President and Chief Executive Officer in 2008. He was Chairman of the Board from 2012 until we closed the merger of equals between First Horizon and IBKC in 2020. He resumed being Chairman in 2022 on the second anniversary of the IBKC merger. From 2007 until 2008 Mr. Jordan was Executive Vice President and Chief Financial Officer of First Horizon and the Bank. From 2000 until 2002 Mr. Jordan was Comptroller, and from 2002 until 2007 Mr. Jordan was Chief Financial Officer, of Regions Financial Corp. During that time he was also an Executive Vice President and a Senior Executive Vice President of Regions.
Tammy S. LoCascio Age: 56	Senior Executive Vice President—Chief Operating Officer of First Horizon & the Bank (2021) Following the closing of the merger of equals between First Horizon and IBKC in 2020, Ms. LoCascio assumed the role of Senior Executive Vice President—Chief Human Resources Officer of First Horizon and the Bank. Prior to the merger, starting in 2011, she served in several roles with the Bank, most recently Executive Vice President—Consumer Banking (2017-2020). In that role she led the retail, private client/wealth management, mortgage, and small business units.
David T. Popwell Age: 65	Senior Executive Vice President—Senior Strategic Executive of First Horizon & the Bank (2024) From the closing of the merger of equals between First Horizon and IBKC in 2020 until September 2024, Mr. Popwell served as President—Specialty Banking of First Horizon and the Bank. Prior to the merger, starting in 2007, he served in several roles, the most recent of which was President—Regional Banking (2013-2020). From 2004 to 2007 Mr. Popwell was President of SunTrust Bank—Memphis, and prior to that was an Executive Vice President of National Commerce Financial Corp.
Anthony J. Restel Age: 55	Senior Executive Vice President—Chief Banking Officer of First Horizon & the Bank (2024) From 2021 through September 2024, Mr. Restel served as President—Regional Banking of First Horizon and the Bank.  Following the closing of the merger of equals between First Horizon and IBKC in 2020, Mr. Restel assumed the role of Senior Executive Vice President—Chief Operating Officer of First Horizon and the Bank. From July to November 2021, Mr. Restel also acted as interim Chief Financial Officer. Prior to the merger, he had several roles with IBERIABANK Corporation and IBERIABANK starting in 2001, the most recent of which was Vice Chairman and Chief Financial Officer (2005-2020). During his tenure as Chief Financial Officer, Mr. Restel also served as Chief Credit Officer of IBERIABANK (2007-2009).
T. Lang Wiseman Age: 53	Senior Executive Vice President—General Counsel of First Horizon & the Bank (2025) Mr. Wiseman assumed the role of Senior Executive Vice President – General Counsel of First Horizon & the Bank in January 2025. Previously, starting in 2024, Mr. Wiseman joined the organization as Executive Vice President – Deputy General Counsel. From 2022-2024, he was a shareholder in the law firm of Baker, Donelson, Bearman, Caldwell & Berkowitz, PC.  Previously, Mr. Wiseman served as Deputy Governor and Chief Counsel to the Governor of the State of Tennessee from 2019—2021.

Selected Other Corporate Officers

Shannon M. Hernandez

Senior Vice President, Assistant

General Counsel, and Corporate

Secretary

Dane P. Smith

Senior Vice President

Corporate Treasurer

   

	55	2024 FORM 10-K ANNUAL REPORT

ITEM 5. MARKET FOR COMMON EQUITY, STOCKHOLDER MATTERS, & EQUITY PURCHASES AND ITEM 6.
Table of Contents

PART  II

Item 5.Market for Registrant's Common Equity,

Related Stockholder Matters and Issuer

Purchases of Equity Securities

Market for Our Common Stock; Common Shareholders

Our sole class of common stock, $0.625 par value, is listed

and trades on the New York Stock Exchange LLC under the

symbol FHN. At December 31, 2024 , there were

approximately 8,317 shareholders of record of our

common stock.

Sales of Unregistered Common and Preferred Stock

Common Stock. Not applicable.

Preferred Stock. Not applicable.

Repurchases by Us of Our Common Stock

Under authorizations from our Board of Directors, we may

repurchase common shares from time to time for general

purposes, subject to various factors, including FHN's

capital position, financial performance, expected capital

market impacts of strategic initiatives, market conditions,

business conditions, and regulatory considerations, as well

as to cover tax obligations associated with stock-based

awards under our compensation plans. We evaluate the

level of capital and take action designed to generate or

use capital as appropriate for the interests of the

shareholders.

Additional information concerning repurchase activity

during the final three months of 2024 is presented in

Tables 7.20a, 7.20b and 7.20c, and the surrounding notes

and other text under the caption Common Stock Purchase

Programs beginning on page 84 of our 2024 MD&A (Item

7), which information is incorporated herein by this

reference.

Total Shareholder Return Performance Graph

The “Total Shareholder Return 2019-2024” performance

graph appearing on the next page, along with Table 5.1, is

“furnished” and not “filed” as part of this report, and is

not deemed to be soliciting material. Notwithstanding

anything to the contrary set forth in this report or in any

of our previous filings under the Securities Act of 1933, as

amended, or the Securities Exchange Act of 1934, as

amended, that might incorporate future filings by

reference, including this report in whole or in part, neither

the “Total Shareholder Return 2019-2024” performance

graph nor Table 5.1 shall be incorporated by reference

into any such filings.

The “Total Shareholder Return 2019-2024” performance

graph compares the yearly percentage change in our

cumulative total shareholder return with returns based on

the Standard and Poor’s 500 and Keefe, Bruyette & Woods

(KBW) Regional and Nasdaq Bank Indices. The graph

assumes $100 is invested on December 31, 2019 and

dividends are reinvested. Returns are market-

capitalization weighted.

At year-end 2019 and earlier, FHN was included in the

KBW Regional Bank Index. At year-end 2020 and later,

FHN is included in the KBW Nasdaq Bank Index. The

change in index resulted from the merger of equals in

2020 between FHN and IBERIABANK Corporation.

   

	56	2024 FORM 10-K ANNUAL REPORT

ITEM 5. MARKET FOR COMMON EQUITY, STOCKHOLDER MATTERS, & EQUITY PURCHASES AND ITEM 6.
Table of Contents

At year-end 2022, FHN's stock price was significantly

boosted by the then-pending acquisition of FHN by TD for

an all-cash purchase price of over $25 per FHN share.

After TD was unable to obtain regulatory approval, the TD

Transaction was terminated by the parties in May 2023.

Table 5.1 

TOTAL SHAREHOLDER RETURN DATA

	2019	2020	2021	2022	2023	2024
First Horizon Corporation (FHN)	$100.00	$81.83	$108.52	$167.06	$101.06	$149.23
S&P 500 Index	100.00	118.39	152.34	124.73	157.48	196.85
KBW Regional Bank Index (KRX)	100.00	91.32	124.78	116.15	115.69	130.96
KBW Nasdaq Bank Index (BKX)	100.00	89.69	124.08	97.53	96.66	132.63

Data source: Bloomberg

Item 6.[Reserved]

   

	57	2024 FORM 10-K ANNUAL REPORT

ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
Table of Contents

Item 7.Management's Discussion and Analysis

of Financial Condition and Results of

Operations

TABLE OF ITEM 7 TOPICS

Introduction	58
Financial Performance Summary	58
Results of Operations	59
Analysis of Financial Condition	67
Capital	82
Risk Management	86
Repurchase Obligations	96
Market Uncertainties and Prospective Trends	97
Critical Accounting Policies and Estimates	100
Accounting Changes	102
Non-GAAP Information	102

   

	58	2024 FORM 10-K ANNUAL REPORT

ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
Table of Contents

Introduction

First Horizon Corporation (NYSE common stock trading

symbol “FHN”) is a financial holding company

headquartered in Memphis, Tennessee. FHN’s principal

subsidiary, and only banking subsidiary, is First Horizon

Bank. Through the Bank and other subsidiaries, FHN offers

commercial, private banking, consumer, small business,

wealth and trust management, retail brokerage, capital

markets, fixed income, and mortgage banking services.

At December 31, 2024, FHN had over 450 business

locations in 24 states, including over 400 banking centers

in 12 states, and employed approximately 7,200

associates.

This MD&A should be read in conjunction with the

accompanying audited Consolidated Financial Statements

and Notes to the Consolidated Financial Statements in

Part II, Item 8 of this Form 10-K, as well as with the other

information contained in this report.

Financial Performance Summary

FHN reported net income available to common

shareholders of $738 million, or $1.36 per diluted share,

for the year ended December 31, 2024, compared to $865

million, or $1.54 per diluted share, for the same period of

2023.

Net interest income of $2.5 billion decreased $29 million

compared to 2023, largely driven by higher funding costs,

partially offset by higher loan yields and loan growth. The

net interest margin decreased 7 basis points to 3.35%

compared to 3.42% in 2023.

Provision for credit losses decreased to $150 million

compared to $260 million in 2023, largely driven by lower

net charge-offs in 2024. Net charge-offs were $112 million

compared to $170 million in 2023, largely reflecting the

prior year impact of an idiosyncratic credit loss on a single

relationship.

Noninterest income of $679 million decreased $248

million from 2023, largely driven by a $225 million gain on

merger termination in 2023. Results in 2024 were also

impacted by $91 million in net securities losses from an

opportunistic restructuring of a portion of the securities

portfolio. The countercyclical businesses improved from

cycle lows in 2023 as fixed income increased $54 million

and mortgage banking income increased $12 million.

Noninterest expense of $2.0 billion decreased $44 million

from 2023, largely attributable to $68 million in FDIC

special assessment expense and a $50 million contribution

to the First Horizon Foundation in the previous year,

partially offset by increases in incentive-based

compensation tied to higher commission-based revenue

and strategic investments in technology.

Period-end loans and leases of $62.6 billion increased

$1.3 billion from December 31, 2023, reflecting

commercial loan growth of $1.0 billion, or 2%, and

consumer loan growth of $273 million, or 2%.

Period-end deposits of $65.6 billion decreased

$199 million from December 31, 2023, as a $1.2 billion

decrease in noninterest-bearing deposits more than offset

a $984 million increase in interest-bearing deposits.

Tier 1 risk-based capital and total risk-based capital ratios

at December 31, 2024 were 12.22% and 13.87%,

respectively, compared to 12.42% and 13.96% at

December 31, 2023. The CET1 ratio was 11.20% at

December 31, 2024 compared to 11.40% at December 31,

2023.

   

	59	2024 FORM 10-K ANNUAL REPORT

ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
Table of Contents

Table 7.1

KEY PERFORMANCE INDICATORS

	For the years ended December 31,
(Dollars in millions, except per share data)	2024		2023		2022
Pre-provision net revenue (a)	$1,155		$1,388		$1,254
Diluted earnings per common share	$1.36		$1.54		$1.53
Return on average assets (b)	0.97%		1.12%		1.08%
Return on average common equity (c)	8.80%		11.01%		11.81%
Return on average tangible common equity (a) (d)	10.99%		14.11%		15.58%
Net interest margin (e)	3.35%		3.42%		3.10%
Noninterest income to total revenue (f)	23.42%		26.82%		24.99%
Efficiency ratio (g)	62.06%		59.90%		61.24%
Allowance for loan and lease losses to total loans and leases	1.30%		1.26%		1.18%
Net charge-offs (recoveries) to average loans and leases	0.18%		0.28%		0.11%
Total period-end equity to period-end assets	11.09%		11.38%		10.83%
Tangible common equity to tangible assets (a)	8.37%		8.48%		7.12%
Cash dividends declared per common share	$0.60		$0.60		$0.60
Book value per common share	$16.00		$15.17		$13.48
Tangible book value per common share (a)	$12.85		$12.13		$10.23
Common equity Tier 1	11.20%		11.40%		10.17%
Market capitalization	$10,559		$7,913		$13,159

(a) Represents a non-GAAP measure which is reconciled in the non-GAAP to GAAP reconciliation in Table 7.28.

(b) Calculated using net income divided by average assets.

(c) Calculated using net income available to common shareholders divided by average common equity.

(d) Calculated using 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).

   

	60	2024 FORM 10-K ANNUAL REPORT

ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
Table of Contents

Results of Operations—2024 compared to 2023

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 local

economic conditions, competition for loans and deposits,

the monetary policy of the FRB and market interest rates.

Net interest income of $2.5 billion in 2024 decreased

$29 million, or 1%, from 2023. The decrease was largely

attributable to higher funding costs, partially offset by

higher loan yields and loan growth. Interest income

increased $252 million, largely driven by higher interest on

loans and leases of $299 million. Interest expense

increased $281 million, largely from higher interest

expense on deposits of $354 million, partially offset by a

decline in interest on short-term borrowings of $80

million.

FHN's net interest margin decreased 7 basis points to

3.35% in 2024 compared to 2023 and the net interest

spread decreased 6 basis points to 2.38% over the same

period. The decline in the margin was attributable to a 35

basis point increase in the cost of interest-bearing

liabilities, partially offset by a 29 basis point increase in

earning asset yields.

Total average earning assets increased $665 million in

2024, largely driven by average loan growth of $1.8 billion,

partially offset by lower levels of interest-bearing deposits

with banks and investment securities. Total average

interest-bearing liabilities increased $3.0 billion, largely

driven by average interest-bearing deposit growth of $4.4

billion, partially offset by a decrease in other short-term

borrowings.

The following table presents the major components of net

interest income and net interest margin.

   

	61	2024 FORM 10-K ANNUAL REPORT

ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
Table of Contents

Table 7.2

AVERAGE BALANCES, NET INTEREST INCOME AND YIELDS/RATES

(Dollars in millions)		2024						2023						2022
Assets:		Average Balance		Interest Income/ Expense		Yield/ Rate		Average Balance		Interest Income/ Expense		Yield/ Rate		Average Balance		Interest Income/ Expense		Yield/ Rate
Loans and leases:
Commercial loans and leases		$47,429		$3,166		6.68%		$46,175		$2,958		6.41%		$43,691		$1,823		4.18%
Consumer loans		14,576		720		4.93		13,994		630		4.48		12,261		479		3.89
Total loans and leases		62,005		3,886		6.27		60,169		3,588		5.96		55,952		2,302		4.11
Loans held for sale		472		36		7.61		664		51		7.71		884		39		4.41
Investment securities		9,386		244		2.60		9,912		250		2.52		9,976		200		2.01
Trading securities		1,399		85		6.12		1,179		78		6.62		1,438		58		4.04
Federal funds sold		39		2		5.61		61		4		5.56		191		4		2.09
Securities purchased under agreements to resell		566		29		5.01		318		15		4.81		522		6		1.12
Interest-bearing deposits with banks		1,605		85		5.29		2,504		130		5.20		8,672		87		1.00
Total earning assets / Total interest income		$75,472		$4,367		5.79%		$74,807		$4,116		5.50%		$77,635		$2,696		3.47%
Cash and due from banks		917						1,012						1,217
Goodwill and other intangible assets, net		1,674						1,720						1,777
Premises and equipment, net		580						596						636
Allowance for loan and lease losses		(812)						(740)						(648)
Other assets		3,991						4,288						3,600
Total assets		$81,822						$81,683						$84,217
Liabilities and Shareholders' Equity:
Interest-bearing deposits:
Savings		$25,941		$848		3.27%		$23,547		$679		2.88%		$24,292		$94		0.39%
Other interest-bearing deposits		16,215		449		2.77		15,300		351		2.30		15,641		72		0.47
Time deposits		7,224		323		4.47		6,095		236		3.87		2,963		18		0.60
Total interest-bearing deposits		49,380		1,620		3.28		44,942		1,266		2.82		42,896		184		0.43
Federal funds purchased		420		22		5.34		349		18		5.12		699		11		1.56
Securities sold under agreements to repurchase		1,720		66		3.83		1,426		52		3.66		881		7		0.77
Trading liabilities		555		24		4.22		301		12		4.16		480		12		2.56
Other short-term borrowings		781		42		5.38		2,688		140		5.19		229		5		2.26
Term borrowings		1,180		67		5.63		1,335		72		5.39		1,596		72		4.51
Total interest-bearing liabilities / Total interest expense		$54,036		$1,841		3.41%		$51,041		$1,560		3.06%		$46,781		$291		0.62%
Noninterest-bearing deposits		16,297						19,341						26,851
Other liabilities		2,353						2,396						2,006
Total liabilities		72,686						72,778						75,638
Shareholders' equity		8,841						8,610						8,284
Noncontrolling interest		295						295						295
Total shareholders' equity		9,136						8,905						8,579
Total liabilities and shareholders' equity		$81,822						$81,683						$84,217
Net earnings assets / Net interest income (TE) / Net interest spread		$21,436		$2,526		2.38%		$23,766		$2,556		2.44%		$30,854		$2,405		2.85%
Taxable equivalent adjustment				(15)		0.97				(16)		0.98				(13)		0.25
Net interest income / Net interest margin (a)				$2,511		3.35%				$2,540		3.42%				$2,392		3.10%

(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.

   

	62	2024 FORM 10-K ANNUAL REPORT

ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
Table of Contents

The following table presents the change in interest income and interest expense due to changes in both average volume and

average rate.

Table 7.3

ANALYSIS OF CHANGES IN NET INTEREST INCOME

		2024 Compared to 2023						2023 Compared to 2022
		Increase (Decrease) Due to (a)						Increase (Decrease) Due to (a)
(Dollars in millions)		Rate (b)		Volume (b)		Total		Rate (b)		Volume (b)		Total
Interest income:
Loans and leases (c)		$183		$115		$298		$1,101		$185		$1,286
Loans held for sale		(1)		(14)		(15)		24		(12)		12
Investment securities (c)		7		(13)		(6)		51		(1)		50
Trading securities		(6)		13		7		32		(12)		20
Other earning assets:
Federal funds sold		—		(2)		(2)		3		(3)		—
Securities purchased under agreements to resell		1		13		14		13		(4)		9
Interest-bearing deposits with banks		2		(47)		(45)		143		(100)		43
Total other earning assets		3		(36)		(33)		159		(107)		52
Total change in interest income - earning assets		$186		$65		$251		$1,367		$53		$1,420
Interest expense:
Interest-bearing deposits:
Savings		$96		$73		$169		$588		$(3)		$585
Other interest-bearing deposits		75		23		98		280		(1)		279
Time deposits		39		48		87		183		35		218
Total interest-bearing deposits		210		144		354		1,051		31		1,082
Federal funds purchased		1		3		4		15		(8)		7
Securities sold under agreements to repurchase		2		12		14		39		6		45
Trading liabilities		—		12		12		6		(6)		—
Other short-term borrowings		4		(102)		(98)		15		120		135
Term borrowings		3		(8)		(5)		13		(13)		—
Total change in interest expense - interest-bearing liabilities		220		61		281		1,139		130		1,269
Net interest income, taxable equivalent		$(34)		$4		$(30)		$228		$(77)		$151

(a)The changes in interest due to both rate and volume have been allocated to change due to rate and change due to volume in proportion to the absolute

amounts of the changes in each.

(b)Variances are computed on a line-by-line basis and are non-additive.

(c)Reflects taxable-equivalent adjustments, using the statutory federal income tax rate of 21%, and where applicable, state income taxes.

   

	63	2024 FORM 10-K ANNUAL REPORT

ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
Table of Contents

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 decreased to $150 million in

2024, compared to $260 million in 2023. Net charge-offs

were $112 million in 2024 compared to $170 million in

2023. The higher level of provision and net charge-offs in

2023 largely reflects the impact of a $72 million

idiosyncratic credit loss on a single relationship in 2023.

For additional information about general asset quality

trends refer to the Asset Quality section in this MD&A.

Noninterest Income

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

Table 7.4

NONINTEREST INCOME

								2024 vs. 2023				2023 vs. 2022
(Dollars in millions)		2024		2023		2022		$ Change		% Change		$ Change		% Change
Noninterest income
Fixed income		$187		$133		$205		$54		41%		$(72)		(35)%
Deposit transactions and cash management		176		179		171		(3)		(2)		8		5
Brokerage, management fees and commissions		101		90		92		11		12		(2)		(2)
Card and digital banking fees		77		77		84		—		—		(7)		(8)
Other service charges and fees		51		54		54		(3)		(6)		—		—
Trust services and investment management		48		47		48		1		2		(1)		(2)
Mortgage banking income		35		23		68		12		52		(45)		(66)
Gain on merger termination		—		225		—		(225)		(100)		225		100
Securities gains (losses), net		(89)		(4)		18		(85)		NM		(22)		(122)
Other income		93		103		75		(10)		(10)		28		37
Total noninterest income		$679		$927		$815		$(248)		(27)%		$112		14%

NM – Not meaningful

Noninterest income of $679 million decreased

$248 million from $927 million in 2023, largely driven by

the $225 million gain on merger termination in 2023.

Results in 2024 also reflect higher securities losses due to

an opportunistic restructuring of a portion of the

securities portfolio, partially offset by improvements in

fixed income and mortgage banking income. Noninterest

income represented 21% and 27% of total revenue for

2024 and 2023, respectively.

Fixed income improved $54 million, or 41%, for 2024

compared to 2023. Fixed income product revenue

increased $58 million, largely driven by more favorable

market conditions. Revenue from other products

decreased $4 million, largely driven by lower investment

advisory fees due to the sale of the assets of FHN Financial

Main Street Advisors in fourth quarter 2023 and lower

derivative sales.

Brokerage, management fees and commissions of $101

million increased $11 million, or 12%, as strong market

performance improved wealth management fees.

Mortgage banking income of $35 million increased

$12 million from $23 million in 2023, largely driven by

higher secondary volume.

Securities losses in 2024 reflect the impact of $91 million

in losses on the sale of AFS securities tied to an

opportunistic restructuring of a portion of the securities

portfolio during the fourth quarter of 2024.

Other income included a gain of $9 million on the

disposition of the assets of FHN Financial Main Street

Advisors in 2023.

   

	64	2024 FORM 10-K ANNUAL REPORT

ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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Noninterest Expense

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

Table 7.5

NONINTEREST EXPENSE

								2024 vs. 2023				2023 vs. 2022
(Dollars in millions)		2024		2023		2022		$ Change		% Change		$ Change		% Change
Noninterest expense
Personnel expense		$1,137		$1,100		$1,101		$37		3%		$(1)		—%
Net occupancy expense		130		123		128		7		6		(5)		(4)
Computer software		121		111		113		10		9		(2)		(2)
Operations services		94		87		87		7		8		—		—
Deposit insurance expense		64		122		32		(58)		(48)		90		281
Legal and professional fees		64		49		62		15		31		(13)		(21)
Contract employment and outsourcing		51		49		54		2		4		(5)		(9)
Advertising and public relations		48		71		50		(23)		(32)		21		42
Amortization of intangible assets		44		47		51		(3)		(6)		(4)		(8)
Equipment expense		42		42		45		—		—		(3)		(7)
Communications and delivery		32		35		37		(3)		(9)		(2)		(5)
Contributions		18		61		7		(43)		(70)		54		771
Other expense		190		182		186		8		4		(4)		(2)
Total noninterest expense		$2,035		$2,079		$1,953		$(44)		(2)%		$126		6%

NM - Not meaningful

Noninterest expense of $2.0 billion decreased $44 million,

or 2%, compared to 2023.

Personnel expense of $1.1 billion increased $37 million

compared to 2023, reflecting higher salaries and benefits

expense and incentive-based compensation, partially

offset by the decrease to merger-related expenses, as

there were no merger and integration expenses in 2024

compared to $51 million in 2023.

Net occupancy expense increased $7 million, computer

software expense increased $10 million and legal and

professional fees increased $15 million in 2024, largely

attributable to strategic investments.

Deposit insurance expense declined $58 million, largely

attributable to $68 million in special assessment expense

in 2023, compared to $9 million in 2024.

Advertising and public relations expense decreased $23

million from 2023, largely attributable to the end of

deposit campaign and brand awareness initiatives that

were launched in 2023.

Contributions decreased $43 million, largely attributable

to a $50 million contribution to the First Horizon

Foundation in 2023 following the termination of the TD

Transaction, compared to a $10 million contribution in

2024.

There were no merger and integration related expenses in

2024 compared to $51 million in 2023. Restructuring

expenses were $14 and $10 million for 2024 and 2023,

respectively.

Income Taxes

FHN recorded income tax expense of $211 million in 2024

compared to $212 million in 2023, resulting in an effective

tax rate of 21.0% and 18.8%, 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, executive

compensation, and merger expenses. 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. During 2024, FHN recognized net favorable

discrete items primarily attributable to the lapse of the

statute of limitations for uncertain positions. In 2023, the

reduction in the rate from the statutory U.S. federal

income tax rate of 21% was primarily related to the

benefit from the settlement of uncertain tax positions

related to prior merger-related items, which was partially

   

	65	2024 FORM 10-K ANNUAL REPORT

ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
Table of Contents

offset by the additional tax expense from the surrender of

bank-owned life insurance policies.

A deferred tax asset ("DTA") or deferred tax liability 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. FHN’s net DTA was $227 million and

$215 million at December 31, 2024 and 2023, respectively.

As of December 31, 2024, FHN had DTA balances related

to federal and state income tax carryforwards of $29

million and $3 million, respectively, which will expire at

various dates. Refer to Note 14 - Income Taxes for

additional information.

FHN’s gross DTA after valuation allowance was $768

million and $737 million as of December 31, 2024 and

2023, respectively. Based on current analysis, FHN

believes that its ability to realize the DTA is more likely

than not. FHN monitors its 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.

FHN and its eligible subsidiaries are included in a

consolidated federal income tax return. FHN files separate

returns for subsidiaries that are not eligible to be included

in a consolidated federal income tax return. Based on the

laws of the applicable states where it conducts business

operations, FHN either files consolidated, combined, or

separate returns. The statute of limitations for FHN’s

consolidated federal income tax returns remains open for

tax years 2021 through 2023. On occasion, as federal or

state auditors examine the tax returns of FHN and its

subsidiaries, FHN may extend the statute of limitations for

a reasonable period. Otherwise, the statutes of limitations

remain open only for tax years in accordance with federal

and state statutes. See Note 14 - Income Taxes to the

Consolidated Financial Statements in Part II, Item 8 of this

Report for additional information.

Business Segment Results

During 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 years prior to 2024 have been recast

to adjust for the realignment of the segment reporting

structure. See Note 19 - Business Segment Information to

the Consolidated Financial Statements in Part II, Item 8 of

this Report for additional disclosures related to FHN's

segments.

2024 vs. 2023

Commercial, Consumer & Wealth

The Commercial, Consumer & Wealth segment generated

pre-tax income of $1.4 billion in 2024 compared to

$1.5 billion in 2023, a decrease of $83 million.

Net interest income of $2.5 billion decreased $151 million,

reflecting higher funding costs, partially offset by the

benefit of higher interest rates and average loan balances.

Provision for credit losses decreased $102 million, largely

reflecting the impact of a $72 million credit loss on a single

relationship in 2023.

Noninterest income increased $13 million, largely driven

by an $11 million increase in brokerage, management fees

and commissions as strong market performance improved

wealth management fees.

Noninterest expense increased $47 million, largely driven

by higher personnel expense and other expenses related

to strategic investments.

Wholesale

Pre-tax income of $122 million in the Wholesale segment

increased $56 million compared to 2023, largely reflecting

a $67 million increase in revenue tied to improvements in

fixed income and mortgage banking income. Fixed income

of $187 million increased $53 million, largely driven by

more favorable market conditions. Mortgage banking

income of $33 million increased $12 million, largely driven

by higher secondary volume.

Noninterest expense of $299 million increased

$23 million, largely due to an increase in incentive-based

compensation expense tied to the improvement in fixed

income and mortgage banking income.

Corporate

Pre-tax loss for the Corporate segment was $546 million

for 2024 compared to $450 million for 2023.

Net interest income (expense) improved $111 million

compared to 2023, primarily driven by the impact of the

funds transfer pricing methodology.

Noninterest income decreased $317 million, largely

attributable to the $225 million gain on merger

termination in 2023 and $91 million in net securities losses

tied to an opportunistic restructuring of a portion of the

AFS securities portfolio in 2024. 

Noninterest expense of $319 million for 2024 decreased

$114 million compared to 2023, largely driven by lower

FDIC special assessment expense, lower contributions to

the First Horizon Foundation, and a decline in advertising

and public relations expense. Restructuring expenses

totaled $14 million and $10 million for 2024 and 2023,

   

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ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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respectively. There were no merger and integration

expenses in 2024 compared to $51 million in 2023.

2023 vs. 2022

Commercial, Consumer & Wealth

The Commercial, Consumer & Wealth segment generated

pre-tax income of $1.5 billion in 2023 compared to $1.3

billion in 2022, an increase of $164 million, driven by a

$400 million increase in revenue largely tied to higher net

interest income, partially offset by a $175 million increase

in provision for credit losses and a $61 million increase in

noninterest expense.

Net interest income of $2.7 billion increased $429 million,

reflecting the benefit of higher interest rates and average

loan balances, partially offset by higher funding costs.

The increase in the provision for credit losses largely

reflected loan growth, macroeconomic uncertainty, and

modest grade migration.

The increase in noninterest expense was largely driven by

higher personnel, deposit insurance, advertising and

public relations, and technology-related expenses.

Wholesale

Pre-tax income of $66 million in the Wholesale segment

decreased $91 million compared to 2022, largely

reflecting a $155 million decrease in revenue tied to lower

fixed income, mortgage banking income, and net interest

income. The decrease in revenue was partially offset by a

$68 million decrease in noninterest expense.

Income from the fixed income business of $134 million

decreased $71 million, largely driven by less favorable

market conditions.

Mortgage banking income of $21 million decreased $25

million largely driven by lower origination volume given

the impact of higher long-term rates. Results in 2022 also

reflected a $12 million gain on sale of mortgage servicing

rights.

Noninterest expense of $276 million decreased $68

million, largely due to lower incentive-based

compensation expense tied to the decline in fixed income

and mortgage banking income.

Corporate

Pre-tax loss for the Corporate segment was $450 million

for 2023 compared to $346 million for 2022.

Noninterest income increased $226 million, largely driven

by the gain on merger termination. Noninterest income

results also reflect lower securities gains of $22 million in

2023 and a $22 million gain on sale of the title business in

2022.

Noninterest expense of $433 million for 2023 increased

$133 million compared to 2022, largely driven by higher

deposit insurance expense, a $50 million contribution to

the First Horizon Foundation, and higher personnel

expense. Merger and integration expense was $51 million

in 2023 compared to $136 million in 2022.

Results of Operations—2023 compared to 2022

For a description of FHN's results of operations for 2023, see Results of Operations - 2023 compared to 2022 in Item 7 in the

2023 Form 10-K which is incorporated herein by reference.

   

	67	2024 FORM 10-K ANNUAL REPORT

ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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Analysis of Financial Condition

Investment Securities

The following table presents the carrying value of securities by category as of December 31 for the years indicated.

Table 7.6

COMPOSITION OF SECURITIES PORTFOLIO

	2024				2023
(Dollars in millions)	Balance		Mix		Balance		Mix
Securities available for sale at fair value:
Government agency issued MBS and CMO	$6,469		70%		$6,630		68%
Other U.S. government agencies (a)	1,073		12		1,172		12
States and municipalities	354		4		589		6
Total securities available for sale	$7,896		86%		$8,391		86%
Securities held to maturity at amortized cost:
Government agency issued MBS and CMO	$1,270		14%		$1,323		14%
Total investment securities	$9,166		100%		$9,714		100%

(a) Includes securities issued by government sponsored entities which are not backed by the full faith and credit of the U.S. Government.

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 $9.2 billion and $9.7 billion on

December 31, 2024 and 2023, representing 11% and 12%

of total assets, respectively. During the fourth quarter of

2024, as part of an opportunistic restructuring of a portion

of the securities portfolio, FHN sold $1.2 billion of AFS

securities, which resulted in realized losses of $91 million

for the year ended December 31, 2024. See Note 2 -

Investment Securities to the Consolidated Financial

Statements in Part II, Item 8 of this Report for more

information about the securities portfolio.

The following table presents an analysis of the amortized

cost, remaining contractual maturities, and weighted-

average yields by contractual maturity for the debt

securities portfolio.

   

	68	2024 FORM 10-K ANNUAL REPORT

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Table 7.7

CONTRACTUAL MATURITIES OF INVESTMENT SECURITIES

	As of December 31, 2024
					After 1 year				After 5 years
	Within 1 year				Within 5 years				Within 10 years				After 10 years				Total
(Dollars in millions)	Amount		Yield (b)		Amount		Yield (b)		Amount		Yield (b)		Amount		Yield (b)		Amount		Yield (b)
Securities available for sale:
Government agency issued MBS and CMO (a)	$99		1.64	%	$1,003		3.36	%	$610		2.63	%	$5,590		2.65	%	$7,302		2.45	%
Other U.S. government agencies	1		1.70		42		1.44		171		2.10		1,020		2.97		1,234		3.09
States and municipalities	23		0.42		34		1.70		99		2.57		238		2.88		394		2.75
Total securities available for sale	$123		1.41	%	$1,079		3.23	%	$880		2.52	%	$6,848		2.71	%	$8,930		2.55	%
Securities held to maturity:
Government agency issued MBS and CMO (a)	$—		—	%	$264		3.45	%	$55		3.71	%	$951		2.60	%	$1,270		2.88	%
Total securities held to maturity	$—		—	%	$264		3.45	%	$55		3.71	%	$951		2.60	%	$1,270		2.88	%

(a)Represents government agency-issued mortgage-backed securities and collateralized mortgage obligations which, when adjusted for early paydowns,

have an estimated average life of 5.7 years.

(b)Weighted average yields were calculated using amortized cost on a fully taxable equivalent basis, assuming a 24% tax rate where applicable.

Loans and Leases

Period-end loans and leases increased $1.3 billion, or 2%,

to $62.6 billion as of December 31, 2024. Commercial

loans and leases increased $1.0 billion , primarily from

growth in loans to mortgage companies and commercial

real estate, partially offset by a decline in other C&I loans.

Consumer loans increased $273 million, primarily from

growth in real estate installment loans, partially offset by

declines in HELOCs and consumer construction loans.

Average loans and leases increased to $62.0 billion in 2024

compared to $60.2 billion in 2023, primarily driven by a

$1.3 billion increase in commercial loans and a $582

million increase in consumer loans.

The following table provides detail regarding FHN's

period-end loans and leases.

Table 7.8

 LOANS AND LEASES

(Dollars in millions)		2024		Percent  of total		2024 Growth Rate		2023		Percent  of total		2023 Growth Rate		2022		Percent  of total		2022 Growth Rate
Commercial:
Commercial, financial, and industrial (a)		$33,428		53%		2%		$32,633		53%		3%		$31,781		55%		2%
Commercial real estate		14,421		23		1		14,216		23		7		13,228		23		9
Total commercial		47,849		76		2		46,849		76		4		45,009		78		4
Consumer:
Consumer real estate		14,047		23		3		13,650		23		11		12,253		21		14
Credit card and other		669		1		(16)		793		1		(6)		840		1		(8)
Total consumer		14,716		24		2		14,443		24		10		13,093		22		12
Total loans and leases		$62,565		100%		2%		$61,292		100%		5%		$58,102		100%		6%

(a) Includes equipment financing loans and leases.

   

	69	2024 FORM 10-K ANNUAL REPORT

ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
Table of Contents

The following table provides detail of the contractual maturities of loans and leases at December 31, 2024.

Table 7.9

CONTRACTUAL MATURITIES OF LOANS AND LEASES

(Dollars in millions)	Within 1 Year		After 1 Year Within 5 Years		After 5 Years Within 15 Years		After 15 Years		Total
Commercial, financial, and industrial	$8,139		$17,476		$7,043		$770		$33,428
Commercial real estate	3,871		8,401		2,096		53		14,421
Consumer real estate	55		181		1,175		12,636		14,047
Credit card and other	235		255		66		113		669
Total loans and leases	$12,300		$26,313		$10,380		$13,572		$62,565
For maturities over one year at fixed interest rates:
Commercial, financial, and industrial			$4,945		$4,763		$724		$10,432
Commercial real estate			2,620		829		36		3,485
Consumer real estate			144		1,017		3,178		4,339
Credit card and other			70		33		91		194
Total loans and leases at fixed interest rates			$7,779		$6,642		$4,029		$18,450
For maturities over one year at floating interest rates:
Commercial, financial, and industrial			$12,531		$2,280		$46		$14,857
Commercial real estate			5,781		1,267		17		7,065
Consumer real estate			37		158		9,458		9,653
Credit card and other			185		33		22		240
Total loans and leases at floating interest rates			$18,534		$3,738		$9,543		$31,815
Total maturities over one year			$26,313		$10,380		$13,572		$50,265

Because of various factors, the contractual maturities of

consumer loans are not indicative of the actual lives of

such loans. A significant component of FHN’s loan

portfolio consists of consumer real estate loans, a majority

of which are home equity lines of credit and home equity

installment loans. These loans have an initial period where

the borrower is only required to pay the periodic interest.

After the interest-only period, the loan will require the

payment of both principal and interest over the remaining

term. Numerous factors can contribute to the actual life of

a home equity line or installment loan. As a result, the

actual average life of home equity lines and loans is

difficult to predict, and changes in any of these factors

could result in changes in projections of average lives.

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 7 -

Mortgage Banking Activity to the Consolidated Financial

Statements in Part II, Item 8 of this Report.

On December 31, 2024 and 2023, loans HFS were $551

million and $502 million, respectively. Held-for-sale

consumer mortgage loans secured by residential real

estate in process of foreclosure totaled $1 million and

$2 million for December 31, 2024 and 2023, respectively.

   

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ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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Asset Quality

Loan and Lease Portfolio Composition

FHN groups its loans into portfolio segments based on

internal classifications reflecting the manner in which the

ALLL is established and how credit risk is measured,

monitored, and reported. From time to time, and if

conditions are such that certain subsegments are uniquely

affected by economic or market conditions or are

experiencing greater deterioration than other

components of the loan portfolio, management may

determine the ALLL at a more granular level. Commercial

loans are composed of C&I loans and leases and CRE

loans. Consumer loans are composed of consumer real

estate loans and credit card and other loans. FHN had a

concentration of residential real estate loans of 23% of

total loans as of both December 31, 2024 and 2023.

Industry concentrations are discussed under the C&I

heading below.

Underwriting Policies and Procedures

The following sections describe each portfolio as well as

general underwriting procedures for each. As economic

and real estate conditions develop, enhancements to

underwriting and credit policies and procedures may be

necessary or desirable. Loan policies and procedures for

all portfolios are reviewed by credit risk working groups

and management risk committees comprised of business

line managers and credit administration professionals as

well as by various other reviewing bodies within FHN.

Policies and procedures are approved by key executives

and/or senior managers leading the applicable credit risk

working groups as well as by management risk

committees.

The credit risk working groups and management risk

committees strive to ensure that the approved policies

and procedures address the associated risks and establish

reasonable underwriting criteria that appropriately

mitigate risk. Policies and procedures are reviewed,

revised and re-issued periodically at established review

dates or earlier if changes in the economic environment,

portfolio performance, the size of portfolio or industry

concentrations, or regulatory guidance warrant an earlier

review.

Commercial Loan and Lease Portfolios

FHN’s commercial loan approval process grants lending

authority based upon job description, experience, and

performance. The lending authority is delegated to the

business line (Market Managers, Departmental Managers,

Regional Presidents, Relationship Managers ("RM") and

Portfolio Managers ("PM") and to Credit Officers. While

individual limits vary, the predominant amount of

approval authority is vested with the Credit function.

Portfolio, industry, and borrower concentration limits for

the various portfolios are established by executive

management and approved by the Risk Committee of the

Board.

FHN’s commercial lending process incorporates an RM

and a PM for most commercial credits. The RM is primarily

responsible for communications with the borrower and

maintaining the relationship, while the PM is responsible

for assessing the credit quality of the borrower, beginning

with the initial underwriting and continuing through the

servicing period. Other specialists and the assigned RM/

PM are organized into units called relationship teams.

Relationship teams are constructed with specific job

attributes that facilitate FHN’s ability to identify, mitigate,

document, and manage ongoing risk. PMs and credit

analysts provide enhanced analytical support during loan

origination and servicing, including monitoring of the

financial condition of the borrower and tracking

compliance with loan agreements. Loan closing officers

and the construction loan management unit specialize in

loan documentation and the management of the

construction lending process. FHN strives to identify

problem assets early through comprehensive policies and

guidelines, targeted portfolio reviews, more frequent

servicing on lower rated borrowers, and an emphasis on

frequent grading. For smaller commercial credits,

generally $5 million or less, and income-producing CRE

credits greater than $10 million to non-professional real

estate developers and smaller professional real estate

investors/developers, FHN utilizes a centralized

underwriting unit in order to originate and grade these

credits more efficiently and consistently.

C&I

C&I loans are the largest component of the loan and lease

portfolio, comprising 53% of total loans and leases at both

December 31, 2024 and 2023. The C&I portfolio is

comprised of loans used for general business purposes.

Products offered in the C&I portfolio include term loan

financing, direct financing and sales-type leases, lines of

credit, and trade credit enhancement through letters of

credit.

Income-producing C&I loans are underwritten in

accordance with a well-defined credit origination process.

This process includes applying minimum underwriting

standards as well as separation of origination and credit

   

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ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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approval roles on transaction sizes over PM authorization

limits. Underwriting typically includes due diligence of the

borrower and the applicable industry of the borrower,

analysis of the borrower’s available financial information,

identification and analysis of the various sources of

repayment and identification of the primary risk

attributes. Stress testing the borrower’s financial capacity,

adherence to loan documentation requirements, and

assigning credit risk grades using internally developed

scorecards are also used to help quantify the risk when

appropriate. Underwriting parameters also include loan-

to-value ratios which vary depending on collateral type,

use of guaranties, loan agreement requirements, and

other recommended terms such as equity requirements,

amortization, and maturity. Approval decisions also

consider various financial ratios and performance

measures of the borrowers, such as cash flow and balance

sheet leverage, liquidity, coverage of fixed charges, and

working capital. Additionally, approval decisions consider

the capital structure of the borrower, sponsorship, and

quality/value of collateral. Generally, guideline and policy

exceptions are identified and mitigated during the

approval process. Pricing of C&I loans is based upon tenor

and the determined credit risk specific to the individual

borrower. Historically, the majority of these loans typically

have variable rates tied to SOFR, as the primary

replacement index for LIBOR, or prime rate of interest plus

or minus the appropriate margin.

The largest geographical concentrations of balances as of

December 31, 2024 were in Tennessee (20%), Florida

(12%), Texas (11%), North Carolina (7%), California (6%),

and Louisiana (6%) with no other state representing 5% or

more of the portfolio.

The following table provides the composition of the C&I

portfolio by industry as of December 31, 2024 and 2023.

For purposes of this disclosure, industries are determined

based on the 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 7.10a

C&I PORTFOLIO BY INDUSTRY

		December 31, 2024				December 31, 2023
(Dollars in millions)		Amount		Percent		Amount		Percent
Industry:
Real estate and rental and leasing (a)		$3,888		12%		$3,858		12%
Finance and insurance		3,666		11		4,083		12
Loans to mortgage companies		3,471		10		2,024		6
Health care and social assistance		2,576		8		2,676		8
Wholesale trade		2,433		7		2,147		7
Manufacturing		2,312		7		2,267		7
Accommodation and food service		2,198		7		2,288		7
Retail trade		1,756		5		1,866		6
Transportation and warehousing		1,616		5		1,580		5
Energy		1,273		4		1,293		4
Other (professional, construction, education, etc.) (b)		8,239		24		8,551		26
Total C&I loan portfolio		$33,428		100%		$32,633		100%

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

(b) Industries in this category each comprise less than 5%.

Industry Concentrations

Loan concentrations are considered to exist for a financial

institution when there are loans to numerous borrowers

engaged in similar activities that would cause them to be

similarly impacted by economic or other conditions. Loans

to mortgage companies and borrowers in the finance and

insurance industry were 21% and 18% of FHN’s C&I loan

portfolio as of December 31, 2024 and 2023, respectively,

and as a result could be affected by items that uniquely

impact the financial services industry. Loans to borrowers

in the real estate and rental and leasing industry were

12% of FHN's C&I portfolio as of both December 31, 2024

and 2023. As of December 31, 2024, 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 December 31, 2024 and 2023. This portfolio primarily

consists of equipment financing loans and leases to clients

across FHN's footprint in a broad range of industries and

asset types. This portfolio also includes a smaller balance

of loans and leases for solar and wind generating facilities.

   

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ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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Finance and Insurance

The finance and insurance component represented 11%

and 12% of the C&I portfolio as of December 31, 2024 and

2023, respectively, and includes TRUPs (i.e., long-term

unsecured loans to bank and insurance-related

businesses), loans to bank holding companies, and asset-

based lending to consumer finance companies. As of

December 31, 2024, asset-based lending to consumer

finance companies represents approximately $1.9 billion

of the finance and insurance component.

Loans to Mortgage Companies

Loans to mortgage companies were 10% and 6% of the

C&I portfolio as of December 31, 2024 and 2023,

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. 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 2024,

approximately 78% of the loan originations were home

purchases and 22% were refinance transactions.

Commercial Real Estate

The CRE portfolio totaled $14.4 billion as of December 31,

2024, a $205 million, or 1%, increase compared to

December 31, 2023, largely driven by growth in multi-

family loans, partially offset by decreases across multiple

other property types.

The CRE portfolio includes both financings for commercial

construction and non-construction loans. This portfolio

contains loans, draws on lines, and letters of credit to

commercial real estate developers for the construction

and mini-permanent financing of income-producing real

estate.

Residential CRE loans include loans to residential builders

and developers for the purpose of constructing single-

family homes, condominiums, and town homes, and on a

limited basis, for developing residential subdivisions. The

residential CRE class is not currently an area of growth for

the bank.

Income-producing CRE loans

Income-producing CRE loans are underwritten in

accordance with credit policies and underwriting

guidelines that are formally reviewed at a minimum of

once every three years and revised as necessary based on

market conditions. Loans are underwritten based upon

project type, size, location, sponsorship, and other

market-specific data. Generally, minimum requirements

for equity, debt service coverage ratios, and level of pre-

leasing activity are established based on perceived risk in

each subcategory. Loan-to-value limits are set below

regulatory prescribed ceilings and generally range

between 50% and 80% depending on the underlying

product type. Term and amortization requirements are set

based on prudent standards for interim real estate

lending. Equity requirements are established based on the

quality and liquidity of the primary source of repayment.

For example, more equity would be required for a

speculative construction project or land loan than for a

property fully leased to a credit tenant or a roster of

tenants. Typically, a borrower must have at least 15% of

cost invested in a project before FHN will provide loan

funding. Income properties are generally required to

achieve a debt service coverage ratio greater than or

equal to 1.25x at inception or stabilization of the project

based on loan amortization and a minimum underwriting

interest rate. Some product types that possess a greater

risk profile require a higher level of equity, as well as a

higher debt service coverage ratio threshold. A proprietary

minimum underwriting interest rate is used to calculate

compliance with underwriting standards. Generally,

specific levels of pre-leasing must be met for construction

loans on income properties, where applicable. A global

cash flow analysis is typically performed at the sponsor

level.

The credit administration and ongoing monitoring consists

of multiple internal control processes. Construction loans

are closed by a centralized control unit and construction

loan management is administered centrally for loans $3

million and over. Underwriters and credit approval

personnel stress the borrower’s/project’s financial

capacity utilizing numerous attributes such as interest

rates, vacancy, capitalization rates, and debt service

coverage ratios under various scenarios. Key information

is captured from the various portfolios and then stressed

at the aggregate level. Results are utilized to assist with

the assessment of the adequacy of the ALLL and to steer

portfolio management strategies.

The largest geographical concentrations of CRE balances

as of December 31, 2024 were in Florida (26%), Texas

(13%), North Carolina (13%), Georgia (10%), Tennessee

(9%), and Louisiana (7%), with no other state representing

more than 5% of the portfolio.

The following table represents subcategories of CRE loans

by property type.

   

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ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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Table 7.10b

CRE PORTFOLIO BY PROPERTY TYPE

		December 31, 2024				December 31, 2023
		Amount		Percent		Amount		Percent
Property Type:
Multi-family		$5,122		36%		$4,409		31%
Office		2,785		19		2,782		20
Retail		2,167		15		2,310		16
Industrial		2,130		15		2,236		16
Hospitality		1,332		9		1,467		10
Land/land development		249		2		307		2
Other CRE (a)		636		4		705		5
Total CRE loan portfolio		$14,421		100%		$14,216		100%

(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 $14.0 billion and $13.7 billion as of December 31,

2024 and 2023, respectively. The largest geographical

concentrations of balances in the consumer real estate

portfolio as of December 31, 2024 were in Florida (29%),

Tennessee (22%), Texas (12%), Louisiana (8%), North

Carolina (7%), Georgia (6%), and New York (5%), with no

other state representing 5% or more of the portfolio.

As of December 31, 2024, 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

756 as of December 31, 2024 , no change from those as of

December 31, 2023. Generally, performance of this

portfolio is affected by life events that affect borrowers’

finances, the level of unemployment, and home prices.

As of December 31, 2024 and 2023, FHN had held-to-

maturity consumer mortgage loans secured by real estate

totaling $26 million and $29 million, respectively, that

were in the process of foreclosure.

HELOCs comprised $2.1 billion and $2.2 billion of the

consumer real estate portfolio for December 31, 2024 and

2023, respectively. 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

concluded, 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 December 31, 2024, approximately 95% of FHN's

HELOCs were in the draw period compared to 94% at the

end of 2023. Based on when draw periods are scheduled

to end per the line agreements, it is expected that $598

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 shows the HELOCs currently in the

draw period and expected timing of conversion to the

repayment period.

   

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ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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Table 7.11

HELOC DRAW TO REPAYMENT SCHEDULE

		December 31, 2024				December 31, 2023
(Dollars in millions)		Repayment Amount		Percent		Repayment Amount		Percent
Months remaining in draw period:
0-12		$79		4%		$30		1%
13-24		90		5		90		4
25-36		134		7		110		5
37-48		147		7		163		8
49-60		148		7		178		9
>60		1,404		70		1,530		73
Total		$2,002		100%		$2,101		100%

Underwriting

For loans in this portfolio, underwriting decisions are

made through a centralized loan underwriting center. To

obtain a consumer real estate loan, the loan applicant(s)

must first meet a minimum qualifying FICO score.

Minimum FICO score requirements are established by

management for both loans secured by real estate as well

as non-real estate loans. Management also establishes

maximum loan amounts, loan-to-value ratios, and debt-

to-income ratios for each consumer real estate product.

Applicants must have the financial capacity (or available

income) to service the debt by not exceeding a calculated

debt-to-income ratio. The amount of the loan is limited to

a percentage of the lesser of the current appraised value

or sales price of the collateral. Identified guideline and

policy exceptions require established mitigating factors

that have been approved for use by Credit.

HELOC interest rates are variable and adjust with

movements in the index rate stated in the loan

agreement. Such loans can have elevated risk of default,

particularly in a rising interest rate environment,

potentially stressing borrower capacity to repay the loan

at the higher interest rate. FHN’s current underwriting

practice requires HELOC borrowers to qualify based on a

sensitized interest rate (above the current note rate), fully

amortized payment methodology. FHN’s underwriting

guidelines require borrowers to qualify at an interest rate

that is 200 basis points above the note rate. This mitigates

risk to FHN in the event of a sharp rise in interest rates

over a relatively short time horizon.

HELOC Portfolio Risk Management

FHN performs continuous HELOC account reviews to

identify higher-risk home equity lines and initiate

preventative and corrective actions. The reviews consider

a number of account activity patterns and characteristics

such as the number of times delinquent within recent

periods, changes in credit bureau score since origination,

score degradation, performance of the first lien, and

account utilization. In accordance with FHN’s

interpretation of regulatory guidance, FHN may block

future draws on accounts in order to mitigate risk of loss

to FHN.

Credit Card and Other

The credit card and other consumer loan portfolio totaled

$669 million as of December 31, 2024 and $793 million as

of December 31, 2023. This portfolio primarily consists of

consumer-related credits, including home equity and

other personal consumer loans, credit card receivables,

and automobile loans. The $124 million decrease was

driven by net repayments.

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 Notes 1 and 4 to the

Consolidated Financial Statements in Part II, Item 8 of this

Report.

The ALLL increased to $815 million as of December 31,

2024 , or 1.30% of total loans and leases, compared to

$773 million, or 1.26% of total loans and leases, at the end

of 2023 . The ACL to total loans and leases ratio increased

to 1.43% as of December 31, 2024 from 1.40% as of

December 31, 2023. The increase in the ALLL balance

reflects negative grade migration in the commercial loan

portfolio.

   

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ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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Consolidated Net Charge-offs

Net charge-offs were $112 million in 2024 compared to

$170 million in 2023. As a percentage of average total

loans and leases, net charge-offs decreased 10 basis

points from 2023.

Prior year net charge-offs were elevated primarily as the

result of a $72 million idiosyncratic charge-off related to

one client relationship.

Table 7.12

ANALYSIS OF ALLOWANCE FOR CREDIT LOSSES AND CHARGE-OFFS

			December 31,
(Dollars in millions)			2024		2023		2022
Allowance for loan and lease losses
	C&I		$345		$339		$308
	CRE		227		172		146
	Consumer real estate		221		233		200
	Credit card and other		22		29		31
	Total allowance for loan and lease losses		$815		$773		$685
Reserve for remaining unfunded commitments
	C&I		$57		$49		$55
	CRE		11		22		22
	Consumer real estate		11		12		10
	Total reserve for remaining unfunded commitments		$79		$83		$87
Allowance for credit losses
	C&I		$402		$388		$363
	CRE		238		194		168
	Consumer real estate		232		245		210
	Credit card and other		22		29		31
	Total allowance for credit losses		$894		$856		$772
Period-end loans and leases
	C&I		$33,428		$32,633		$31,781
	CRE		14,421		14,216		13,228
	Consumer real estate		14,047		13,650		12,253
	Credit card and other		669		793		840
	Total period-end loans and leases		$62,565		$61,292		$58,102
ALLL / loans and leases %
	C&I		1.03%		1.04%		0.97%
	CRE		1.57		1.21		1.10
	Consumer real estate		1.57		1.71		1.63
	Credit card and other		3.28		3.63		3.72
	Total ALLL / loans and leases %		1.30%		1.26%		1.18%

   

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ACL / loans and leases %
	C&I		1.20%		1.19%		1.14%
	CRE		1.65		1.36		1.27
	Consumer real estate		1.65		1.79		1.71
	Credit card and other		3.28		3.63		3.72
	Total ACL / loans and leases %		1.43%		1.40%		1.33%
Net charge-offs (recoveries)
	C&I		$47		$142		$53
	CRE		55		15		—
	Consumer real estate		(6)		(5)		(14)
	Credit card and other		16		18		20
	Total net charge-offs		$112		$170		$59
Average loans and leases
	C&I		$32,871		$32,390		$30,969
	CRE		14,558		13,785		12,722
	Consumer real estate		13,836		13,179		11,397
	Credit card and other		740		815		864
	Total average loans and leases		$62,005		$60,169		$55,952
Charge-off %
	C&I		0.14%		0.44%		0.17%
	CRE		0.38		0.10		—
	Consumer real estate		NM		NM		NM
	Credit card and other		2.11		2.18		2.39
	Total charge-off %		0.18%		0.28%		0.11%
ALLL / net charge-offs
	C&I		738%		239%		578%
	CRE		411		1,097		NM
	Consumer real estate		NM		NM		NM
	Credit card and other		141		162		151
	Total ALLL / net charge-offs		731%		455%		1,155%

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 (excluding OREO from government-

insured mortgages).

Total NPAs (including NPLs HFS) increased $139 million to

$608 million as of December 31, 2024, largely driven by an

increase in nonaccrual CRE loans, partially offset by

decreases in nonaccrual C&I and nonaccrual consumer

real estate loans. The increase in nonaccrual CRE loans

was largely driven by multi-family and office property

types. Multi-family has been affected by strong supply,

which is expected to be absorbed at a modestly slower

rate than experienced in recent years. Office performance

has been strong for the medical segment, while traditional

office has been impacted by the continued influence of

remote work on occupancy levels. These portfolios

continue to maintain strong underwriting and client

selection. In addition, over 60% of the commercial

   

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ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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nonaccrual loan balance was current on payments as of

December 31, 2024. The vast majority of NPAs have

individual impairment reviews with no specific reserve

required. The nonperforming loans and leases ratio

increased 21 basis points to 0.96% as of December 31,

2024.

Table 7.13

NONPERFORMING ASSETS

			December 31,
(Dollars in millions)			2024		2023		2022
Nonperforming loans and leases
	C&I		$173		$184		$153
	CRE		294		136		9
	Consumer real estate		133		140		152
	Credit card and other		2		2		2
	Total nonperforming loans and leases (a) (c)		$602		$462		$316
Nonperforming loans held for sale (a)			$3		$3		$8
Foreclosed real estate and other assets (b)			3		4		3
	Total nonperforming assets (a) (b)		$608		$469		$327
Nonperforming loans and leases to total loans and leases
	C&I		0.52%		0.57%		0.48%
	CRE		2.04		0.96		0.07
	Consumer real estate		0.95		1.02		1.24
	Credit card and other		0.23		0.30		0.27
	Total NPL %		0.96%		0.75%		0.54%
ALLL / NPLs
	C&I		199%		184%		202%
	CRE		77		126		1,554
	Consumer real estate		167		167		131
	Credit card and other		1,438		1,202		1,364
	Total ALLL / NPLs		136%		167%		217%

(a) Excludes loans and leases that are 90 or more days past due and still accruing interest.

(b) Excludes government-insured foreclosed real estate. There were no foreclosed real estate balances from GNMA loans at December 31, 2024,

2023, and 2022.

(c) Under the original terms of the loans, estimated interest income would have been approximately $43 million, $35 million, and $21 million

during 2024, 2023, and 2022, respectively.

   

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ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
Table of Contents

The following table provides nonperforming assets by business segment.

Table 7.14

NONPERFORMING ASSETS BY SEGMENT

		December 31,
(Dollars in millions)			2024		2023		2022
Nonperforming loans and leases (a) (b)
	Commercial, Consumer & Wealth		$572		$401		$227
	Wholesale		12		38		60
	Corporate		18		23		29
	Consolidated		$602		$462		$316
Foreclosed real estate (c)
	Commercial, Consumer & Wealth		$1		$1		$—
	Wholesale		1		2		2
	Corporate		1		1		1
	Consolidated		$3		$4		$3
Nonperforming Assets (a) (b) (c)
	Commercial, Consumer & Wealth		$573		$402		$227
	Wholesale		13		40		62
	Corporate		19		24		30
	Consolidated		$605		$466		$319
Nonperforming loans and leases to total loans and leases
	Commercial, Consumer & Wealth		1.01%		0.71%		0.43%
	Wholesale		0.20		0.87		1.27
	Corporate		5.46		4.68		6.02
	Consolidated		0.96%		0.75%		0.54%
NPA % (d)
	Commercial, Consumer & Wealth		1.02%		0.71%		0.43%
	Wholesale		0.23		0.93		1.33
	Corporate		5.65		4.81		6.28
	Consolidated		0.97%		0.76%		0.55%

(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) Excludes foreclosed real estate and receivables related to government-insured mortgages. There were no foreclosed real estate balances from GNMA

loans at December 31, 2024, 2023, and 2022.

(d) Ratio is non-performing assets to total loans and leases plus foreclosed real estate.

   

	79	2024 FORM 10-K ANNUAL REPORT

ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
Table of Contents

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

$21 million as of both December 31, 2024 and 2023. Loans

30 to 89 days past due and still accruing were $89 million

as of December 31, 2024 compared to $85 million as of

December 31, 2023, largely reflecting higher consumer

real estate past due loan balances, partially offset by

lower past due CRE loan balances.

Table 7.15

ACCRUING DELINQUENCIES & OTHER CREDIT DISCLOSURES

		December 31,
(Dollars in millions)			2024		2023		2022
Accruing loans and leases 30+ days past due
	C&I		$33		$33		$61
	CRE		3		8		11
	Consumer real estate		69		57		55
	Credit card and other		5		8		11
	Total accruing loans and leases 30+ days past due		$110		$106		$138
Accruing loans and leases 30+ days past due %
	C&I		0.10%		0.10%		0.19%
	CRE		0.02		0.06		0.08
	Consumer real estate		0.50		0.42		0.44
	Credit card and other		0.79		1.03		1.28
	Total accruing loans and leases 30+ days past due %		0.18%		0.17%		0.24%
Accruing loans and leases 90+ days past due (a) (b) (c)
	C&I		$1		$1		$11
	Consumer real estate		19		17		18
	Credit card and other		1		3		4
	Total accruing loans and leases 90+ days past due		$21		$21		$33
Loans held for sale
	30 to 89 days past due (b)		$9		$12		$10
	30 to 89 days past due - guaranteed portion (b) (d)		6		8		7
	90+ days past due (b)		9		9		16
	90+ days past due - guaranteed portion (b) (d)		4		4		6

(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 the Federal

banking regulators for loans classified as substandard.

Potential problem assets in the loan portfolio increased to

$1.9 billion as of December 31, 2024, compared to $666

million as of year-end 2023. This increase was largely

attributable to grade migration in the multi-family and

office portfolios. Multi-family has been affected by strong

supply, which is expected to be absorbed at a modestly

slower rate than experienced in recent years. Office

performance has been strong for the medical segment,

while traditional office has been impacted by the

continued influence of remote work on occupancy levels.

These portfolios continue to maintain strong underwriting

and client selection. The current expectation of losses

from potential problem assets has been included in

   

	80	2024 FORM 10-K ANNUAL REPORT

ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
Table of Contents

management’s analysis for assessing the adequacy of the

allowance for loan and lease losses.

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 - Significant Accounting Policies, Note 3 - Loans and

Leases and Note 4 - Allowance for Credit Losses to the

Consolidated Financial Statements in Part II, Item 8 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 ("HAMP").

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 debt-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.

   

	81	2024 FORM 10-K ANNUAL REPORT

ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
Table of Contents

Deposits

Total deposits of $65.6 billion as of December 31, 2024

decreased $199 million compared to December 31, 2023.

Interest-bearing deposits increased $984 million and

noninterest-bearing deposits decreased $1.2 billion.

FHN continues to maintain a well-diversified and stable

funding mix across its footprint and specialty lines of

business. 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

December 31, 2023, commercial deposits were

$35.9 billion, or 55% of total deposits, and consumer

deposits were $29.9 billion, or 45% of total deposits.

At December 31, 2024, 37% of deposits were associated

with Tennessee, 18% with Florida, 13% with North

Carolina, and 12% with Louisiana, with no other state

above 10%. This mix remained relatively consistent with

the previous year-end.

Total estimated uninsured deposits were $26.7 billion, or

41% of total deposits, and $26.8 billion, or 41% of total

deposits, as of December 31, 2024 and 2023, respectively.

Of the uninsured deposits as of December 31, 2024,

$4.7 billion, or 7% of total deposits, were collateralized. As

of December 31, 2023, collateralized deposits were

$5.3 billion, or 8% of total deposits.

The following tables present the major components of

FHN's total deposits for 2024 and 2023, FHN's total

estimated uninsured deposits for the years ended

December 31, 2024 and 2023, and the maturities of FHN's

uninsured time deposits as of December 31, 2024 and

2023. See Table 7.2 - Average Balances, Net Interest

Income and Yields/Rates in this Report for information on

average deposits, including average rates paid.

Table 7.16

DEPOSITS

(Dollars in millions)		2024		Percent  of Total		2024 Growth Rate		2023		Percent  of Total		2023 Growth  Rate
Savings		$26,695		41%		6%		$25,082		38%		14%
Time deposits		6,613		10		(3)		6,804		10		136
Other interest-bearing deposits		16,252		25		(3)		16,690		26		10
Total interest-bearing deposits		49,560		76		2		48,576		74		21
Noninterest-bearing deposits		16,021		24		(7)		17,204		26		(27)
Total deposits		$65,581		100%		—%		$65,780		100%		4%

Table 7.17

ESTIMATED UNINSURED DEPOSITS

		For the Year Ended December 31,
(Dollars in millions)		2024		2023
Uninsured deposits		$26,679		$26,752

Table 7.18

UNINSURED TIME DEPOSITS BY MATURITY

(Dollars in millions)		December 31, 2024		December 31, 2023
Portion of U.S. time deposits in excess of insurance limit		$1,068		$1,143
Time deposits otherwise uninsured with a maturity of:
3 months or less		328		304
Over 3 months through 6 months		379		519
Over 6 months through 12 months		332		282
Over 12 months		29		38

   

	82	2024 FORM 10-K ANNUAL REPORT

ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
Table of Contents

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 were $4.0 billion and $3.1 billion as of

December 31, 2024 and 2023, respectively. The increase

in short-term borrowings was largely driven by an increase

of $600 million in FHLB borrowings and an increase of

$132 million in federal funds purchased and securities sold

under agreements to repurchase.

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. 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. See

Note 9 - Short-Term Borrowings to the Consolidated

Financial Statements in Part II, Item 8 of this Report for

additional information.

Term Borrowings

Term borrowings include senior and subordinated

borrowings with original maturities greater than one year.

Total term borrowings were $1.2 billion as of both

December 31, 2024 and 2023. See Note 10 - Term

Borrowings to the Consolidated Financial Statements in

Part II, Item 8 of this Report for additional information.

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 of $9.1 billion decreased $180 million

compared to December 31, 2023. Significant changes

included net income of $794 million and an increase of

$60 million in AOCI, offset by $626 million in common

stock repurchases, $358 million in common and preferred

dividends, and $100 million from the Series D 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.

   

	83	2024 FORM 10-K ANNUAL REPORT

ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
Table of Contents

Table 7.19a

REGULATORY CAPITAL DATA

(Dollars in millions)		December 31, 2024		December 31, 2023
FHN shareholders’ equity		$8,816		$8,996
Modified CECL transitional amount (a)		28		57
FHN non-cumulative perpetual preferred		(426)		(520)
Common equity tier 1 before regulatory adjustments		$8,418		$8,533
Regulatory adjustments:
Disallowed goodwill and other intangibles		$(1,578)		$(1,617)
Net unrealized (gains) losses on securities available for sale		782		836
Net unrealized (gains) losses on pension and other postretirement plans		252		273
Net unrealized (gains) losses on cash flow hedges		94		79
Disallowed deferred tax assets		(1)		—
Common equity tier 1		$7,967		$8,104
FHN non-cumulative perpetual preferred		426		426
Qualifying noncontrolling interest—First Horizon Bank preferred stock		295		295
Tier 1 capital		$8,688		$8,825
Tier 2 capital		1,174		1,097
Total regulatory capital		$9,862		$9,922
Risk-Weighted Assets
First Horizon Corporation		$71,108		$71,074
First Horizon Bank		70,418		70,635
Average Assets for Leverage
First Horizon Corporation		$81,645		$82,540
First Horizon Bank		80,791		81,898

Table 7.19b

REGULATORY RATIOS & AMOUNTS

		December 31, 2024				December 31, 2023
(Dollars in millions)		Ratio		Amount		Ratio		Amount
Common Equity Tier 1
First Horizon Corporation		11.20%		$7,967		11.40%		$8,104
First Horizon Bank		11.12		7,834		11.40		8,055
Tier 1
First Horizon Corporation		12.22		8,688		12.42		8,825
First Horizon Bank		11.54		8,129		11.82		8,350
Total
First Horizon Corporation		13.87		9,862		13.96		9,922
First Horizon Bank		13.00		9,156		13.17		9,303
Tier 1 Leverage
First Horizon Corporation		10.64		8,688		10.69		8,825
First Horizon Bank		10.06		8,129		10.20		8,350
Other Capital Ratios
Total period-end equity to period-end assets		11.09				11.38
Tangible common equity to tangible assets (b)		8.37				8.48

(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 and 2023, 25% and 50%, respectively,

of the full amount is 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 7.28.

   

	84	2024 FORM 10-K ANNUAL REPORT

ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
Table of Contents

Banking regulators define minimum capital ratios for bank

holding companies and their bank subsidiaries. Based on

the capital rules and definitions prescribed by the banking

regulators, should any depository institution’s capital

ratios decline below predetermined levels, it would

become subject to a series of increasingly restrictive

regulatory actions.

The system categorizes a depository institution’s capital

position into one of five categories ranging from well-

capitalized to critically under-capitalized. For an institution

the size of FHN 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 December 31, 2024 , both FHN and First Horizon

Bank had sufficient capital to qualify as well-capitalized

institutions and to meet the capital conservation buffer

requirement. Capital ratios for both FHN and First Horizon

Bank as of December 31, 2024 are 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 both FHN and First Horizon Bank, the risk-based

regulatory capital and Tier 1 leverage ratios decreased in

2024 relative to 2023 primarily from the impact of

common share repurchases. The Series D Preferred Stock

redemption in 2024 did not impact FHN's regulatory

capital ratios as it did not qualify as Tier 1 capital because

the earliest redemption date was less than five years from

the issuance date.

During 2025, capital ratios are expected to remain above

well-capitalized standards plus the required capital

conservation buffer.

Stress Testing

The Economic Growth, Regulatory Relief, and Consumer

Protection Act, along with an interagency regulatory

statement effectively exempted both FHN and First

Horizon Bank from Dodd-Frank Act stress testing

requirements starting in 2018.

For 2024, FHN and First Horizon Bank completed a

company run stress test using the Comprehensive Capital

Analysis and Review ("CCAR") scenarios published in

February 2024. Results of these tests indicate that both

FHN and First Horizon Bank would be able to maintain

capital well in excess of Basel III Adequately Capitalized

standards under the hypothetical severe global recession

of the 2024 CCAR Severely Adverse scenario. A summary

of those results was posted in the “Fixed Income - Stress

Test Results” section on FHN’s investor relations website

on July 30, 2024. Neither FHN’s stress test posting, nor any

other material found on FHN’s website generally, is part of

this report or incorporated herein.

FHN anticipates that it will continue performing an annual

enterprise-wide stress test as part of its capital and risk

management process. Results of this test will be

presented to executive management and the Board.

The disclosures in this “Stress Testing” section include

forward-looking statements. Please refer to “Forward-

Looking Statements” for additional information

concerning the characteristics and limitations of

statements of that type.

Common Stock Purchase Programs

If and as authorized by its Board of Directors, FHN may

repurchase shares of its common stock from time to time

and will evaluate the level of capital and take action

designed to generate or use capital, as appropriate, for

the interests of the shareholders, subject to legal and

regulatory restrictions. Two common stock purchase

programs authorized by FHN's Board of Directors

operated during the fourth quarter of 2024. FHN’s Board

has not authorized a preferred stock purchase program.

January 2024 General Purchase Program

On January 23, 2024, FHN announced that its Board of

Directors had approved a $650 million common share

purchase program that was scheduled to expire on

January 31, 2025. Purchases 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 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 December 31, 2024, $476 million in purchases had

been made life-to-date under the January 2024 program

at an average price per share of $15.17, or $15.16

excluding commissions. Program purchases made during

the quarter ended December 31, 2024 are summarized in

the following table. The program was terminated effective

the close of business on October 29, 2024 with $174

million in authorization unused.

   

	85	2024 FORM 10-K ANNUAL REPORT

ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
Table of Contents

Table 7.20a

COMMON STOCK PURCHASES—JANUARY 2024 PROGRAM

(Dollar values and volume in thousands, except per share data)		Total number of shares purchased		Average price paid per share (a)		Total number of shares purchased as part of publicly announced programs		Maximum approximate dollar value that may yet be purchased under the programs
2024
October 1 to October 31		2,010		$17.30		2,010		N/A
November 1 to November 30		N/A		N/A		N/A		N/A
December 1 to December 31		N/A		N/A		N/A		N/A
Total		2,010		$17.30		2,010

(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 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 January 2024 program

discussed above. The new October program is scheduled

to expire on January 31, 2026. 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.

As of December 31, 2024, $129 million in purchases had

been made life-to-date under the October 2024 program

at an average price per share of $19.88, or $19.86

excluding commissions. Program purchases made during

the quarter ended December 31, 2024 are summarized in

the following table.

Table 7.20b

COMMON STOCK PURCHASES—OCTOBER 2024 PROGRAM

(Dollar values and volume in thousands, except per share data)		Total number of shares purchased		Average price paid per share (a)		Total number of shares purchased as part of publicly announced programs		Maximum approximate dollar value that may yet be purchased under the programs
2024
October 1 to October 31		105		$17.77		105		$998,134
November 1 to November 30		3,803		19.51		3,803		923,941
December 1 to December 31		2,563		20.52		2,563		871,353
Total		6,471		$19.88		6,471

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

      repurchases.

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 December 31, 2024 are summarized in the

following table.

   

	86	2024 FORM 10-K ANNUAL REPORT

ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
Table of Contents

Table 7.20c

COMMON STOCK PURCHASES—TAX WITHHOLDING FOR STOCK AWARDS

(Dollar values and volume in thousands, except per share data)		Total number of shares purchased		Average price paid per share		Total number of shares purchased as part of publicly announced programs		Maximum number of shares that may yet be purchased under the programs
2024
October 1 to October 31		25		$16.53		N/A		N/A
November 1 to November 30		3		17.26		N/A		N/A
December 1 to December 31		3		20.60		N/A		N/A
Total		31		$17.03

Risk Management

FHN derives revenue from providing services and, in many

cases, assuming and managing risk for profit, which

exposes FHN to strategic, reputational, liquidity, market,

capital adequacy, operational, compliance, legal, and

credit risks that require ongoing oversight and

management. FHN has an enterprise-wide approach to

risk governance, measurement, management, and

reporting, including an economic capital allocation process

that is tied to risk profiles used to measure risk-adjusted

returns. Through an enterprise-wide risk governance

structure and a Risk Appetite Statement approved by the

Board, management continually evaluates the balance of

risk/return and earnings volatility with shareholder value.

FHN’s enterprise-wide risk governance structure begins

with the Board. The Board, working with the Risk

Committee of the Board, establishes FHN’s risk appetite

by approving policies and limits that provide standards for

the nature and the level of risk FHN is willing to assume.

The Board regularly receives reports on management’s

performance against FHN’s risk appetite primarily through

the Board’s Risk and Audit Committees.

To further support the risk governance provided by the

Board, FHN has established accountabilities, control

processes, procedures, and a management governance

structure designed to align risk management with risk-

taking throughout FHN. The control procedures are

aligned with FHN’s four components of risk governance:

(1) Specific Risk Committees; (2) the Risk Management

Organization; (3) Business Unit Risk Management; and

(4) Independent Assurance Functions.

1. Specific Risk Committees: The Board has delegated

authority to the Chief Executive Officer to manage

Strategic Risk and Reputational Risk, and the general

business affairs of FHN under the Board’s oversight.

The CEO utilizes the executive management team to

carry out these duties in conjunction with the Risk

governance structure. The Management Risk

Committee is chaired by the Chief Risk Officer and is

comprised of the CEO and certain officers that oversee

all risk areas, including Strategic and Reputational

Risks, and analyzes both existing and emerging risks.

The Management Risk Committee is supported by a set

of specific risk committees focused on unique risk

types (e.g. liquidity, credit, operational, etc.). These

risk committees provide a mechanism that assembles

the necessary expertise and perspectives of the

management team to discuss emerging risk issues,

monitor FHN’s risk-taking activities, and evaluate

specific transactions and exposures. These committees

also monitor the direction and trend of risks relative to

business strategies and market conditions and direct

management to respond to risk issues.

2. The Risk Management Organization: FHN’s risk

management organization, led by the Chief Risk Officer

and Chief Credit Officer, provides objective oversight

of risk-taking activities. The risk management

organization translates FHN’s overall risk appetite into

approved limits and formal policies and is supported by

corporate staff functions, including the Corporate

Secretary, Legal, Finance, Human Resources

Operations, and Technology. Risk management also

works with business units and functional experts to

establish appropriate operating standards and monitor

business practices in relation to those standards.

Additionally, risk management proactively works with

business units and senior management to focus

management on key risks in FHN and emerging trends

that may change FHN’s risk profile. The Chief Risk

Officer has overall responsibility and accountability for

enterprise risk management and aggregate risk

reporting.

3. Business Unit Risk Management: FHN’s business units

are responsible for identifying, acknowledging,

quantifying, mitigating, and managing all risks arising

within their respective units. They determine and

execute their business strategies, which puts them

closest to the changing nature of risks, and they are

best able to take the needed actions to manage and

mitigate those risks. The business units are supported

   

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by the risk management organization that helps

identify and consider risks when making business

decisions. Management processes, structure, and

policies are designed to help ensure compliance with

laws and regulations as well as provide organizational

clarity for authority, decision-making, and

accountability. Business units have designated control

processes to help mitigate their identified risks, and

business units attest to the effectiveness of those

controls. The risk governance structure supports and

promotes the escalation of material items to executive

management and the Board.

4. Independent Assurance Functions: Internal Audit,

Credit Assurance Services ("CAS"), Compliance Testing,

and Model Validation provide an independent and

objective assessment of the design and execution of

FHN’s internal control system, including management

processes, risk governance, and policies and

procedures. These groups’ activities are designed to

provide reasonable assurance that risks are

appropriately identified and communicated; resources

are safeguarded; significant financial, managerial, and

operating information is complete, accurate, and

reliable; and associate actions are in compliance with

FHN’s policies and applicable laws and regulations.

Internal Audit and CAS are independent third line

functions within First Horizon for the purpose of

providing unfettered objective assurance. The Internal

Audit function reports to the Chief Audit Executive,

who is appointed by and reports functionally to the

Audit Committee of the Board and administratively to

the CEO. The CAS function reports to the CAS Director,

who is appointed by and reports functionally to the

Risk Committee of the Board and administratively to

the Chief Audit Executive.  Internal Audit provides

quarterly reports to the Audit Committee of the Board,

while CAS provides quarterly reports to the Risk

Committee of the Board. Compliance Testing and

Model Validation report to the Chief Risk Officer and

provide annual reports to the Audit Committee of the

Board.

Market Risk Management

Market risk is the risk that changes in market conditions

will adversely impact the value of assets or liabilities, or

otherwise negatively impact FHN’s earnings. Market risk is

inherent in the financial instruments associated with

FHN’s operations, primarily trading activities within FHN

Financial, but also through non-trading activities which are

primarily affected by interest rate risk that is managed by

the ALCO within FHN.

FHN is exposed to market risk related to the trading

securities inventory and loans held for sale maintained by

FHN Financial in connection with its fixed income

distribution activities. Various types of securities inventory

positions are procured for distribution to clients by the

sales staff. When these securities settle on a delayed

basis, they are considered forward contracts. Refer to the

"Determination of Fair Value - Trading securities and

trading liabilities" section of Note 23 - Fair Value of Assets

and Liabilities, which section is incorporated into this

MD&A by this reference.

FHN’s market risk appetite is approved by the Risk

Committee of the Board of Directors and executed

through management policies and procedures of ALCO

and the FHN Financial Risk Committee. These policies

contain various market risk limits including, for example,

VaR limits for the trading securities inventory, and

individual position limits and sector limits for products

with credit risk, among others. Risk measures are

computed and reviewed on a daily basis to ensure

compliance with market risk management policies.

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.

   

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Table 7.21

VaR & SVaR MEASURES

		Year Ended December 31, 2024						As of December 31, 2024
(Dollars in millions)		Mean		High		Low
1-day
VaR		$3		$4		$2		$2
SVaR		7		9		4		6
10-day
VaR		8		12		4		4
SVaR		32		43		21		31
		Year Ended December 31, 2023						As of December 31, 2023
(Dollars in millions)		Mean		High		Low
1-day
VaR		$3		$4		$2		$3
SVaR		6		8		3		6
10-day
VaR		8		11		4		10
SVaR		24		34		12		28

FHN’s overall VaR measure includes both interest rate risk and credit spread risk. Separate measures of these component risks

are as follows.

Table 7.22

SCHEDULE OF RISKS INCLUDED IN VaR

		As of December 31, 2024				As of December 31, 2023
(Dollars in millions)		1-day		10-day		1-day		10-day
Interest rate risk		$1		$2		$1		$2
Credit spread risk		—		1		1		1

The potential risk of loss reflected by FHN’s VaR measures

assumes the trading securities inventory is static. Because

FHN Financial procures fixed income securities for

purposes of distribution to clients, its trading securities

inventory turns over regularly. Additionally, FHNF traders

actively manage the trading securities inventory

continuously throughout each trading day. Accordingly,

FHNF’s trading securities inventory is highly dynamic,

rather than static. As a result, it would be rare for FHNF to

incur a negative revenue day in its fixed income activities

at the levels indicated by its VaR measures.

In addition to being used in FHN’s daily market risk

management process, the VaR and SVaR measures are

also 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

   

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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 years ended December 31, 2024 and 2023, 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.

Interest Rate Risk Management

Interest rate risk is the risk to earnings or capital arising

from movement in interest rates. ALCO is responsible for

overseeing the management of existing and emerging

interest rate risk for the company within risk tolerances

established by the Board. FHN primarily manages interest

rate risk by structuring the balance sheet to maintain a

desired level of associated earnings and to protect the

economic value of FHN’s capital.

Net interest income and the value of equity are affected

by changes in the level of market interest rates because of

the differing repricing characteristics of assets and

liabilities, the exercise of prepayment options held by loan

clients, the early withdrawal options held by deposit

clients, and changes in the basis between and changing

shapes of the various yield curves used to price assets and

liabilities. To isolate the repricing, basis, option, and yield

curve components of overall interest rate risk, FHN

employs Gap, Net Interest Income at Risk, and Economic

Value of Equity analyses generated by a balance sheet

simulation model.

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 December 31, 2024,

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 7.23

INTEREST RATE SENSITIVITY

Shifts in Interest Rates (in bps)		% Change in Projected Net Interest Income
-200		(4.7)%
-100		(2.0)%
-50		(0.9)%
-25		(0.5)%
+25		0.4%
+50		0.7%
+100		1.3%
+200		2.2%

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 0.2%. A flattening

yield curve scenario, where long-term rates decrease by

50 basis points and short-term rates are static, results in

   

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ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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an unfavorable NII variance of 0.3%. 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 prior to September 2024's 50 basis point rate

cut. Coupled with market disruption from recent high

profile bank failures in 2023, this high interest rate

environment has increased competitive pressures on

deposit costs.

The yield curve was inverted for much of the last half of

2022, throughout 2023, and during the first eight months

of 2024 before flattening in September 2024. As of

December 2024, the yield curve has normalized and is

upward sloping. Following the 50 basis point rate cut in

September 2024, and 25 basis point cuts in both

November and December, market participants are now

projecting one additional rate cut in 2025. FHN continues

to monitor current economic trends and potential

exposures closely. For additional information, see Yield

Curve within Market Uncertainties and Prospective Trends

below.

Fair Value Shock Analysis

Interest rate risk and the slope of the yield curve also

affect the fair value of FHN's trading inventory that is

reflected in noninterest income.

Generally, low or declining interest rates with a positively

sloped yield curve tend to increase income through higher

demand for fixed income products. Additionally, the fair

value of FHN's trading inventory can fluctuate as a result

of differences between current interest rates and the

interest rates of fixed income securities in the trading

inventory.

Derivatives

In the normal course of business, FHN utilizes various

financial instruments (including derivative contracts and

credit-related agreements) to manage the risk of loss

arising from adverse changes in the fair value of certain

financial instruments generally caused by changes in

interest rates, including FHN's securities inventory, certain

term borrowings, and certain loans. Additionally, FHN may

enter into derivative contracts in order to meet clients'

needs. However, such derivative contracts are typically

offset with a derivative contract entered into with an

upstream counterparty in order to mitigate risk associated

with changes in interest rates.

The simulation models and related hedging strategies

discussed above exclude the dynamics related to how fee

income and noninterest expense may be affected by

actual changes in interest rates or expectations of

changes. See Note 21 - Derivatives to the Consolidated

Financial Statements in Part II, Item 8 of this Report for

additional discussion of these instruments.

Capital Risk Management & Adequacy

The capital management objectives of FHN are to provide

capital sufficient to cover the risks inherent in FHN’s

businesses, to maintain excess capital to well-capitalized

standards and Board policy, and to ensure ready access to

the capital markets. The Capital & Stress Testing

Committee, chaired by the Corporate Treasurer, reports

to ALCO and is responsible for capital management

oversight and provides a forum for addressing

management issues related to capital adequacy. This

committee reviews sources and uses of capital, key capital

ratios, segment economic capital allocation

methodologies, coordinates the annual enterprise-wide

stress testing process, and considers other factors in

monitoring and managing current capital levels, as well as

potential future sources and uses of capital. The Capital &

Stress Testing Committee also recommends capital

management policies, which are submitted for approval to

ALCO and the Risk Committee of the Board as necessary.

Operational Risk Management

Operational risk is the risk of loss from inadequate or

failed internal processes, people, or systems or from

external events including data or network security

breaches of FHN or of third parties affecting FHN or its

clients. Inherent drivers of operational risk include the

following:

• Business Resilience Risk

• Fraud Risk

• Physical Security Risk

• Financial Reporting and Recording Risk

• Technology Risk

• Cybersecurity Risk

• Model Risk

• Third Party Risk

Management, measurement, and reporting of operational

risk are overseen by the Operational Risk Committee

which includes key representatives from the business

segments and support functions. Operational risk is

assessed and aggregated across the enterprise quarterly

and reported to the Risk Committee.

   

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Cybersecurity Risk Management

Overview

As mentioned immediately above, FHN's operational risk

function is divided into several risk areas. Each area has

been established at the corporate level to address risks in

that area across the entire organization. One of those

areas—information technology ("IT") risk—includes

cybersecurity risk management.

As FHN manages it, IT risk includes cybersecurity risk,

which in turn includes the risks from cyber fraud, cyber

theft, cyber vandalism, cyber ransom, data and system

security, and other unauthorized incursions into FHN's IT

systems. IT risk management also includes IT system

reliability, data integrity, IT aspects of regulatory

compliance, and risks associated with the use of artificial

intelligence tools and systems. The discussion in this

section focuses on cybersecurity. Additional information

on this topic is presented in Cybersecurity Risks within

Item 1A beginning on page 35.

Key Cybersecurity Risk Management Goals

Cybersecurity risk management has two primary goals:

defend FHN and its clients from fraudulent and other

unauthorized incursions; and, when an incursion happens,

detect and respond as soon as practical. The optimal

cybersecurity program will defend as much as is practical

while also detecting rapidly those incursions that get

through.

Management Structure & Key Processes

Operational risk is managed by FHN's Operational Risk

("Op Risk") Committee. Members of the Op Risk

Committee include senior-level representatives from

these teams or departments: Enterprise Risk

Management, Operations, Model Risk, Enterprise Data,

Enterprise Technology, Enterprise Technology Risk

Management, Credit and Credit Risk Management, Legal,

Security, Internal Audit, Deposit & Loan Operations, Retail

and Digital Banking, Regional Bank Products, Mortgage

Banking, Accounting, and Fixed Income/Bond Trading. The

Op Risk Committee reports to FHN's Management Risk

Committee, which is headed by FHN's Chief Risk Officer,

who reports to FHN's Chief Executive Officer.

IT risk is managed by the IT Risk Working Group, overseen

by the Op Risk Committee. The IT Risk Working Group

meets quarterly to discuss emerging cyber risks,

regulatory changes, vendor risk, audits, and outstanding-

issue resolution. The Group also provides updates to the

Op Risk Committee on IT aspects of compliance, policies,

and security standards. Members of the IT Risk Working

Group include the head of Enterprise Technology along

with personnel from nearly all of the teams and

departments represented in Op Risk.

FHN also has a Cybersecurity Working Group. The

Cybersecurity Working Group, which is outside of the risk

management hierarchy, meets quarterly. Its primary

functions are to provide cybersecurity awareness to the

executive leadership team and to provide high-level

support if a significant cybersecurity event occurs. In

connection with awareness, (a) external vendors,

consultants, law enforcement, and other persons are

invited to speak on industry-wide cybersecurity topics to

provide an independent view of external threats facing

the industry; and (b) members of the Enterprise

Technology team provide updates regarding how FHN is

addressing current risks and threats. The Cybersecurity

Working Group includes: FHN's CEO; the heads of FHN's

banking segments; the heads of Risk Management,

Enterprise Technology, Security, Operations, and Legal;

and senior personnel in the other teams and departments

represented in the IT Risk Working Group.

Key leaders within these committees and groups and for

these processes are FHN's Chief Information Officer and

Chief Information Security Officer. The Chief Information

Officer has substantial banking, IT, and related experience:

had roles at FHN since 2009 related to IT and data systems

culminating in CIO since 2020; prior to joining FHN, had

roles at a large regional bank, including technology leader

of the bank's electronic payments platform related to

treasury management and enterprise IT architect; and,

earned an MS in computer science as well as an MBA. The

Chief Information Security Officer has over twenty years

of banking, IT, and related experience: oversees

information security and many related systems and

processes; has established risk-based security programs to

meet regulatory requirements and align with business

needs; and has implemented numerous data protection,

data access, and identity management systems.

FHN has a written Computer Security Incident Response

Plan ("CSIRP") outlining FHN's incident response and

communication processes. FHN's Chief Information

Security Officer or certain other managers have the

authority to initiate the execution of the CSIRP if an

incident occurs. A working group called the Computer

Security Incident Response Team has primary

responsibility to implement or coordinate many of the

CSIRP actions, along with FHN's IT Risk Working Group.

Key goals of the CSIRP are to: contain, remediate, and

recover; mitigate impact on FHN and clients; report

findings to Op Risk and other senior management; and

manage external communications. The Cybersecurity

Working Group is informed of incidents that appear to

have a significant risk of becoming material.

FHN engages third-party vendors to conduct several

periodic cybersecurity reviews:  Network Penetration

testing; Cyber Security Maturity Assessment; Red Team

(simulated cyber-attack) testing; SOX (financial reporting

controls and data integrity) testing; and, PCI-DSS

(proprietary data security standard for payment systems)

   

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attestation of compliance and SOC 1 Type II reports

(attesting to the design and operation of cybersecurity

systems) for lockbox and electronic bill pay. The frequency

of these reviews ranges from several times per year to

every three years. FHN also has a cybersecurity incident

specialty firm on retainer for incident response, as

needed.

FHN has a dedicated Third-Party Risk Management

("TPRM") department reporting to the Chief Risk Officer.

TPRM engages the IT Risk and Control Team to perform

cybersecurity assessments for new vendors during

onboarding, re-assessments of existing vendors on a risk-

based cadence, and continuous monitoring of critical third

parties.

Board Oversight

The Board's Risk Committee oversees all risk management

functions for the enterprise, including operational risk, IT

risk, and cybersecurity risk. The Risk Committee, as well as

the full Board, each quarter receives a risk management

update from FHN's Chief Risk Officer. Each update

includes a written presentation covering all major risk

areas, including operational risk, and each is supported by

a detailed Enterprise Risk Report which is available to all

directors. Major topics in the operational risk portion of

the Enterprise Risk Report each quarter include fraud and

related incidents; process management, which includes

many processes related to cybersecurity defenses; and

information security, which addresses core cybersecurity

processes and incidents.

Tactical, Operational & Other Impacts

The measures FHN takes to manage cybersecurity risk

affect how associates and clients use FHN's platforms and

systems. For every safeguard considered or implemented,

FHN must weigh potential and actual inconveniences

against security concerns. Practical realities make it

impossible to maximize security and ignore resulting

restrictions on the ability of associates and clients to

conduct banking and financial business. Primarily for that

reason, cybersecurity risks are and will be a major risk

management concern, and losses from incursions will be

impossible to avoid. As mentioned above, FHN's goals are

to prevent what can be prevented, and detect and

respond to incursions that get through as quickly as

possible.

For those incursions that are not blocked, FHN's processes

are designed to detect them quickly enough so that the

financial and operational impact on FHN is zero or modest.

But the risk of a major incursion occurring cannot be

reduced to zero. A major incursion could have a material

financial impact on FHN's business operations and

earnings.

Compliance Risk Management

Compliance risk is the risk of legal or regulatory sanctions,

material financial loss, or loss to reputation the Company

may suffer as a result of its failure to comply with laws,

regulations, rules, self-regulatory organization standards,

and codes of conduct applicable to FHN’s activities.

Management, measurement, and reporting of compliance

risk are overseen by the Compliance Risk Committee and

other key Corporate Governance Committees. Key

executives from the business segments, legal, compliance,

risk management, and service functions are represented

on the Committees. Summary reports of Committee

activities and decisions are provided to the appropriate

Board governance committees. Reports include the status

of regulatory activities, internal compliance program

initiatives, compliance testing and internal audit results

and evaluation of emerging compliance risk areas.

Credit Risk Management

Credit risk is the risk of loss due to adverse changes in a

borrower’s or counterparty’s ability or willingness to meet

its financial obligations under agreed upon terms. FHN is

subject to credit risk in lending, trading, investing,

liquidity/funding, and asset management activities

although lending activities have the most exposure to

credit risk. The nature and amount of credit risk depends

on the types of transactions, the structure of those

transactions, collateral received, the use of guarantors

and the parties involved.

FHN assesses and manages credit risk through a series of

policies, processes, measurement systems, and controls.

The Credit Risk Management Committee ("CRMC") is

responsible for overseeing the management of existing

and emerging credit risks in the company within the broad

risk tolerances established by the Board. The CRMC

reports through the Management Risk Committee. The

Credit Risk Management function, which is shared by the

Chief Credit Officer and Chief Risk Officer, provides

strategic and tactical credit leadership by maintaining

policies, overseeing credit approval, assessing new credit

products, strategies and processes, and managing

portfolio composition and performance.

While the Credit Risk function oversees FHN’s credit risk

management, there is significant coordination between

the business lines and the Credit Risk function in order to

manage FHN’s credit risk and maintain strong asset

quality. The Credit Risk function recommends portfolio

industry/sector and individual country limits to the Risk

Committee of the Board for approval. Adherence to these

approved limits is vigorously monitored by Credit Risk

which provides recommendations to slow or cease lending

   

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to the business lines as commitments near established

lending limits. Credit Risk also ensures subject matter

experts are providing oversight, support and credit

approvals, particularly in the specialty lending areas where

industry-specific knowledge is required. Management

emphasizes general portfolio servicing such that emerging

risks are able to be spotted early enough to correct

potential deficiencies, prevent further credit

deterioration, and mitigate credit losses.

The Credit Risk Management function assesses the asset

quality trends and results, as well as lending processes,

adherence to underwriting guidelines (portfolio-specific

underwriting guidelines are discussed further in the Asset

Quality Trends section), and utilizes this information to

inform management regarding the current state of credit

quality and as a factor in the estimation process for

determining the allowance for credit losses. The CRMC

reviews on a periodic basis various reports issued by

assurance functions which provide an independent

assessment of the adequacy of loan servicing, grading

accuracy, and other key functions. Additionally, CRMC is

presented with and discusses various portfolios, lending

activity and lending-related projects.

All of the above activities are subject to independent

review by FHN’s Credit Assurance Services Group. CAS

reports to the CAS Director who is appointed by and

reports functionally to the Risk Committee of the Board

(and administratively to the Chief Audit Executive) and

provides quarterly reports to that Committee. CAS is

charged with providing the Risk Committee of the Board

and executive management with independent, objective,

and timely assessments of FHN’s portfolio quality, credit

policies, and credit risk management processes.

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 of which the objective is to

ensure 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 are periodically reviewed. 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 December 31,

2024, 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 the overnight and term

Federal Funds markets, brokered deposits, loan sales, and

syndications. The table below details FHN’s sources of

available liquidity as of December 31, 2024.

Table 7.24

AVAILABLE LIQUIDITY

as of December 31, 2024

(Dollars in millions)		Total Capacity		Outstanding Borrowings		Available Liquidity
Cash on deposit with FRB (a)		$1,393		$—		$1,393
FHLB		8,722		600		8,122
Discount Window		23,475		—		23,475
Unencumbered securities (b)		1,039		—		1,039
Total available liquidity						$34,029

(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 95% and 93% as of

December 31, 2024 and 2023, respectively.

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,

   

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subject to market conditions and compliance with

applicable regulatory requirements. As of December 31,

2024, FHN had outstanding $798 million in senior and

subordinated unsecured debt and $426 million in non-

cumulative perpetual preferred stock. FHN redeemed all

outstanding shares of its Series D Non-Cumulative

Perpetual Preferred Stock during second quarter 2024.

Refer to Note 11 - Preferred Stock to the Consolidated

Financial Statements in Part II, Item 8 of this Report for

additional information. As of December 31, 2024, 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. The amount paid to the parent

company through First Horizon Bank common dividends is

managed as part of FHN’s overall cash management

process, subject to applicable regulatory restrictions.

Certain regulatory restrictions exist regarding the ability of

First Horizon Bank to transfer funds to FHN in the form of

cash, common dividends, loans, or advances. At any given

time, the pertinent portions of those regulatory

restrictions allow First Horizon Bank to declare preferred

or common dividends without prior regulatory approval in

an aggregate amount equal to First Horizon Bank’s

retained net income for the two most recently completed

years plus the current year-to-date period. For any period,

First Horizon Bank’s "retained net income" generally is

equal to First Horizon Bank’s regulatory net income

reduced by the preferred and common dividends declared

by First Horizon Bank. Applying the dividend restrictions

imposed under applicable federal and state rules as

outlined above, the Bank’s total amount available for

dividends was $374 million as of January 1, 2025.

Consequently, on that date the Bank could pay common

dividends up to that amount to its sole common

shareholder, FHN, or to its preferred shareholders without

prior regulatory approval. Additionally, a capital

conservation buffer must be maintained (as described in

the Capital section of this Report) to avoid restrictions on

dividends.

First Horizon Bank declared and paid common dividends

to the parent company in the amount of $1.1 billion in

2024 and $220 million in 2023. In January 2025, First

Horizon Bank declared and paid a common dividend to the

parent company in the amount of $115 million. First

Horizon Bank declared and paid preferred dividends in

each quarter of 2024 and 2023. Additionally, First Horizon

Bank declared preferred dividends in first quarter 2025,

payable in April 2025.

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

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

January 2, 2025. FHN paid cash dividends of $1,625 per

Series E preferred share and $1,175 per Series F preferred

share on January 10, 2025 and $331.25 per Series B

preferred share and $165 per Series C preferred share on

February 3, 2025. In addition, in January 2025, the Board

approved cash dividends per share in the following

amounts:

Table 7.25

CASH DIVIDENDS APPROVED BUT NOT PAID

		Dividend/ Share		Record Date		Payment Date
Common Stock		$0.15		3/14/2025		4/1/2025
Preferred Stock
Series C		$165.00		4/16/2025		5/1/2025
Series E		$1,625.00		3/26/2025		4/10/2025
Series F		$1,175.00		3/26/2025		4/10/2025

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 and are not included

in the table below. Based on its available liquidity and

available borrowing capacity, FHN anticipates it will

continue to have sufficient funds to meet its current

commitments. See Note 16 - Contingencies and Other

Disclosures to the Consolidated Financial Statements in

Part II, Item 8 of this Report for more information.

Contractual Obligations

The following table sets forth contractual obligations

representing required and potential cash outflows as of

December 31, 2024. Purchase obligations represent

obligations under agreements to purchase goods or

   

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services that are enforceable and legally binding on FHN

and that specify all significant terms, including fixed or

minimum quantities to be purchased; fixed, minimum, or

variable price provisions; and the approximate timing of

the transaction.

Table 7.26

CONTRACTUAL OBLIGATIONS

as of December 31, 2024

		Payments due by period (a)
		Less than		1 year -		3 years -		After 5
(Dollars in millions)		1 year		< 3 years		< 5 years		years		Total
Contractual obligations:
Time deposit maturities (b) (c)		$6,398		$157		$52		$6		$6,613
Short-term borrowings (b) (d)		3,950		—		—		—		3,950
Term borrowings (b) (e)		350		—		—		862		1,212
Annual rental commitments under noncancelable leases (b) (f)		45		87		71		199		402
Purchase obligations		242		216		88		9		555
Total contractual obligations		$10,985		$460		$211		$1,076		$12,732

(a) Excludes a $13 million liability for unrecognized tax benefits as the timing of payment cannot be reasonably estimated.

(b) Amounts do not include interest.

(c) See Note 8 - Deposits for further details.

(d) See Note 9 - Short-Term Borrowings for further details.

(e) See Note 10 - Term Borrowings for further details.

(f) See Note 5 - Premises, Equipment, and Leases for further details.

Credit Ratings

FHN is currently able to fund a majority of the balance

sheet through core deposits, which are generally not

directly tied to FHN’s credit ratings as are other types of

funding. However, maintaining adequate credit ratings on

debt issues and preferred stock is critical to liquidity

should FHN need to access funding from other sources,

including from long-term debt issuances and certain

brokered deposits, at an attractive rate. The availability

and cost of funds other than core deposits is also

dependent upon marketplace perceptions of the financial

soundness of FHN, which include such factors as capital

levels, asset quality, and reputation. The availability of

core deposit funding is stabilized by federal deposit

insurance, which can be removed only in extraordinary

circumstances, but may also be influenced to some extent

by the same factors that affect other funding sources.

FHN’s credit ratings are also referenced in various respects

in agreements with certain derivative counterparties as

discussed in Note 21 - Derivatives to the Consolidated

Financial Statements in Part II, Item 8 of this Report.

The following table provides FHN’s most recent credit

ratings.

   

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Table 7.27

CREDIT RATINGS

		Moody's (a)		Fitch (b)
First Horizon Corporation
	Overall credit rating: Long-term/Short-term/Outlook	Baa3/--/Stable		BBB+/F2/Stable
	Long-term senior debt	Baa3		BBB+
	Subordinated debt (c)	Baa3		BBB+
	Junior subordinated debt (c)	Ba1		BB
	Preferred stock	Ba2		BB
First Horizon Bank
	Overall credit rating: Long-term/Short-term/Outlook	Baa3/P-2/Stable		BBB+/F2/Stable
	Long-term/short-term deposits	A3/P-2		A-/F2
	Long-term/short-term senior debt (c)	Baa3/P-2		BBB+/F2
	Subordinated debt	Baa3		BBB
	Preferred stock	Ba2		BB
FT Real Estate Securities Company, Inc.
	Preferred stock	Ba1

A rating is not a recommendation to buy, sell, or hold securities and is subject to revision or withdrawal at any time and should be

evaluated independently of any other rating.

(a) Last change in ratings was on May 14, 2015. Outlook changed to stable ("Stable") and ratings affirmed on June 25, 2024.

(b) Last change in ratings was on October 3, 2024. Outlook changed to stable ("Stable") on May 5, 2023.

(c) Ratings are preliminary/implied.

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. As

discussed in Note 16 - Contingencies and Other

Disclosures, 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 16 - Contingencies and Other

Disclosures, 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 from borrowers, and

certain related exposures. The liability contemplates

repurchase/make-whole and damages obligations and

estimates for probable incurred losses associated with

   

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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 $15 million and $16 million as of December 31, 2024

and 2023, 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. 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.

Inflation, Recession, and Federal Reserve Policy

Economic Overview

The post-COVID economy in the U.S. has been marked by:

strong inflation, which began in 2021, peaked in 2022, and

abated, though not fully, starting in 2023; the Federal

Reserve "tightening" in 2022 and the first half of 2023 to

contain inflation by rapidly increasing short-term interest

rates and ending asset purchases; low unemployment

rates; moderate economic growth; and, until September

2024, an inverted yield curve. Key aspects were:

• 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 4.65% a year later. Hikes after that were much

more modest and infrequent.

• The Federal Reserve ended rate hikes in 2023. No rate

actions were taken for more than a year, until a 50

basis point cut in September 2024 followed by cuts of

25 basis points in both November and December. 

• In response to 2022's extremely rapid and vigorous

tightening of monetary policy, the inflation rate in the

U.S. now is well below 2022's levels. However,

throughout 2024 and in early 2025, measures of

inflation generally remain higher than the Federal

Reserve's stated long-term goal of 2%.

• Monetary tightening often creates yield curve

inversion for a time. In the current cycle, traditional

inversion (when ten-year treasury rates are below two-

year rates) was both very deep and unusually

sustained, with inversion lasting from the summer of

2022 to September 2024 when the yield curve began

to return to its more typical upward slope.

Key events and circumstances are noted in the following

discussions.

Federal Reserve and Rates

The Federal Reserve raised short-term rates several times

in 2022 and in the first part of 2023. All but one of the rate

increases in 2022 were 75 and 50 basis points each—

aggressive by historical standards—while the 2023 rate

increases were the more-typical 25 basis points each. The

Federal Reserve cut rates 50 basis points in September

2024 and 25 basis points in November and again in

December 2024. Rates were held steady in late January

2025.

FHN cannot predict when or how much short-term rates

will be changed, how market-driven long-term rates will

behave, nor how those actions may affect financial

markets during the next several quarters.

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.

Over the last several months, the yield curve has

steepened somewhat as longer-term rates have risen or

held steady while short-term rates have fallen.

   

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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 bond trading. Both of those impacts

occurred over the last three years, with fluctuations. Refer

to Interest Rate & Yield Curve Risks, located in Item 1A.

Risk Factors beginning on page 46, for a 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. The expansion rate has varied

without a sustained trend.

Recession expectations in the U.S. were high in 2022 and

early 2023. They moderated significantly after that and

became generally low in 2024.

Fiscal Policy

The Federal Reserve controls monetary policy for the U.S.

government, but not fiscal policy (spending and taxation).

Fiscal policy 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. Some of the unusual or

unexpected aspects of the post-COVID economy likely

were created or supported by historically unusual fiscal

stimulus and other stimulative policies which pushed, and

in some cases continue to push, substantial amounts of

money into the economy. 

The changes in the executive and legislative branches of

government in 2025 could result in significant changes in

U.S. fiscal policy in 2025 and 2026. Even if significant

changes to policy are made quickly, usually it takes time

for the effect of such changes to become a significant

factor in the economic data.

2023 Banking Crisis

In March 2023, two large regional U.S. banks failed after

sudden large deposit outflows, and a major Swiss bank

was acquired by another bank at the behest of regulators.

In May 2023, a third large regional U.S. bank failed after

experiencing very large deposit outflows in March. 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, and such competition is expected to

continue into 2025.

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 fueled 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.

In 2024, improvements in loan yields were largely offset

by higher funding costs, especially for deposits. Deposit

costs increased largely in response to heightened

competition in many of FHN's markets.

In addition, some of FHN's businesses have been

negatively impacted by rate actions in the past two years

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 modestly

abated early in 2024 and FHN's mortgage business saw

improvement, but then rates started to rise later in the

year as the yield curve steepened somewhat after its long

inversion. However, the negative impacts of these higher

rates were 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. Bond revenues have fluctuated, likely

due to changing market expectations about rate moves,

among other things; those fluctuations could continue

going into 2025.

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 whether those regulations will be

adopted, or their final form, if adopted, remains

uncertain. 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.

   

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The triggering of significant cost increases based on a

single threshold financial measure—$100 billion in assets

—has been in place for many years and has impacted the

U.S. banking industry. Compliance restrictions and costs

increase as the threshold is approached, but a step-up

pattern remains. Those effects have added to the

incentives for banks to consolidate, and the proposed new

rules are likely to enhance those incentives if adopted.

It appears likely that, if adopted as proposed, significant

parts of the proposals will be challenged in court as being

inconsistent with legislation enacted by Congress in 2018.

Such a challenge would be technical and complex, and

likely would take many years to resolve. Moreover, even if

a challenge of that sort were successful, many parts of the

proposals likely would remain intact and others might be

modified without being rescinded.

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 report annually their

greenhouse gas ("GHG") emissions, with an external

assurance requirement, and to report biennially 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

implementing regulations to be adopted by July 1, 2025,

and 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. 

These challenges could take many years to resolve.

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 Disclosure 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.

Three GHG Scopes

Scope 1 GHG emissions are those from a source the

company owns or controls directly, such as a

manufacturing plant. Scope 2 emissions are indirect

emissions from company activities, such as from power

consumed by company operations. Scope 1 and 2

emissions generally can be measured or estimated using

information a company normally can obtain without

significant external inquiry.

Scope 3 GHG emissions are those from sources and

activities that a company neither owns nor controls. Scope

3 emissions are from a wide range of sources that touch

upon a company, such as: vendors; employees

(commuting, business travel, etc.); and customers. Scope 3

information generally is unknown to a company without

significant external inquiry and/or estimation.

Potential Business Impacts

Direct compliance costs 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

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.

Over the past two years it has been widely reported that

the economic costs of hurricane and other severe weather

events in the southeastern U.S. have been rising

   

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significantly. FHN believes that rising costs are directly

related to growth in those areas.

For example, much of the growth in Florida has been

along the coast. A gulf coast hurricane 50 or 60 years ago

had a fair chance of making landfall in a relatively

unpopulated area. Now, the chances of a hurricane

directly hitting a population center are much higher, the

average population in that center is much higher, and the

average value per building is much higher.

The reported significant increase in casualty risks and

costs is being reflected in property insurance practices

which currently are in significant flux. The insurance

industry is being forced to revise its risk assessment and

premium pricing practices in coastal and other impacted

areas as loss experience has deviated from earlier

predictions, sometimes badly. In Florida, for example,

some smaller carriers have failed, some larger carriers

have left markets, and remaining carriers have

significantly increased the premiums of hurricane-related

insurance, narrowed coverage, or both.

Coastal states such as Florida and Louisiana have created

last-resort insurance pools for residents who cannot

obtain or afford private property insurance. However, as

the costs borne by those pools increase, either the

premiums will have to rise, or general taxation will have to

cover the difference. In addition, those programs

generally do not help business clients, nor are they

offered in many states that can be severely impacted by

hurricane-related flooding.

State and local building and water-control codes have

been and are being revised, but often unevenly and often

not retroactive to pre-existing structures and

developments. The current transition period could be

lengthy. During the transition, insurance and other costs

are likely to reduce the practical life of properties built

under older codes even if the newer codes are not directly

applied to those properties.

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

Allowance for Loan and Lease Losses

Management’s policy is to maintain the ALLL at a level

sufficient to absorb expected credit losses in the loan and

lease portfolio. Management performs periodic and

systematic detailed reviews of its loan and lease portfolio

to identify trends and to assess the overall collectability of

the portfolio. Management believes the accounting

estimate related to the ALLL is a “critical accounting

estimate” as: (1) changes in it can materially affect the

provision for loan and lease losses and net income, (2) it

requires management to predict borrowers’ likelihood or

capacity to repay, including evaluation of inherently

uncertain future economic conditions, (3) prepayment

activity must be projected to estimate the life of loans

that often are shorter than contractual terms, (4) it

requires estimation of a reasonable and supportable

forecast period for credit losses for loan portfolio

segments before reversion to historical loss levels over the

remaining life of a loan and (5) expected future recoveries

of amounts previously charged off must be estimated.

Accordingly, this is a highly subjective process and

requires significant judgment since it is difficult to

evaluate current and future economic conditions in

relation to an overall credit cycle and estimate the timing

and extent of loss events that are expected to occur prior

to the end of a loan’s and lease's estimated life.

FHN believes that the principal assumptions underlying

the accounting estimates made by management include:

(1) the commercial loan portfolio has been properly risk

graded based on information about borrowers in specific

industries and specific issues with respect to single

borrowers; (2) borrower-specific information made

available to FHN is current and accurate; (3) the loan

portfolio has been segmented properly and individual

loans have similar credit risk characteristics and will

behave similarly; (4) the lives for loan portfolio pools have

been estimated properly, including consideration of

expected prepayments; (5) the economic forecasts utilized

and associated weighting selected by management in the

modeling of expected credit losses are reflective of future

economic conditions; (6) entity-specific historical loss

information has been properly assessed for all loan

portfolio segments as the initial basis for estimating

expected credit losses; (7) the reasonable and supportable

periods for loan portfolio segments have been properly

determined; (8) the reversion methodologies and

timeframes for migration from the reasonable and

supportable period to the use of historical loss rates are

reasonable; (9) expected recoveries of prior charge off

amounts have been properly estimated; and

(10) qualitative adjustments to modeled loss results

   

	101	2024 FORM 10-K ANNUAL REPORT

ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
Table of Contents

reasonably reflect expected future credit losses as of the

date of the financial statements.

While management uses the best information available to

establish the ALLL, future adjustments to the ALLL and

methodology may be necessary if economic or other

conditions differ substantially from the assumptions used

in making the estimates. Such adjustments to prior

estimates, as necessary, are made in the period in which

these factors and other relevant considerations indicate

that loss levels vary from previous estimates.

Selection and weighting of macroeconomic forecasts are

the most significant inputs in quantitative ALLL

calculations. Due to the sensitivity of the ALLL

determination to macroeconomic forecasts, changes in

those forecasts can result in materially different results

between reporting periods. In the determination of the

ALLL as of December 31, 2024, FHN utilized Moody's

Baseline and S3 (adverse) scenarios for the calculation of

the ALLL. FHN placed the most weight on the Moody's

Baseline scenario but included the S3 scenario to reflect

the uncertainty of macroeconomic forecasts related to

ongoing economic conditions.

Due to the dynamic relationship of macroeconomic inputs

in modeling calculations, quantifying the effects of

changing individual inputs is highly challenging.

Additionally, management applies judgment in developing

qualitative adjustments that are considered necessary to

appropriately reflect elements of credit risk that are not

captured in the quantitative model results. To provide

some hypothetical sensitivity analysis, FHN prepared two

alternate quantitative calculations, applying 100%

weighting to Moody's Baseline and S3 (adverse) scenarios. 

These hypothetical calculations resulted in a 3% reduction

and 29% increase, respectively, in ALLL in comparison to

the ALLL recorded as of December 31, 2024, inclusive of

qualitative adjustments that are affected by the weighting

of forecast scenarios.

See Note 1 - Significant Accounting Policies and Note 4 -

Allowance for Credit Losses to the Consolidated Financial

Statements in Part II, Item 8 of this Report for detail

regarding FHN’s processes, models, and methodology for

determining the ALLL.

Income Taxes

FHN is subject to the income tax laws of the U.S. and the

states and jurisdictions in which it operates. FHN accounts

for income taxes in accordance with ASC 740, "Income

Taxes". Significant judgments and estimates are required

in the determination of the consolidated income tax

expense. FHN income tax expense, deferred tax assets and

liabilities, and liabilities for unrecognized tax benefits

reflect management’s best estimate of current and future

taxes to be paid.

Income tax expense consists of both current and deferred

taxes. Current income tax expense is an estimate of taxes

to be paid or refunded for the current period and includes

income tax expense related to uncertain tax positions. A

DTA or a 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. Deferred taxes can be affected by changes in tax

rates applicable to future years, either as a result of

statutory changes or business changes that may change

the jurisdictions in which taxes are paid. Additionally,

DTAs are subject to a “more likely than not” test to

determine whether the full amount of the DTAs should be

realized in the financial statements. FHN evaluates the

likelihood of realization of the DTA based on both positive

and negative evidence available at the time, including (as

appropriate) scheduled reversals of DTLs, projected future

taxable income, tax planning strategies, and recent

financial performance. Realization is dependent on

generating sufficient taxable income prior to the

expiration of the carryforwards attributable to or

generated with respect to the DTA. In projecting future

taxable income, FHN incorporates assumptions including

the amount of future state and federal pre-tax operating

income, the reversal of temporary differences, and the

implementation of feasible and prudent tax planning

strategies. These assumptions require significant

judgment about the forecasts of future taxable income

and are consistent with the plans and estimates used to

manage the underlying business. If the “more likely than

not” test is not met, a valuation allowance must be

established against the DTA.

The income tax laws of the jurisdictions in which FHN

operate are complex and subject to different

interpretations by the taxpayer and the relevant

government taxing authorities. In determining if a tax

position should be recognized and in establishing a

provision for income tax expense, FHN must make

judgments and interpretations about the application of

these inherently complex tax laws. Interpretations may be

subjected to review during examination by taxing

authorities and disputes may arise over the respective tax

positions. FHN attempts to resolve disputes that may arise

during the tax examination and audit process. However,

certain disputes may ultimately be resolved through the

federal and state court systems.

FHN monitors relevant tax authorities and revises

estimates of accrued income taxes on a quarterly basis.

Changes in estimates may occur due to changes in income

tax laws and their interpretation by the courts and

regulatory authorities. Revisions of estimates may also

result from income tax planning and from the resolution

   

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ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
Table of Contents

of income tax controversies. Revisions in estimates may

be material to operating results for any given period.

See Note 14 - Income Taxes to the Consolidated Financial

Statements in Part II, Item 8 of this Report for additional

information including discussion of valuation allowances

related to deferred tax assets and the potential impact of

unrecognized tax benefits on future earnings.

Contingent Liabilities

A liability is contingent if the amount or outcome is not

presently known but may become known in the future as

a result of the occurrence of some uncertain future event.

FHN estimates its contingent liabilities based on:

management’s ability to reasonably estimate the loss or

range of loss related to probable loss outcomes; and

management's estimates of reasonably possible loss

associated with less-than-probable, but more-than-

remote, loss outcomes. Accounting standards require that

a liability be recorded if management determines that it is

probable that a loss has occurred and the loss can be

reasonably estimated. In addition, it must be probable

that the loss will be confirmed by some future event. As

part of the estimation process, management is required to

make assumptions about matters that are by their nature

highly uncertain and difficult to estimate.

The assessment of contingent liabilities, including legal

contingencies, involves the use of critical estimates,

assumptions, and judgments. Management’s estimates

are based on their belief that future events will validate

the current assumptions regarding the ultimate outcome

of these exposures. However, there can be no assurance

that future events, such as court decisions or decisions of

arbitrators, will not differ from management’s

assessments. Whenever practicable, management

consults with third-party experts (e.g., attorneys,

accountants, claims administrators, etc.) to assist with the

gathering and evaluation of information related to

contingent liabilities. Based on internally and/or externally

prepared evaluations, management makes a

determination whether the potential exposure requires

accrual in the financial statements.

See Note 16 - Contingencies and Other Disclosures to the

Consolidated Financial Statements in Part II, Item 8 of this

Report for additional information regarding FHN's existing

material contingent liabilities, including those with and

without loss accruals, and discussion of reasonably

possible loss amounts for pending litigation matters.

Accounting Changes

Refer to Note 1 – Significant Accounting Policies to the

Consolidated Financial Statements in Part II, Item 8 of this

Report for a summary of accounting changes and

accounting changes issued but not currently effective,

which section is incorporated into this MD&A by this

reference.

Non-GAAP Information

Certain measures included in this report are “non-GAAP”,

meaning they are not presented in accordance with U.S.

GAAP and also are not codified in U.S. banking regulations

currently applicable to FHN. Although other entities may

use calculation methods that differ from those used by

FHN for non-GAAP measures, FHN’s management believes

such measures are relevant to understanding the capital

position or financial results of FHN and its business

segments. Non-GAAP measures are reported to FHN’s

management and Board of Directors through various

internal reports.

The non-GAAP measures presented in this report are pre-

provision net revenue, return on average tangible

common equity, tangible common equity to tangible

assets, and tangible book value per common share. Table

7.28 provides a reconciliation of non-GAAP items

presented in this report to the most comparable GAAP

presentation.

Presentation of regulatory measures, even those which

are not GAAP, provides a meaningful base for

comparability to other financial institutions subject to the

same regulations as FHN, as demonstrated by their use by

banking regulators in reviewing capital adequacy of

financial institutions. Although not GAAP terms, these

regulatory measures are not considered “non-GAAP”

under U.S. financial reporting rules as long as their

presentation conforms to regulatory standards.

Regulatory measures used in this MD&A include: common

equity tier 1 capital, generally defined as common equity

less goodwill, other intangibles, and certain other required

regulatory deductions; tier 1 capital, generally defined as

the sum of core capital (including common equity and

instruments that cannot be redeemed at the option of the

holder) adjusted for certain items under risk based capital

regulations; and risk-weighted assets, which is a measure

of total on- and off-balance sheet assets adjusted for

credit and market risk, used to determine regulatory

capital ratios.

The following table provides a reconciliation of non-GAAP

items presented in this MD&A to the most comparable

GAAP presentation.

   

	103	2024 FORM 10-K ANNUAL REPORT

ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
Table of Contents

Table 7.28

NON-GAAP TO GAAP RECONCILIATION

(Dollars in millions; shares in thousands)		2024		2023		2022
Pre-provision Net Revenue (Non-GAAP)
Net interest income (GAAP)		$2,511		$2,540		$2,392
Plus: Noninterest income (GAAP)		679		927		815
Total revenues (GAAP)		3,190		3,467		3,207
Less: Noninterest expense (GAAP)		2,035		2,079		1,953
Pre-provision net revenue (Non-GAAP)		$1,155		$1,388		$1,254
Tangible Common Equity (Non-GAAP)
(A) Total equity (GAAP)		$9,111		$9,291		$8,547
Less: Noncontrolling interest (a)		295		295		295
Less: Preferred stock (a)		426		520		1,014
(B) Total common equity		8,390		8,476		7,238
Less: Goodwill and other intangible assets (GAAP) (b)		1,653		1,696		1,745
(C) Tangible common equity (Non-GAAP)		$6,737		$6,780		$5,493
Tangible Assets (Non-GAAP)
(D) Total assets (GAAP)		$82,152		$81,661		$78,953
Less: Goodwill and other intangible assets (GAAP) (b)		1,653		1,696		1,745
(E) Tangible assets (Non-GAAP)		$80,499		$79,965		$77,208
Average Tangible Common Equity (Non-GAAP)
Average total equity (GAAP)		$9,136		$8,905		$8,579
Less: Average noncontrolling interest (a)		295		295		295
Less: Average preferred stock (a)		450		758		935
(F) Total average common equity		8,391		7,852		7,349
Less: Average goodwill and other intangible assets (GAAP) (b)		1,674		1,720		1,777
(G) Average tangible common equity (Non-GAAP)		$6,717		$6,132		$5,572
Net Income Available to Common Shareholders
(H) Net income available to common shareholders (GAAP)		$738		$865		$868
Period-end shares outstanding
(I) Period-end shares outstanding		524,280		558,839		537,101
Ratios
(A)/(D) Total period-end equity to period-end assets (GAAP)		11.09%		11.38%		10.83%
(C)/(E) Tangible common equity to tangible assets (Non-GAAP)		8.37		8.48		7.12
(H)/(F) Return on average common equity (GAAP)		8.80		11.01		11.81
(H)/(G) Return on average tangible common equity (Non-GAAP)		10.99		14.11		15.58
(B)/(I) Book value per common share (GAAP)		$16.00		$15.17		$13.48
(C)/(I) Tangible book value per common share (Non-GAAP)		$12.85		$12.13		$10.23

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

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

   

	104	2024 FORM 10-K ANNUAL REPORT

ITEM 7A. QUANTITATIVE & QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Table of Contents

Item 7A.Quantitative and Qualitative Disclosures

About Market Risk

The information called for by this Item is incorporated

herein by reference to: 2024 MD&A (Item 7), which begins

on page 57 of this report; Note 21—Derivatives, which

begins on page 185 of this report; and Note 22—Master

Netting and Similar Agreements - Repurchase, Reverse

Repurchase, and Securities Borrowing Transactions, which

begins on page 192 of this report. Within 2024 MD&A,

these sections are especially pertinent to this Item 7A:

Market Risk Management and Interest Rate Risk

Management which begin, respectively, on pages 87 and

89 of this report. Notes 21 and 22 are part of our 2024

Financial Statements (Item 8).

   

	105	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	ITEM 8 TOPICS

Item 8.Financial Statements and Supplementary

Data

TABLE OF ITEM 8 TOPICS

Report of Management on Internal Control over Financial Reporting	107
Report of Independent Registered Public Accounting Firm	108
Consolidated Balance Sheets	112
Consolidated Statements of Income	113
Consolidated Statements of Comprehensive Income (Loss)	115
Consolidated Statements of Changes in Equity	116
Consolidated Statements of Cash Flows	117
Notes to the Consolidated Financial Statements	119
Note 1 Significant Accounting Policies	119
Note 2 Investment Securities	132
Note 3 Loans and Leases	135
Note 4 Allowance for Credit Losses	144
Note 5 Premises, Equipment, and Leases	147
Note 6 Goodwill and Other Intangible Assets	150
Note 7 Mortgage Banking Activity	151
Note 8 Deposits	152
Note 9 Short-Term Borrowings	153
Note 10 Term Borrowings	154
Note 11 Preferred Stock	156
Note 12 Regulatory Capital and Restrictions	157
Note 13 Components of Other Comprehensive Income (Loss)	159
Note 14 Income Taxes	160
Note 15 Earnings Per Share	164
Note 16 Contingencies and Other Disclosures	165
Note 17 Retirement Plans and Other Employee Benefits	167
Note 18 Stock Options and Restricted Stock	172

   

	106	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	ITEM 8 TOPICS

Note 19 Business Segment Information	175
Note 20 Variable Interest Entities	182
Note 21 Derivatives	185
Note 22 Master Netting and Similar Agreements - Repurchase, Reverse Repurchase, and Securities Borrowing Transactions	192
Note 23 Fair Value of Assets and Liabilities	194
Note 24 Parent Company Financial Information	209

   

	107	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	MANAGEMENT REPORT ON ICOFR

Report of Management on Internal Control over Financial Reporting

Management at First Horizon Corporation is responsible for establishing and maintaining adequate internal control over

financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. First Horizon

Corporation’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the

reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally

accepted accounting principles.

Even effective internal controls, no matter how well designed, have inherent limitations such as the possibility of human error

or of circumvention or overriding of controls, and consideration of cost in relation to benefit of a control. Moreover,

effectiveness must necessarily be considered according to the existing state of the art of internal control. Further, because of

changes in conditions, the effectiveness of internal controls may diminish over time.

Management assessed the effectiveness of First Horizon Corporation’s internal control over financial reporting as of

December 31, 2024. This assessment was based on criteria established in Internal Control – Integrated Framework (2013)

issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Based on our assessment and those criteria, management believes that First Horizon Corporation maintained effective

internal control over financial reporting as of December 31, 2024.

KPMG LLP, the independent registered public accounting firm that audited First Horizon Corporation's financial statements,

issued an audit report on First Horizon Corporation’s internal control over financial reporting. That report appears on the

following page.

   

	108	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	OPINION ON ICOFR

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors

First Horizon Corporation:

Opinion on Internal Control Over Financial Reporting

We have audited First Horizon Corporation and subsidiaries' (the Company) internal control over financial reporting as of

December 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee

of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects,

effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control –

Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)

(PCAOB), the consolidated balance sheets of the Company as of December 31, 2024 and 2023, the related consolidated

statements of income, comprehensive income, changes in equity, and cash flows for each of the years in the three-year

period ended December 31, 2024, and the related notes (collectively, the consolidated financial statements), and our report

dated February 27, 2025 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its

assessment of the effectiveness of internal control over financial reporting, included in the accompanying Report of

Management on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s

internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and

are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the

applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform

the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in

all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal

control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and

operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other

procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our

opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the

reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally

accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures

that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and

dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to

permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and

expenditures of the company are being made only in accordance with authorizations of management and directors of the

company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or

disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,

projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate

because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Memphis, Tennessee

February 27, 2025

   

	109	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	OPINION ON CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors

First Horizon Corporation:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of First Horizon Corporation and subsidiaries (the Company)

as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, changes in

equity, and cash flows for each of the years in the three-year period ended December 31, 2024, and the related notes

(collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all

material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations

and its cash flows for each of the years in the three-year period ended December 31, 2024, in conformity with U.S. generally

accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)

(PCAOB), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in

Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway

Commission, and our report dated February 27, 2025 expressed an unqualified opinion on the effectiveness of the Company’s

internal control over financial reporting.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express

an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with

the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities

laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform

the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material

misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material

misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that

respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures

in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant

estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We

believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial

statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts

or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging,

subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the

consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below,

providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Assessment of the allowance for loan losses for loans collectively evaluated for impairment

As discussed in Notes 1 and 4 to the consolidated financial statements, the Company’s total allowance for loan losses

as of December 31, 2024 was $815 million, of which a portion related to the allowance for loan losses for loans

collectively evaluated for impairment (the collective ALLL). The collective ALLL includes the measure of expected

credit losses on a collective (pooled) basis for those loans that share similar risk characteristics. The Company

estimated the collective ALLL using a current expected credit losses methodology which is based on internal and

external information relating to past events, current conditions, and reasonable and supportable forecasts of future

conditions that affect the collectability of future cash flows. The expected credit losses are the product of multiplying

   

	110	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	OPINION ON CONSOLIDATED FINANCIAL STATEMENTS

the Company’s estimates of probability of default (PD), loss given default (LGD), and individual loan level exposure at

default (EAD), including amortization and prepayment assumptions, on an undiscounted basis. The Company uses

models or assumptions to develop expected loss forecasts, inclusive of qualitative adjustments that are affected by

the weighting of multiple macroeconomic forecast scenarios over a four year reasonable and supportable forecast

period. After the reasonable and supportable forecast period, the Company immediately reverts to its historical loss

averages, evaluated over the historical observation period, for the remaining estimated life of the loans. In order to

capture the unique risks of the loan portfolio within the PD, LGD, and prepayment models, the Company segments

the portfolio into pools, generally incorporating loan grades for commercial loans. The Company uses qualitative

adjustments to adjust historical loss information in situations where current loan characteristics differ from those in

the historical loss information and for differences in economic conditions and other factors.

We identified the assessment of the collective ALLL as a critical audit matter. A high degree of audit effort, including

specialized skills and knowledge, and subjective and complex auditor judgment was involved in the assessment of the

collective ALLL due to significant measurement uncertainty. Specifically, the assessment encompassed the evaluation

of the collective ALLL methodology, including the methods and models used to estimate the PD, LGD, and

prepayments and their significant assumptions, which included the selection of the economic forecast scenarios and

the weighting of each economic scenario. The assessment also included the evaluation of certain qualitative

adjustments and their significant assumptions. The significant assumptions are sensitive to variation, such that minor

changes in the assumption can cause significant changes in the estimates. The assessment also included an

evaluation of the conceptual soundness and performance of the PD, LGD, and prepayments models. In addition,

auditor judgment was required to evaluate the sufficiency of audit evidence obtained.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the

design and tested the operating effectiveness of certain internal controls related to the Company’s measurement of

the collective ALLL estimate, including controls over the:

• assessment of the collective ALLL methodology

• performance monitoring of the PD, LGD and prepayment models

• continued use and appropriateness of changes to the PD, LGD, and prepayment models, including the

significant assumptions used in the PD, LGD, and prepayment models

• selection of the economic scenarios and the weighting of each economic scenario

• development of the qualitative adjustments, including the significant assumptions used in the measurement

of the qualitative adjustments

• analysis of the collective ALLL results, trends, and ratios.

We evaluated the Company’s process to develop the collective ALLL estimate by testing certain sources of data,

factors, and assumptions that the Company used, and considered the relevance and reliability of such data, factors,

and assumptions. In addition, we involved credit risk professionals with specialized skills and knowledge, who

assisted in:

• evaluating the Company’s collective ALLL methodology for compliance with U.S. generally accepted

accounting principles

• evaluating judgments made by the Company relative to the performance testing of the PD, LGD, and

prepayment models by comparing them to relevant Company-specific metrics and trends and the applicable

industry and regulatory practices

• assessing the conceptual soundness and performance testing of the PD, LGD, and prepayment models by

inspecting the model documentation to determine whether the models are suitable for their intended use

• evaluating the selection of the economic forecast scenarios and the weighting applied to each scenario by

comparing them to the Company’s business environment and relevant industry practices

   

	111	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	OPINION ON CONSOLIDATED FINANCIAL STATEMENTS

• evaluating the methodology used to develop the qualitative adjustments and the effect of those

adjustments on the collective ALLL compared with relevant credit risk factors and consistency with credit

trends and identified limitations of the underlying quantitative models.

We also assessed the sufficiency of the audit evidence obtained related to the collective ALLL estimate by evaluating

the:

• cumulative results of the audit procedures

• qualitative aspects of the Company’s accounting practice

• potential bias in the accounting estimates.

We have served as the Company’s auditor since 2002.

Memphis, Tennessee

February 27, 2025

   

	112	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	CONSOLIDATED BALANCE SHEETS

Consolidated Balance Sheets

		December 31,
(Dollars in millions, except per share amounts)		2024		2023
Assets
Cash and due from banks		$906		$1,012
Interest-bearing deposits with banks		1,538		1,328
Federal funds sold and securities purchased under agreements to resell		631		719
Trading securities		1,387		1,412
Securities available for sale at fair value		7,896		8,391
Securities held to maturity (fair value of $1,083 and $1,161, respectively)		1,270		1,323
Loans held for sale (including $85 and $68 at fair value, respectively)		551		502
Loans and leases		62,565		61,292
Allowance for loan and lease losses		(815)		(773)
Net loans and leases		61,750		60,519
Premises and equipment		574		590
Goodwill		1,510		1,510
Other intangible assets		143		186
Other assets		3,996		4,169
Total assets		$82,152		$81,661
Liabilities
Noninterest-bearing deposits		$16,021		$17,204
Interest-bearing deposits		49,560		48,576
Total deposits		65,581		65,780
Trading liabilities		550		509
Short-term borrowings		3,400		2,549
Term borrowings		1,195		1,150
Other liabilities		2,315		2,382
Total liabilities		73,041		72,370
Equity
Preferred stock, Non-cumulative perpetual, no par value; authorized 5,000,000 shares; issued 16,750 and 26,750 shares, respectively		426		520
Common stock, $0.625 par value; authorized 700,000,000 shares; issued 524,280,412 and 558,838,694 shares, respectively		328		349
Capital surplus		4,808		5,351
Retained earnings		4,382		3,964
Accumulated other comprehensive loss, net		(1,128)		(1,188)
FHN shareholders' equity		8,816		8,996
Noncontrolling interest		295		295
Total equity		9,111		9,291
Total liabilities and equity		$82,152		$81,661

See accompanying notes to consolidated financial statements.

   

	113	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	CONSOLIDATED STATEMENTS OF INCOME

Consolidated Statements of Income

		Year Ended December 31
(Dollars in millions, except per share data; shares in thousands)		2024		2023		2022
Interest income
Interest and fees on loans and leases		$3,874		$3,575		$2,292
Interest and fees on loans held for sale		36		51		39
Interest on investment securities		241		247		198
Interest on trading securities		85		78		58
Interest on other earning assets		116		149		96
Total interest income		4,352		4,100		2,683
Interest expense
Interest on deposits		1,620		1,266		184
Interest on trading liabilities		24		12		12
Interest on short-term borrowings		130		210		23
Interest on term borrowings		67		72		72
Total interest expense		1,841		1,560		291
Net interest income		2,511		2,540		2,392
Provision for credit losses		150		260		95
Net interest income after provision for credit losses		2,361		2,280		2,297
Noninterest income
Fixed income		187		133		205
Deposit transactions and cash management		176		179		171
Brokerage, management fees and commissions		101		90		92
Card and digital banking fees		77		77		84
Other service charges and fees		51		54		54
Trust services and investment management		48		47		48
Mortgage banking income		35		23		68
Gain on merger termination		—		225		—
Securities gains (losses), net		(89)		(4)		18
Other income		93		103		75
Total noninterest income		679		927		815
Noninterest expense
Personnel expense		1,137		1,100		1,101
Net occupancy expense		130		123		128
Computer software		121		111		113
Operations services		94		87		87
Deposit insurance expense		64		122		32
Legal and professional fees		64		49		62
Contract employment and outsourcing		51		49		54
Advertising and public relations		48		71		50
Amortization of intangible assets		44		47		51
Equipment expense		42		42		45
Communications and delivery		32		35		37
Contributions		18		61		7
Other expense		190		182		186
Total noninterest expense		2,035		2,079		1,953
Income before income taxes		1,005		1,128		1,159

   

	114	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	CONSOLIDATED STATEMENTS OF INCOME

Income tax expense		211		212		247
Net income		$794		$916		$912
Net income attributable to noncontrolling interest		19		19		12
Net income attributable to controlling interest		$775		$897		$900
Preferred stock dividends		37		32		32
Net income available to common shareholders		$738		$865		$868
Basic earnings per share		$1.37		$1.58		$1.62
Diluted earnings per share		$1.36		$1.54		$1.53
Weighted average common shares		540,317		548,410		535,033
Diluted average common shares		544,285		561,732		566,004

See accompanying notes to consolidated financial statements.

   

	115	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Consolidated Statements of Comprehensive Income (Loss)

		Year Ended December 31
(Dollars in millions)		2024		2023		2022
Net income		$794		$916		$912
Other comprehensive income (loss), net of tax:
Net unrealized gains (losses) on securities available for sale		54		137		(937)
Net unrealized gains (losses) on cash flow hedges		(14)		47		(129)
Net unrealized gains (losses) on pension and other postretirement plans		20		(4)		(14)
Other comprehensive income (loss)		60		180		(1,080)
Comprehensive income (loss)		854		1,096		(168)
Comprehensive income attributable to noncontrolling interest		19		19		12
Comprehensive income (loss) attributable to controlling interest		$835		$1,077		$(180)
Income tax expense (benefit) of items included in other comprehensive income:
Net unrealized gains (losses) on securities available for sale		$17		$44		$(302)
Net unrealized gains (losses) on cash flow hedges		(5)		15		(42)
Net unrealized gains (losses) on pension and other postretirement plans		7		(1)		(5)

See accompanying notes to consolidated financial statements.

   

	116	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Consolidated Statements of Changes in Equity

		Preferred Stock				Common Stock
(Dollars in millions, except per share data; shares in thousands)		Shares		Amount		Shares		Amount		Capital Surplus		Retained Earnings		Accumulated Other Comprehensive Income (Loss) (a)		Noncontrolling Interest		Total
Balance, December 31, 2021		26,750		$520		533,577		$333		$4,743		$2,891		$(288)		$295		$8,494
Net income		—		—		—		—		—		900		—		12		912
Other comprehensive income (loss)		—		—		—		—		—		—		(1,080)		—		(1,080)
Cash dividends declared:
Preferred stock		—		—		—		—		—		(32)		—		—		(32)
Common stock ($0.60 per share)		—		—		—		—		—		(329)		—		—		(329)
Preferred stock issuance (4,936 shares issued at $100,000 per share)		4,936		494		—		—		—		—		—		—		494
Common stock repurchased		—		—		(577)		—		(12)		—		—		—		(12)
Common stock issued for:
Stock options exercised and restricted stock awards		—		—		4,101		3		34		—		—		—		37
Stock-based compensation expense		—		—		—		—		75		—		—		—		75
Dividends declared - noncontrolling interest of subsidiary preferred stock		—		—		—		—		—		—		—		(12)		(12)
Balance, December 31, 2022		31,686		1,014		537,101		336		4,840		3,430		(1,368)		295		8,547
Adjustment to reflect adoption of ASU 2022-02		—		—		—		—		—		4		—		—		4
Net income		—		—		—		—		—		897		—		19		916
Other comprehensive income (loss)		—		—		—		—		—		—		180		—		180
Cash dividends declared:
Preferred stock		—		—		—		—		—		(32)		—		—		(32)
Common stock ($0.60 per share)		—		—		—		—		—		(335)		—		—		(335)
Preferred stock conversion		(4,936)		(494)		—		—		—		—		—		—		(494)
Common stock repurchased		—		—		(807)		(1)		(9)		—		—		—		(10)
Common stock issued for:
Stock options exercised and restricted stock awards		—		—		2,802		—		5		—		—		—		5
Series G preferred stock conversion		—		—		19,743		12		481		—		—		—		493
Stock-based compensation expense		—		—		—		2		34		—		—		—		36
Dividends declared - noncontrolling interest of subsidiary preferred stock		—		—		—		—		—		—		—		(19)		(19)
Balance, December 31, 2023		26,750		520		558,839		349		5,351		3,964		(1,188)		295		9,291
Adjustment to reflect adoption of ASU 2023-02		—		—		—		—		—		8		—		—		8
Net income		—		—		—		—		—		775		—		19		794
Other comprehensive income (loss)		—		—		—		—		—		—		60		—		60
Cash dividends declared:
Preferred stock		—		—		—		—		—		(29)		—		—		(29)
Common stock ($0.60 per share)		—		—		—		—		—		(329)		—		—		(329)
Series D preferred stock redemption		(10,000)		(94)		—		—		—		(6)		—		—		(100)
Excise tax on preferred stock redemption		—		—		—		—		—		(1)		—		—		(1)
Common stock repurchased (b)		—		—		(39,203)		(25)		(601)		—		—		—		(626)
Excise tax on common stock repurchased		—		—		—		—		(6)		—		—		—		(6)
Common stock issued for:
Stock options exercised and restricted stock awards		—		—		4,644		1		8		—		—		—		9
Stock-based compensation expense		—		—		—		3		56		—		—		—		59
Dividends declared - noncontrolling interest of subsidiary preferred stock		—		—		—		—		—		—		—		(19)		(19)
Balance, December 31, 2024		16,750		$426		524,280		$328		$4,808		$4,382		$(1,128)		$295		$9,111

(a) Due to the nature of the preferred stock issued by FHN and its subsidiaries, all components of other comprehensive income (loss) have been attributed

solely to FHN as the controlling interest holder.

(b) 2024 includes $604 million repurchased under FHN's general purchase programs.

See accompanying notes to consolidated financial statements.

   

	117	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	CONSOLIDATED STATEMENTS OF CASH FLOWS

Consolidated Statements of Cash Flows

		Year Ended December 31
(Dollars in millions)		2024		2023		2022
Operating Activities
Net income		$794		$916		$912
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses		150		260		95
Deferred income tax expense (benefit)		(17)		44		91
Depreciation and amortization of premises and equipment		55		55		59
Amortization of intangible assets		44		47		51
Net other amortization and accretion		2		—		(25)
Net decrease in trading securities (a)		1,011		1,163		2,120
Net (increase) decrease in derivatives		(2)		(314)		524
Stock-based compensation expense		59		36		75
Securities (gains) losses, net		89		4		(18)
Net (gains) losses on sale/disposal of fixed assets		(3)		—		(1)
Gain on divestiture		—		(9)		—
Gain on BOLI		(5)		(7)		(9)
Loans held for sale:
Purchases and originations		(2,758)		(2,295)		(3,728)
Gross proceeds from settlements and sales		1,792		1,183		2,310
(Gain) loss due to fair value adjustments and other		(75)		(12)		107
Other operating activities, net		132		228		(272)
Total adjustments		474		383		1,379
Net cash provided by operating activities		1,268		1,299		2,291
Investing Activities
Proceeds from sales of securities available for sale		1,155		—		—
Proceeds from maturities of securities available for sale		831		856		1,351
Purchases of securities available for sale		(1,538)		(261)		(2,767)
Purchases of securities held to maturity		—		—		(712)
Proceeds from prepayments of securities held to maturity		57		53		55
Proceeds from sales of premises and equipment		8		1		18
Purchases of premises and equipment		(44)		(37)		(28)
Proceeds from BOLI		13		14		22
Net increase in loans and leases		(1,337)		(3,303)		(3,204)
Net (increase) decrease in interest-bearing deposits with banks		(209)		56		13,523
Cash received for divestitures		—		11		—
Other investing activities, net		6		5		75
Net cash (used in) provided by investing activities		(1,058)		(2,605)		8,333
Financing Activities
Common stock:
Stock options exercised		9		5		36
Cash dividends paid		(332)		(335)		(324)
Repurchase of shares		(626)		(10)		(12)
Preferred stock:
Preferred stock issuance		—		—		494
Call of preferred stock		(100)		—		—
Cash dividends paid - preferred stock - noncontrolling interest		(19)		(17)		(11)
Cash dividends paid - preferred stock		(29)		(32)		(32)
Net (decrease) increase in deposits		(201)		2,289		(11,406)

   

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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	CONSOLIDATED STATEMENTS OF CASH FLOWS

Net increase in short-term borrowings		851		43		382
Net increase (decrease) in term borrowings		43		(449)		4
Net cash (used in) provided by financing activities		(404)		1,494		(10,869)
Net (decrease) increase in cash and cash equivalents		(194)		188		(245)
Cash and cash equivalents at beginning of period		1,731		1,543		1,788
Cash and cash equivalents at end of period		$1,537		$1,731		$1,543
Supplemental Disclosures
Total interest paid		$1,869		$1,428		$280
Total taxes paid		106		123		20
Total taxes refunded		7		19		7
Transfer from loans to OREO		3		4		3
Transfer from loans HFS to trading securities		992		1,212		1,893
Transfer from loans to loans HFS		—		7		—
Preferred stock conversion to common stock		—		493		—

(a) Includes transfers from loans HFS to trading securities.

See accompanying notes to consolidated financial statements.

   

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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 1—SIGNIFICANT ACCOUNTING POLICIES

Notes to the Consolidated Financial Statements

Note 1—Significant Accounting Policies

Basis of Accounting

The consolidated financial statements of FHN, including its

subsidiaries, have been prepared in conformity with

accounting principles generally accepted in the United

States of America and follow general practices within the

industries in which it operates. This preparation requires

management to make estimates and assumptions that

affect the amounts reported in the financial statements

and accompanying notes. These estimates and

assumptions are based on information available as of the

date of the financial statements and could differ from

actual results.

Principles of Consolidation

The consolidated financial statements include the

accounts of FHN and other entities in which it has a

controlling financial interest. Variable interest entities for

which FHN or a subsidiary has been determined to be the

primary beneficiary are also consolidated. Affiliates for

which FHN is not considered the primary beneficiary and

in which FHN does not have a controlling financial interest

are accounted for under the equity method. These

investments are included in other assets, and FHN’s

proportionate share of income or loss is included in

noninterest income. All significant intercompany

transactions and balances have been eliminated.

Revenues

Revenue is recognized when the performance obligations

under the terms of a contract with a client are satisfied in

an amount that reflects the consideration FHN expects to

be entitled. FHN derives a significant portion of its

revenues from fee-based services. Noninterest income

from transaction-based fees is generally recognized

immediately upon completion of the transaction.

Noninterest income from service-based fees is generally

recognized over the period in which FHN provides the

service. Any services performed over time generally

require that FHN render services each period and,

therefore, FHN measures progress in completing these

services based upon the passage of time and recognizes

revenue as invoiced.

Following is a discussion of FHN's key revenues within the

scope of ASC 606, "Revenue from Contracts with

Customers," except as noted.

Fixed Income

Fixed income includes fixed income securities sales,

trading, and strategies, as well as loan sales and derivative

sales, which are not within the scope of revenue from

contracts with customers. Fixed income also includes

investment banking fees earned for services related to

underwriting debt securities and performing portfolio

advisory services. FHN's performance obligation for

underwriting services is satisfied on the trade date, while

the performance obligation for advisory services is

satisfied over time.

Mortgage Banking Income

Mortgage banking income includes mortgage servicing

income, mortgage loan originations and sales, derivative

settlements, as well as any changes in fair value recorded

on mortgage loans and derivatives. Mortgage banking

income from 1) the sale of loans, 2) the settlement of

derivatives, 3) changes in the fair value of loans,

derivatives, and servicing rights, and 4) the servicing of

loans is not within the scope of revenue from contracts

with customers. Prior to the sale of the title insurance

business during 2022, mortgage banking income also

included title income, which was earned when FHN

fulfilled its performance obligation at the point in time

when the services were completed.

Deposit Transactions and Cash Management

Deposit transactions and cash management activities

include fees for services related to consumer and

commercial deposit products (such as service charges on

checking accounts), cash management products and

services such as electronic transaction processing

(Automated Clearing House and Electronic Data

Interchange), account reconciliation services, cash vault

services, lockbox processing, and information reporting to

large corporate clients. FHN's obligation for transaction-

based services is satisfied at the time of the transaction

when the service is delivered, while FHN's obligation for

service-based fees is satisfied over the course of each

month.

Brokerage, Management Fees and Commissions

Brokerage, management fees and commissions include

fees for portfolio management, trade commissions, and

annuity and mutual fund sales. Asset-based management

fees are charged based on the market value of the client’s

assets. The services associated with these revenues, which

include investment advice and active management of

client assets, are generally performed and recognized over

a month or quarter. Transactional revenues are based on

the size and number of transactions executed at the

client’s direction and are generally recognized on the

trade date.

Trust Services and Investment Management

Trust services and investment management fees include

investment management, personal trust, employee

benefits, and custodial trust services. Obligations for trust

services are generally satisfied over time but may be

   

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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 1—SIGNIFICANT ACCOUNTING POLICIES

satisfied at points in time for certain activities that are

transactional in nature.

Card and Digital Banking Fees

Card and digital banking fees include credit interchange

and network revenues and various card-related fees.

Interchange income is recognized concurrently with the

delivery of services on a daily basis. Card-related fees such

as late fees, currency conversion, and cash advance fees

are loan-related and excluded from the scope of ASC 606.

Contract Balances

As of December 31, 2024 and 2023, accounts receivable

related to products and services on noninterest income

were $14 million and $13 million, respectively. For the

year ended December 31, 2024, FHN had no material

impairment losses on noninterest accounts receivable,

and there were no material contract assets, contract

liabilities, or deferred contract costs recorded on the

Consolidated Balance Sheets as of December 31, 2024.

Credit risk is assessed on these accounts receivable each

reporting period, and the amount of estimated

uncollectible receivables is not material.

Transaction Price Allocated to Remaining Performance

Obligations

For the year ended December 31, 2024, revenue

recognized from performance obligations related to prior

periods was not material. Revenue expected to be

recognized in any future year related to remaining

performance obligations, excluding revenue pertaining to

contracts that have an original expected duration of one

year or less and contracts where revenue is recognized as

invoiced, is not material.

Refer to Note 19 - Business Segment Information for a

reconciliation of disaggregated revenue by major product

line and reportable segment.

Statements of Cash Flows

For purposes of these statements, cash and due from

banks, federal funds sold, and securities purchased under

agreements to resell are considered cash and cash

equivalents. Federal funds are usually sold for one-day

periods, and securities purchased under agreements to

resell are short-term, highly liquid investments.

Interest-Bearing Deposits With Banks

Interest-bearing deposits with banks primarily consist of

funds on deposit with the Federal Reserve and collateral

posted with derivative counterparties. Interest is earned

at overnight rates.

Debt Investment Securities

Debt securities that may be sold prior to maturity are

classified as AFS and are carried at fair value. The

unrealized gains and losses on debt securities AFS,

including securities for which no credit impairment exists,

are excluded from earnings and are reported, net of tax,

as a component of other comprehensive income within

shareholders’ equity and the Consolidated Statements of

Comprehensive Income. Debt securities which

management has the intent and ability to hold to maturity

are reported at amortized cost. See Note 23 - Fair Value of

Assets and Liabilities for additional information. Realized

gains and losses (i.e., from sales) for debt investment

securities are determined by the specific identification

method and reported in noninterest income.

The evaluation of credit risk for HTM debt securities

mirrors the process described below for loans held for

investment. AFS debt securities are reviewed for potential

credit impairment at the individual security level. The

evaluation of credit risk includes consideration of third-

party and government guarantees (both explicit and

implicit), senior or subordinated status, credit ratings of

the issuer, the effects of interest rate changes since

purchase, and observable market information such as

issuer-specific credit spreads. Credit losses for AFS debt

securities are generally recognized through establishment

of an allowance for credit losses that cannot exceed the

amount by which amortized cost exceeds fair value.

Charge-offs are recorded as reductions of the security’s

amortized cost and the credit allowance. Subsequent

improvements in estimated credit losses result in

reduction of the credit allowance, but not beyond zero.

However, if FHN has the intent to sell or if it is more-likely-

than-not that it will be compelled to sell a security with an

unrecognized loss, the difference between the security's

carrying value and fair value is recognized through

earnings and a new amortized cost basis is established for

the security (i.e., no allowance for credit losses is

recognized).

FHN has elected to exclude accrued interest receivable

from the fair value and amortized cost basis on debt

securities when assessing whether these securities have

experienced credit impairment. Additionally, FHN has

elected to not measure an allowance for credit losses on

AIR for debt securities based on its policy to write off

uncollectible interest in a timely manner, which generally

occurs when delinquency reaches no more than 90 days

for all security types. Any such write-offs are recognized as

a reduction of interest income. AIR for debt securities is

included within other assets in the Consolidated Balance

Sheets.

Equity Investments

Equity investments are classified in other assets. Banks

organized under state law may apply to be members of

the Federal Reserve System. Each member bank is

required to own stock in its regional Federal Reserve Bank.

Given this requirement, FRB stock may not be sold,

traded, or pledged as collateral for loans. Membership in

the Federal Home Loan Bank network requires ownership

of capital stock. Member banks are entitled to borrow

funds from the FHLB and are required to pledge mortgage

loans as collateral. Investments in the FHLB are non-

   

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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 1—SIGNIFICANT ACCOUNTING POLICIES

transferable and, generally, membership is maintained

primarily to provide a source of liquidity as needed. FRB

and FHLB stock are recorded at cost and are subject to

impairment reviews. FHN's subsidiary, First Horizon Bank,

was a state member bank throughout 2024.

Other equity investments primarily consist of mutual

funds, which are marked to fair value through earnings,

and equity investments without a readily determinable

fair value, which are recorded at cost minus impairment,

with adjustments through earnings for observable price

changes in orderly transactions for the identical or a

similar investment of the same issuer.

Federal Funds Sold and Purchased

Federal funds sold and purchased represent unsecured

overnight funding arrangements between participants in

the Federal Reserve system primarily to assist banks in

meeting their regulatory cash reserve requirements.

Federal funds sold are evaluated for credit risk each

reporting period. Due to the short duration of each

transaction and the history of no credit losses, no credit

loss has been recognized.

Securities Purchased Under Agreements to Resell and

Securities Sold Under Agreements to Repurchase

FHN purchases short-term securities under agreements to

resell, which are accounted for as collateralized financings

except where FHN does not have an agreement to sell the

same or substantially the same securities before maturity

at a fixed or determinable price. All of FHN’s securities

purchased under agreements to resell are recognized as

collateralized financings. Securities delivered under these

transactions are delivered to either the dealer custody

account at the FRB or to the applicable counterparty.

Securities sold under agreements to repurchase are

offered to cash management clients as an automated,

collateralized investment account. Securities sold under

agreements to repurchase are also used by the consumer

or commercial bank to obtain favorable borrowing rates

on its purchased funds. All of FHN's securities sold under

agreements to repurchase are secured borrowings.

Collateral is valued daily and FHN may require

counterparties to deposit additional securities or cash as

collateral, or FHN may return cash or securities previously

pledged by counterparties, or FHN may be required to

post additional securities or cash as collateral, based on

the contractual requirements for these transactions.

FHN’s fixed income business utilizes securities borrowing

arrangements as part of its trading operations. Securities

borrowing transactions generally require FHN to deposit

cash with the securities lender. The amount of cash

advanced is recorded within securities purchased under

agreements to resell in the Consolidated Balance Sheets.

These transactions are not considered purchases and the

securities borrowed are not recognized by FHN. FHN does

not conduct securities lending transactions.

Securities purchased under agreements to resell and

securities borrowing arrangements are evaluated for

credit risk each reporting period. As presented in Note 22 -

Master Netting and Similar Agreements - Repurchase,

Reverse Repurchase, and Securities Borrowing

Transactions, these agreements are collateralized by the

related securities and collateral maintenance provisions

with counterparties, including replenishment and

adjustment on a transaction-specific basis. This collateral

includes both the securities collateral for each transaction

as well as offsetting securities sold under agreements to

repurchase with the same counterparty. Given the history

of no credit losses and collateralized nature of these

transactions, no credit loss has been recognized.

Loans Held for Sale

Loans originated or purchased for which management

lacks the intent to hold are included in loans held for sale

in the Consolidated Balance Sheets. FHN generally

accounts for loans held for sale at the lower of amortized

cost or market value, with an exception for certain

mortgage loans held for sale and repurchased loans that

are not government insured which are accounted for

under the fair value option of reporting.

• Fair Value Option Election. These loans consist of

originated fixed-rate single-family residential

mortgage loans that are committed to be sold in the

secondary market. Gains and losses on these

mortgage loans are included in mortgage banking

income.

• Other loans held for sale. For these loans, gains on

sale are recognized through noninterest income. Net

unrealized losses, if any, are recognized through a

valuation allowance that is also recorded as a charge

to noninterest income.

Loans and Leases

Generally, loans are stated at principal amounts

outstanding, net of unearned income. Interest on loans is

recognized on an accrual basis at the applicable interest

rate on the principal amount outstanding. Loan origination

fees and direct costs as well as premiums and discounts

are amortized as level yield adjustments over the

respective loan terms. Unamortized net fees or costs,

premiums and discounts are recognized in interest income

upon early repayment of the loans. Loan commitment

fees are generally deferred and amortized on a straight-

line basis over the commitment period.

Equipment financing leases to commercial clients are

primarily classified as direct financing and sales-type

leases. Equipment financing leases are reported at the net

lease investment, which represents the sum of minimum

lease payments over the lease term and the estimated

residual value, less unearned interest income. Interest

income is accrued as earned over the term of the lease

based on the net investment in leases. Fees incurred to

   

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originate the lease are deferred and recognized as an

adjustment of the yield on the lease.

FHN has elected to exclude accrued interest receivable

from the amortized cost basis on its held-for-investment

loan portfolio. FHN has also elected to not measure an

allowance for credit losses on AIR for loans held for

investment based on its policy to write off uncollectible

interest in a timely manner, which occurs when a loan is

placed on nonaccrual status. Such write-offs are

recognized as a reduction of interest income. AIR for held-

for-investment loans is included within other assets in the

Consolidated Balance Sheets.

Nonaccrual and Past Due Loans

Generally, loans are placed on nonaccrual status if it

becomes evident that full collection of principal and

interest is at risk, impairment has been recognized as a

partial charge-off of principal balance due to insufficient

collateral value and past due status, or on a case-by-case

basis if FHN continues to receive payments, but there are

other borrower-specific issues. Consumer loans are

generally placed into nonaccrual status no later than 90

days past due.

• Residential real estate loans discharged through

Chapter 7 bankruptcy and not reaffirmed by the

borrower (“discharged bankruptcies”) are placed on

nonaccrual. They are not returned to accrual status

even if current and performing in the future.

• Current second-lien residential real estate loans that

are junior to first liens are placed on nonaccrual

status if in bankruptcy.

When commercial and consumer loans within each

portfolio segment and class are placed on nonaccrual

status, accrued but uncollected interest is reversed and

charged against interest income. Management may elect

to continue the accrual of interest when the estimated net

realizable value of collateral is sufficient to recover the

principal balance and accrued interest. Interest payments

received on nonaccrual loans are normally applied to

outstanding principal first. Once all principal has been

received, additional interest payments are recognized on a

cash basis as interest income.

Generally, commercial and consumer loans within each

portfolio segment and class that have been placed on

nonaccrual status can be returned to accrual status if all

principal and interest is current and FHN expects full

repayment of the remaining contractual principal and

interest. This typically requires that a borrower make

payments in accordance with the contractual terms for a

sustained period of time (generally for a minimum of six

months) before being returned to accrual status.

Residential real estate loans discharged through Chapter 7

bankruptcy and not reaffirmed by the borrower are not

returned to accrual status. For current second liens that

have been placed on nonaccrual because the first lien is

90 or more days past due, the second lien may be

returned to accrual upon pay-off or cure of the first lien.

Charge-offs

For all commercial and consumer loan portfolio segments,

all losses of principal are charged to the ALLL in the period

in which the loan is deemed to be uncollectible.

For consumer loans, the timing of a full or partial charge-

off generally depends on the loan type and delinquency

status. Generally, for the consumer real estate segment, a

loan will be either partially or fully charged off when it

becomes 180 days past due. At this time, if the collateral

value does not support foreclosure, balances are fully

charged off and other avenues of recovery are pursued. If

the collateral value supports foreclosure, the loan is

charged down to net realizable value (collateral value less

estimated costs to sell) and is placed on nonaccrual status.

For residential real estate loans discharged in Chapter 7

bankruptcy and not reaffirmed by the borrower, the fair

value of the collateral position is assessed at the time FHN

is made aware of the discharge and the loan is charged

down to the net realizable value (collateral value less

estimated costs to sell). Within the credit card and other

portfolio segment, credit cards are normally charged off

upon reaching 120 days past due. Other non-real estate

consumer loans are charged off or partially charged off

upon reaching 120 days past due.

For acquired PCD loans where all or a portion of the loan

balance had been charged off prior to acquisition, and for

which active collection efforts are still underway, the ALLL

recorded at acquisition is immediately charged off if

required by FHN’s existing charge off policy. Additionally,

FHN is required to consider its existing policies in

determining whether to charge off any financial assets,

regardless of whether a charge-off was recorded by the

predecessor company. The initial ALLL recognized on PCD

assets includes the gross-up of the loan balance reduced

by immediate charge-offs for loans previously charged off

by the predecessor company or which meet FHN’s charge-

off policy on the date of acquisition. Charge-offs against

the allowance related to such acquired PCD loans do not

result in an income statement impact.

Purchased Credit-Deteriorated Loans

At the time of acquisition, FHN evaluates all acquired

loans to determine if they have experienced a more-than-

insignificant deterioration in credit quality since

origination. PCD loans can be identified on either an 1)

individual or a 2) pooled basis when the loans share

similar risk characteristics. FHN evaluates various absolute

factors to assist in the identification of PCD loans,

including criteria such as existing PCD status, risk rating of

special mention or lower, nonaccrual or impaired status,

identification of prior loan modifications, and delinquency

status. FHN also utilizes relative factors to identify PCD

loans, such as commercial loan grade migration,

expansion of borrower credit spreads, declines in external

   

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risk ratings and changes in consumer loan characteristics

(e.g., FICO decline or LTV increase). In addition, factors

reflective of broad economic considerations are also

considered in identifying PCD loans. These include

industry, collateral type, and the geographic location of

the borrower’s operations. Internal factors for the

origination of new loans that are similar to the acquired

loans are also evaluated to assess loans for PCD status,

including increases in required yields, the necessity of

borrowers providing additional collateral and/or

guarantees, and changes in acceptable loan duration.

Other indicators may also be used to evaluate loans for

PCD status depending on borrower-specific

communications and actions, such as public statements,

initiation of loan modification discussions, and obtaining

emergency funding from alternate sources.

Upon acquisition, the expected credit losses are allocated

to the purchase price of individual PCD loans to determine

each individual asset's amortized cost basis, typically

resulting in a reduction of the discount that is accreted

prospectively to interest income. At the acquisition date

and prospectively, only the unpaid principal balance is

incorporated within the estimation of expected credit

losses for PCD loans. Otherwise, the process for

estimation of expected credit losses is consistent with that

discussed below. As discussed below, FHN applies

undiscounted cash flow methodologies for the estimation

of expected credit losses, which results in the calculated

amount of credit losses at acquisition that is added to the

amortized cost basis of the related PCD loans to exceed

the discounted value of estimated credit losses included in

the loan valuation.

For PCD loans where all or a portion of the loan balance

has been previously written off, or would be subject to

write-off under FHN’s charge-off policy, the initial ALLL

included as part of the grossed-up loan balance at

acquisition was immediately written off, resulting in a zero

period-end allowance balance and no impact on the ALLL

rollforward.

Allowance for Credit Losses

The nature of the process by which FHN determines the

appropriate ACL requires the exercise of considerable

judgment. The ACL is determined in accordance with ASC

326-20, "Financial Instruments—Credit Losses," which was

adopted on January 1, 2020. See Note 4 - Allowance for

Credit Losses for a discussion of FHN’s ACL methodology

and a description of the models utilized in the estimation

process for the commercial and consumer loan portfolios.

Future adjustments to the ACL may be necessary if

economic or other conditions differ substantially from the

assumptions used in making the estimates or, if required

by regulators, based upon information at the time of their

examinations or upon future regulatory guidance. Such

adjustments to original estimates, as necessary, are made

in the period in which these factors and other relevant

considerations indicate that loss levels vary from previous

estimates.

Management's estimate of expected credit losses in the

loan and lease portfolio is recorded in the ALLL and the

reserve for unfunded lending commitments, together

referred to as the ACL. The ACL is maintained at a level

that management determines is appropriate to absorb

current expected credit losses in the loan and lease

portfolio and unfunded lending commitments.

Management uses analytical models to estimate expected

credit losses in the loan and lease portfolio and unfunded

lending commitments as of the balance sheet date. The

models are carefully reviewed to identify trends that may

not be captured in the modeled loss estimates.

Management uses qualitative adjustments for those items

not reflected in the modeled loss information such as

recent changes from the macroeconomic forecasts utilized

in model calculations, results of additional stressed

modeling scenarios, observed and/or expected changes

affecting borrowers in specific industries or geographic

areas, exposure to large lending relationships, and

expected recoveries of prior charge-offs. Qualitative

adjustments are also used to accommodate for the

imprecision of certain assumptions and uncertainties

inherent in the model calculations as well as to align

certain differences in models used by acquired loan

portfolios to the methodologies described herein. Loans

accounted for at elected fair value are excluded from CECL

measurements.

The ALLL is increased by the provision for loan and lease

losses and is decreased by loan charge-offs. Credit loss

estimation is based on the amortized cost of loans, which

includes the following:

1. Unpaid principal balance for originated assets or

acquisition price for purchased assets

2. Accrued interest (see elections discussed previously)

3. Accretion or amortization of premium, discount, and

net deferred fees or costs

4. Collection of cash

5. Charge-offs

Premiums, discounts, and net deferred origination costs/

fees affect the calculated amount of expected credit

losses, but they are not considered when determining the

amount of expected credit losses that are recorded.

Under CECL, a loan must be pooled when it shares similar

risk characteristics with other loans. Loans that do not

share similar risk characteristics are evaluated individually.

Expected credit loss is estimated for the remaining life of

loan(s), which is limited to the remaining contractual

term(s), adjusted for prepayment estimates, which are

included as separate inputs into modeled loss estimates.

Renewals and extensions are not anticipated unless they

   

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are included in existing loan documentation and are not

unconditionally cancellable by the lender. However, prior

to January 1, 2023, losses were estimated over the

estimated remaining life of reasonably expected TDRs

which could extend beyond the current remaining

contractual term.

Management has developed multiple current expected

credit losses models which segment the loan and lease

portfolio by borrower type and loan or lease type to

estimate expected lifetime expected credit losses for loans

and leases that share similar risk characteristics. Estimates

of expected credit losses incorporate consideration of

available information that is relevant to assessing the

collectability of future cash flows. This includes internal

and external information relating to past events, current

conditions, and reasonable and supportable forecasts of

future conditions. FHN utilizes internal and external

historical loss information, as applicable, for all available

historical periods as the initial point for estimating

expected credit losses. Given the duration of historical

information available, FHN considers its internal loss

history to fully incorporate the effects of prior credit

cycles dating back to the Great Recession. The historical

loss information may be adjusted in situations where

current loan characteristics (e.g., underwriting criteria)

differ from those in existence at the time the historical

losses occurred. Historical loss information is also adjusted

for differences in economic conditions, macroeconomic

forecasts and other factors management considers

relevant over a period extending beyond the

measurement date which is considered reasonable and

supportable.

FHN generally measures expected credit losses using

undiscounted cash flow methodologies. Credit

enhancements (e.g., guarantors) that are not freestanding

are considered in the estimation of uncollectible cash

flows. Estimation of expected credit losses for loan

agreements involving collateral maintenance provisions

includes consideration of the value of the collateral and

replenishment requirements, with the maximum loss

limited to the difference between the amortized cost of

the loan and the fair value of the collateral. Expected

credit losses for loans for which foreclosure is probable

are measured at the fair value of collateral, less estimated

costs to sell when disposition through sale is anticipated.

Additionally, for borrowers experiencing financial

difficulty, certain loans are valued at the fair value of

collateral when repayment is expected to be provided

substantially through the operation of the collateral. The

fair value of the collateral is reduced for estimated costs

to sell when repayment is expected through sale of the

collateral. Prior to January 1, 2023, expected credit losses

for TDRs were measured in accordance with ASC 310-40,

which generally required a discounted cash flow

methodology, whereby the loans were measured based

on the present value of expected future payments

discounted at the loan’s original effective interest rate.

Subsequent to December 31, 2022, in accordance with the

provisions of ASU 2022-02, FHN has ceased recognition of

TDRs and no longer performs discounted cash flow

calculations for these loans to estimate expected credit

losses. FHN now monitors and discloses information

associated with modifications to borrowers experiencing

financial difficulty. For both commercial and consumer

portfolio segments, an adjustment to the ACL is generally

not recorded at the time of modification because FHN

includes these modified loans in its quantitative loss

estimation processes. In the event of principal forgiveness,

which primarily occurs for commercial loan workouts and

consumer loans experiencing bankruptcy, FHN records the

reduction in expected collectible principal balance as a

charge-off against the ALLL.

Expected recoveries of previously charged-off amounts

are also included as a qualitative adjustment in the

estimation of expected credit losses, which reduces the

amount of the allowance recognized. Estimates of

recoveries on previously charged-off assets included in the

allowance for loan losses do not exceed the aggregate of

amounts previously written off and expected to be written

off for an individual loan or pool.

Since CECL requires the estimation of credit losses for the

entire expected life of loans, loss estimates are highly

sensitive to changes in macroeconomic forecasts,

especially when those forecasts change dramatically in

short time periods. Additionally, under CECL credit loss

estimates are more likely to increase rapidly in periods of

loan growth.

Expected credit losses for unfunded commitments are

estimated for periods where the commitment is not

unconditionally cancellable by FHN. The measurement of

expected credit losses for unfunded commitments mirrors

that of loans with the additional estimate of future draw

rates (timing and amount). The liability for credit losses

inherent in lending-related commitments, such as letters

of credit and unfunded loan commitments, is included in

other liabilities on the Consolidated Balance Sheets and

established through a charge to the provision for credit

losses.

Premises and Equipment

Premises and equipment are carried at cost less

accumulated depreciation and amortization and include

additions that materially extend the useful lives of existing

premises and equipment. All other maintenance and

repair expenditures are expensed as incurred. Premises

and equipment held for sale are generally valued at

appraised values which reference recent disposition

values for similar property types but also consider

marketability discounts for vacant properties. The

valuations of premises and equipment held for sale are

reduced by estimated costs to sell. Impairments, and any

subsequent recoveries, are recorded in noninterest

   

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expense. Gains and losses on dispositions are reflected in

noninterest income and expense, respectively.

Depreciation and amortization are computed on the

straight-line method over the estimated useful lives of the

assets and are recorded as noninterest expense.

Leasehold improvements are amortized over the lesser of

the lease periods or the estimated useful lives using the

straight-line method. Useful lives utilized in determining

depreciation for furniture, fixtures, and equipment and for

buildings are three years to fifteen years and seven years

to forty-five years, respectively.

Other Real Estate Owned

Real estate acquired by foreclosure or other real estate-

owned consists of properties that have been acquired in

satisfaction of debt. These properties are carried at the

lower of the outstanding loan amount or estimated fair

value less estimated costs to sell the real estate. At the

time acquired, and in conjunction with the transfer from

loans to OREO, there is a charge-off against the ALLL if the

estimated fair value less costs to sell is less than the loan’s

cost basis. Subsequent declines in fair value and gains or

losses on dispositions, if any, are charged to other

expense on the Consolidated Statements of Income.

Required developmental costs associated with acquired

property under construction are capitalized and included

in determining the estimated net realizable value of the

property, which is reviewed periodically, and any write-

downs are charged against current earnings.

Goodwill and Other Intangible Assets

Goodwill represents the excess of cost over net assets of

acquired businesses less identifiable intangible assets. On

an annual basis, or more frequently if necessary, FHN

assesses goodwill for impairment. Other intangible assets

primarily represent client lists and relationships, acquired

contracts, covenants not to compete and premiums on

purchased deposits, which are amortized over their

estimated useful lives. Intangible assets related to

acquired deposit bases are primarily amortized over 10

years using an accelerated method. Management

evaluates whether events or circumstances have occurred

that indicate the remaining useful life or carrying value of

amortizing intangibles should be revised. Other

intangibles also include smaller amounts of non-

amortizing intangibles for state banking licenses.

Servicing Rights

FHN recognizes the rights to service mortgage and other

loans as separate assets, which are recorded in other

assets in the Consolidated Balance Sheets, when

purchased or when servicing is contractually separated

from the underlying loans by sale with servicing rights

retained. For loan sales with servicing retained, a servicing

right, generally an asset, is recorded at fair value at the

time of sale for the right to service the loans sold. All

servicing rights are identified by class and amortized over

the remaining life of the loan with periodic reviews for

impairment.

Transfers of Financial Assets

Transfers of financial assets, or portions thereof which

meet the definition of a participating interest, are

accounted for as sales when control over the assets has

been surrendered. Control over transferred assets is

deemed to be surrendered when 1) the assets have been

legally isolated from FHN, 2) the transferee has the right

to pledge or exchange the assets with no conditions that

constrain the transferee and provide more than a trivial

benefit to FHN, and 3) FHN does not maintain effective

control over the transferred assets. If the transfer does

not satisfy all three criteria, the transaction is recorded as

a secured borrowing. If the transfer is accounted for as a

sale, the transferred assets are derecognized from FHN’s

balance sheet and a gain or loss on sale is recognized. If

the transfer is accounted for as a secured borrowing, the

transferred assets remain on FHN’s balance sheet and the

proceeds from the transaction are recognized as a liability.

Derivative Financial Instruments

FHN accounts for derivative financial instruments in

accordance with ASC 815, which requires recognition of all

derivative instruments on the balance sheet as either an

asset or liability measured at fair value through

adjustments to either accumulated other comprehensive

income within shareholders’ equity or current earnings.

Fair value is defined as the price that would be received to

sell a derivative asset or paid to transfer a derivative

liability in an orderly transaction between market

participants on the transaction date. Fair value is

determined using available market information and

appropriate valuation methodologies. FHN has elected to

present its derivative assets and liabilities gross on the

Consolidated Balance Sheets. Amounts of collateral

posted or received have not been netted with the related

derivatives unless the collateral amounts are considered

legal settlements of the related derivative positions. See

Note 21 - Derivatives for discussion on netting of

derivatives.

FHN prepares written hedge documentation identifying

the risk management objective and designating the

derivative instrument as a fair value hedge or cash flow

hedge, as applicable, or as a free-standing derivative

instrument entered into as an economic hedge or to meet

clients’ needs. All transactions designated as ASC 815

hedges must be assessed at inception and on an ongoing

basis as to the effectiveness of the derivative instrument

in offsetting changes in fair value or cash flows of the

hedged item. For a fair value hedge, changes in the fair

value of the derivative instrument and changes in the fair

value of the hedged asset or liability attributable to the

hedged risk are recognized currently in earnings. For a

cash flow hedge, changes in the fair value of the derivative

instrument are recorded in accumulated other

   

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comprehensive income and subsequently reclassified to

earnings as the hedged transaction impacts net income.

For fair value hedges, the entire change in the fair value of

the hedging instrument included in the assessment of

effectiveness is recorded to the same financial statement

line item (e.g., interest expense) used to present the

earnings effect of the hedged item. For cash flow hedges,

the entire fair value change of the hedging instrument

that is included in the assessment of hedge effectiveness

is initially recorded in other comprehensive income and

later recycled into earnings as the hedged transaction(s)

affect net income with the income statement effects

recorded in the same financial statement line item used to

present the earnings effect of the hedged item (e.g.,

interest income). For free-standing derivative instruments,

changes in fair values are recognized currently in earnings.

See Note 21 - Derivatives for additional information.

Cash flows from derivative contracts are reported as

operating activities on the Consolidated Statements of

Cash Flows.

Leases

At inception, all arrangements are evaluated to determine

if they contain a lease, which is defined as a contract, or

part of a contract, that conveys the right to control the

use of identified property, plant, or equipment for a

period of time in exchange for consideration. Control is

deemed to exist when a lessor has granted and a lessee

has received both the right to obtain substantially all of

the economic benefits from use of the identified asset and

the right to direct the use of the identified asset

throughout the period of use.

Lessee

As a lessee, FHN recognizes lease (right-of-use) assets and

lease liabilities for all leasing arrangements with lease

terms that are greater than one year. The lease asset and

lease liability are recognized at the present value of

estimated future lease payments, including estimated

renewal periods, with the discount rate reflecting a fully-

collateralized rate matching the estimated lease term.

Renewal options are included in the estimated lease term

if they are considered reasonably certain of exercise.

Periods covered by termination options are included in

the lease term if it is reasonably certain they will not be

exercised. Additionally, prepaid or accrued lease

payments, lease incentives and initial direct costs related

to lease arrangements are recognized within the right-of-

use asset. Each lease is classified as a financing or

operating lease which depends on the relationship of the

lessee’s rights to the economic value of the leased asset.

For finance leases, interest on the lease liability is

recognized separately from amortization of the right-of-

use asset in earnings, resulting in higher expense in the

earlier portion of the lease term. For operating leases, a

single lease cost is calculated so that the cost of the lease

is allocated over the lease term on a generally straight-line

basis. Substantially all of FHN’s lessee arrangements are

classified as operating leases. For leases with a term of 12

months or less, FHN does not recognize lease assets and

lease liabilities and expense is generally recognized on a

straight-line basis over the lease term.

Lease assumptions and classification are reassessed upon

the occurrence of events that result in changes to the

estimated lease term or consideration. Modifications to

lease contracts are evaluated to determine 1) if a right to

use an additional asset has been obtained, 2) if only the

lease term and/or consideration have been revised, or 3)

if a full or partial termination has occurred. If an additional

right-of-use asset has been obtained, the modification is

treated as a separate contract and its classification is

evaluated as a new lease arrangement. If only the lease

term or consideration are changed, the lease liability is

revalued with an offset to the lease asset and the lease

classification is re-assessed. If a modification results in a

full or partial termination of the lease, the lease liability is

revalued through earnings along with a proportionate

reduction in the value of the related lease asset and

subsequent expense recognition is similar to a new lease

arrangement.

Lease assets are evaluated for impairment when triggering

events occur, such as a change in management intent

regarding the continued occupation of the leased space. If

a lease asset is impaired, it is written down to the present

value of estimated future cash flows and the prospective

expense recognition for that lease follows the accelerated

expense recognition methodology applicable to finance

leases, even if it remains classified as an operating lease.

Sublease arrangements are accounted for consistent with

the lessor accounting described below. Sublease

arrangements are evaluated to determine if changes to

estimates for the primary lease are warranted or if the

sublease terms reflect impairment of the related lease

asset.

Lease assets are recognized in other assets and lease

liabilities are recognized in other liabilities in the

Consolidated Balance Sheets. Since substantially all of its

leasing arrangements relate to real estate, FHN records

lease expense, and any related sublease income, within

net occupancy expense in the Consolidated Statements of

Income.

Lessor

As a lessor, FHN also evaluates its lease arrangements to

determine whether a finance lease or an operating lease

exists and utilizes the rate implicit in the lease

arrangement as the discount rate to calculate the present

value of future cash flows. Depending upon the terms of

the individual agreements, finance leases represent either

sales-type or direct financing leases, both of which require

de-recognition of the asset being leased with offsetting

recognition of a lease receivable that is evaluated for

   

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impairment similar to loans. Other than equipment leases

entered into as part of commercial lease financing

arrangements, all of FHN's lessor arrangements are

considered operating leases.

Lease income for operating leases is recognized over the

life of the lease, generally on a straight-line basis. Lease

incentives and initial direct costs are capitalized and

amortized over the estimated life of the lease. Lease

income is not significant for any reporting periods and is

classified as a reduction of net occupancy expense in the

Consolidated Statements of Income.

Tax Credit Investments

Commencing in 2024 with the adoption of ASU 2023-02

(see discussion below), FHN has elected to apply the

proportional amortization method ("PAM") to all

qualifying equity investments generating low income

housing tax credits, new markets tax credits and historic

tax credits.  Under the PAM, the initial cost of a qualifying

equity investment is amortized in proportion to the tax

credits and other tax benefits received and recognizes the

net investment performance as a component of income

tax expense. Prior to 2024, FHN’s election to apply the

PAM was limited by then-existing GAAP to qualifying

equity investments generating low income housing tax

credits.  Prior to 2024, low income housing tax credit

equity investments that did not qualify for the PAM, along

with new markets tax credit equity investments and

historic tax credit equity investments, were accounted for

using the equity method.

FHN has elected to utilize the deferral method for

investments that generate investment tax credits. This

includes both renewable energy tax credit investments

and historic tax credit equity investments that do not

qualify for the proportional amortization method. Under

this approach, the investment tax credits are recorded as

an offset to the related investment on the balance sheet.

Credit amounts are recognized in earnings over the life of

the investment within the same income or expense

accounts as used for the investment.

Advertising and Public Relations

Advertising and public relations costs are generally

expensed as incurred.

Income Taxes

FHN accounts for income taxes using the asset and liability

method pursuant to ASC 740, “Income Taxes,” which

requires the recognition of deferred tax assets and

liabilities for the expected future tax consequences of

events that have been included in the financial

statements. Under this method, FHN’s deferred tax assets

and liabilities are determined based on differences

between financial statement carrying amounts and the

corresponding tax basis of certain assets and liabilities

using enacted tax rates in effect for the year in which the

differences are expected to reverse. The effect of a

change in tax rates on DTAs and DTLs is recognized in

income in the period that includes the enactment date.

Additionally, DTAs are subject to a “more likely than not”

test to determine whether the full amount of the DTAs

should be recognized in the financial statements. FHN

evaluates the likelihood of realization of the DTA based on

both positive and negative evidence available at the time,

including (as appropriate) scheduled reversals of DTLs,

projected future taxable income, tax planning strategies,

and recent financial performance. If the “more likely than

not” test is not met, a valuation allowance must be

established against the DTA. In the event FHN determines

that DTAs are realizable in the future in excess of their net

recorded amount, FHN would make an adjustment to the

valuation allowance, which would reduce income tax

expense.

FHN records uncertain tax positions in accordance with

ASC 740 on the basis of a two-step process in which 1) it is

determined whether it is more likely than not that the tax

positions will be sustained on the basis of the technical

merits of the position and 2) for those tax positions that

meet the more-likely-than-not recognition threshold, the

largest amount of tax benefit that is more than 50 percent

likely to be realized upon ultimate settlement with the

related tax authority is recognized. FHN's ASC 740 policy is

to recognize interest and penalties related to

unrecognized tax benefits as a component of income tax

expense. Accrued interest and penalties are included

within the related tax asset or liability line in the

Consolidated Balance Sheets.

FHN and its eligible subsidiaries are included in a

consolidated federal income tax return. FHN files separate

returns for subsidiaries that are not eligible to be included

in a consolidated federal income tax return. Based on the

laws of the applicable state where it conducts business

operations, FHN either files consolidated, combined, or

separate returns.

Earnings per Share

Earnings per share is computed by dividing net income or

loss available to common shareholders by the weighted

average number of common shares outstanding for each

period. Diluted earnings per share in net income periods is

computed by dividing net income available to common

shareholders by the weighted average number of

common shares outstanding adjusted to include the

number of additional common shares that would have

been outstanding if the potential dilutive common shares

resulting from performance shares and units, restricted

shares and units, and options granted under FHN’s equity

compensation plans and deferred compensation

arrangements had been issued. FHN utilizes the treasury

stock method in this calculation. Diluted earnings per

share does not reflect an adjustment for potentially

   

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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
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dilutive shares in periods in which a net loss available to

common shareholders exists.

Equity Compensation

FHN accounts for its employee stock-based compensation

plans using the grant date fair value of an award to

determine the expense to be recognized over the life of

the award. Stock options are valued using an option-

pricing model, such as Black-Scholes. Restricted and

performance shares and share units are valued at the

stock price on the grant date. For awards with service

vesting criteria, expense is recognized using the straight-

line method over the requisite service period (generally

the vesting period). Forfeitures are recognized when they

occur. For awards vesting based on a performance

measure, anticipated performance is projected to

determine the number of awards expected to vest, and

the corresponding aggregate expense is adjusted to reflect

the elapsed portion of the performance period. If a

performance period extends beyond the required service

term, total expense is adjusted for changes in estimated

achievement through the end of the performance period.

Some performance awards include a total shareholder

return modifier (“TSR Modifier”) that operates after

determination of the performance criteria, affecting only

the quantity of awards issued if the minimum

performance threshold is attained. The effect of the TSR

Modifier is considered in the grant date fair value of the

related performance awards. The fair value of equity

awards with cash payout requirements, as well as awards

for which fair value cannot be estimated at grant date, is

remeasured each reporting period through vesting date.

Performance awards with pre-grant date achievement

criteria are expensed over the period from the start of the

performance period through the end of the service vesting

term. Awards are amortized using the nonsubstantive

vesting methodology, which requires that expense

associated with awards having only service vesting criteria

that continue vesting after retirement be recognized over

a period ending no later than an associate’s retirement

eligibility date.

Cash settled awards with payouts partially or fully based

on changes in share price are accounted for as liability

awards and are remeasured based on changes in their fair

value until the end of the performance period.

Compensation cost for each reporting period is based on

the change in the fair value of the award within each

reporting period adjusted for the portion of required

service that occurred during the reporting period.

Repurchase and Foreclosure Provision

The repurchase and foreclosure provision is the charge to

earnings necessary to maintain the liability at a level that

reflects management’s best estimate of losses associated

with the repurchase of loans previously transferred in

whole loans sales or securitizations or make-whole

requests as of the balance sheet date. See Note 16 -

Contingencies and Other Disclosures for discussion related

to FHN’s obligations to repurchase such loans.

Legal Costs

Generally, legal costs are expensed as incurred. Costs

related to equity issuances are netted against capital

surplus. Costs related to debt issuances are included in

debt issuance costs that are recorded within term

borrowings. Costs related to equity issuances are recorded

as a reduction of the proceeds from the related issuance.

Contingency Accruals

Contingent liabilities arise in the ordinary course of

business, including those related to lawsuits, arbitration,

mediation, and other forms of litigation. FHN establishes

loss contingency liabilities for matters when loss is both

probable and reasonably estimable in accordance with

ASC 450-20-50, “Contingencies – Accruals for Loss

Contingencies.” If loss for a matter is probable and a range

of possible loss outcomes is the best estimate available,

accounting guidance generally requires a liability to be

established at the low end of the range. Expected

recoveries from insurance and indemnification

arrangements are recognized if they are considered

equally as probable and reasonably estimable as the

related loss contingency up to the recognized amount of

the estimated loss. Gain contingencies and expected

recoveries from insurance and indemnification

arrangements in excess of the associated recorded

estimated losses are generally recognized when received.

Recognized recoveries are recorded as offsets to the

related expense in the Consolidated Statements of

Income. The favorable resolution of a gain contingency

generally results in the recognition of other income in the

Consolidated Statements of Income. Contingencies

assumed in business combinations are evaluated through

the end of the one-year post-closing measurement

period. If the acquisition-date fair value of the contingency

can be determined during the measurement period,

recognition occurs as part of the acquisition-date fair

value of the acquired business. If the acquisition-date fair

value of the contingency cannot be determined, but loss is

considered probable as of the acquisition date and can be

reasonably estimated within the measurement period,

then the estimated amount is recorded within acquisition

accounting. If the requirements for inclusion of the

contingency as part of the acquisition are not met,

subsequent recognition of the contingency is included in

earnings.

Business Combinations

Assets and liabilities acquired in business combinations

are generally recognized at their fair values as of the

acquisition date, with the related transaction costs

expensed in the period incurred. Specified items such as

net investment in leases as lessor, acquired operating

lease assets and liabilities as lessee, employee benefit

plans and income-tax related balances are recognized in

   

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accordance with accounting guidance that results in

measurements that may differ from fair value. FHN may

record provisional amounts at the time of acquisition

based on available information. The provisional valuation

estimates may be adjusted for a period of up to one year

(“measurement period”) from the date of acquisition if

new information is obtained about facts and

circumstances that existed as of the acquisition date that,

if known, would have affected the measurement of the

amounts recognized as of that date. Business

combinations are included in the financial statements

from the respective dates of acquisition. Adjustments

recorded during the measurement period are recognized

in the current reporting period.

The excess of purchase price over the valuation of

specifically identified assets and liabilities is recorded as

goodwill. In certain circumstances the net values of assets

and liabilities acquired may exceed the purchase price,

which is recognized within noninterest income as a

purchase accounting gain.

Summary of Accounting Changes

ASU 2020-04, 2021-01, and 2022-06

In March 2020, the FASB issued ASU 2020-04, “Facilitation

of the Effects of Reference Rate Reform on Financial

Reporting” which provides several optional expedients

and exceptions to ease the potential burden in accounting

for (or recognizing the effects of) reference rate reform on

financial reporting. The provisions of ASU 2020-04

primarily affect 1) contract modifications (e.g., loans,

leases, debt, and derivatives) made in anticipation that a

reference rate (e.g., LIBOR) will be discontinued and 2) the

application of hedge accounting for existing relationships

affected by those modifications. The provisions of ASU

2020-04 were effective upon release and apply only to

contracts, hedging relationships, and other transactions

that reference LIBOR or another reference rate expected

to be discontinued because of reference rate reform.

Including the adoption of ASU 2022-06 (discussed below),

the expedients and exceptions provided by ASU 2020-04

do not apply to contract modifications made and hedging

relationships entered into or evaluated after December

31, 2024, except for hedging relationships existing as of

December 31, 2024, that an entity has elected certain

optional expedients for and that are retained through the

end of the hedging relationship.

FHN identified contracts affected by reference rate

reform, developed modification plans for those contracts

and implemented those modifications before the last

quotation of LIBOR on June 30, 2023. FHN elected to

utilize the optional expedients and exceptions provided by

ASU 2020-04 for contract modifications that immediately

converted the reference rate within each contract. FHN

also elected that revisions to contractual fallback

provisions, including modifications in accordance with the

provisions of Regulation ZZ, did not require evaluation for

modification accounting. Additionally, FHN elected that

the revisions to derivative contracts implemented by

central clearinghouses to convert centrally cleared

derivative contracts from LIBOR to SOFR plus an

appropriate spread adjustment were not considered

changes requiring assessment for modification accounting.

During the transition period, for cash flow hedges that

reference 1-Month USD LIBOR, FHN applied expedients

related to 1) the assumption of probability of cash flows

when reference rates are changed on hedged items 2)

avoiding dedesignation when critical terms (i.e., reference

rates) change and 3) the allowed assumption of shared

risk exposure for hedged items. Additionally, for its cash

flow hedges that reference 1-Month Term SOFR, FHN

applied expedients related to 1) the allowed assumption

of shared risk exposure for hedged items and 2) multiple

allowed assumptions of conformity between hedged items

and the hedging instrument when assessing effectiveness.

FHN continued to utilize these expedients and exceptions

through the final cash flows affected by the quotation of

LIBOR.

In accordance with the provisions of ASU 2020-04,

effective immediately after the end of the transition

period for its cash flow hedges (i.e., no more cash flows

were affected by LIBOR), FHN elected that the cessation of

effectiveness assessments under the transition guidance

and subsequent initiation of hedge effectiveness

assessments under ASC 815 did not require dedesignation

of the hedge relationships.

In December 2022, the FASB issued ASU 2022-06,

"Deferral of the Sunset Date of Topic 848" which extends

the transition window for ASU 2020-04 from December

31, 2022 to December 31, 2024, consistent with key USD

LIBOR tenors continuing to be published through June 30,

2023.

In January 2021, the FASB issued ASU 2021-01, "Scope" to

expand the scope of ASU 2020-04 to apply to certain

contract modifications that were implemented in October

2020 by derivative clearinghouses for the use of the

Secured Overnight Funding Rate ("SOFR") in discounting,

margining and price alignment for centrally cleared

derivatives, including derivatives utilized in hedging

relationships. ASU 2021-01 also applies to derivative

contracts affected by the change in discounting

convention regardless of whether they are centrally

cleared (i.e., bilateral contracts can also be modified) and

regardless of whether they reference LIBOR. ASU 2021-01

was effective immediately upon issuance with retroactive

application permitted. FHN elected to retroactively apply

the provisions of ASU 2021-01 because FHN's centrally

cleared derivatives were affected by the change in

discounting convention and because FHN has other

bilateral derivative contracts that may be modified to

conform to the use of SOFR for discounting. Adoption did

   

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not have a significant effect on FHN's reported financial

condition or results of operations.

All applicable asset, liability and equity instruments had

transitioned from LIBOR by the end of 2024.

ASU 2023-02

In March 2023, the FASB issued ASU 2023-02, “Accounting

for Investments in Tax Credit Structures Using the

Proportional Amortization Method” which permits

investors to elect to account for their tax equity

investments, regardless of the tax credit program from

which the income tax credits are received, using the

proportional amortization method if certain conditions are

met. The proportional amortization method results in the

cost of the investment being amortized in proportion to

the income tax credits and other income tax benefits

received, with the amortization of the investment and the

income tax credits being presented net in the income

statement as a component of income tax provision

(benefit). Prior to ASU 2023-02, the proportional

amortization method was only available to qualifying low

income housing equity investments. An investor is

required to make an accounting policy election to apply

the proportional amortization method on a tax-credit-

program-by-tax-credit-program basis. An investor that

applies the proportional amortization method to

qualifying tax equity investments must account for the

receipt of the investment tax credits using the flow-

through method, even if the entity applies the deferral

method for other investment tax credits received. ASU

2023-02 also requires specific disclosures that must be

applied to all investments that generate income tax

credits and other income tax benefits from a tax credit

program for which the entity has elected to apply the

proportional amortization method.

ASU 2023-02 was effective for fiscal years beginning after

December 15, 2023, including interim periods within those

fiscal years. Adoption of ASU 2023-02 is applied on either

a modified retrospective (cumulative catch up) or a

retrospective (restatement of prior years) basis. FHN has

assessed the applicability of ASU 2023-02 to its tax credit

program equity investments, determined that its New

Markets Tax Credit and Historic Tax Credit programs

qualified, and made the proportional method election for

them. The use of the proportional amortization method

continued for FHN's Low Income Housing Tax Credits

program. Upon adoption of ASU 2023-02, FHN recognized

a cumulative effect adjustment that increased retained

earnings by $8 million, net of tax, on January 1, 2024.

The adoption of ASU 2023-02 resulted in a revision to

FHN’s accounting policy for equity investments in tax

credit programs. After adoption, FHN’s election to utilize

the deferral method for investments that generate

Investment Tax Credits is made subsequent to the

determination of whether a tax credit program will apply

the proportional amortization method.

ASU 2023-07

In November 2023, the FASB issued ASU 2023-07,

"Improvements to Reportable Segment Disclosures" that

requires public entities to provide disclosures of significant

segment expenses and other segment items on an annual

and interim basis and to provide in interim periods all

disclosures about a reportable segment's profit or loss and

assets that are currently required annually. The ASU

requires a public entity to disclose, for each reportable

segment, the significant expense categories and amounts

that are regularly provided to the chief operating decision-

maker ("CODM") and included in each reported measure

of a segment's profit or loss. ASU 2023-07 also requires

disclosure of the title and position of the CODM and an

explanation of how the CODM uses the reported

measure(s) of segment profit or loss in assessing segment

performance and deciding how to allocate resources.

ASU 2023-07 was effective for fiscal years beginning after

December 15, 2023 and for interim periods beginning

after December 15, 2024. FHN adopted ASU 2023-07 as of

December 31, 2024 and its requirements have been

applied retrospectively to all periods presented in Note 19

— Business Segment Information.

Accounting Changes Issued But Not Currently Effective

ASU 2023-09

In December 2023, the FASB issued ASU 2023-09,

"Improvements to Income Tax Disclosures" to enhance

transparency and decision usefulness of income tax

disclosures. The provisions of this ASU require

disaggregated information about a reporting entity's

effective tax rate reconciliation in both percentages and

reporting currency amounts. Certain categories of

reconciling items are required by the ASU with additional

categories required if a specified quantitative threshold is

met. Reporting entities are also required to provide a

qualitative discussion of the primary state and local

jurisdictions for income taxes and the type of reconciling

categories. ASU 2023-09 also requires disaggregation of

income taxes paid by jurisdiction.

For public business entities, ASU 2023-09 is effective for

annual periods beginning after December 31, 2024. The

guidance will be applied on a prospective basis with the

option to apply the standard retrospectively. Early

adoption is permitted. FHN is currently assessing the

impact of adopting ASU 2023-09 on its income tax

disclosures.

ASU 2024-03

In November 2024, the FASB issued ASU 2024-03,

"Disaggregation of Income Statement Expenses" that

requires tabular disclosure, on an annual and interim

basis, of additional disaggregated information about

prescribed expense categories if they are present in any

expense caption on the face of the income statement

within continuing operations. The prescribed categories

   

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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 1—SIGNIFICANT ACCOUNTING POLICIES

applicable to FHN are employee compensation,

depreciation, and intangible asset amortization. Other

required expense disclosures must be included in the

tabular disclosure when they are included in the same

income statement caption as a prescribed expense

category. ASU 2024-03 also requires disclosure of the total

amount of selling expenses and, annually, an entity’s

definition of selling expenses.

ASU 2024-03 is effective for fiscal years beginning after

December 15, 2026, and for interim periods beginning

after December 15, 2027. The guidance is required to be

applied prospectively. Early adoption and retrospective

application are permitted. FHN is currently assessing the

effects of adopting ASU 2024-03 on its financial statement

disclosures.

SEC Final Rule

In March 2024, the SEC adopted final rules, “The

Enhancement and Standardization of Climate-Related

Disclosures for Investors” (the “Climate Disclosures

Rules”) to require registrants to disclose certain climate-

related information in registration statements and annual

reports. Information required for inclusion within the

footnotes to the financial statements for severe weather

events and other natural conditions includes 1) income

statement effects before insurance recoveries above 1%

of pre-tax income/loss, 2) balance sheet effects above 1%

of shareholders’ equity, and 3) certain carbon offsets and

renewable energy credits. Qualitative discussion is also

required for material impacts on financial estimates and

assumptions that are due to severe weather events and

other natural conditions or disclosed climate-related

targets or transition plans. 

In April 2024, the SEC issued a stay of the Climate

Disclosures Rules pending the completion of judicial

review of various legal challenges. Therefore, the actual

timing of the implementation of the Climate Disclosure

Rules, if sustained through the judicial process and not

withdrawn by the SEC, is uncertain. FHN is assessing the

potential effects of the Climate Disclosure Rules on its

financial statements.

   

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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 2—INVESTMENT SECURITIES

Note 2—Investment Securities

The following table summarizes FHN’s investment securities as of December 31, 2024 and 2023.

Table 8.2.1

INVESTMENT SECURITIES AT DECEMBER 31, 2024
		December 31, 2024
(Dollars in millions)		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities available for sale:
Government agency issued MBS		$4,223		$1		$(522)		$3,702
Government agency issued CMO		3,079		—		(312)		2,767
Other U.S. government agencies		1,234		—		(161)		1,073
States and municipalities		394		—		(40)		354
Total securities available for sale (a)		$8,930		$1		$(1,035)		$7,896
Securities held to maturity:
Government agency issued MBS		$804		$—		$(109)		$695
Government agency issued CMO		466		—		(78)		388
Total securities held to maturity		$1,270		$—		$(187)		$1,083

(a) Includes $6.9 billion of securities available for sale and $1.3 billion of securities held to maturity pledged to secure public deposits, securities sold under

agreements to repurchase, and for other purposes.

INVESTMENT SECURITIES AT DECEMBER 31, 2023
		December 31, 2023
(Dollars in millions)		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities available for sale:
Government agency issued MBS		$5,061		$2		$(579)		$4,484
Government agency issued CMO		2,487		—		(341)		2,146
Other U.S. government agencies		1,321		2		(151)		1,172
States and municipalities		627		3		(41)		589
Total securities available for sale (a)		$9,496		$7		$(1,112)		$8,391
Securities held to maturity:
Government agency issued MBS		$852		$—		$(96)		$756
Government agency issued CMO		471		—		(66)		405
Total securities held to maturity		$1,323		$—		$(162)		$1,161

(a) Includes $7.6 billion of securities available for sale and $1.3 billion of securities held to maturity pledged to secure public deposits, securities sold under

agreements to repurchase, and for other purposes.

   

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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 2—INVESTMENT SECURITIES

The amortized cost and fair value by contractual maturity for the debt securities portfolio as of December 31, 2024 is provided

below.

Table 8.2.2

DEBT SECURITIES PORTFOLIO MATURITIES 

		Held to Maturity				Available for Sale
(Dollars in millions)		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Within 1 year		$—		$—		$24		$24
After 1 year through 5 years		—		—		76		71
After 5 years through 10 years		—		—		270		241
After 10 years		—		—		1,258		1,091
Subtotal		—		—		1,628		1,427
Government agency issued MBS and CMO (a)		1,270		1,083		7,302		6,469
Total		$1,270		$1,083		$8,930		$7,896

(a) Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or

prepayment penalties.

During the fourth quarter of 2024, as part of an

opportunistic restructuring of a portion of the securities

portfolio, FHN sold $1.2 billion of AFS securities, which

resulted in realized losses of $91 million for the year

ended December 31, 2024. There were no sales of AFS

securities for the years ended December 31, 2023 and

2022.

The following tables provide information on investments

within the available-for-sale portfolio that had unrealized

losses as of December 31, 2024 and 2023.

Table 8.2.3

AFS INVESTMENT SECURITIES WITH UNREALIZED LOSSES  

		As of December 31, 2024
		Less than 12 months				12 months or longer				Total
(Dollars in millions)		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Government agency issued MBS		$663		$(9)		$2,992		$(513)		$3,655		$(522)
Government agency issued CMO		675		(2)		1,744		(310)		2,419		(312)
Other U.S. government agencies		210		(6)		863		(155)		1,073		(161)
States and municipalities		66		(1)		256		(39)		322		(40)
Total		$1,614		$(18)		$5,855		$(1,017)		$7,469		$(1,035)

		As of December 31, 2023
		Less than 12 months				12 months or longer				Total
(Dollars in millions)		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Government agency issued MBS		$140		$(2)		$4,231		$(577)		$4,371		$(579)
Government agency issued CMO		32		—		2,098		(341)		2,130		(341)
Other U.S. government agencies		114		(2)		905		(149)		1,019		(151)
States and municipalities		14		—		465		(41)		479		(41)
Total		$300		$(4)		$7,699		$(1,108)		$7,999		$(1,112)

FHN has evaluated all AFS debt securities that were in

unrealized loss positions in accordance with its accounting

policy for recognition of credit losses. No AFS debt

securities were determined to have credit losses. Total AIR

not included in the fair value or amortized cost basis of

AFS debt securities was $29 million and $32 million as of

December 31, 2024 and 2023. Consistent with FHN's

review of the related securities, there were no credit-

   

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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 2—INVESTMENT SECURITIES

related write downs of AIR for AFS debt securities during

the reporting periods. Additionally, for AFS debt securities

with unrealized losses, FHN does not intend to sell them

and it is more likely than not that FHN will not be required

to sell them prior to recovery. Therefore, no write downs

of these investments to fair value occurred during the

reporting periods. There were no transfers to or from AFS

or HTM securities during the years ended December 31,

2024, 2023, or 2022.

For HTM securities, an allowance for credit losses is

required to absorb estimated lifetime credit losses. Total

AIR not included in the fair value or amortized cost basis

of HTM debt securities was $3 million as of both

December 31, 2024 and 2023. FHN has assessed the risk of

credit loss and has determined that no allowance for

credit losses for HTM securities was necessary as of

December 31, 2024 and 2023. The evaluation of credit risk

includes consideration of third-party and government

guarantees (both explicit and implicit), senior or

subordinated status, credit ratings of the issuer, the

effects of interest rate changes since purchase and

observable market information such as issuer-specific

credit spreads.

The carrying amount of equity investments without a

readily determinable fair value was $96 million and $89

million as of December 31, 2024 and 2023, respectively.

The year-to-date 2024 gross amounts of upward and

downward valuation adjustments were not significant.

The year-to-date 2023 gross amounts of upward and

downward valuation adjustments included a $6 million

loss.

Unrealized gains of $11 million were recognized during

2024 and 2023 and unrealized losses of $11 million were

recognized during 2022 for equity investments with

readily determinable fair values.

   

	135	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 3—LOANS & LEASES

Note 3—Loans and Leases

The loans and leases portfolio is disaggregated into

portfolio segments and then further disaggregated into

classes for certain disclosures. GAAP defines a portfolio

segment as the level at which an entity develops and

documents a systematic method for determining its

allowance for credit losses. A class is generally a

disaggregation of a portfolio segment and is generally

determined based on risk characteristics of the loan and

FHN’s method for monitoring and assessing credit risk and

performance. FHN's loan and lease portfolio segments are

commercial and consumer. The classes of loans and leases

are: (1) commercial, financial, and industrial, which

includes commercial and industrial loans and leases and

loans to mortgage companies, (2) commercial real estate,

(3) consumer real estate, which includes both real estate

installment and home equity lines of credit, and (4) credit

card and other.

The following table provides the amortized cost basis of

loans and leases by portfolio segment and class as of

December 31, 2024 and 2023, excluding accrued interest

of $271 million and $287 million , respectively, which is

included in other assets in the Consolidated Balance

Sheets.

Table 8.3.1

LOANS AND LEASES BY PORTFOLIO SEGMENT

		December 31,
(Dollars in millions)		2024		2023
Commercial:
Commercial and industrial (a) (b)		$29,957		$30,609
Loans to mortgage companies		3,471		2,024
Total commercial, financial, and industrial		33,428		32,633
Commercial real estate		14,421		14,216
Consumer:
HELOC		2,092		2,219
Real estate installment loans		11,955		11,431
Total consumer real estate		14,047		13,650
Credit card and other (c)		669		793
Loans and leases		$62,565		$61,292
Allowance for loan and lease losses		(815)		(773)
Net loans and leases		$61,750		$60,519

(a) Includes equipment financing leases of $1.4 billion and $1.2 billion as of December 31, 2024 and 2023, respectively.

(b) Includes PPP loans fully guaranteed by the SBA of $12 million and $29 million as of December 31, 2024 and 2023, respectively.

(c) Includes $174 million and $180 million of commercial credit card balances as of December 31, 2024 and 2023, respectively.

Restrictions

Loans and leases with carrying values of $45.8 billion and

$46.1 billion were pledged as collateral for borrowings as

of December 31, 2024 and 2023, respectively.

Concentrations of Credit Risk

Most of FHN’s business activity is with clients located in

the southern United States. FHN’s lending activity is

concentrated in its market areas within those states. As of

December 31, 2024, FHN had loans to mortgage

companies of $3.5 billion and loans to finance and

insurance companies of $3.7 billion. As a result, 21% of

the C&I portfolio is sensitive to impacts on the financial

services industry.

Credit Quality Indicators

FHN employs a dual grade commercial risk grading

methodology to assign an estimate for the probability of

default and the loss given default for each commercial

loan using factors specific to various industry, portfolio, or

product segments that result in a rank ordering of risk and

the assignment of grades PD 1 to PD 16. This credit

grading system is intended to identify and measure the

credit quality of the loan and lease portfolio by analyzing

the migration between grading categories. It is also

integral to the estimation methodology utilized in

determining the ALLL since an allowance is established for

pools of commercial loans based on the credit grade

assigned. Each PD grade corresponds to an estimated one-

year default probability percentage. PD grades are

continually evaluated but require a formal scorecard

annually.

PD 1 through PD 12 are “pass” grades. PD grades 13-16

correspond to the regulatory-defined categories of special

mention (13), substandard (14), doubtful (15), and loss

(16). Special mention commercial loans and leases have

potential weaknesses that, if left uncorrected, may result

   

	136	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 3—LOANS & LEASES

in deterioration of FHN's credit position at some future

date. Substandard commercial loans and leases have well-

defined weaknesses and are characterized by the distinct

possibility that FHN will sustain some loss if the

deficiencies are not corrected. Doubtful commercial loans

and leases have the same weaknesses as substandard

loans and leases with the added characteristics that the

probability of loss is high and collection of the full amount

is improbable.

The following table provides the amortized cost basis of

the commercial loan portfolio by year of origination and

credit quality indicator as of December 31, 2024 and 2023.

Table 8.3.2

C&I PORTFOLIO

		December 31, 2024
(Dollars in millions)		2024		2023		2022		2021		2020		Prior to 2020		LMC (a)		Revolving Loans		Revolving Loans Converted to Term Loans		Total
Credit Quality Indicator:
Pass (PD grades 1 through 12) (b)		$5,590		$2,607		$3,649		$2,336		$1,055		$3,853		$3,471		$8,784		$248		$31,593
Special Mention (PD grade 13)		106		27		78		47		33		57		—		279		2		629
Substandard, Doubtful, or Loss (PD grades 14,15, and 16)		84		184		113		179		33		169		—		383		61		1,206
Total C&I loans		$5,780		$2,818		$3,840		$2,562		$1,121		$4,079		$3,471		$9,446		$311		$33,428

		December 31, 2023
(Dollars in millions)		2023		2022		2021		2020		2019		Prior to 2019		LMC (a)		Revolving Loans		Revolving Loans Converted to Term Loans		Total
Credit Quality Indicator:
Pass (PD grades 1 through 12) (b)		$4,008		$5,637		$3,506		$1,636		$1,665		$3,448		$2,019		$9,087		$327		$31,333
Special Mention (PD grade 13)		75		60		64		56		101		57		—		186		—		599
Substandard, Doubtful, or Loss (PD grades 14,15, and 16)		41		135		94		51		39		100		5		187		49		701
Total C&I loans		$4,124		$5,832		$3,664		$1,743		$1,805		$3,605		$2,024		$9,460		$376		$32,633

(a) LMC includes non-revolving commercial lines of credit to qualified mortgage companies primarily for the temporary warehousing of eligible mortgage

loans prior to the borrower's sale of those mortgage loans to third party investors. The loans are of short duration with maturities of less than one year.

(b)Balance includes PPP loans.

Table 8.3.3

CRE PORTFOLIO

		December 31, 2024
(Dollars in millions)		2024		2023		2022		2021		2020		Prior to 2020		Revolving Loans		Revolving Loans Converted to Term Loans		Total
Credit Quality Indicator:
Pass (PD grades 1 through 12)		$694		$1,296		$3,282		$2,778		$894		$3,281		$340		$47		$12,612
Special Mention (PD grade 13)		—		42		280		198		37		130		—		1		688
Substandard, Doubtful, or Loss (PD grades 14,15, and 16)		3		31		251		278		116		436		6		—		1,121
Total CRE loans		$697		$1,369		$3,813		$3,254		$1,047		$3,847		$346		$48		$14,421

   

	137	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 3—LOANS & LEASES

		December 31, 2023
(Dollars in millions)		2023		2022		2021		2020		2019		Prior to 2019		Revolving Loans		Revolving Loans Converted to Term Loans		Total
Credit Quality Indicator:
Pass (PD grades 1 through 12)		$853		$3,473		$3,518		$1,162		$1,216		$2,853		$393		$18		$13,486
Special Mention (PD grade 13)		5		1		129		86		175		82		—		—		478
Substandard, Doubtful, or Loss (PD grades 14,15, and 16)		—		2		5		11		175		59		—		—		252
Total CRE loans		$858		$3,476		$3,652		$1,259		$1,566		$2,994		$393		$18		$14,216

The consumer portfolio is comprised primarily of smaller-

balance loans which are very similar in nature in that most

are standard products and are backed by residential real

estate. Because of the similarities of consumer loan types,

FHN is able to utilize the FICO score, among other

attributes, to assess the credit quality of consumer

borrowers. FICO scores are refreshed on a quarterly basis

in an attempt to reflect the recent risk profile of the

borrowers. Accruing delinquency amounts are indicators

of asset quality within the credit card and other consumer

portfolio.

The following table reflects the amortized cost basis by

year of origination and refreshed FICO scores for

consumer real estate loans as of December 31, 2024 and

2023. Within consumer real estate, classes include HELOC

and real estate installment loans. HELOCs are loans which

during their draw period are classified as revolving loans.

Once the draw period ends and the loan enters its

repayment period, the loan converts to a term loan and is

classified as a revolving loan converted to a term loan. All

loans classified in the following table as revolving loans or

revolving loans converted to term loans are HELOCs. Real

estate installment loans are originated as fixed term loans

and are classified below in their vintage year. All loans in

the following tables classified in a vintage year are real

estate installment loans.

Table 8.3.4

CONSUMER REAL ESTATE PORTFOLIO

		December 31, 2024
(Dollars in millions)		2024		2023		2022		2021		2020		Prior to 2020		Revolving Loans		Revolving Loans Converted to Term Loans		Total
FICO score 740 or greater		$1,045		$1,493		$2,009		$1,592		$675		$1,554		$1,430		$56		$9,854
FICO score 720-739		149		197		270		213		99		271		175		17		1,391
FICO score 700-719		98		140		217		175		72		242		150		18		1,112
FICO score 660-699		133		160		183		100		75		294		146		25		1,116
FICO score 620-659		11		10		17		21		20		122		30		9		240
FICO score less than 620		18		22		19		18		18		203		25		11		334
Total consumer real estate loans		$1,454		$2,022		$2,715		$2,119		$959		$2,686		$1,956		$136		$14,047

   

	138	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 3—LOANS & LEASES

		December 31, 2023
(Dollars in millions)		2023		2022		2021		2020		2019		Prior to 2019		Revolving Loans		Revolving Loans Converted to Term Loans		Total
FICO score 740 or greater		$1,572		$2,099		$1,720		$730		$465		$1,332		$1,522		$50		$9,490
FICO score 720-739		205		286		227		107		88		230		192		15		1,350
FICO score 700-719		154		232		193		81		52		224		159		17		1,112
FICO score 660-699		170		198		113		83		53		290		168		18		1,093
FICO score 620-659		11		20		23		22		36		106		36		7		261
FICO score less than 620		18		19		15		20		12		225		24		11		344
Total consumer real estate loans		$2,130		$2,854		$2,291		$1,043		$706		$2,407		$2,101		$118		$13,650

The following table reflects the amortized cost basis by year of origination and refreshed FICO scores for credit card and other

loans as of December 31, 2024 and 2023.

Table 8.3.5

CREDIT CARD & OTHER PORTFOLIO

		December 31, 2024
(Dollars in millions)		2024		2023		2022		2021		2020		Prior to 2020		Revolving Loans		Revolving Loans Converted to Term Loans		Total
FICO score 740 or greater		$21		$22		$10		$4		$2		$19		$197		$8		$283
FICO score 720-739		7		3		1		1		—		3		20		2		37
FICO score 700-719		1		2		2		—		—		2		14		—		21
FICO score 660-699		1		2		1		—		—		3		15		4		26
FICO score 620-659		2		1		—		—		—		1		9		—		13
FICO score less than 620		8		8		5		4		4		78		181		1		289
Total credit card and other loans		$40		$38		$19		$9		$6		$106		$436		$15		$669

		December 31, 2023
(Dollars in millions)		2023		2022		2021		2020		2019		Prior to 2019		Revolving Loans		Revolving Loans Converted to Term Loans		Total
FICO score 740 or greater		$52		$26		$10		$5		$3		$27		$207		$5		$335
FICO score 720-739		5		3		1		1		1		5		24		1		41
FICO score 700-719		5		4		1		1		1		4		25		1		42
FICO score 660-699		4		3		1		1		1		8		23		—		41
FICO score 620-659		2		1		1		—		—		3		7		—		14
FICO score less than 620		12		9		6		8		13		103		168		1		320
Total credit card and other loans		$80		$46		$20		$16		$19		$150		$454		$8		$793

   

	139	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 3—LOANS & LEASES

Nonaccrual and Past Due Loans and Leases

Loans and leases are placed on nonaccrual if it becomes

evident that full collection of principal and interest is at

risk, impairment has been recognized as a partial charge-

off of principal balance due to insufficient collateral value

and past due status, or on a case-by-case basis if FHN

continues to receive payments but there are other

borrower-specific issues. Included in nonaccrual are loans

for which FHN continues to receive payments including

residential real estate loans where the borrower has been

discharged of personal obligation through bankruptcy.

Past due loans are loans contractually past due as to

interest or principal payments, but which have not yet

been put on nonaccrual status.

The following table reflects accruing and non-accruing

loans and leases by class on December 31, 2024 and 2023.

Table 8.3.6

ACCRUING & NON-ACCRUING LOANS & LEASES

		December 31, 2024
		Accruing								Non-Accruing
(Dollars in millions)		Current		30-89 Days Past Due		90+ Days Past Due		Total Accruing		Current		30-89 Days Past Due		90+ Days Past Due		Total Non- Accruing		Total Loans and Leases
Commercial, financial, and industrial:
C&I (a)		$29,751		$32		$1		$29,784		$101		$26		$46		$173		$29,957
Loans to mortgage companies		3,471		—		—		3,471		—		—		—		—		3,471
Total commercial, financial, and industrial		33,222		32		1		33,255		101		26		46		173		33,428
Commercial real estate:
CRE (b)		14,124		3		—		14,127		221		10		63		294		14,421
Consumer real estate:
HELOC (c)		2,045		11		2		2,058		19		4		11		34		2,092
Real estate installment loans (d)		11,800		39		17		11,856		31		10		58		99		11,955
Total consumer real estate		13,845		50		19		13,914		50		14		69		133		14,047
Credit card and other:
Credit card		262		2		1		265		—		—		—		—		265
Other		400		2		—		402		—		1		1		2		404
Total credit card and other		662		4		1		667		—		1		1		2		669
Total loans and leases		$61,853		$89		$21		$61,963		$372		$51		$179		$602		$62,565

		December 31, 2023
		Accruing								Non-Accruing
(Dollars in millions)		Current		30-89 Days Past Due		90+ Days Past Due		Total Accruing		Current		30-89 Days Past Due		90+ Days Past Due		Total Non- Accruing		Total Loans and Leases
Commercial, financial, and industrial:
C&I (a)		$30,398		$31		$1		$30,430		$108		$18		$53		$179		$30,609
Loans to mortgage companies		2,018		1		—		2,019		5		—		—		5		2,024
Total commercial, financial, and industrial		32,416		32		1		32,449		113		18		53		184		32,633
Commercial real estate:
CRE (b)		14,072		8		—		14,080		41		—		95		136		14,216
Consumer real estate:
HELOC (c)		2,158		11		4		2,173		30		6		10		46		2,219
Real estate installment loans (d)		11,295		29		13		11,337		43		6		45		94		11,431
Total consumer real estate		13,453		40		17		13,510		73		12		55		140		13,650
Credit card and other:
Credit card		271		3		3		277		—		—		—		—		277
Other		512		2		—		514		1		—		1		2		516
Total credit card and other		783		5		3		791		1		—		1		2		793
Total loans and leases		$60,724		$85		$21		$60,830		$228		$30		$204		$462		$61,292

(a)$172 million and $178 million of C&I loans are nonaccrual loans that have been specifically reviewed for impairment with no related allowance in 2024

and 2023, respectively.

(b)$287 million and $129 million of CRE loans are nonaccrual loans that have been specifically reviewed for impairment with no related allowance for 2024

and 2023, respectively.

   

	140	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 3—LOANS & LEASES

(c)$3 million and $4 million of HELOC loans are nonaccrual loans that have been specifically reviewed for impairment with no related allowance for 2024

and 2023, respectively.

(d)$9 million and $10 million of real estate installment loans are nonaccrual loans that have been specifically reviewed for impairment with no related

allowance for 2024 and 2023, respectively.

Collateral-Dependent Loans

Collateral-dependent loans are defined as loans for which

repayment is expected to be derived substantially through

the operation or sale of the collateral and where the

borrower is experiencing financial difficulty. At a

minimum, the estimated value of the collateral for each

loan equals the current book value.

As of December 31, 2024 and 2023, FHN had commercial

loans with amortized cost of approximately $352 million

and $250 million, respectively, that were based on the

value of underlying collateral. Collateral-dependent C&I

and CRE loans totaled $109 million and $243 million,

respectively, as of December 31, 2024. The collateral for

these loans generally consists of business assets including

land, buildings, equipment and financial assets. During the

years ended December 31, 2024 and 2023, FHN

recognized total charge-offs of approximately $75 million

and $144 million, respectively, on these loans related to

reductions in estimated collateral values.

Consumer HELOC and real estate installment loans with

amortized cost based on the value of underlying real

estate collateral were approximately $6 million and

$36 million, respectively, as of December 31, 2024, and

$6 million and $27 million, respectively, as of

December 31, 2023. Charge-offs were $2 million and

$1 million for collateral-dependent consumer loans during

the years ended December 31, 2024 and 2023,

respectively.

Loan Modifications to Troubled Borrowers

As part of FHN’s ongoing risk management practices, FHN

attempts to work with borrowers when necessary to

extend or modify loan terms to better align with their

current ability to repay. Modifications could include

extension of the maturity date, reductions of the interest

rate, reduction or forgiveness of accrued interest, or

principal forgiveness. Combinations of these modifications

may also be made for individual loans. Extensions and

modifications to loans are made in accordance with

internal policies and guidelines which conform to

regulatory guidance. Principal reductions may be made in

limited circumstances, typically for specific commercial

loan workouts, and in the event of borrower bankruptcy.

Each occurrence is unique to the borrower and is

evaluated separately.

Troubled loans are considered those in which the

borrower is experiencing financial difficulty. The

assessment of whether a borrower is experiencing

financial difficulty can be subjective in nature and

management’s judgment may be required in making this

determination. FHN may determine that a borrower is

experiencing financial difficulty if the borrower is currently

in default on any of its debt, or if it is probable that a

borrower may default in the foreseeable future absent a

modification. Many aspects of a borrower’s financial

situation are assessed when determining whether they

are experiencing financial difficulty.

Troubled commercial loans are typically modified through

forbearance agreements which could include reduced

interest rates, reduced payments, term extension, or

entering into short sale agreements. Principal reductions

may occur in specific circumstances.

Modifications for troubled consumer loans are generally

structured using parameters of U.S. government-

sponsored programs. For HELOC and real estate

installment loans, troubled loans are typically modified by

an interest rate reduction and a possible maturity date

extension to reach an affordable housing debt-to-income

ratio. Despite the absence of a loan modification by FHN,

the discharge of personal liability through bankruptcy

proceedings is considered a court-imposed modification.

For the credit card portfolio, troubled loan modifications

are typically enacted through either a short-term credit

card hardship program or a longer-term credit card

workout program. In the credit card hardship program,

borrowers may be granted rate and payment reductions

for six months to one year. In the credit card workout

program, borrowers are granted a rate reduction to 0%

and a term extension for up to five years.

Modifications to Borrowers Experiencing Financial

Difficulty

The following tables present the amortized cost basis at

the end of the reporting period of loans modified to

borrowers experiencing financial difficulty, disaggregated

by class of financing receivable and type of modification

made, as well as the financial effect of the modifications

made as of December 31, 2024.

   

	141	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 3—LOANS & LEASES

Table 8.3.7

LOAN MODIFICATIONS TO BORROWERS EXPERIENCING FINANCIAL DIFFICULTY

	Interest Rate Reduction
	December 31, 2024						December 31, 2023
(Dollars in millions)	Balance		% of Total Class		Financial Effect		Balance		% of Total Class		Financial Effect
Consumer real estate (a)	$—		—%		Reduced weighted-average contractual interest rate from 10.70% to 6.75%		$2		—%		Reduced weighted-average contractual interest rate from 8.60% to 5.00%
Credit card and other (a)	—		—		Reduced weighted-average contractual interest rate from 4.63% to 3.98%		—		—		Reduced weighted-average contractual interest rate from 11.20% to 0.00%
Total	$—		—%				$2		—%

	Term Extension
	December 31, 2024						December 31, 2023
(Dollars in millions)	Balance		% of Total Class		Financial Effect		Balance		% of Total Class		Financial Effect
C&I	$132		0.4%		Added a weighted-average 1.3 years to the life of loans, which reduced monthly payment amounts for the borrowers		$90		0.3%		Added a weighted-average 1 year to the life of loans, which reduced monthly payment amounts for the borrowers
CRE	180		1.2		Added a weighted-average 1.3 years to the life of loans, which reduced monthly payment amounts for the borrowers		40		0.3		Added a weighted-average 0.8 year to the life of loans, which reduced monthly payment amounts for the borrowers
Consumer real estate (a)	—		—		Added a weighted-average 24.4 years to the life of loans, which reduced monthly payment amounts for the borrowers		2		—		Added a weighted-average 12 years to the life of loans, which reduced monthly payment amounts for the borrowers
Total	$312		0.5%				$132		0.2%

	Principal Forgiveness
	December 31, 2024						December 31, 2023
(Dollars in millions)	Balance		% of Total Class		Financial Effect		Balance		% of Total Class		Financial Effect
Consumer real estate (a)	$—		—%		Less than $1 million of the principal of consumer loans was legally discharged in bankruptcy during the period and the borrowers have not re-affirmed the debt as of period end		$2		—%		$1.3 million of the principal of consumer loans was legally discharged in bankruptcy during the period and the borrowers have not re- affirmed the debt as of period end
Total	$—		—%				$2		—%

	Payment Deferrals
	December 31, 2024						December 31, 2023
(Dollars in millions)	Balance		% of Total Class		Financial Effect		Balance		% of Total Class		Financial Effect
Consumer real estate	$—		—%		N/A		$3		—%		Payment deferral for 11 months, with a balloon payment at the end of the term
Total	$—		—%				$3		—%
(a) Balance less than $1 million

   

	142	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 3—LOANS & LEASES

	Combination - Term Extension and Interest Rate Reduction
	December 31, 2024						December 31, 2023
(Dollars in millions)	Balance		% of Total Class		Financial Effect		Balance		% of Total Class		Financial Effect
C&I (a)	$8		—%		Added a weighted-average 1 year to the life of loans and reduced weighted-average contractual interest rate from 8.00% to 7.50%		$—		—%		Added a weighted-average 1.2 years to the life of loans and reduced weighted- average contractual interest rate from 13.00% to 11.50%
CRE	61		0.4		Added a weighted-average 2 years to the life of loans and reduced weighted-average contractual interest rate from 7.01% to 6.66%		—		—		N/A
Consumer real estate	3		—		Added a weighted-average 11 years to the life of loans and reduced weighted-average contractual interest rate from 8.72% to 4.09%		6		—		Added a weighted-average 14.3 years to the life of loans and reduced weighted- average contractual interest rate from 5.00% to 4.70%
Total	$72		0.1%				$6		—%

	Combination - Term Extension, Interest Rate Reduction, and Interest Forgiveness
	December 31, 2024						December 31, 2023
(Dollars in millions)	Balance		% of Total Class		Financial Effect		Balance		% of Total Class		Financial Effect
C&I	$—		—%		N/A		$2		—%		Added a weighted-average 3.7 years to the life of loans, reduced weighted-average contractual interest rate from 11.25% to 7.50% and provided less than $1 million in interest forgiveness
Total	$—		—%				$2		—%

	Combination - Term Extension, Interest Rate Reduction, and Interest Deferrals
	December 31, 2024						December 31, 2023
(Dollars in millions)	Balance		% of Total Class		Financial Effect		Balance		% of Total Class		Financial Effect
CRE	$—		—%		N/A		$15		0.1%		Added a weighted-average 1 year to the life of loans, reduced weighted-average contractual interest rate from 8.65% to 8.00% and provided less than $1 million in deferred interest
Total	$—		—%				$15		—%
(a) Balance less than $1 million

Loan modifications to borrowers experiencing financial

difficulty that had a payment default during the period

and were modified in the 12 months before default

totaled $19 million and $28 million as of December 31,

2024 and 2023, respectively. FHN closely monitors the

performance of the loans that are modified to borrowers

experiencing financial difficulty to understand the

effectiveness of its modification efforts.

   

	143	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 3—LOANS & LEASES

The following table depicts the performance of loans that have been modified in the last 12 months.

Table 8.3.8

PERFORMANCE OF LOANS THAT HAVE BEEN MODIFIED IN THE LAST 12 MONTHS
		December 31, 2024
(Dollars in millions)		Current		30-89 Days Past Due		90+ Days Past Due		Non-Accruing
C&I		$116		$—		$—		$24
CRE		195		—		—		45
Consumer real estate		2		—		—		2
Credit card and other		—		—		—		—
Total		$313		$—		$—		$71

   

	144	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 4—ALLOWANCE FOR CREDIT LOSSES

Note 4—Allowance for Credit Losses

Management's estimate of expected credit losses in the

loan and lease portfolios is recorded in the ALLL and the

reserve for unfunded lending commitments, collectively

referred to as the Allowance for Credit Losses, or the ACL.

See Note 1 - Significant Accounting Policies for further

discussion of FHN's ACL methodology.

The ACL is maintained at a level management believes to

be appropriate to absorb expected lifetime credit losses

over the contractual life of the loan and lease portfolio

and unfunded lending commitments. The determination

of the ACL is based on periodic evaluation of the loan and

lease portfolios and unfunded lending commitments

considering a number of relevant underlying factors,

including key assumptions and evaluation of quantitative

and qualitative information.

The expected loan losses are the product of multiplying

FHN’s estimates of probability of default ("PD"), loss given

default ("LGD"), and individual loan level exposure at

default ("EAD"), including amortization and prepayment

assumptions, on an undiscounted basis. FHN uses models

or assumptions to develop the expected loss forecasts,

which incorporate multiple macroeconomic forecasts over

a reasonable and supportable forecast period of at most

four years. After the reasonable and supportable forecast

period, the Company reverts to its historical loss averages,

evaluated over the historical observation period, for the

remaining estimated life of the loans. In order to capture

the unique risks of the loan portfolio within the PD, LGD,

and prepayment models, FHN segments the portfolio into

pools, generally incorporating loan grades for commercial

loans. As there can be no certainty that actual economic

performance will precisely follow any specific

macroeconomic forecast, FHN uses qualitative

adjustments where current loan characteristics or current

or forecasted economic conditions differ from historical

periods.

The evaluation of quantitative and qualitative information

is performed through assessments of groups of assets that

share similar risk characteristics and certain individual

loans and leases that do not share similar risk

characteristics with the collective group. As described in

Note 3 - Loans and Leases, loans are grouped generally by

product type and significant loan portfolios are assessed

for credit losses using analytical or statistical models. The

quantitative component utilizes economic forecast

information as its foundation and is primarily based on

analytical models that use known or estimated data as of

the balance sheet date and forecasted data over the

reasonable and supportable period. The ACL is also

affected by qualitative factors that FHN considers to

reflect current judgment of various events and risks that

are not measured in the quantitative calculations,

including alternative economic forecasts.

In accordance with its accounting policy elections, FHN

does not recognize a separate allowance for expected

credit losses for AIR and records reversals of AIR as

reductions of interest income. FHN reverses previously

accrued but uncollected interest when an asset is placed

on nonaccrual status. AIR and the related allowance for

expected credit losses is included as a component of other

assets. The total amount of interest reversals from loans

placed on nonaccrual status and the amount of income

recognized on nonaccrual loans during the years ended

December 31, 2024, 2023, and 2022 were not material.

Expected credit losses for unfunded commitments are

estimated for periods where the commitment is not

unconditionally cancellable. The measurement of

expected credit losses for unfunded commitments mirrors

that of loans and leases with the additional estimate of

future draw rates (timing and amount).

The increase in the ACL balance as of December 31, 2024

as compared to December 31, 2023 largely reflects

negative grade migration in the commercial portfolio. In

developing credit loss estimates for its loan and lease

portfolios, FHN utilized a baseline and a downside forecast

scenario from Moody’s for its macroeconomic inputs. As

of December 31, 2024, among other things, FHN's

scenario selection process factored in the outlook for

production, inflation, interest rates, employment, real

estate prices, and international conflict. FHN selected one

scenario as its base case, which was the Moody's baseline

scenario. The heaviest weight was placed on this scenario.

A smaller weight was placed on the FHN-selected

downside scenario.

Management also made qualitative adjustments to reflect

estimated recoveries based on a review of prior charge-off

and recovery levels, for default risk associated with large

balances with individual borrowers, for estimated loss

amounts not reflected in historical factors due to specific

portfolio risk or identified model limitations, and for

instances where limited data for acquired loans is

considered to affect modeled results.

The following table provides a rollforward of the ALLL and

the reserve for unfunded lending commitments by

portfolio type for December 31, 2024, 2023 and 2022.

   

	145	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 4—ALLOWANCE FOR CREDIT LOSSES

Table 8.4.1

ROLLFORWARD OF ALLL & RESERVE FOR UNFUNDED LENDING COMMITMENTS

(Dollars in millions)		Commercial, Financial, and Industrial (a)		Commercial Real Estate		Consumer Real Estate		Credit Card and Other		Total
Allowance for loan and lease losses:
Balance as of January 1, 2024		$339		$172		$233		$29		$773
Charge-offs		(77)		(56)		(3)		(21)		(157)
Recoveries		30		1		9		5		45
Provision for loan and lease losses		53		110		(18)		9		154
Balance as of December 31, 2024		345		227		221		22		815
Reserve for remaining unfunded commitments:
Balance as of January 1, 2024		49		22		12		—		83
Provision for unfunded lending commitments		8		(11)		(1)		—		(4)
Balance as of December 31, 2024		57		11		11		—		79
Allowance for credit losses as of December 31, 2024		$402		$238		$232		$22		$894
Allowance for loan and lease losses:
Balance as of January 1, 2023		$308		$146		$200		$31		$685
Adoption of ASU 2022-02 (b)		1		—		(7)		—		(6)
Charge-offs (c)		(156)		(17)		(4)		(22)		(199)
Recoveries		14		2		9		4		29
Provision for loan and lease losses		172		41		35		16		264
Balance as of December 31, 2023		339		172		233		29		773
Reserve for remaining unfunded commitments:
Balance as of January 1, 2023		55		22		10		—		87
Provision for unfunded lending commitments		(6)		—		2		—		(4)
Balance as of December 31, 2023		49		22		12		—		83
Allowance for credit losses as of December 31, 2023		$388		$194		$245		$29		$856
Allowance for loan and lease losses
Balance as of January 1, 2022		$334		$154		$163		$19		$670
Charge-offs		(62)		(1)		(5)		(25)		(93)
Recoveries		9		1		19		5		34
Provision for loan and lease losses		27		(8)		23		32		74
Balance as of December 31, 2022		308		146		200		31		685
Reserve for remaining unfunded commitments:
Balance as of January 1, 2022		46		12		8		—		66
Provision for unfunded lending commitments		9		10		2		—		21
Balance as of December 31, 2022		55		22		10		—		87
Allowance for credit losses as of December 31, 2022		$363		$168		$210		$31		$772

(a)C&I loans as of December 31, 2024, 2023, and 2022 include $12 million, $29 million, and $76 million in PPP loans, respectively, which due to the government guarantee and

forgiveness provisions are considered to have no credit risk and therefore have no allowance for loan and lease losses.

(b)See Note 1 for additional information.

(c)Charge-offs in the C&I portfolio in 2023 include $72 million from a single credit from a company in bankruptcy.

   

	146	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 4—ALLOWANCE FOR CREDIT LOSSES

The following table represents gross charge-offs by year of origination for the years ended December 31, 2024 and 2023.

Table 8.4.2

GROSS CHARGE-OFFS
(Dollars in millions)		2024		2023		2022		2021		2020		Prior to 2020		Revolving Loans		Total
C&I		$1		$16		$15		$23		$3		$15		$4		$77
CRE		—		—		5		—		17		34		—		56
Consumer real estate		—		1		—		—		—		2		—		3
Credit card and other		8		1		1		—		—		2		9		21
Total		$9		$18		$21		$23		$20		$53		$13		$157
(Dollars in millions)		2023		2022		2021		2020		2019		Prior to 2019		Revolving Loans		Total
C&I		$1		$17		$82		$5		$10		$34		$7		$156
CRE		—		—		—		—		2		15		—		17
Consumer real estate		—		1		—		—		—		3		—		4
Credit card and other		12		1		—		—		—		2		7		22
Total		$13		$19		$82		$5		$12		$54		$14		$199

   

	147	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 5—PREMISES, EQUIPMENT, & LEASES

Note 5—Premises, Equipment, and Leases

Premises and equipment was comprised of the following

at December 31, 2024 and 2023.

Table 8.5.1

PREMISES & EQUIPMENT

(Dollars in millions)		December 31, 2024		December 31, 2023
Land		$163		$163
Buildings		570		554
Leasehold improvements		88		84
Furniture, fixtures, and equipment		304		295
Fixed assets held for sale (a)		1		—
Total premises and equipment		1,126		1,096
Less accumulated depreciation and amortization		(552)		(506)
Premises and equipment, net		$574		$590

(a) Primarily comprised of land and buildings.

Fixed asset and leased asset impairments were immaterial

for 2024 , 2023, and 2022. Net gains related to the sales of

fixed assets were $3 million for 2024, immaterial for 2023,

and $1 million for 2022.

First Horizon as Lessee

FHN has operating, financing, and short-term leases for

branch locations, corporate offices and certain equipment.

Substantially all of these leases are classified as operating

leases.

The following table provides details of the classification of

FHN's right-of-use assets and lease liabilities included in

the Consolidated Balance Sheets.

Table 8.5.2

RIGHT-OF-USE ASSETS & LEASE LIABILITIES

(Dollars in millions)		December 31, 2024		December 31, 2023
Lease right-of-use assets:	Classification
Operating lease right-of-use assets	Other assets	$296		$306
Finance lease right-of-use assets	Other assets	2		3
Total lease right-of-use assets		$298		$309
Lease liabilities:
Operating lease liabilities	Other liabilities	$330		$342
Finance lease liabilities	Other liabilities	3		3
Total lease liabilities		$333		$345

The calculated amount of ROU assets and lease liabilities

in the table above are impacted by the length of the lease

term and the discount rate used to determine the present

value of the minimum lease payments. The following table

details the weighted average remaining lease term and

discount rate for FHN's operating and finance leases as of

December 31, 2024 and 2023.

Table 8.5.3

REMAINING LEASE TERMS

& DISCOUNT RATES

	December 31, 2024		December 31, 2023
Weighted Average Remaining Lease Terms
Operating leases	11.68 years		11.79 years
Finance leases	8.60 years		9.15 years
Weighted Average Discount Rate
Operating leases	3.19%		2.84%
Finance leases	2.16%		2.39%

   

	148	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 5—PREMISES, EQUIPMENT, & LEASES

The following table provides a detail of the components of

lease expense and other lease information for the years

ended December 31, 2024, 2023, and 2022.

Table 8.5.4

LEASE EXPENSE &

OTHER INFORMATION

(Dollars in millions)	2024		2023		2022
Lease cost
Operating lease cost	$44		$45		$47
Sublease income	(1)		(2)		(2)
Total lease cost	$43		$43		$45
Other information
(Gain) loss on right-of- use asset impairment - operating leases	$—		$1		$1
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	43		46		50
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases	22		11		31

The following table provides a detail of the maturities of

FHN's operating and finance lease liabilities as of

December 31, 2024.

Table 8.5.5

LEASE LIABILITY MATURITIES

(Dollars in millions)	December 31, 2024
2025	$45
2026	44
2027	43
2028	37
2029	34
2030 and thereafter	199
Total lease payments	402
Less lease liability interest	(69)
Total lease liability	$333

FHN had aggregate undiscounted contractual obligations

totaling $4 million for lease arrangements that have not

commenced as of December 31, 2024. Payments under

these arrangements are expected to occur from 2025

through 2035.

First Horizon as Lessor

As a lessor, FHN engages in the leasing of equipment to

commercial clients primarily through direct financing and

sales-type leases. Direct financing and sales-type leases

are similar to other forms of installment lending in that

lessors generally do not retain benefits and risks incidental

to ownership of the property subject to leases. Such

arrangements are essentially financing transactions that

permit lessees to acquire and use property. As lessor, the

sum of all minimum lease payments over the lease term

and the estimated residual value, less unearned interest

income, is recorded as the net investment in the lease on

the commencement date and is included in loans and

leases in the Consolidated Balance Sheets. Interest income

is accrued as earned over the term of the lease based on

the net investment in leases. Fees incurred to originate

the lease are deferred on the commencement date and

recognized as an adjustment of the yield on the lease.

FHN’s portfolio of direct financing and sales-type leases

contains terms of 2 to 23 years, some of which contain

options to extend the lease for various periods of time

and/or to purchase the equipment subject to the lease at

various points in time. These direct financing and sales-

type leases typically include a payment structure set at

lease inception and do not provide any additional services.

Expenses associated with the leased equipment, such as

maintenance and insurance, are paid by the lessee directly

to third parties. The lease agreement typically contains an

option for the purchase of the leased property by the

lessee at the end of the lease term at either the property’s

residual value or a specified price. In all cases, FHN

expects to sell or re-lease the equipment at the end of the

lease term. Due to the nature and structure of FHN’s

direct financing and sales-type leases, there is no selling

profit or loss on these transactions.

The components of the Company’s net investment in

leases as of December 31, 2024 and 2023 were as follows.

Table 8.5.6

LEASE NET INVESTMENTS

(Dollars in millions)	December 31, 2024		December 31, 2023
Lease receivable	$1,300		$1,143
Unearned income	(279)		(244)
Guaranteed residual	166		147
Unguaranteed residual	228		189
Total net investment	$1,415		$1,235

Interest income for direct financing or sales-type leases

totaled $64 million, $50 million, and $34 million for the

years ended December 31, 2024, 2023 , and 2022,

respectively.  There was no profit or loss recognized at the

commencement date for direct financing or sales-type

leases for the years ended December 31, 2024, 2023, and

2022.

   

	149	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 5—PREMISES, EQUIPMENT, & LEASES

Maturities of the Company's lease receivables as of

December 31, 2024 were as follows.

Table 8.5.7

LEASE RECEIVABLE MATURITIES

(Dollars in millions)	December 31, 2024
2025	$292
2026	266
2027	226
2028	164
2029	128
2030 and thereafter	224
Total future minimum lease payments	$1,300

   

	150	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 6—GOODWILL & OTHER INTANGIBLE ASSETS

Note 6—Goodwill and Other Intangible Assets

Goodwill

FHN performed the required annual goodwill impairment

test as of October 1, 2024. The annual impairment test did

not indicate impairment in any of FHN’s reporting units as

of the testing date. Following the testing date,

management evaluated the events and circumstances that

could indicate that goodwill might be impaired and

concluded that it is not more likely than not that goodwill

was impaired. If there are any triggering events between

annual evaluations, management will evaluate whether an

interim impairment analysis is warranted.

Accounting estimates and assumptions were made about

FHN’s future performance and cash flows, as well as other

prevailing market factors (e.g., interest rates, economic

trends, etc.) when determining fair value as part of the

goodwill impairment test. While management used the

best information available to estimate future performance

for each reporting unit, future adjustments to

management’s projections may be necessary if conditions

differ substantially from the assumptions used in making

the estimates.

As further discussed in Note 19 - Business Segment

Information, FHN reorganized its management reporting

structure during the fourth quarter of 2024 and,

accordingly, its segment reporting structure and reporting

units used in the assessment of goodwill impairment. In

connection with the reorganization, goodwill was

reallocated to segments and reporting units.

The following is a summary of goodwill by reportable

segment included in the Consolidated Balance Sheets as of

December 31, 2024.

Table 8.6.1

GOODWILL

(Dollars in millions)		Commercial, Consumer & Wealth		Wholesale		Total
December 31, 2021		$1,217		$294		$1,511
Additions		—		—		—
December 31, 2022		$1,217		$294		$1,511
Additions		—		—		—
Divestitures (a)		—		(1)		(1)
December 31, 2023		$1,217		$293		$1,510
Additions		—		—		—
December 31, 2024		$1,217		$293		$1,510

(a) Reduction in goodwill is related to the divestiture of FHN

Financial Main Street Advisors assets in December 2023.

Other intangible assets

The following table, which excludes fully amortized

intangibles, presents other intangible assets included in

the Consolidated Balance Sheets.

Table 8.6.2

OTHER INTANGIBLE ASSETS

		December 31, 2024						December 31, 2023
(Dollars in millions)		Gross Carrying Amount		Accumulated Amortization		Net Carrying Value		Gross Carrying Amount		Accumulated Amortization		Net Carrying Value
Core deposit intangibles		$356		$(233)		$123		$368		$(208)		$160
Client relationships		32		(18)		14		32		(16)		16
Other (a)		27		(21)		6		27		(17)		10
Total		$415		$(272)		$143		$427		$(241)		$186

(a) Includes non-compete covenants and purchased credit card intangible assets. Also includes state banking licenses which are not subject to amortization.

Amortization expense was $44 million, $47 million, and

$51 million for the years ended December 31, 2024, 2023

and 2022, respectively. The following table shows the

aggregated amortization expense estimated, as of

December 31, 2024, for the next five years.

Table 8.6.3

ESTIMATED AMORTIZATION EXPENSE

(Dollars in millions)
2025		$38
2026		33
2027		29
2028		17
2029		15

   

	151	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 7—MORTGAGE BANKING ACTIVITY

Note 7—Mortgage Banking Activity

FHN originates mortgage loans for sale into the secondary

market. These loans primarily consist of residential first

lien mortgages that conform to standards established by

GSEs that are major investors in U.S. home mortgages, but

can also consist of junior lien and jumbo loans secured by

residential property. These loans are primarily sold to

private companies that are unaffiliated with the GSEs on a

servicing-released basis. Gains and losses on these

mortgage loans are included in mortgage banking income

on the Consolidated Statements of Income.

As of December 31, 2024, FHN had approximately

$31 million of loans that remained from pre-2009

mortgage business operations of legacy First Horizon.

Activity related to the pre-2009 mortgage loans was

primarily limited to payments and write-offs in 2024,

2023, and 2022, with no new originations or loan sales

and only an insignificant amount of repurchases. These

loans are excluded from the disclosure below.

The following table summarizes activity relating to

residential mortgage loans held for sale for the years

ended December 31, 2024, 2023, and 2022.

Table 8.7.1

MORTGAGE LOAN ACTIVITY

(Dollars in millions)		2024		2023		2022
Balance at beginning of period		$62		$44		$250
Originations and purchases		951		692		1,275
Sales, net of gains		(932)		(674)		(1,481)
Balance at end of period		$81		$62		$44

Mortgage Servicing Rights

FHN records mortgage servicing rights at the lower of cost

or market value and amortizes them over the remaining

servicing life of the loans, with consideration given to

prepayment assumptions.

Mortgage servicing rights are included in other assets on

the Consolidated Balance Sheets. The following table

presents the carrying values of mortgage servicing rights

as of December 31, 2024 and 2023.

Table 8.7.2

MORTGAGE SERVICING RIGHTS

	December 31, 2024
(Dollars in millions)	Gross  Carrying Amount		Accumulated Amortization		Net Carrying Amount
Mortgage servicing rights	$30		$(9)		$21
	December 31, 2023
(Dollars in millions)	Gross  Carrying Amount		Accumulated Amortization		Net Carrying Amount
Mortgage servicing rights	$25		$(7)		$18

In addition, there was an insignificant amount of non-

mortgage and commercial servicing rights as of December

31, 2024 and 2023. Total mortgage servicing fees included

in mortgage banking income were $4 million for each of

the years ended December 31, 2024, 2023, and 2022.

Mortgage servicing rights with a net carrying amount of

$21 million were sold during 2022, resulting in a gain of

$12 million for the year ended December 31, 2022 which

is included in mortgage banking income on the

Consolidated Statements of Income.

   

	152	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 8—DEPOSITS

Note 8—Deposits

The composition of deposits is presented in the following

table.

Table 8.8.1

DEPOSITS

(Dollars in millions)		2024		2023
Savings		$26,695		$25,082
Time deposits		6,613		6,804
Other interest-bearing deposits		16,252		16,690
Total interest-bearing deposits		49,560		48,576
Noninterest-bearing deposits		16,021		17,204
Total deposits		$65,581		$65,780

Time deposits in denominations that exceed the FDIC

insurance limit of $250,000 as of December 31, 2024 and

2023 were $1.9 billion and $1.8 billion, respectively.

Scheduled maturities of time deposits as of December 31,

2024 were as follows.

Table 8.8.2

TIME DEPOSIT MATURITIES

(Dollars in millions)
2025		$6,398
2026		109
2027		48
2028		32
2029		20
2030 and after		6
Total		$6,613

   

	153	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 9—SHORT-TERM BORROWINGS

Note 9—Short-Term Borrowings

A summary of short-term borrowings for the years 2024, 2023 and 2022 is presented in the following table.

Table 8.9.1

SHORT-TERM BORROWINGS

(Dollars in millions)		Trading Liabilities		Federal Funds Purchased		Securities Sold Under Agreements to Repurchase		Other Short-term Borrowings
2024
Average balance		$555		$420		$1,720		$781
Year-end balance		550		259		2,096		1,045
Maximum month-end outstanding		767		626		2,096		2,067
Average rate for the year		4.22%		5.34%		3.83%		5.38%
Average rate at year-end		4.20%		4.40%		3.23%		4.48%
2023
Average balance		$301		$349		$1,426		$2,688
Year-end balance		509		302		1,921		326
Maximum month-end outstanding		509		622		1,957		7,476
Average rate for the year		4.16%		5.12%		3.66%		5.19%
Average rate at year-end		4.48%		5.40%		3.98%		5.36%
2022
Average balance		$480		$699		$881		$229
Year-end balance		335		400		1,013		1,093
Maximum month-end outstanding		700		1,023		1,211		1,093
Average rate for the year		2.56%		1.56%		0.77%		2.26%
Average rate at year-end		3.67%		4.40%		2.19%		4.30%

Federal funds purchased and securities sold under

agreements to repurchase generally have maturities of

less than 90 days. Trading liabilities, which represent short

positions in securities, are generally held for less than 90

days. Other short-term borrowings have original

maturities of one year or less. On December 31, 2024 ,

there were no fixed income trading securities pledged to

secure other short-term borrowings.

   

	154	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 10—TERM BORROWINGS

Note 10—Term Borrowings

Term borrowings include senior and subordinated borrowings with original maturities greater than one year. The following

table presents information pertaining to term borrowings as of December 31, 2024 and 2023.

Table 8.10.1

TERM BORROWINGS

(Dollars in millions)		2024		2023
First Horizon Bank:
Subordinated notes (a)
Maturity date – May 1, 2030 - 5.75%		$448		$448
Other collateralized borrowings - Maturity date – December 22, 2037
4.92% on December 31, 2024 and 5.95% on December 31, 2023 (b)		88		88
Other collateralized borrowings - SBA loans (c)		37		3
First Horizon Corporation:
Senior notes
Maturity date – May 26, 2025 - 4.00%		350		349
Junior subordinated debentures (d)
Maturity date - June 28, 2035 - 6.30% on December 31, 2024 and 7.33% on December 31, 2023		3		3
Maturity date - December 15, 2035 - 5.99% on December 31, 2024 and 7.02% on December 31, 2023		18		18
Maturity date - March 15, 2036 - 6.02% on December 31, 2024 and 7.05% on December 31, 2023		9		9
Maturity date - March 15, 2036 - 6.16% on December 31, 2024 and 7.19% on December 31, 2023		12		12
Maturity date - June 30, 2036 - 5.91% on December 31, 2024 and 6.91% on December 31, 2023		28		28
Maturity date - July 7, 2036 - 6.47% on December 31, 2024 and 7.21% on December 31, 2023		19		19
Maturity date - June 15, 2037 - 6.27% on December 31, 2024 and 7.30% on December 31, 2023		53		52
Maturity date - September 6, 2037 - 6.14% on December 31, 2024 and 7.05% on December 31, 2023		9		9
Tax Credit Investment Subsidiaries:
Notes payable - New market tax credit investments; 16 to 35 year term, 0.93% to 4.75% on December 31, 2024; 7 to 35 year term, 0.93% to 4.95% on December 31, 2023		74		65
FT Real Estate Securities Company, Inc.:
Cumulative preferred stock (e)
Maturity date – March 31, 2031 – 9.50%		47		47
Total		$1,195		$1,150

(a) Qualifies for Tier 2 capital under the risk-based capital guidelines for First Horizon Bank as well as First Horizon Corporation up to certain limits for

minority interest capital instruments.

(b) Secured by trust preferred loans.

(c) Collateralized borrowings associated with SBA loan sales that did not meet sales criteria. The loans have remaining terms of 1 to 25 years. These

borrowings had a weighted average interest rate of 7.08% and 4.81% on December 31, 2024 and 2023, respectively.

(d) Acquired in conjunction with the acquisition of CBF. A portion qualifies for Tier 2 capital under the risk-based capital guidelines. All are floating rate

debentures tied to 3-month CME Term SOFR plus a term spread adjustment of 0.26161%.

(e) Qualifies for Tier 2 capital under the risk-based capital guidelines for both First Horizon Bank and First Horizon Corporation up to certain limits for

minority interest capital instruments.

   

	155	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 10—TERM BORROWINGS

Annual principal repayment requirements as of

December 31, 2024 are as follows.

Table 8.10.2

ANNUAL PRINCIPAL REPAYMENT SCHEDULE

(Dollars in millions)
2025		$350
2026		—
2027		—
2028		—
2029 and after		862

In conjunction with its acquisition of CBF, FHN obtained

junior subordinated debentures, each of which is held by a

wholly-owned trust that has issued trust preferred

securities to external investors and loaned the funds to

FHN as junior subordinated debt. The book value for each

issuance represents the purchase accounting fair value as

of the CBF acquisition closing date less accumulated

amortization of the associated discount, as applicable.

Through various contractual arrangements, FHN assumed

a full and unconditional guarantee for each trust’s

obligations with respect to the securities. While the

maturity dates are typically 30 years from the original

issuance date, FHN has the option to redeem each of the

junior subordinated debentures at par on any future

interest payment date, which would trigger redemption of

the related trust preferred securities. A portion of FHN's

remaining junior subordinated notes qualifies as Tier 2

capital under the risk-based capital guidelines.

   

	156	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 11—PREFERRED STOCK

Note 11—Preferred Stock

FHN Preferred Stock

The following table presents a summary of FHN's non-cumulative perpetual preferred stock.

Table 8.11.1

PREFERRED STOCK

													December 31,
(Dollars in millions)													2024		2023
	Issuance Date		Earliest Redemption Date (a)		Annual Dividend Rate		Dividend Payments		Shares Outstanding		Liquidation Amount		Carrying Amount		Carrying Amount
Series B	7/2/2020		8/1/2025		6.625%	(b)	Semi-annually		8,000		$80		$77		$77
Series C	7/2/2020		5/1/2026		6.600%	(c)	Quarterly		5,750		58		59		59
Series D	7/2/2020		5/1/2024		6.100%	(d)	Semi-annually		—		—		—		94
Series E	5/28/2020		10/10/2025		6.500%		Quarterly		1,500		150		145		145
Series F	5/3/2021		7/10/2026		4.700%		Quarterly		1,500		150		145		145
									16,750		$438		$426		$520

(a)Denotes earliest optional redemption date. Earlier redemption is possible, at FHN's election, if certain regulatory capital events occur.

(b)As a result of LIBOR transition, the fixed dividend rate will reset on August 1, 2025 to three-month CME Term SOFR plus 4.52361% (0.26161% plus

4.262%).

(c)As a result of LIBOR transition, the fixed dividend rate will reset on May 1, 2026 to three-month CME Term SOFR plus 5.18161% (0.26161% plus 4.920%).

(d)On May 1, 2024, FHN redeemed all outstanding shares of its Series D Preferred Stock. The fixed dividend rate was set to convert to three-month CME

Term SOFR plus 4.12061% (0.26161% plus 3.859%) on May 1, 2024.

FHN redeemed all outstanding shares of Series D

Preferred Stock effective May 1, 2024. The difference

between the $100 million outstanding liquidation

preference amount and the $94 million carrying value of

the Series D Preferred Stock along with the related share

repurchase tax resulted in $7 million in deemed dividends

that were included in net income available to common

shareholders and EPS for the year ended December 31,

2024.

Subsidiary Preferred Stock

First Horizon Bank has issued 300,000 shares of Class A

Non-Cumulative Perpetual Preferred Stock (Class A

Preferred Stock) with a liquidation preference of $1,000

per share. Dividends on the Class A Preferred Stock, if

declared, accrue and are payable each quarter, in arrears,

at a floating rate equal to the greater of three-month CME

Term SOFR plus 1.11161% (0.26161% plus 0.85%) or

3.75% per annum. These securities qualify fully as Tier 1

capital for both First Horizon Bank and FHN. On

December 31, 2024 and 2023, $295 million of Class A

Preferred Stock was recognized as noncontrolling interest

on the Consolidated Balance Sheets.

FT Real Estate Securities Company, Inc. ("FTRESC"), an

indirect subsidiary of FHN, has issued 50 shares of 9.50%

Cumulative Preferred Stock, Class B (Class B Preferred

Shares), with a liquidation preference of $1 million per

share; of those shares, 47 were issued to nonaffiliates.

FTRESC is a real estate investment trust established for

the purpose of acquiring, holding, and managing real

estate mortgage assets. Dividends on the Class B Preferred

Shares are cumulative and are payable semi-annually. As

of December 31, 2024 and 2023, the Class B Preferred

Shares qualified as Tier 2 regulatory capital. For all periods

presented, these securities are presented in the

Consolidated Balance Sheets as term borrowings.

The Class B Preferred Shares are mandatorily redeemable

on March 31, 2031, and redeemable at the discretion of

FTRESC in the event that the Class B Preferred Shares

cannot be accounted for as Tier 2 regulatory capital or

there is more than an insubstantial risk that dividends paid

with respect to the Class B Preferred Shares will not be

fully deductible for tax purposes.

   

	157	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 12—REGULATORY CAPITAL & RESTRICTIONS

Note 12—Regulatory Capital and Restrictions

Regulatory Capital

FHN is subject to various regulatory capital requirements

administered by the federal banking agencies. Failure to

meet minimum capital requirements can initiate certain

mandatory, and possibly additional discretionary actions

by regulators that, if undertaken, could have a direct

material effect on FHN’s financial statements. Under

capital adequacy guidelines and the regulatory framework

for prompt corrective action, FHN must meet specific

capital guidelines that involve quantitative measures of

assets, liabilities, and certain off-balance sheet items

calculated pursuant to regulatory directives. Capital

amounts and classification are also subject to qualitative

judgment by the regulators such as capital components,

asset risk weightings, and other factors.

Management believes that, as of December 31, 2024, FHN

and First Horizon Bank met all capital adequacy

requirements to which they were subject. As of

December 31, 2024, First Horizon Bank was classified as

well-capitalized under the regulatory framework for

prompt corrective action. To be categorized as well-

capitalized, an institution must maintain minimum Total

Risk-Based, Tier 1 Risk-Based, Common Equity Tier 1, and

Tier 1 Leverage ratios, as set forth in the following table.

Management believes that no events or changes have

occurred subsequent to year-end that would change this

designation.

Quantitative measures established by regulation to ensure

capital adequacy require FHN to maintain minimum ratios

as set forth in the following table. FHN and First Horizon

Bank are also subject to a 2.5% capital conservation

buffer, which is an amount above the minimum levels

designed to ensure that banks remain well-capitalized,

even in adverse economic scenarios.

The actual capital amounts and ratios of FHN and First

Horizon Bank are presented in the following table.

Table 8.12.1

CAPITAL AMOUNTS & RATIOS

(Dollars in millions)		First Horizon Corporation				First Horizon Bank
		Amount		Ratio		Amount		Ratio
December 31, 2024
Actual:
Total Capital		$9,862		13.87%		$9,156		13.00%
Tier 1 Capital		8,688		12.22		8,129		11.54
Common Equity Tier 1		7,967		11.20		7,834		11.12
Leverage		8,688		10.64		8,129		10.06
Minimum Requirement for Capital Adequacy Purposes:
Total Capital		5,689		8.00		5,633		8.00
Tier 1 Capital		4,266		6.00		4,225		6.00
Common Equity Tier 1		3,200		4.50		3,169		4.50
Leverage		3,266		4.00		3,232		4.00
Minimum Requirement to be Well Capitalized Under Prompt Corrective Action Provisions:
Total Capital						7,042		10.00
Tier 1 Capital						5,633		8.00
Common Equity Tier 1						4,577		6.50
Leverage						4,040		5.00
December 31, 2023
Actual:
Total Capital		$9,922		13.96%		$9,303		13.17%
Tier 1 Capital		8,825		12.42		8,350		11.82
Common Equity Tier 1		8,104		11.40		8,055		11.40
Leverage		8,825		10.69		8,350		10.20

   

	158	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 12—REGULATORY CAPITAL & RESTRICTIONS

Minimum Requirement for Capital Adequacy Purposes:
Total Capital		5,686		8.00		5,651		8.00
Tier 1 Capital		4,264		6.00		4,238		6.00
Common Equity Tier 1		3,198		4.50		3,179		4.50
Leverage		3,302		4.00		3,276		4.00
Minimum Requirement to be Well Capitalized Under Prompt Corrective Action Provisions:
Total Capital						7,064		10.00
Tier 1 Capital						5,651		8.00
Common Equity Tier 1						4,591		6.50
Leverage						4,095		5.00

Restrictions on cash and due from banks

Effective March 26, 2020, the Federal Reserve reduced its

reserve requirement to zero, and as a result, on December

31, 2024 and 2023, First Horizon Bank was not required to

maintain cash reserves.

Restrictions on dividends

Cash dividends are paid by FHN from its assets, which are

mainly provided by dividends from its subsidiaries. Certain

regulatory restrictions exist regarding the ability of First

Horizon Bank to transfer funds to FHN in the form of cash,

dividends, loans, or advances. As of December 31, 2024,

First Horizon Bank had undivided profits of $3.1 billion, of

which a limited amount was available for distribution to

FHN as dividends without prior regulatory approval.  At

any given time, the pertinent portions of those regulatory

restrictions allow First Horizon Bank to declare preferred

or common dividends without prior regulatory approval in

an amount equal to First Horizon Bank's retained net

income for the two most recent completed years plus the

current year-to-date period. For any period, First Horizon

Bank’s "retained net income" generally is equal to First

Horizon Bank’s regulatory net income reduced by the

preferred and common dividends declared by First

Horizon Bank. Applying the dividend restrictions imposed

under applicable federal and state rules, First Horizon

Bank’s total amount available for dividends was $374

million as of January 1, 2025. First Horizon Bank declared

and paid common dividends to the parent company in the

amount of $1.1 billion in 2024 and $220 million in 2023.

During 2024 and 2023, First Horizon Bank declared and

paid dividends on its preferred stock according to the

payment terms of its issuances as noted in Note 11 -

Preferred Stock.

The payment of cash dividends by FHN and First Horizon

Bank may also be affected or limited by other factors, such

as the requirement to maintain adequate capital above

regulatory guidelines. Furthermore, the Federal Reserve

generally requires insured banks and bank holding

companies to pay dividends only out of current operating

earnings.

Restrictions on intercompany transactions

Under current Federal banking laws, First Horizon Bank

may not enter into covered transactions with any affiliate

including the parent company and certain financial

subsidiaries in excess of 10% of the bank’s capital stock

and surplus, as defined, or $937 million, on December 31,

2024. Covered transactions include a loan or extension of

credit to an affiliate, a purchase of or an investment in

securities issued by an affiliate, and the acceptance of

securities issued by the affiliate as collateral for any loan

or extension of credit. The equity investment, including

retained earnings, in certain of a bank’s financial

subsidiaries is also treated as a covered transaction. On

December 31, 2024, the parent company had no covered

transactions from First Horizon Bank and 840 Denning LLC,

a parent company subsidiary, had a covered transaction of

$2 million. Two of the bank’s financial subsidiaries, FHN

Financial Securities Corp. and First Horizon Advisors, Inc.,

had covered transactions from First Horizon Bank totaling

$387 million and $54 million, respectively. In addition, the

aggregate amount of covered transactions with all

affiliates, as defined, is limited to 20% of the bank’s capital

stock and surplus, as defined, or $1.9 billion, on

December 31, 2024. First Horizon Bank’s total covered

transactions with all affiliates including the parent

company on December 31, 2024 were $443 million.

   

	159	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 13—COMPONENTS OF OTHER COMPREHENSIVE INCOME (LOSS)

Note 13—Components of Other Comprehensive Income (Loss)

The following table provides the changes in accumulated other comprehensive income (loss) by component, net of tax, for the

years ended December 31, 2024, 2023, and 2022.

Table 8.13.1

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

(Dollars in millions)		Securities AFS		Cash Flow Hedges		Pension and Post-retirement Plans		Total
Balance as of December 31, 2021		$(36)		$2		$(254)		$(288)
Net unrealized gains (losses)		(937)		(144)		(22)		(1,103)
Amounts reclassified from AOCI		—		15		8		23
Other comprehensive income (loss)		(937)		(129)		(14)		(1,080)
Balance as of December 31, 2022		$(973)		$(127)		$(268)		$(1,368)
Net unrealized gains (losses)		137		(5)		(11)		121
Amounts reclassified from AOCI		—		52		7		59
Other comprehensive income (loss)		137		47		(4)		180
Balance as of December 31, 2023		$(836)		$(80)		$(272)		$(1,188)
Net unrealized gains (losses)		(15)		(63)		12		(66)
Amounts reclassified from AOCI		69		49		8		126
Other comprehensive income (loss)		54		(14)		20		60
Balance as of December 31, 2024		$(782)		$(94)		$(252)		$(1,128)

Reclassifications from AOCI, and related tax effects, were as follows.

Table 8.13.2

RECLASSIFICATIONS FROM AOCI

(Dollars in millions)
Details about AOCI		2024		2023		2022		Affected line item in the statement where net income is presented
Securities AFS:
Realized (gains) losses on securities AFS		$91		$—		$—		Securities gains (losses), net
Tax expense (benefit)		(22)		—		—		Income tax expense
		69		—		—
Cash flow hedges:
Realized (gains) losses on cash flow hedges		$65		$69		$20		Interest and fees on loans and leases
Tax expense (benefit)		(16)		(17)		(5)		Income tax expense
		$49		$52		$15
Pension and Postretirement Plans:
Amortization of prior service cost and net actuarial (gain) loss		$11		$9		$10		Other expense
Tax expense (benefit)		(3)		(2)		(2)		Income tax expense
		8		7		8
Total reclassification from AOCI		$126		$59		$23

   

	160	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 14—INCOME TAXES

Note 14—Income Taxes

The aggregate amount of income taxes included in the Consolidated Statements of Income and the Consolidated Statements

of Changes in Equity for the years ended December 31 were as follows.

Table 8.14.1

INCOME TAX EXPENSE

(Dollars in millions)		2024		2023		2022
Consolidated Statements of Income:
Income tax expense		$211		$212		$247
Consolidated Statements of Changes in Equity:
Income tax expense (benefit) related to:
Net unrealized gains (losses) on pension and other postretirement plans		7		(1)		(5)
Net unrealized gains (losses) on securities available for sale		17		44		(302)
Net unrealized gains (losses) on cash flow hedges		(5)		15		(42)
Total		$230		$270		$(102)

The components of income tax expense (benefit) for the years ended December 31, were as follows.

Table 8.14.2

INCOME TAX EXPENSE COMPONENTS

(Dollars in millions)		2024		2023		2022
Current:
Federal		$204		$140		$123
State		24		28		33
Deferred:
Federal		(14)		37		87
State		(3)		7		4
Total		$211		$212		$247

   

	161	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 14—INCOME TAXES

A reconciliation of expected income tax expense (benefit) at the federal statutory rate of 21% for 2024, 2023, and 2022,

respectively, to total income tax expense follows.

Table 8.14.3

RECONCILIATION FROM STATUTORY RATES

(Dollars in millions)		2024		2023		2022
Federal income tax rate		21%		21%		21%
Tax computed at statutory rate		$211		$237		$243
Increase (decrease) resulting from:
State income taxes, net of federal income tax benefit		20		34		31
BOLI		(5)		(6)		(4)
Tax-exempt interest		(12)		(12)		(10)
FDIC premium		12		11		7
Non-deductible expenses		8		9		4
LIHTC credits and benefits, net of amortization		(13)		(15)		(16)
Other tax credits		(1)		(5)		(4)
Other changes in unrecognized tax benefits		(2)		(50)		(2)
Termination of BOLI policies		—		21		—
Other		(7)		(12)		(2)
Total		$211		$212		$247

As of December 31, 2024, FHN had net deferred tax asset balances related to federal and state income tax carryforwards of

$29 million and $3 million, respectively, which will expire at various dates as follows.

Table 8.14.4

TAX CARRYFORWARD DTA EXPIRATION DATES

(Dollars in millions)		Expiration Dates		Net Deferred Tax Asset Balance
Losses - federal		2028 - 2035		$29
Net operating losses - states		2025 - 2034		2
Net operating losses - states		2035 - 2041		1

We believe it is more likely than not that the benefit from

certain state NOL carryforwards will not be realized. In

recognition of this risk, we have provided an immaterial

valuation allowance on the DTAs related to these state

NOL carryforwards. If our assumptions change and we

determine that we will be able to realize these NOLs, the

tax benefits related to any reversal of the valuation

allowance on DTAs will be recognized as a reduction of

income tax expense.

A DTA or 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

enacted statutory tax rates, applicable to future years, to

these temporary differences. In order to support the

recognition of the DTA, FHN’s management must believe

that the realization of the DTA is more likely than not. FHN

evaluates the likelihood of realization of the DTA based on

both positive and negative evidence available at the time,

including (as appropriate) scheduled reversals of DTLs,

projected future taxable income, tax planning strategies,

and recent financial performance. Realization is

dependent on generating sufficient taxable income prior

to the expiration of the carryforwards attributable to the

DTA. In projecting future taxable income, FHN

incorporates assumptions including the estimated amount

of future state and federal pre-tax operating income, the

reversal of temporary differences, and the

implementation of feasible and prudent tax planning

strategies. These assumptions require significant

judgment about the forecasts of future taxable income

and are consistent with the plans and estimates used to

manage the underlying business.

As of December 31, 2024, FHN's net DTA was $227 million

compared to $215 million at December 31, 2023. At

December 31, 2024, FHN's gross DTA (net of a valuation

allowance) and gross DTL were $768 million and $541

million, respectively. Although realization is not assured,

FHN believes that it meets the more-likely-than-not

requirement with respect to the net DTA after valuation

allowance.

   

	162	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 14—INCOME TAXES

Temporary differences which gave rise to deferred tax assets and deferred tax liabilities on December 31, 2024 and 2023 were

as follows.

Table 8.14.5

COMPONENTS OF DTAs & DTLs

(Dollars in millions)		2024		2023
Deferred tax assets:
Securities available for sale and financial instruments (a)		$284		$296
Loan valuations and loss reserves		152		107
Employee benefits		119		128
Lease liability		82		85
Depreciation and amortization		54		37
Accrued expenses		20		21
Federal loss carryforwards		29		32
State loss carryforwards		3		3
Other		25		28
Gross deferred tax assets		768		737
Deferred tax liabilities:
Leasing		$363		$316
ROU lease asset		73		76
Other intangible assets		71		75
Prepaid expenses		23		20
Equity investments		2		31
Other		9		4
Gross deferred tax liabilities		541		522
Net deferred tax assets		$227		$215

(a)Tax effects of unrealized gains and losses are tracked on a security-by-security basis.

Total unrecognized tax benefits at December 31, 2024 and

2023 were $13 million and $15 million, respectively. To

the extent such unrecognized tax benefits as of

December 31, 2024 are subsequently recognized, $13

million of tax benefits could impact tax expense and FHN’s

effective tax rate in future periods.

During 2023, FHN settled audits which allowed it to

reduce unrecognized benefits by $76 million, this resulted

in a reduction of tax expense by $32 million.  A reduction

of accrued interest related to unrecognized benefits

resulted in a reduction of tax expense of $14 million.

It is reasonably possible that the unrecognized tax benefits

related to federal and state exposures could decrease by

$3 million during 2025 if the applicable statutes of

limitations expire as scheduled. FHN recognizes interest

accrued and penalties related to unrecognized tax benefits

within income tax expense. FHN had approximately $2

million and $3 million accrued for the payment of interest

as of December 31, 2024 and 2023, respectively. The total

amounts of interest and penalties recognized in the

Consolidated Statements of Income during 2024 and 2023

were net benefits of $1 million and $14 million,

respectively.

The rollforward of unrecognized tax benefits is shown in

the following table.

   

	163	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 14—INCOME TAXES

Table 8.14.6

ROLLFORWARD OF UNRECOGNIZED TAX BENEFITS

(Dollars in millions)
Balance at December 31, 2022		$89
Increases related to prior year tax positions		1
Increases related to current year tax positions		2
Settlements		(76)
Lapse of statutes		(1)
Balance at December 31, 2023		$15
Increases related to prior year tax positions		2
Increases related to current year tax positions		3
Lapse of statutes		(7)
Balance at December 31, 2024		$13

   

	164	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 15—EARNINGS PER SHARE

Note 15—Earnings Per Share

The computations of basic and diluted earnings per common share were as follows.

Table 8.15.1

EARNINGS PER SHARE COMPUTATIONS

(Dollars in millions, except per share data; shares in thousands)		2024		2023		2022
Net income		$794		$916		$912
Net income attributable to noncontrolling interest		19		19		12
Net income attributable to controlling interest		775		897		900
Preferred stock dividends		37		32		32
Net income available to common shareholders		$738		$865		$868
Weighted average common shares outstanding—basic		540,317		548,410		535,033
Effect of dilutive restricted stock, performance equity awards and options		3,968		3,802		7,830
Effect of dilutive convertible preferred stock (a)		—		9,520		23,141
Weighted average common shares outstanding—diluted		544,285		561,732		566,004
Basic earnings per common share		$1.37		$1.58		$1.62
Diluted earnings per common share		$1.36		$1.54		$1.53
(a) On February 28, 2022, FHN issued $494 million of Series G Convertible Preferred Stock, which was converted into common stock on June 26, 2023, following the termination of the TD Merger Agreement. Conversion occurred at the rate of 4,000 common shares per Series G preferred share resulting in 19,742,776 additional common shares outstanding. 2023 includes the impact of the Series G based on the final conversion rate and 2022 includes the impact based on the original maximum conversion rate.

The following table presents outstanding options and

other equity awards that were excluded from the

calculation of diluted earnings per share because they

were either anti-dilutive (the exercise price was higher

than the weighted-average market price for the period) or

the performance conditions have not been met.

Table 8.15.2

ANTI-DILUTIVE EQUITY AWARDS

(Shares in thousands)		2024		2023		2022
Stock options excluded from the calculation of diluted EPS		26		—		29
Weighted average exercise price of stock options excluded from the calculation of diluted EPS		$19.73		$24.36		$25.64
Other equity awards excluded from the calculation of diluted EPS		2,439		2,242		144

   

	165	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 16—CONTINGENCIES & OTHER DISCLOSURES

Note 16—Contingencies and Other Disclosures

Contingencies

Contingent Liabilities Overview

Contingent liabilities arise in the ordinary course of

business. Often they are related to lawsuits, arbitration,

mediation, and other forms of litigation. Various litigation

matters currently are threatened or pending against FHN

and its subsidiaries. Also, FHN at times receives requests

for information, subpoenas, or other inquiries from

federal, state, and local regulators, from other

government authorities, and from other parties

concerning various matters relating to FHN’s current or

former businesses. Certain matters of that sort are

pending at most times, and FHN generally cooperates

when those matters arise. Pending and threatened

litigation matters sometimes are settled by the parties,

and sometimes pending matters are resolved in court or

before an arbitrator or are withdrawn. Regardless of the

manner of resolution, frequently the most significant

changes in status of a matter occur over a short time

period, often following a lengthy period of little

substantive activity. In view of the inherent difficulty of

predicting the outcome of these matters, particularly

where the claimants seek very large or indeterminate

damages, or where the cases present novel legal theories

or involve a large number of parties, or where claims or

other actions may be possible but have not been brought,

FHN cannot reasonably determine what the eventual

outcome of the matters will be, what the timing of the

ultimate resolution of these matters may be, or what the

eventual loss or impact related to each matter may be.

FHN establishes a loss contingency liability for a litigation

matter when loss is both probable and reasonably

estimable as prescribed by applicable financial accounting

guidance. If loss for a matter is probable and a range of

possible loss outcomes is the best estimate available,

accounting guidance requires a liability to be established

at the low end of the range.

Based on current knowledge, and after consultation with

counsel, management is of the opinion that loss

contingencies related to threatened or pending litigation

matters should not have a material adverse effect on the

consolidated financial condition of FHN, but may be

material to FHN’s operating results for any particular

reporting period depending, in part, on the results from

that period.

Material Loss Contingency Matters

As used in this Note, except for matters that are reported

as having been substantially settled or otherwise

substantially resolved, FHN's “material loss contingency

matters” generally fall into at least one of the following

categories: (i) FHN has determined material loss to be

probable and has established a material loss liability in

accordance with applicable financial accounting guidance;

(ii) FHN has determined material loss to be probable but is

not reasonably able to estimate an amount or range of

material loss liability; or (iii) FHN has determined that

material loss is not probable but is reasonably possible,

and the amount or range of that reasonably possible

material loss is estimable. As defined in applicable

accounting guidance, loss is reasonably possible if there is

more than a remote chance of a material loss outcome for

FHN. FHN provides contingencies note disclosures for

certain pending or threatened litigation matters each

quarter, including all matters mentioned in categories (i)

or (ii) and, occasionally, certain matters mentioned in

category (iii). In addition, in this Note, certain other

matters, or groups of matters, are discussed relating to

FHN’s pre-2009 mortgage origination and servicing

businesses. In all litigation matters discussed in this Note,

unless settled or otherwise resolved, FHN believes it has

meritorious defenses and intends to pursue those

defenses vigorously.

FHN reassesses the liability for litigation matters each

quarter as the matters progress. At December 31, 2024,

the aggregate amount of liabilities established for all such

loss contingency matters was $1 million. These liabilities

are separate from those discussed under the heading

Mortgage Loan Repurchase and Foreclosure Liability

below.

In each material loss contingency matter, except as

otherwise noted, there is more than a remote chance that

any of the following outcomes will occur: the plaintiff will

substantially prevail; the defense will substantially prevail;

the plaintiff will prevail in part; or the matter will be

settled by the parties. At December 31, 2024, FHN

estimates that for all material loss contingency matters,

estimable reasonably possible losses in future periods in

excess of currently established liabilities could aggregate

in a range from zero to less than $1 million.

As a result of the general uncertainties discussed above

and the specific uncertainties discussed for each matter

mentioned below, it is possible that the ultimate future

loss experienced by FHN for any particular matter may

materially exceed the amount, if any, of currently

established liability for that matter.

Mortgage Loan Repurchase and Foreclosure Liability

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 from borrowers, and

   

	166	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 16—CONTINGENCIES & OTHER DISCLOSURES

certain related exposures. 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.

Based on currently available information and experience

to date, FHN has evaluated its loan repurchase, make-

whole, foreclosure, and certain related exposures and has

accrued for losses of $15 million and $16 million as of

December 31, 2024 and 2023, respectively. Accrued

liabilities for FHN’s estimate of these obligations are

reflected in other liabilities on the Consolidated Balance

Sheets. Charges/expense reversals to increase/decrease

the liability are included within other income on the

Consolidated Statements of Income. The estimates are

based upon currently available information and fact

patterns that exist as of each balance sheet date and

could be subject to future changes. Changes to any one of

these factors could significantly impact the estimate of

FHN’s liability.

Other Disclosures

Indemnification Agreements and Guarantees

In the ordinary course of business, FHN enters into

indemnification agreements for legal proceedings against

its directors and officers and standard representations and

warranties for underwriting agreements, merger and

acquisition agreements, loan sales, contractual

commitments, and various other business transactions or

arrangements.

The extent of FHN’s obligations under these agreements

depends upon the occurrence of future events; therefore,

it is not possible to estimate a maximum potential amount

of payouts that could be required by such agreements.

   

	167	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 17—RETIREMENT PLANS & OTHER EMPLOYEE BENEFITS

Note 17—Retirement Plans and Other Employee Benefits

Pension Plan

FHN sponsors a noncontributory, qualified defined benefit

pension plan to employees hired or re-hired on or before

September 1, 2007. Pension benefits are based on years

of service, average compensation near retirement or

other termination, and estimated social security benefits

at age 65. Benefits under the plan are “frozen” so that

years of service and compensation changes after 2012 do

not affect the benefit owed. Minimum contributions are

based upon actuarially determined amounts necessary to

fund the total benefit obligation. Decisions to contribute

to the plan are based upon pension funding requirements

under the Pension Protection Act, the maximum amount

deductible under the Internal Revenue Code, the actual

performance of plan assets, and trends in the regulatory

environment. FHN made no contributions to the qualified

pension plan in 2024, 2023, and 2022. Management does

not currently anticipate that FHN will make a contribution

to the qualified pension plan in 2025.

FHN also maintains non-qualified plans including a

supplemental retirement plan that covers certain

employees whose benefits under the qualified pension

plan have been limited by tax rules. These other non-

qualified plans are unfunded, and contributions to these

plans cover all benefits paid under the non-qualified plans.

Payments made under the non-qualified plans were

$4 million for 2024, $6 million for 2023, and $5 million for

2022. FHN anticipates making benefit payments under the

non-qualified plans of $5 million in 2025.

Savings Plan

FHN provides all qualifying full-time employees with the

opportunity to participate in FHN's tax-qualified 401(k)

savings plan. The qualified plan allows employees to defer

receipt of earned salary, up to tax law limits, on a tax-

advantaged basis. Accounts, which are held in trust, may

be invested in a wide range of mutual funds and in FHN

common stock. Up to tax law limits, FHN provides a 100%

match for the first 6% of salary deferred, with company

matching contributions invested according to a

participant’s current investment election. Through a non-

qualified savings restoration plan, FHN provides a

restorative benefit to certain highly compensated

employees who participate in the savings plan and whose

contribution elections are capped by tax limitations.

FHN also provides “flexible dollars” to assist employees

with the cost of annual benefits and/or allow the

employee to contribute to his or her qualified savings plan

account. These “flexible dollars” are pre-tax contributions

and are based upon the employees’ years of service and

qualified compensation. Contributions made by FHN

through the flexible benefits plan and the company

matches were $49 million, $48 million, and $47 million for

2024, 2023, and 2022, respectively.

Other Employee Benefits

FHN provides postretirement life insurance benefits to

certain employees and also provides postretirement

medical insurance benefits to retirement-eligible

employees, including certain prescription drug benefits.

The postretirement medical plan is contributory with FHN

contributing a fixed amount for certain participants.

Actuarial Assumptions

FHN’s process for developing the long-term expected rate

of return of pension plan assets is based on capital market

exposure as the source of investment portfolio returns.

Capital market exposure refers to the plan’s allocation of

its assets to asset classes, which primarily represent fixed

income investments. FHN also considers expectations for

inflation, real interest rates, and various risk premiums

based primarily on the historical risk premium for each

asset class. The expected return is based upon a time

horizon of 30 years. Given its funded status, the asset

allocation strategy for the qualified pension plan utilizes

fixed income instruments that closely match the

estimated duration of payment obligations.

The discount rates for the three years ended 2024 for

pension and other benefits were determined by using a

hypothetical AA yield curve represented by a series of

annualized individual discount rates from one-half to 30

years. The discount rates are selected based upon data

specific to FHN’s plans and employee population. The

bonds used to create the hypothetical yield curve were

subjected to several requirements to ensure that the

resulting rates were representative of the bonds that

would be selected by management to fulfill the company’s

funding obligations. In addition to the AA rating, only non-

callable bonds were included. Each bond issue was

required to have at least $300 million par outstanding so

that each issue was sufficiently marketable. Finally, bonds

more than two standard deviations from the average yield

were removed. When selecting the discount rate, FHN

matches the duration of high-quality bonds with the

duration of the obligations of the plan as of the

measurement date. For all years presented, the

measurement date of the benefit obligations and net

periodic benefit costs was December 31.

The actuarial assumptions used in the defined benefit

pension plans and other employee benefit plans were as

follows.

   

	168	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 17—RETIREMENT PLANS & OTHER EMPLOYEE BENEFITS

Table 8.17.1

ACTUARIAL ASSUMPTIONS FOR DEFINED BENEFIT PLANS

		Benefit Obligations						Net Periodic Benefit Cost
		2024		2023		2022		2024		2023		2022
Discount rate
Qualified pension		5.66%		5.00%		5.20%		5.00%		5.20%		2.96%
Nonqualified pension		5.50%		4.90%		5.10%		4.90%		5.10%		2.65%
Other nonqualified pension		5.20%		4.75%		4.94%		4.75%		4.94%		1.99%
Postretirement benefits		5.40% - 5.74%		4.84% - 5.06%		5.04% - 5.25%		4.84% - 5.49%		4.88% - 5.25%		2.42% - 5.08%
Expected long- term rate of return
Qualified pension/ postretirement benefits		N/A		N/A		N/A		5.00%		5.15%		2.85%
Postretirement benefit (retirees post January 1, 1993)		N/A		N/A		N/A		5.25%		5.50%		5.95%
Postretirement benefit (retirees prior to January 1, 1993)		N/A		N/A		N/A		N/A		N/A		1.05%

Since the benefits in the defined benefit pension plan are

frozen, the rate of compensation increase has no effect on

qualified pension benefits.

FHN has one pension plan where participants' benefits are

affected by interest crediting rates. The plan's projected

benefit obligation as of December 31, 2024, 2023 and

2022 and interest crediting rates for the respective years

were as follows.

Table 8.17.2

PROJECTED BENEFIT OBLIGATION

& CREDITING RATE

(Dollars in millions)		2024		2023		2022
Projected benefit obligation		$7		$8		$10
Interest crediting rate		12.25%		12.04%		10.77%

The components of net periodic benefit cost for the plan years 2024, 2023 and 2022 were as follows.

Table 8.17.3

COMPONENTS OF NET PERIODIC BENEFIT COST

(Dollars in millions)		Pension Benefits						Other Benefits
		2024		2023		2022		2024		2023		2022
Components of net periodic benefit cost
Interest cost		$32		$33		$20		$2		$2		$1
Expected return on plan assets		(32)		(32)		(24)		(1)		(1)		(2)
Amortization of unrecognized:
Actuarial (gain) loss		13		13		12		(1)		(1)		—
Net periodic benefit cost		$13		$14		$8		$—		$—		$(1)

The long-term expected rate of return is applied to the

market-related value of plan assets in determining the

expected return on plan assets. FHN determines the

market-related value of plan assets using a hybrid

methodology which recognizes liability-hedging assets at

current fair value while return-seeking assets use a

calculated value that recognizes changes in fair value over

five years, as permitted by GAAP.

FHN utilizes a spot rate approach which applies duration-

specific rates from the full yield curve to estimated future

benefit payments for the determination of interest cost.

   

	169	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 17—RETIREMENT PLANS & OTHER EMPLOYEE BENEFITS

The following table presents the plans’ benefit obligations and plan assets for 2024 and 2023.

Table 8.17.4

BENEFIT OBLIGATIONS & PLAN ASSETS

(Dollars in millions)		Pension Benefits				Other Benefits
		2024		2023		2024		2023
Change in benefit obligation
Benefit obligation, beginning of year		$675		$663		$31		$32
Interest cost		32		33		2		2
Actuarial (gain) loss (a)		(38)		20		(1)		—
Actual benefits paid		(42)		(41)		(2)		(3)
Premium paid for annuity purchase (b)		(28)		—		—		—
Benefit obligation, end of year		$599		$675		$30		$31
Change in plan assets
Fair value of plan assets, beginning of year		$638		$641		$23		$21
Actual return on plan assets		7		35		2		2
Employer contributions		3		3		1		3
Actual benefits paid – settlement payments		(41)		(40)		(2)		(3)
Actual benefits paid – other payments		(1)		(1)		—		—
Premium paid for annuity purchase (b)		(28)		—		—		—
Fair value of plan assets, end of year		$578		$638		$24		$23
Funded (unfunded) status of the plans		$(21)		$(37)		$(6)		$(8)
Amounts recognized in the Balance Sheets
Other assets		$1		$—		$22		$21
Other liabilities		(22)		(37)		(28)		(29)
Net asset (liability) at end of year		$(21)		$(37)		$(6)		$(8)

(a) Variances in the actuarial (gain) loss are due to normal activity such as changes in discount rates, updates to participant demographic information and

revisions to life expectancy assumptions.

(b) Amounts represent settlements of certain retired participants in the qualified pension plan that occurred during the year.

The projected benefit obligation for unfunded plans was as follows.

Table 8.17.5

BENEFIT OBLIGATION - UNFUNDED PLANS

		Pension Benefits				Other Benefits
(Dollars in millions)		2024		2023		2024		2023
Projected benefit obligation		$22		$24		$28		$29

The qualified pension plan was overfunded by $1 million

and underfunded by $13 million as of December 31, 2024

and 2023, respectively. Because of the pension freeze at

the end of 2012, as of both December 31, 2024 and 2023,

the pension benefit obligation is equivalent to the

accumulated benefit obligation. FHN's funded

postretirement plan was in an overfunded status as of

December 31, 2024 and 2023.

Unrecognized actuarial gains and losses and unrecognized

prior service costs and credits are recognized as a

component of accumulated other comprehensive income.

Balances reflected in accumulated other comprehensive

income on a pre-tax basis for the years ended

December 31, 2024 and 2023 consist of the following.

   

	170	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 17—RETIREMENT PLANS & OTHER EMPLOYEE BENEFITS

Table 8.17.6

PRE-TAX ACTUARIAL (GAINS) LOSSES REFLECTED IN AOCI

(Dollars in millions)		Pension Benefits				Other Benefits
		2024		2023		2024		2023
Amounts recognized in accumulated other comprehensive income
Net actuarial (gain) loss		$341		$367		$(9)		$(8)

The pre-tax amounts recognized in other comprehensive income during 2024, 2023, and 2022 were as follows.

Table 8.17.7

PRE-TAX AMOUNTS RECOGNIZED IN OCI

(Dollars in millions)		Pension Benefits						Other Benefits
		2024		2023		2022		2024		2023		2022
Changes in plan assets and benefit obligation recognized in other comprehensive income
Net actuarial (gain) loss arising during measurement period		$(13)		$17		$32		$(2)		$—		$(3)
Items amortized during the measurement period:
Net actuarial gain (loss)		(13)		(13)		(11)		1		1		—
Total recognized in other comprehensive income		$(26)		$4		$21		$(1)		$1		$(3)

FHN utilizes the minimum amortization method in

determining the amount of actuarial gains or losses to

include in plan expense. Under this approach, the net

deferred actuarial gain or loss that exceeds a threshold is

amortized over the average remaining service period of

active plan participants. The threshold is measured as the

greater of 10% of a plan’s projected benefit obligation as

of the beginning of the year or 10% of the market-related

value of plan assets as of the beginning of the year. FHN

amortizes actuarial gains and losses using the estimated

average remaining life expectancy of the remaining

participants since all participants are considered inactive

due to the freeze.

The following table provides detail on expected benefit

payments, which reflect expected future service, as

appropriate.

Table 8.17.8

EXPECTED BENEFIT PAYMENTS

(Dollars in millions)		Pension Benefits		Other Benefits
2025		$44		$2
2026		45		2
2027		46		2
2028		46		2
2029		46		2
2030-2034		229		12

Plan Assets

FHN’s overall investment goal is to create, over the life of

the pension plan and retiree medical plan, an adequate

pool of sufficiently liquid assets to support the qualified

pension benefit obligations to participants, retirees, and

beneficiaries, as well as to partially support the medical

obligations to retirees and beneficiaries. Thus, the

qualified pension plan and retiree medical plan seek to

achieve a level of investment return consistent with

changes in projected benefit obligations.

Qualified pension plan assets primarily consist of fixed

income securities which include U.S. treasuries, corporate

bonds of companies from diversified industries, municipal

bonds, and foreign bonds. Fixed income investments

generally have long durations consistent with the

estimated pension liabilities of FHN. This duration-

matching strategy is intended to hedge substantially all of

the plan’s risk associated with future benefit payments.

Retiree medical funds are kept in short-term investments,

primarily money market funds and mutual funds. On

December 31, 2024 and 2023, FHN did not have any

significant concentrations of risk within the plan assets

related to the pension plan or the retiree medical plan.

The fair value of FHN’s pension plan assets at

December 31, 2024 and 2023, by asset category classified

using the fair value measurement hierarchy, is shown in

the table below. See Note 23 – Fair Value of Assets and

Liabilities for more details about fair value measurements.

   

	171	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 17—RETIREMENT PLANS & OTHER EMPLOYEE BENEFITS

Table 8.17.9

FAIR VALUE OF PENSION ASSETS

(Dollars in millions)		December 31, 2024
		Level 1		Level 2		Level 3		Total
Cash equivalents and money market funds		$11		$—		$—		$11
Fixed income securities:
U.S. treasuries		—		8		—		8
Corporate, municipal and foreign bonds		—		295		—		295
Common and collective funds:
Fixed income		—		264		—		264
Total		$11		$567		$—		$578

(Dollars in millions)		December 31, 2023
		Level 1		Level 2		Level 3		Total
Cash equivalents and money market funds		$6		$—		$—		$6
Fixed income securities:
U.S. treasuries		—		9		—		9
Corporate, municipal and foreign bonds		—		317		—		317
Common and collective funds:
Fixed income		—		306		—		306
Total		$6		$632		$—		$638

The HR Investment and Risk Committee, comprised of

senior managers within the organization, meets regularly

to review asset performance and potential portfolio

revisions.

Adjustments to the qualified pension plan asset allocation

primarily reflect changes in anticipated liquidity needs for

plan benefits.

The fair value of FHN’s retiree medical plan assets at

December 31, 2024 and 2023 by asset category is as

follows.

Table 8.17.10

FAIR VALUE OF RETIREE MEDICAL PLAN ASSETS

(Dollars in millions)		December 31, 2024
		Level 1		Level 2		Level 3		Total
Mutual funds:
Equity mutual funds		$8		$—		$—		$8
Fixed income mutual funds		16		—		—		16
Total		$24		$—		$—		$24

(Dollars in millions)		December 31, 2023
		Level 1		Level 2		Level 3		Total
Mutual funds:
Equity mutual funds		$7		$—		$—		$7
Fixed income mutual funds		16		—		—		16
Total		$23		$—		$—		$23

   

	172	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 18—STOCK OPTIONS AND RESTRICTED STOCK

Note 18—Stock Options and Restricted Stock

Equity Compensation Plans

FHN currently has one plan which authorizes the grant of

new stock-based awards, the 2021 Incentive Plan (the IP).

New awards under the IP may be granted to any of FHN's

directors, officers, or associates. The IP was approved by

shareholders in April 2021 and again in April 2024.

The IP authorizes a broad range of award types, including

restricted shares, stock units, cash units, and stock

options. Stock units may be paid in shares or cash,

depending upon the terms of the award. The IP also

authorizes the grant of stock appreciation rights, though

no such grants have been made under the IP or recent

predecessor plans. Unvested awards have service and/or

performance conditions which must be met in order for

the shares to vest. Awards generally have service-vesting

conditions, meaning that the associate must remain

employed by FHN for certain periods in order for the

award to vest. Some outstanding awards also have

performance conditions. FHN operates the IP by

establishing award programs, each of which is intended to

cover a specific need. Programs are created, changed, or

terminated as needs change.

On December 31, 2024, there were 13,173,672 shares

available for new awards under the IP. This includes the

new/additional shares originally authorized under the IP

along with shares underlying ECP awards that have been

forfeited or canceled since the IP was approved by

shareholders, net of shares underlying IP awards that are

outstanding or have been paid.

Service condition full-value awards

Awards may be granted with service conditions only. In

recent years, programs using these awards have included

annual programs for executives and selected management

associates, a mandatory deferral program for executives

tied to annual bonuses earned, other mandatory or

elective deferral programs, various retention programs,

and special hiring-incentive situations. Details of the

awards vary by program, but most are settled in shares at

vesting rather than cash, and vesting generally begins no

earlier than the third anniversary of grant and rarely

extends beyond the fifth anniversary of grant.

Performance condition awards

Under FHN’s long-term incentive and corporate

performance programs, performance stock units ("PSUs")

(executives) and cash units (selected management

employees) are granted annually and vest only if

predetermined performance measures are met. The

measures are changed each year based on goals and

circumstances prevailing at the time of grant. In recent

years the performance periods have been three years,

with service-vesting near the third anniversary of the

grant. PSUs granted from 2014 to 2020 had a post-vest

holding period of two years. Recent annual performance

awards require pro-rated forfeiture (in relation to the

maximum possible) for performance falling between a

threshold level and a maximum. Performance awards

sometimes are used to provide a narrow, targeted

incentive to a single person or small group. Of the annual

program awards paid during 2024 or outstanding on

December 31, 2024: the 2019, 2020 and 2021 units vested

in 2022, 2023 and 2024 at the 187.5%, 187.5% and 162.5%

payout level, respectively, and only the 2020 units remain

in a two-year post-vesting holding period; the three-year

performance period of the 2022 units has ended but

performance is measured relative to peers and has not yet

been determined; and, the three-year performance

periods for the 2023 and 2024 units have not ended.

Director awards

Non-employee directors receive cash and annual grants of

service-conditioned stock units under a program approved

by the board of directors. Director stock units granted vest

in the year following the year of grant and settle in shares.

In 2024 and 2023, each director received a base stock unit

award of $140,000 and $122,000, respectively,

representing a portion of their annual retainer. Each

director is permitted to increase the portion paid as stock

units.

A summary of restricted and performance stock and unit

activity during the year ended December 31, 2024, is

presented below.

   

	173	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 18—STOCK OPTIONS AND RESTRICTED STOCK

Table 8.18.1

RESTRICTED AND PERFORMANCE EQUITY AWARD ACTIVITY

		Shares/ Units (a)		Weighted average grant date fair value (per share) (b)
January 1, 2024		11,317,704		$15.89
Shares/units granted		5,088,696		15.24
Shares/units vested/distributed		(4,110,142)		15.81
Shares/units canceled		(456,173)		13.90
December 31, 2024		11,840,085		$15.71

(a) Includes only units that settle in shares; nonvested performance units are included at 100% payout level.

(b) The weighted average grant date fair value for shares/units granted in 2023 and 2022 was $16.08 and $20.64, respectively.

On December 31, 2024, there was $90 million of

unrecognized compensation cost related to nonvested

restricted stock awards. That cost is expected to be

recognized over a weighted-average period of three years.

The total grant date fair value of shares vested during

2024, 2023 and 2022, was $65 million, $32 million, and

$29 million, respectively.

Stock option awards

In 2021 FHN ended its only remaining stock option

program, making only one grant related to a 2020

commitment. Options under that program, for executives,

have service-vesting requirements and seven-year terms.

In the past, option programs varied widely in their uses

and terms, and many old-program options, granted under

the ECP or its predecessor plans, remain outstanding

today. All options granted since 2005 provide for the

issuance of FHN common stock at a price fixed at its fair

market value on the grant date. Except for converted

options and a special retention stock option award to the

CEO in 2016, all options granted since 2008 vest fully no

later than the fourth anniversary of grant, and all such

options expire seven years from the grant date. CBF

converted options and IBKC converted options granted

prior to November 3, 2019 (the IBKC merger agreement

date) are fully vested and expire ten years from grant

date. IBKC converted options granted subsequent to the

merger agreement vest fully no later than the fifth

anniversary of the grant date and expire ten years from

grant date. The 2016 retention award vested on the fourth

through sixth anniversaries of grant and had a seven-year

term.

The summary of stock option activity for the year ended

December 31, 2024, is shown below.

Table 8.18.2

STOCK OPTION ACTIVITY

		Options Outstanding		Weighted Average Exercise Price (per share)		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value (millions)
January 1, 2024		1,898,968		$16.31
Options granted		—		—
Options exercised		(604,467)		15.52
Options expired/canceled		(335,879)		18.15
December 31, 2024		958,622		$16.16		2.38		$4
Options exercisable		883,705		16.24		2.23		3
Options expected to vest		74,917		15.20		4.07		—

The total intrinsic value of options exercised during 2024,

2023 and 2022 was $2 million, $4 million, and $17 million,

respectively.

On December 31, 2024, there was no unrecognized

compensation cost related to nonvested stock options.

FHN did not grant or convert stock options in 2024, 2023

and 2022.

Expected lives of options granted are determined based

on the vesting period, historical exercise patterns and

contractual term of the options. FHN uses a blend of

historical and implied volatility in determining expected

volatility. A portion of the weighted average volatility rate

is derived by compiling daily closing stock prices over a

historical period approximating the expected lives of the

options. Additionally, because of market volatility due to

   

	174	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 18—STOCK OPTIONS AND RESTRICTED STOCK

economic conditions and the impact on stock prices of

financial institutions, FHN also incorporates a measure of

implied volatility so as to incorporate more recent market

conditions in the estimation of future volatility.

Phantom stock awards

As a result of the IBKC merger, FHN assumed phantom

stock awards under various plans to officers and other key

associates. The awards are subject to a vesting period of

five years and are paid out in cash upon vesting. The

amount paid per vesting period is calculated as the

number of vested share equivalents multiplied by closing

market price of a share of the Company's common stock

on the vesting date. Share equivalents are calculated on

the date of grant as the total award's dollar value divided

by the closing market price of a share of the Company's

common stock on the grant date. As of December 31,

2024, there were 96,156 share equivalents of phantom

stock awards outstanding. See Note 1 - Significant

Accounting Policies for more discussion on FHN's phantom

stock awards.

Compensation Cost

The compensation cost that has been included in the

Consolidated Statements of Income pertaining to stock-

based awards was $59 million, $36 million, and $75

million for 2024, 2023, and 2022, respectively. The

corresponding total income tax benefits recognized were

$14 million, $8 million and $18 million in 2024, 2023, and

2022, respectively.

Authorization

Consistent with Tennessee state law, only authorized, but

unissued, stock may be utilized in connection with any

issuance of FHN common stock which may be required as

a result of stock-based compensation awards. Prior

authorizations to repurchase shares issued in connection

with compensation plans expired on December 31, 2023.

After 2023, as authorized by FHN's Board and the Board's

Compensation Committee, FHN continued to make

automatic stock purchases by withholding shares

associated with stock-based awards to cover tax

obligations associated with those awards. Those limited,

off-market purchases are not connected to a traditional,

announced purchase program. Automatic tax withholding

purchases are not subject to trading blackouts which

affect senior executives and the general purchase

program.

   

	175	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 19—BUSINESS SEGMENT INFORMATION

Note 19—Business Segment Information

During 2024, FHN reorganized its internal management

structure and, accordingly, reclassified its reportable

business segments. Prior to the 2024 reclassification, FHN's

reportable segments were: (1) Regional Banking, (2)

Specialty Banking, and (3) Corporate. As a result of the

2024 reclassification, FHN revised its reportable segments

as described below. Segment information for prior periods

has been reclassified to conform to the current period

presentation.

FHN's operating segments are composed of the following:

• Commercial, Consumer & Wealth segment offers

financial products and services, including traditional

lending and deposit taking, to commercial and

consumer clients primarily in the southern U.S. and

other selected markets. Commercial, Consumer &

Wealth also consists of lines of business that deliver

product offerings and services with niche industry

knowledge including asset-based lending, commercial

real estate, equipment finance/leasing, energy,

international banking, healthcare, and trucking and

transportation. Additionally, Commercial, Consumer &

Wealth provides investment, wealth management,

financial planning, trust and asset management

services for consumer clients as well as delivering

treasury management solutions, loan syndications,

and corporate banking services.

• Wholesale segment consists of lines of business that

deliver product offerings and services with

differentiated industry knowledge. Wholesale’s lines

of business include mortgage warehouse lending,

franchise finance, correspondent banking, and

mortgage. Additionally, Wholesale has a line of

business focused on fixed income securities sales,

trading, underwriting, and strategies for institutional

clients in the U.S. and abroad, as well as loan sales,

portfolio advisory services, and derivative sales.

• Corporate segment consists primarily of corporate

support functions including risk management, audit,

accounting, finance, executive office, and corporate

communications. Shared support services such as

human resources, marketing, properties, technology,

credit risk and bank operations are allocated to the

activities of Commercial, Consumer & Wealth,

Wholesale, and Corporate.  Additionally, the

Corporate segment includes centralized management

of capital and funding to support the business

activities of the company including management of

balance sheet funding, liquidity, and capital

management and allocation. The Corporate segment

also includes the revenue and expense associated with

run-off businesses such as pre-2009 mortgage banking

elements, run-off consumer and trust preferred loan

portfolios, and other exited businesses.

Basis of Presentation

Results of individual segments are presented based on

FHN's internal management reporting practices. There is

no comprehensive, authoritative body of guidance for

management accounting equivalent to GAAP; therefore,

the financial results of FHN's individual segments are not

necessarily comparable with similar information for any

other company.

Periodically, FHN adapts its segments to reflect managerial

or strategic changes. FHN may also modify its methodology

of allocating expenses and equity among segments which

could change historical segment results. Business segment

revenue, expense, asset, and equity levels reflect those

which are specifically identifiable, or which are allocated

based on an internal allocation method. Because the

allocations are based on internally developed assignments

and allocations, to an extent they are subjective. Generally,

all assignments and allocations have been consistently

applied for all periods presented.

Funds Transfer Pricing

Net interest income in segment results reflects FHN's

internal funds transfer pricing methodology which is

designed to consider interest rate and liquidity risks. Under

this methodology, assets receive a funding charge while

liabilities and capital receive a funding credit based on

market interest rates, product characteristics, and other

factors. 

The transfer pricing framework considers the application

of funding curves and methodologies consistently across

the balance sheet. A residual gain or loss from funds

transfer pricing operations is retained within Corporate.

Segment Allocations

Financial results are presented, to the extent practicable,

as if each segment operated on a standalone basis and

include expense allocations for corporate overhead

services used by the segments.

FHN has allocated the ALLL and the reserve for unfunded

lending commitments based on the loan exposures within

each segment’s portfolio.

The Company's Chief Operating Decision Maker ("CODM")

is comprised of the chief executive officer and segment

leadership.

For both the Commercial, Consumer & Wealth and

Wholesale segments, the CODM uses both Pre-Provision

Net Revenue ("PPNR") and Pre-Tax Net Income ("PTNI") to

evaluate performance and allocate resources. The

measure of PPNR focuses on the Company's primary

businesses principally by excluding the volatility associated

with credit risk estimates due to the CECL life-of-loan

estimation requirement, which is highly sensitive to

changes in economic forecasts. PPNR also represents a

   

	176	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 19—BUSINESS SEGMENT INFORMATION

metric utilized by regulatory agencies in stress testing

assessments. PTNI is used to incorporate credit risk

estimates for a holistic view of pre-tax results in the

evaluation of segment performance.

For the Corporate segment, the CODM uses after-tax

income to evaluate performance and allocate resources.

After-tax income is most relevant for the Corporate

segment because of minimal credit risk and inclusion of

the impacts from all consolidated tax matters, which are

not allocated, in addition to all other methodologies

affecting pre-tax income between reported segments (e.g.,

FTP and cost allocations).

The following table presents financial information for each

reportable business segment for the years ended

December 31.

Table 8.19.1

SEGMENT FINANCIAL INFORMATION

		2024
(Dollars in millions)		Commercial, Consumer & Wealth		Wholesale		Corporate		Consolidated
Interest income		$3,538		$530		$284		$4,352
Interest expense		1,413		125		303		1,841
Funds transfer pricing		418		(211)		(207)		—
Net interest income (expense)		2,543		194		(226)		2,511
Noninterest income (a)		461		230		(12)		679
Total revenues		3,004		424		(238)		3,190
Noninterest expense (c)(d)		1,417		299		319		2,035
Pre-provision net revenue (f)		1,587		125		(557)		1,155
Provision for credit losses		158		3		(11)		150
Income (loss) before income taxes		1,429		122		(546)		1,005
Income tax expense (benefit)		337		29		(155)		211
Net income (loss)		$1,092		$93		$(391)		$794
Average assets		$59,402		$8,209		$14,211		$81,822
Depreciation and amortization		37		7		57		101
Expenditures for long-lived assets		26		1		18		45

		2023
(Dollars in millions)		Commercial, Consumer & Wealth		Wholesale		Corporate		Consolidated
Interest income		$3,286		$478		$336		$4,100
Interest expense		1,115		100		345		1,560
Funds transfer pricing		523		(195)		(328)		—
Net interest income (expense)		2,694		183		(337)		2,540
Noninterest income (a)		448		174		305		927
Total revenues		3,142		357		(32)		3,467
Noninterest expense (b)(c)(d)		1,370		276		433		2,079
Pre-provision net revenue (f)		1,772		81		(465)		1,388
Provision for credit losses		260		15		(15)		260
Income (loss) before income taxes		1,512		66		(450)		1,128
Income tax expense (benefit) (e)		357		16		(161)		212
Net income (loss)		$1,155		$50		$(289)		$916
Average assets		$58,126		$7,583		$15,974		$81,683
Depreciation and amortization		34		7		61		102
Expenditures for long-lived assets		16		1		17		34

   

	177	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 19—BUSINESS SEGMENT INFORMATION

		2022
(Dollars in millions)		Commercial, Consumer & Wealth		Wholesale		Corporate		Consolidated
Interest income		$2,053		$339		$291		$2,683
Interest expense		156		47		88		291
Funds transfer pricing		368		(39)		(329)		—
Net interest income (expense)		2,265		253		(126)		2,392
Noninterest income (a)		477		259		79		815
Total revenues		2,742		512		(47)		3,207
Noninterest expense (b)(d)		1,309		344		300		1,953
Pre-provision net revenue (f)		1,433		168		(347)		1,254
Provision for credit losses		85		11		(1)		95
Income (loss) before income taxes		1,348		157		(346)		1,159
Income tax expense (benefit)		319		38		(110)		247
Net income (loss)		$1,029		$119		$(236)		$912
Average assets		$52,771		$9,172		$22,274		$84,217
Depreciation and amortization		(1)		6		80		85
Expenditures for long-lived assets		15		10		(1)		24

(a) 2024 includes a $91 million loss on securities following the restructuring of a portion of the AFS securities portfolio. 2023 includes a $225 million gain on

merger termination and a $6 million loss on equities valuation adjustments in the Corporate segment and a $9 million gain on an FHN Financial asset

disposition in the Wholesale segment. 2022 includes a $12 million gain on sale of mortgage servicing rights in the Wholesale segment and a $22 million

gain related to the sale of the title insurance business, a $10 million gain on equity securities and a $6 million gain related to a fintech investment in the

Corporate segment.

(b) 2023 includes $51 million in merger and integration expenses related to the TD Transaction in the Corporate Segment. 2022 includes $136 million in

merger and integration expenses related to the IBKC merger and TD Transaction in the Corporate segment.

(c) 2024 includes $14 million of restructuring costs and an FDIC special assessment of $9 million in the Corporate segment. 2023 includes $10 million of

restructuring costs, an FDIC special assessment of $68 million, and a $50 million contribution to the First Horizon Foundation in the Corporate segment.

(d) 2024, 2023, and 2022 include $15 million, $15 million and $22 million, respectively, in derivative valuation adjustments related to prior Visa Class B share

sales in the Corporate segment.

(e) 2023 includes $24 million in expense related to the surrender of bank-owned life insurance policies and a $59 million benefit from merger-related tax

items in the Corporate segment.

(f) Pre-provision net revenue is a non-GAAP measure and is reconciled to income (loss) before income taxes (GAAP) in this table.

   

	178	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 19—BUSINESS SEGMENT INFORMATION

The following table presents a disaggregation of FHN’s noninterest income by major product line and reportable segment for

the years ended December 31, 2024, 2023, and 2022.

Table 8.19.2

NONINTEREST INCOME DETAIL BY SEGMENT

		December 31, 2024
(Dollars in millions)		Commercial, Consumer & Wealth		Wholesale		Corporate		Consolidated
Noninterest income:
Fixed income (a)		$—		$187		$—		$187
Deposit transactions and cash management		163		4		9		176
Brokerage, management fees and commissions		101		—		—		101
Card and digital banking fees		67		—		10		77
Other service charges and fees		48		2		1		51
Trust services and investment management		48		—		—		48
Mortgage banking income		1		33		1		35
Securities gains (losses), net (b)		—		—		(89)		(89)
Other income (c)		33		4		56		93
Total noninterest income		$461		$230		$(12)		$679
		December 31, 2023
(Dollars in millions)		Commercial, Consumer & Wealth		Wholesale		Corporate		Consolidated
Noninterest income:
Fixed income (a)		$—		$134		$(1)		$133
Deposit transactions and cash management		165		4		10		179
Brokerage, management fees and commissions		90		—		—		90
Card and digital banking fees		67		—		10		77
Other service charges and fees		51		3		—		54
Trust services and investment management		47		—		—		47
Mortgage banking income		1		21		1		23
Gain on merger termination		—		—		225		225
Securities gains (losses), net (b)		—		—		(4)		(4)
Other income (c)		27		12		64		103
Total noninterest income		$448		$174		$305		$927

   

	179	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 19—BUSINESS SEGMENT INFORMATION

		December 31, 2022
(Dollars in millions)		Commercial, Consumer & Wealth		Wholesale		Corporate		Consolidated
Noninterest income:
Fixed income (a)		$—		$205		$—		$205
Deposit transactions and cash management		161		3		7		171
Brokerage, management fees and commissions		92		—		—		92
Card and digital banking fees		72		—		12		84
Other service charges and fees		49		3		2		54
Trust services and investment management		48		—		—		48
Mortgage banking income		22		46		—		68
Securities gains (losses), net (b)		—		—		18		18
Other income (c)		33		2		40		75
Total noninterest income		$477		$259		$79		$815

(a) 2024, 2023, and 2022 include $42 million, $42 million, and $43 million, respectively, of underwriting, portfolio advisory, and other noninterest income in scope of ASC 606,

"Revenue from Contracts with Customers."

(b) Represents noninterest income excluded from the scope of ASC 606. Amount is presented for informational purposes to reconcile total noninterest income.

(c) Includes letter of credit fees and insurance commissions in scope of ASC 606.

   

	180	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 19—BUSINESS SEGMENT INFORMATION

The following table presents a disaggregation of FHN’s noninterest expense by major product line and reportable segment for

the years ended December 31, 2024, 2023, and 2022.

Table 8.19.3

NONINTEREST EXPENSE DETAIL BY SEGMENT

	December 31, 2024
(Dollars in millions)		Commercial, Consumer & Wealth		Wholesale		Corporate		Consolidated
Noninterest expense:
Personnel expense		$540		$196		$401		$1,137
Net occupancy expense		76		9		45		130
Computer software		25		6		90		121
Operations services		18		22		54		94
Deposit insurance expense		—		—		64		64
Legal and professional fees		11		3		50		64
Contract employment and outsourcing		5		3		43		51
Advertising and public relations		7		1		40		48
Amortization of intangible assets		39		2		3		44
Equipment expense		11		2		29		42
Communications and delivery		10		3		19		32
Contributions		2		—		16		18
Other expense		75		22		93		190
Cost allocations		598		30		(628)		—
Total noninterest expense		$1,417		$299		$319		$2,035

	December 31, 2023
(Dollars in millions)		Commercial, Consumer & Wealth		Wholesale		Corporate		Consolidated
Noninterest expense:
Personnel expense		$526		$179		$395		$1,100
Net occupancy expense		72		9		42		123
Computer software		21		5		85		111
Operations services		20		25		42		87
Deposit insurance expense		—		—		122		122
Legal and professional fees		10		3		36		49
Contract employment and outsourcing		6		4		39		49
Advertising and public relations		7		1		63		71
Amortization of intangible assets		43		1		3		47
Equipment expense		13		1		28		42
Communications and delivery		10		5		20		35
Contributions		2		—		59		61
Other expense		71		20		91		182
Cost allocations		569		23		(592)		—
Total noninterest expense		$1,370		$276		$433		$2,079

   

	181	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 19—BUSINESS SEGMENT INFORMATION

	December 31, 2022
(Dollars in millions)		Commercial, Consumer & Wealth		Wholesale		Corporate		Consolidated
Noninterest expense:
Personnel expense		$516		$240		$345		$1,101
Net occupancy expense		72		11		45		128
Computer software		27		4		82		113
Operations services		21		22		44		87
Deposit insurance expense		—		—		32		32
Legal and professional fees		11		3		48		62
Contract employment and outsourcing		6		5		43		54
Advertising and public relations		6		1		43		50
Amortization of intangible assets		46		2		3		51
Equipment expense		14		1		30		45
Communications and delivery		9		6		22		37
Contributions		2		—		5		7
Other expense		68		29		89		186
Cost allocations		511		20		(531)		—
Total noninterest expense		$1,309		$344		$300		$1,953

   

	182	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 20—VARIABLE INTEREST ENTITIES

Note 20—Variable Interest Entities

FHN makes equity investments in various entities that are

considered VIEs, as defined by GAAP. A VIE typically does

not have sufficient equity at risk to finance its activities

without additional subordinated financial support from

other parties. The Company’s variable interest arises from

contractual, ownership or other monetary interests in the

entity, which change with fluctuations in the fair value of

the entity's net assets. FHN consolidates a VIE if FHN is the

primary beneficiary of the entity. FHN is the primary

beneficiary of a VIE if FHN's variable interest provides it

with the power to direct the activities that most

significantly impact the VIE and the right to receive

benefits (or the obligation to absorb losses) that could

potentially be significant to the VIE. To determine whether

or not a variable interest held could potentially be

significant to the VIE, FHN considers both qualitative and

quantitative factors regarding the nature, size and form of

its involvement with the VIE. FHN assesses whether or not

it is the primary beneficiary of a VIE on an ongoing basis.

Consolidated Variable Interest Entities

FHN has established certain rabbi trusts related to

deferred compensation plans offered to its employees.

FHN contributes employee cash compensation deferrals to

the trusts and directs the underlying investments made by

the trusts. The assets of these trusts are available to FHN’s

creditors only in the event that FHN becomes insolvent.

These trusts are considered VIEs as there is no equity at

risk in the trusts since FHN provided the equity interest to

its employees in exchange for services rendered. FHN is

considered the primary beneficiary of the rabbi trusts as it

has the power to direct the activities that most

significantly impact the economic performance of the

rabbi trusts through its ability to direct the underlying

investments made by the trusts. Additionally, FHN could

potentially receive benefits or absorb losses that are

significant to the trusts due to its right to receive any asset

values in excess of liability payoffs and its obligation to

fund any liabilities to employees that are in excess of a

rabbi trust’s assets.

The following table summarizes the carrying value of

assets and liabilities associated with rabbi trusts used for

deferred compensation plans which are consolidated by

FHN as of December 31, 2024 and 2023.

Table 8.20.1

CONSOLIDATED VIEs

(Dollars in millions)		December 31, 2024		December 31, 2023
Assets:
Other assets		$195		$177
Liabilities:
Other liabilities		$165		$150

Nonconsolidated Variable Interest Entities

Tax Credit Investments

Through designated wholly-owned subsidiaries, First

Horizon Bank makes equity investments as a limited

partner in various partnerships that sponsor affordable

housing projects utilizing the LIHTC. Through designated

subsidiaries, First Horizon Bank periodically makes equity

investments as a non-managing member in various LLCs

that sponsor community development projects utilizing

the NMTC. First Horizon Bank also makes equity

investments as a limited partner or non-managing

member in entities that receive historic tax credits. The

purpose of these investments is to achieve a satisfactory

return on capital and to support FHN’s community

reinvestment initiatives. These entities are considered

VIEs as First Horizon Bank's subsidiaries represent the

holders of the equity investment at risk, but do not have

the ability to direct the activities that most significantly

affect the performance of the entities. FHN is therefore

not the primary beneficiary of any of these entities.

Accordingly, FHN does not consolidate these VIEs and

accounts for these investments in other assets on the

Consolidated Balance Sheets.

FHN accounts for qualifying LIHTC investments under the

PAM. Effective for periods after 2023, all LIHTC

investments qualify for the PAM. Commencing in 2024,

FHN determined that its equity investments in NMTC and

historic tax credit entities qualify for the PAM and made

the election to apply the PAM for these programs.

Expenses associated with non-qualifying LIHTC

investments were not significant for 2023 and 2022.

The following table summarizes the impact to income tax

expense on the Consolidated Statements of Income for

the years ended December 31, 2024, 2023, and 2022 for

investments accounted for under the PAM. The impact of

these investments is included in other operating activities,

net in the Consolidated Statements of Cash Flows.

Table 8.20.2

TAX CREDIT IMPACTS ON TAX EXPENSE

(Dollars in millions)		2024		2023		2022
Income tax expense (benefit):
Amortization of qualifying investments		$65		$54		$44
Tax credits		(70)		(55)		(48)
Other tax benefits related to qualifying investments		(9)		(13)		(12)

Small Issuer Trust Preferred Holdings

First Horizon Bank holds variable interests in trusts which

have issued mandatorily redeemable preferred capital

securities (“trust preferreds”) for smaller banking and

insurance enterprises. First Horizon Bank has no voting

rights for the trusts’ activities. The trusts’ only assets are

   

	183	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 20—VARIABLE INTEREST ENTITIES

junior subordinated debentures of the issuing enterprises.

The creditors of the trusts hold no recourse to the assets

of First Horizon Bank. Since First Horizon Bank is solely a

holder of the trusts’ securities, it has no rights which

would give it the power to direct the activities that most

significantly impact the trusts’ economic performance and

thus it is not considered the primary beneficiary of the

trusts. First Horizon Bank has no contractual requirements

to provide financial support to the trusts.

On-Balance Sheet Trust Preferred Securitization

In 2007, First Horizon Bank executed a securitization of

certain small issuer trust preferreds for which the

underlying trust meets the definition of a VIE, as the

holders of the equity investment at risk do not have the

power through voting rights, or similar rights, to direct the

activities that most significantly impact the entity’s

economic performance. Since First Horizon Bank did not

retain servicing or other decision-making rights, First

Horizon Bank is not the primary beneficiary as it does not

have the power to direct the activities that most

significantly impact the trust’s economic performance.

Accordingly, First Horizon Bank has accounted for the

funds received through the securitization as a term

borrowing in its Consolidated Balance Sheets. First

Horizon Bank has no contractual requirements to provide

financial support to the trust.

Holdings in Agency Mortgage-Backed Securities

FHN holds securities issued by various Agency

securitization trusts. Based on their restrictive nature, the

trusts meet the definition of a VIE since the holders of the

equity investments at risk do not have the power through

voting rights, or similar rights, to direct the activities that

most significantly impact the entities’ economic

performance. FHN could potentially receive benefits or

absorb losses that are significant to the trusts based on

the nature of the trusts’ activities and the size of FHN’s

holdings. However, FHN is solely a holder of the trusts’

securities and does not have the power to direct the

activities that most significantly impact the trusts’

economic performance and is not considered the primary

beneficiary of the trusts. FHN has no contractual

requirements to provide financial support to the trusts.

Commercial Loan Modifications to Borrowers

Experiencing Financial Difficulty

For certain troubled commercial loans, First Horizon Bank

modifies the terms of the borrower’s debt in an effort to

increase the probability of receipt of amounts

contractually due. Following a modification to borrowers

experiencing financial difficulty, the borrower entity

typically meets the definition of a VIE as the initial

determination of whether an entity is a VIE must be

reconsidered as events have proven that the entity’s

equity is not sufficient to permit it to finance its activities

without additional subordinated financial support or a

restructuring of the terms of its financing. As First Horizon

Bank does not have the power to direct the activities that

most significantly impact such troubled commercial

borrowers’ operations, it is not considered the primary

beneficiary even in situations where, based on the size of

the financing provided, First Horizon Bank is exposed to

potentially significant benefits and losses of the borrowing

entity. First Horizon Bank has no contractual requirements

to provide financial support to the borrowing entities

beyond certain funding commitments established upon

restructuring of the terms of the debt that allows for

preparation of the underlying collateral for sale.

Proprietary Trust Preferred Issuances

In conjunction with its acquisitions, FHN acquired junior

subordinated debt underlying multiple issuances of trust

preferred debt. All of the trusts are considered VIEs

because the ownership interests from the capital

contributions to these trusts are not considered “at risk”

in evaluating whether the holders of the equity

investments at risk in the trusts have the ability to direct

the activities that most significantly impact the entities’

economic performance. Thus, FHN cannot be the trusts’

primary beneficiary because its ownership interests in the

trusts are not considered variable interests as they are not

considered “at risk”. Consequently, none of the trusts are

consolidated by FHN.

The following tables summarize FHN’s nonconsolidated

VIEs as of December 31, 2024 and 2023.

   

	184	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 20—VARIABLE INTEREST ENTITIES

Table 8.20.3

NONCONSOLIDATED VIEs AT DECEMBER 31, 2024

(Dollars in millions)		Maximum Loss Exposure		Liability Recognized		Classification
Type:
Low income housing partnerships		$617		$222		(a)
Other tax credit investments (b)		90		73		Other assets
Small issuer trust preferred holdings (c)		171		—		Loans and leases
On-balance sheet trust preferred securitization		26		88		(d)
Holdings of agency mortgage-backed securities (c)		8,017		—		(e)
Commercial loan modifications to borrowers experiencing financial difficulty (f)		381		—		Loans and leases
Proprietary trust preferred issuances (g)		—		167		Term borrowings

(a)Maximum loss exposure represents $395 million of current investments and $222 million of accrued contractual funding commitments. Accrued funding

commitments represent unconditional contractual obligations for future funding events and are recognized in other liabilities. FHN currently expects to

be required to fund substantially all of these accrued commitments by the end of 2026.

(b)Maximum loss exposure represents the value of current investments.

(c)Maximum loss exposure represents the value of current investments. A liability is not recognized as FHN is solely a holder of the trusts’ securities.

(d)Includes $113 million classified as loans and leases and $2 million classified as trading securities, which are offset by $88 million classified as term

borrowings.

(e)Includes $278 million classified as trading securities, $1.3 billion classified as securities held to maturity, and $6.5 billion classified as securities available

for sale.

(f)Maximum loss exposure represents $381 million of current receivables with no additional contractual funding commitments on loans related to

commercial loan modifications to borrowers experiencing financial difficulty.

(g)No exposure to loss due to nature of FHN's involvement.

Table 8.20.4

NONCONSOLIDATED VIEs AT DECEMBER 31, 2023

(Dollars in millions)		Maximum Loss Exposure		Liability Recognized		Classification
Type:
Low income housing partnerships		$587		$223		(a)
Other tax credit investments (b)		79		64		Other assets
Small issuer trust preferred holdings (c)		173		—		Loans and leases
On-balance sheet trust preferred securitization		26		88		(d)
Holdings of agency mortgage-backed securities (c)		8,402		—		(e)
Commercial loan modifications to borrowers experiencing financial difficulty (f)		129		—		Loans and leases
Proprietary trust preferred issuances (g)		—		167		Term borrowings

(a) Maximum loss exposure represents $364 million of current investments and $223 million of accrued contractual funding commitments. Accrued funding

commitments represent unconditional contractual obligations for future funding events and are recognized in other liabilities. FHN currently expects to

be required to fund substantially all of these accrued commitments by the end of 2026.

(b) Maximum loss exposure represents the value of current investments.

(c) Maximum loss exposure represents the value of current investments. A liability is not recognized as FHN is solely a holder of the trusts’ securities.

(d) Includes $113 million classified as loans and leases and $2 million classified as trading securities, which are offset by $88 million classified as term

borrowings.

(e) Includes $450 million classified as trading securities, $1.3 billion classified as securities held to maturity, and $6.6 billion classified as securities available

for sale.

(f) Maximum loss exposure represents $129 million of current receivables with no additional contractual funding commitments on loans related to

commercial loan modifications to borrowers experiencing financial difficulty.

(g) No exposure to loss due to nature of FHN's involvement.

   

	185	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 21—DERIVATIVES

Note 21—Derivatives

In the normal course of business, FHN utilizes various

financial instruments (including derivative contracts and

credit-related agreements) through its fixed income and

risk management operations, as part of its risk

management strategy and as a means to meet clients’

needs. Derivative instruments are subject to credit and

market risks in excess of the amount recorded on the

balance sheet as required by GAAP. The contractual or

notional amounts of these financial instruments do not

necessarily represent the amount of credit or market risk.

However, they can be used to measure the extent of

involvement in various types of financial instruments.

Controls and monitoring procedures for these instruments

have been established and are routinely reevaluated. The

ALCO controls, coordinates, and monitors the usage and

effectiveness of these financial instruments.

Credit risk represents the potential loss that may occur if a

party to a transaction fails to perform according to the

terms of the contract. The measure of credit exposure is

the replacement cost of contracts with a positive fair

value. FHN manages credit risk by entering into financial

instrument transactions through national exchanges,

primary dealers or approved counterparties, and by using

mutual margining and master netting agreements

whenever possible to limit potential exposure. FHN also

maintains collateral posting requirements with certain

counterparties to limit credit risk. Daily margin posted or

received with central clearinghouses is considered a legal

settlement of the related derivative contracts which

results in a net presentation for each contract in the

Consolidated Balance Sheets. Treatment of daily margin as

a settlement has no effect on hedge accounting or gains/

losses for the applicable derivative contracts. On

December 31, 2024 and 2023, respectively, FHN had $541

million and $406 million of cash receivables and $25

million and $33 million of cash payables related to

collateral posting under master netting arrangements,

inclusive of collateral posted related to contracts with

adjustable collateral posting thresholds and over-

collateralized positions, with derivative counterparties.

With exchange-traded contracts, the credit risk is limited

to the clearinghouse used. For non-exchange traded

instruments, credit risk may occur when there is a gain in

the fair value of the financial instrument and the

counterparty fails to perform according to the terms of

the contract and/or when the collateral proves to be of

insufficient value. See additional discussion regarding

master netting agreements and collateral posting

requirements later in this note under the heading “Master

Netting and Similar Agreements.” Market risk represents

the potential loss due to the decrease in the value of a

financial instrument caused primarily by changes in

interest rates or the prices of debt instruments. FHN

manages market risk by establishing and monitoring limits

on the types and degree of risk that may be undertaken.

FHN continually measures this risk through the use of

models that measure value-at-risk and earnings-at-risk.

Derivative Instruments

FHN enters into various derivative contracts both to

facilitate client transactions and as a risk management

tool. Where contracts have been created for clients, FHN

enters into upstream transactions with dealers to offset its

risk exposure. Contracts with dealers that require central

clearing are novated to a clearing agent who becomes

FHN’s counterparty. Derivatives are also used as a risk

management tool to hedge FHN’s exposure to changes in

interest rates or other defined market risks.

Forward contracts are over-the-counter contracts where

two parties agree to purchase and sell a specific quantity

of a financial instrument at a specified price, with delivery

or settlement at a specified date. Futures contracts are

exchange-traded contracts where two parties agree to

purchase and sell a specific quantity of a financial

instrument at a specified price, with delivery or settlement

at a specified date. Interest rate option contracts give the

purchaser the right, but not the obligation, to buy or sell a

specified quantity of a financial instrument, at a specified

price, during a specified period of time. Caps and floors

are options that are linked to a notional principal amount

and an underlying indexed interest rate. Interest rate

swaps involve the exchange of interest payments at

specified intervals between two parties without the

exchange of any underlying principal. Swaptions are

options on interest rate swaps that give the purchaser the

right, but not the obligation, to enter into an interest rate

swap agreement during a specified period of time.

Trading Activities

FHNF trades U.S. Treasury, U.S. Agency, government-

guaranteed loan, mortgage-backed, corporate and

municipal fixed income securities, and other securities for

distribution to clients. When these securities settle on a

delayed basis, they are considered forward contracts.

FHNF also enters into interest rate contracts, including

caps, swaps, and floors, for its clients. In addition, FHNF

enters into futures and option contracts to economically

hedge interest rate risk associated with a portion of its

securities inventory. These transactions are measured at

fair value, with changes in fair value recognized in

noninterest income. Related assets and liabilities are

recorded on the Consolidated Balance Sheets as derivative

assets and derivative liabilities within other assets and

other liabilities. The FHNF Risk Committee and the Credit

Risk Management Committee collaborate to mitigate

credit risk related to these transactions. Credit risk is

controlled through credit approvals, risk control limits,

and ongoing monitoring procedures. Total trading

revenues were $154 million, $97 million and $157 million

for the years ended December 31, 2024, 2023 and 2022,

respectively. Trading revenues are inclusive of both

   

	186	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 21—DERIVATIVES

derivative and non-derivative financial instruments and

are included in fixed income on the Consolidated

Statements of Income.

The following table summarizes derivatives associated

with FHNF's trading activities as of December 31, 2024

and 2023.

Table 8.21.1

DERIVATIVES ASSOCIATED WITH TRADING

		December 31, 2024
(Dollars in millions)		Notional		Assets		Liabilities
Customer interest rate contracts		$4,096		$8		$190
Offsetting upstream interest rate contracts		4,265		134		9
Forwards and futures purchased		1,421		1		6
Forwards and futures sold		1,426		7		—

		December 31, 2023
(Dollars in millions)		Notional		Assets		Liabilities
Customer interest rate contracts		$4,067		$22		$197
Offsetting upstream interest rate contracts		4,273		135		23
Forwards and futures purchased		777		9		—
Forwards and futures sold		912		—		9

Interest Rate Risk Management

FHN’s ALCO focuses on managing market risk by

controlling and limiting earnings volatility attributable to

changes in interest rates. Interest rate risk exists to the

extent that interest-earning assets and interest-bearing

liabilities have different maturity or repricing

characteristics. FHN uses derivatives, primarily swaps, that

are designed to moderate the impact on earnings as

interest rates change. Interest paid or received for swaps

utilized by FHN to hedge the fair value of long-term debt is

recognized as an adjustment of the interest expense of

the liabilities whose risk is being managed. FHN’s interest

rate risk management policy is to use derivatives to hedge

interest rate risk or market value of assets or liabilities,

not to speculate. In addition, FHN has entered into certain

interest rate swaps and caps as a part of a product

offering to commercial clients that includes customer

derivatives paired with upstream offsetting market

instruments that, when completed, are designed to

mitigate interest rate risk. These contracts do not qualify

for hedge accounting and are measured at fair value with

gains or losses included in current earnings in noninterest

expense on the Consolidated Statements of Income.

The following table summarizes FHN’s derivatives

associated with interest rate risk management activities as

of December 31, 2024 and 2023.

Table 8.21.2

DERIVATIVES ASSOCIATED WITH INTEREST RATE RISK MANAGEMENT

		December 31, 2024
(Dollars in millions)		Notional		Assets		Liabilities
Customer Interest Rate Contracts Hedging
Hedging Instruments and Hedged Items:
Customer interest rate contracts		$8,301		$10		$372
Offsetting upstream interest rate contracts		8,301		369		11

		December 31, 2023
(Dollars in millions)		Notional		Assets		Liabilities
Customer Interest Rate Contracts Hedging
Hedging Instruments and Hedged Items:
Customer interest rate contracts		$8,375		$21		$392
Offsetting upstream interest rate contracts		8,375		389		22

   

	187	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 21—DERIVATIVES

The following table summarizes gains (losses) on FHN’s derivatives associated with interest rate risk management activities for

the years ended December 31, 2024, 2023, and 2022.

Table 8.21.3

DERIVATIVE GAINS (LOSSES) ASSOCIATED WITH INTEREST RATE RISK MANAGEMENT

		Year Ended December 31,
		2024		2023		2022
(Dollars in millions)		Gains (Losses)		Gains (Losses)		Gains (Losses)
Customer Interest Rate Contracts Hedging
Hedging Instruments and Hedged Items:
Customer interest rate contracts (a)		$10		$195		$(744)
Offsetting upstream interest rate contracts (a)		(10)		(195)		744

(a) Gains (losses) included in other expense within the Consolidated Statements of Income.

Cash Flow Hedges

Prior to 2021, FHN entered into pay floating, receive fixed

interest rate swaps designed to manage its exposure to

the variability in cash flows related to interest payments

on debt instruments. The debt instruments primarily

consist of held-to-maturity commercial loans that have

variable interest payments that historically were based on

1-month LIBOR. In second quarter 2023, the remaining

hedge was revised to reference 1-month Term SOFR after

the cessation of LIBOR-based cash flows. This hedge

matured in first quarter 2024. In conjunction with the IBKC

merger, FHN acquired interest rate contracts (floors and

collars) which were re-designated as cash flow hedges.

The debt instruments associated with these hedges also

primarily consisted of held-to-maturity commercial loans

that had variable interest payments that were based on 1-

month LIBOR. The last hedge acquired in conjunction with

the IBKC merger matured in second quarter 2023.

In 2022, FHN entered into interest rate contracts (floors

and swaps) which have been designated as cash flow

hedges. These hedges reference 1-month Term SOFR and

FHN made certain elections under ASU 2020-04 to

facilitate qualification for hedge accounting during the

time that hedged items transitioned away from 1-month

LIBOR.

In a cash flow hedge, the entire change in the fair value of

the interest rate derivatives included in the assessment of

hedge effectiveness is initially recorded in OCI and is

subsequently reclassified from OCI to current period

earnings (interest income or interest expense) in the same

period that the hedged item affects earnings.

The following tables summarize FHN’s derivative activities

associated with cash flow hedges as of December 31, 2024

and 2023.

Table 8.21.4

DERIVATIVES ASSOCIATED WITH CASH FLOW HEDGES

		December 31, 2024
(Dollars in millions)		Notional		Assets		Liabilities
Cash Flow Hedges
Hedging Instruments:
Interest rate contracts		$5,000		$—		$67
Hedged Items:
Variability in cash flows related to debt instruments (primarily loans)		N/A		$5,000		N/A

		December 31, 2023
(Dollars in millions)		Notional		Assets		Liabilities
Cash Flow Hedges
Hedging Instruments:
Interest rate contracts		$5,200		$—		$32
Hedged Items:
Variability in cash flows related to debt instruments (primarily loans)		N/A		$5,200		N/A

   

	188	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 21—DERIVATIVES

The following table summarizes gains (losses) on FHN’s derivatives associated with cash flow hedges for the years ended

December 31, 2024, 2023, and 2022.

Table 8.21.5

DERIVATIVE GAINS (LOSSES) ASSOCIATED WITH CASH FLOW HEDGES

		Year Ended December 31,
		2024		2023		2022
(Dollars in millions)		Gains (Losses)		Gains (Losses)		Gains (Losses)
Cash Flow Hedges
Hedging Instruments:
Interest rate contracts (a)		$(19)		$45		$195
Gain (loss) recognized in other comprehensive income (loss)		49		52		15
Gain (loss) reclassified from AOCI into interest income		(14)		47		(129)

(a) Approximately $21 million of pre-tax losses are expected to be reclassified into earnings in the next twelve months.

Other Derivatives

FHN has mortgage banking operations that include the

origination and sale of loans into the secondary market. As

part of the origination of loans, FHN enters into interest

rate lock commitments with borrowers. Additionally, FHN

enters into forward sales contracts with buyers for

delivery of loans at a future date. Both of these contracts

qualify as freestanding derivatives and are recognized at

fair value through earnings. The notional and fair values of

these contracts are presented in the table below.

Table 8.21.6

DERIVATIVES ASSOCIATED WITH MORTGAGE BANKING HEDGES

		December 31, 2024
(Dollars in millions)		Notional		Assets		Liabilities
Mortgage Banking Hedges
Option contracts written		$51		$—		$—
Forward contracts written		100		1		—

		December 31, 2023
(Dollars in millions)		Notional		Assets		Liabilities
Mortgage Banking Hedges
Option contracts written		$55		$1		$—
Forward contracts written		93		—		1

The following table summarizes gains (losses) on FHN's derivatives associated with mortgage banking activities for the years

ended December 31, 2024 and 2023.

Table 8.21.7

DERIVATIVE GAINS (LOSSES) ASSOCIATED WITH MORTGAGE BANKING HEDGES

			Year Ended December 31,
			2024		2023		2022
(Dollars in millions)			Gains (Losses)		Gains (Losses)		Gains (Losses)
Mortgage Banking Hedges
Option contracts written			$1		$—		$3
Forward contracts written			(2)		1		32

In conjunction with pre-2020 sales of Visa Class B shares,

FHN entered into derivative transactions whereby FHN

will make or receive cash payments whenever the

conversion ratio of the Visa Class B shares into Visa Class A

shares is adjusted. As of December 31, 2024 and 2023, the

derivative liabilities associated with the sales of Visa Class

B shares were $15 million and $23 million, respectively.

For each of the years ended December 31, 2024 and 2023,

FHN recognized $15 million in derivative valuation

adjustments related to prior sales of Visa Class B shares.

See Note 23 - Fair Value of Assets and Liabilities for

   

	189	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 21—DERIVATIVES

discussion of the valuation inputs and processes for these

Visa-related derivatives.

FHN utilizes cross-currency swaps and cross-currency

interest rate swaps to economically hedge its exposure to

foreign currency risk and interest rate risk associated with

non-U.S. dollar denominated loans. As of December 31,

2024 and 2023, these loans were valued at $16 million

and $17 million, respectively. The balance sheet amount

and the gains/losses associated with these derivatives

were not significant.

Related to its loan participation/syndication activities, FHN

enters into risk participation agreements, under which it

assumes exposure for, or receives indemnification for,

borrowers’ performance on underlying interest rate

derivative contracts. FHN’s counterparties in these

contracts are other lending institutions involved in the

loan participation/syndication arrangements for which the

underlying interest rate derivative contract is intended to

hedge interest rate risk for the borrower. FHN will make

(other institution is the lead bank) or receive (FHN is the

lead bank) payments for risk participations if the borrower

defaults on its obligation to perform under the terms of its

interest rate derivative agreement with the lead bank in

the participation.

As of December 31, 2024 and 2023, the notional values of

FHN’s risk participations were $268 million and $351

million of derivative assets and $916 million and $874

million of derivative liabilities, respectively. The notional

value for risk participation/syndication agreements is

consistent with the percentage of participation in the

lending arrangement. FHN’s maximum exposure or

benefit in the risk participation agreements is contingent

on the fair value of the underlying interest rate derivative

contracts for which the borrower is in a liability position at

the time of default. FHN monitors the credit risk

associated with the borrowers to which the risk

participations relate through the same credit risk

assessment process utilized for establishing credit loss

estimates for its loan portfolio. These credit risk estimates

are included in the determination of fair value for the risk

participations. Assuming all underlying third-party

customers referenced in the swap contracts defaulted at

December 31, 2024 and 2023, the exposure from these

agreements would not be material based on the fair value

of the underlying swaps.

Master Netting and Similar Agreements

FHN uses master netting agreements, mutual margining

agreements and collateral posting requirements to

minimize credit risk on derivative contracts. Master

netting and similar agreements are used when

counterparties have multiple derivatives contracts that

allow for a “right of setoff,” meaning that a counterparty

may net offsetting positions and collateral with the same

counterparty under the contract to determine a net

receivable or payable. The following discussion provides

an overview of these arrangements which may vary due to

the derivative type and market in which a derivative

transaction is executed.

Interest rate derivatives are subject to agreements

consistent with standard agreement forms of the ISDA.

Currently, all interest rate derivative contracts are entered

into as over-the-counter transactions and collateral

posting requirements are based on the net asset or

liability position with each respective counterparty. For

contracts that require central clearing, novation to a

counterparty with access to a clearinghouse occurs and

initial margin is posted.

Cash margin received (posted) that is considered

settlements for the derivative contracts is included in the

respective derivative asset (liability) value. Cash margin

that is considered collateral received (posted) for interest

rate derivatives is recognized as a liability (asset) on FHN’s

Consolidated Balance Sheets.

Interest rate derivatives with clients that are smaller

financial institutions typically require posting of collateral

by the counterparty to FHN. This collateral is subject to a

threshold with daily adjustments based upon changes in

the level or fair value of the derivative position. Positions

and related collateral can be netted in the event of

default. Collateral pledged by a counterparty is typically

cash or securities. The securities pledged as collateral are

not recognized within FHN’s Consolidated Balance Sheets.

Interest rate derivatives associated with lending

arrangements share the collateral with the related loan(s).

The derivative and loan positions may be netted in the

event of default. For disclosure purposes, the entire

collateral amount is allocated to the loan.

Interest rate derivatives with larger financial institutions

typically contain provisions whereby the collateral posting

thresholds under the agreements adjust based on the

credit ratings of both counterparties. If the credit rating of

FHN and/or First Horizon Bank is lowered, FHN could be

required to post additional collateral with the

counterparties. Conversely, if the credit rating of FHN and/

or First Horizon Bank is increased, FHN could have

collateral released and be required to post less collateral

in the future. Also, if a counterparty’s credit ratings were

to decrease, FHN and/or First Horizon Bank could require

the posting of additional collateral; whereas if a

counterparty’s credit ratings were to increase, the

counterparty could require the release of excess

collateral. Collateral for these arrangements is adjusted

daily based on changes in the net fair value position with

each counterparty.

The net fair value, determined by individual counterparty,

of all derivative instruments with adjustable collateral

posting thresholds was $5 million of assets and $187

million of liabilities on December 31, 2024, and $12 million

of assets and $188 million of liabilities on December 31,

2023. As of December 31, 2024 and 2023, FHN had

   

	190	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 21—DERIVATIVES

received collateral of $82 million and $95 million and

posted collateral of $96 million and $83 million,

respectively, in the normal course of business related to

these agreements.

Certain agreements also contain accelerated termination

provisions, inclusive of the right of offset, if a

counterparty’s credit rating falls below a specified level. If

a counterparty’s debt rating (including FHN’s and First

Horizon Bank's) were to fall below these minimums, these

provisions would be triggered, and the counterparties

could terminate the agreements and require immediate

settlement of all derivative contracts under the

agreements. The net fair value, determined by individual

counterparty, of all interest rate derivative instruments

with credit-risk-related contingent accelerated

termination provisions was $6 million of assets and $187

million of liabilities on December 31, 2024, and $12 million

of assets and $188 million of liabilities on December 31,

2023. As of December 31, 2024 and 2023, FHN had

received collateral of $82 million and $95 million and

posted collateral of $96 million and $83 million,

respectively, in the normal course of business related to

these contracts.

FHNF buys and sells various types of securities for its

clients. When these securities settle on a delayed basis,

they are considered forward contracts. For futures and

options, FHN transacts through a third party, and the

transactions are subject to margin and collateral

maintenance requirements. In the event of default, open

positions can be offset along with the associated

collateral.

For this disclosure, FHN considers the impact of master

netting and other similar agreements which allow FHN to

settle all contracts with a single counterparty on a net

basis and to offset the net derivative asset or liability

position with the related securities and cash collateral.

The application of the collateral cannot reduce the net

derivative asset or liability position below zero, and

therefore any excess collateral is not reflected in the

following tables.

The following table provides details of derivative assets

and collateral received as presented on the Consolidated

Balance Sheets as of December 31, 2024 and 2023.

Table 8.21.8

DERIVATIVE ASSETS & COLLATERAL RECEIVED

								Gross amounts not offset in  the Balance Sheets
(Dollars in millions)		Gross amounts of recognized assets		Gross amounts offset in the Balance Sheets		Net amounts of assets presented in the Balance Sheets (a)		Derivative liabilities available for offset		Collateral received		Net amount
Derivative assets:
December 31, 2024
Interest rate derivative contracts		$522		$—		$522		$(73)		$(436)		$13
Forward contracts		8		—		8		(3)		(4)		1
		$530		$—		$530		$(76)		$(440)		$14
December 31, 2023
Interest rate derivative contracts		$567		$—		$567		$(75)		$(486)		$6
Forward contracts		9		—		9		(4)		(3)		2
		$576		$—		$576		$(79)		$(489)		$8

(a) Included in other assets on the Consolidated Balance Sheets. As of December 31, 2024 and 2023, $2 million and $1 million, respectively, of derivative

assets have been excluded from these tables because they are generally not subject to master netting or similar agreements.

   

	191	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 21—DERIVATIVES

The following table provides details of derivative liabilities and collateral pledged as presented on the Consolidated Balance

Sheets as of December 31, 2024 and 2023.

Table 8.21.9

DERIVATIVE LIABILITIES & COLLATERAL PLEDGED

								Gross amounts not offset  in the Balance Sheets
(Dollars in millions)		Gross amounts of recognized liabilities		Gross  amounts offset in the Balance Sheets		Net amounts of liabilities presented in the Balance Sheets (a)		Derivative assets available for offset		Collateral pledged		Net amount
Derivative liabilities:
December 31, 2024
Interest rate derivative contracts		$649		$—		$649		$(73)		$(168)		$408
Forward contracts		6		—		6		(3)		(1)		2
		$655		$—		$655		$(76)		$(169)		$410
December 31, 2023
Interest rate derivative contracts		$666		$—		$666		$(75)		$(164)		$427
Forward contracts		9		—		9		(4)		(5)		—
		$675		$—		$675		$(79)		$(169)		$427

(a) Included in other liabilities on the Consolidated Balance Sheets. As of December 31, 2024 and 2023, $16 million and $24 million, respectively, of

derivative liabilities (primarily Visa-related derivatives) have been excluded from these tables because they are generally not subject to master netting or

similar agreements.

   

	192	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 22—MASTER NETTING & SIMILAR AGREEMENTS

Note 22—Master Netting and Similar Agreements – Repurchase, Reverse

Repurchase, and Securities Borrowing Transactions

For repurchase, reverse repurchase and securities

borrowing transactions, FHN and each counterparty have

the ability to offset all open positions and related

collateral in the event of default. Due to the nature of

these transactions, the value of the collateral for each

transaction approximates the value of the corresponding

receivable or payable. For repurchase agreements through

FHN’s fixed income business (securities purchased under

agreements to resell and securities sold under agreements

to repurchase), transactions are collateralized by

securities and/or government guaranteed loans which are

delivered on the settlement date and are maintained

throughout the term of the transaction. For FHN’s

repurchase agreements through banking activities

(securities sold under agreements to repurchase),

securities are typically pledged at settlement and not

released until maturity. For asset positions, the collateral

is not included on FHN’s Consolidated Balance Sheets. For

liability positions, securities collateral pledged by FHN is

generally represented within FHN’s trading or available-

for-sale securities portfolios.

For this disclosure, FHN considers the impact of master

netting and other similar agreements that allow FHN to

settle all contracts with a single counterparty on a net

basis and to offset the net asset or liability position with

the related securities collateral. The application of the

collateral cannot reduce the net asset or liability position

below zero, and therefore any excess collateral is not

reflected in the tables below.

Securities purchased under agreements to resell is

included in federal funds sold and securities purchased

under agreements to resell in the Consolidated Balance

Sheets. Securities sold under agreements to repurchase is

included in short-term borrowings.

The following table provides details of securities

purchased under agreements to resell and collateral

pledged by counterparties as of December 31, 2024 and

2023.

Table 8.22.1

SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL

								Gross amounts not offset in the Balance Sheets
(Dollars in millions)		Gross amounts of recognized assets		Gross amounts offset in the Balance Sheets		Net amounts of assets presented in the Balance Sheets		Offsetting securities sold under agreements to repurchase		Securities collateral (not recognized on FHN’s Balance Sheets)		Net amount
Securities purchased under agreements to resell:
2024		$572		$—		$572		$—		$(567)		$5
2023		519		—		519		—		(516)		3

The following table provides details of securities sold under agreements to repurchase and collateral pledged by FHN as of

December 31, 2024 and 2023.

Table 8.22.2

SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

								Gross amounts not offset in the Balance Sheets
(Dollars in millions)		Gross amounts of recognized liabilities		Gross amounts offset in the Balance Sheets		Net amounts of liabilities presented in the Balance Sheets		Offsetting securities purchased under agreements to resell		Securities/ government guaranteed loans collateral		Net amount
Securities sold under agreements to repurchase:
2024		$2,096		$—		$2,096		$—		$(2,096)		$—
2023		1,921		—		1,921		—		(1,921)		—

Due to the short duration of securities sold under agreements to repurchase and the nature of collateral involved, the risks

associated with these transactions are considered minimal.

   

	193	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 22—MASTER NETTING & SIMILAR AGREEMENTS

The following table provides details, by collateral type, of the remaining contractual maturity of securities sold under

agreements to repurchase as of December 31, 2024 and 2023.

Table 8.22.3

MATURITIES OF SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

	December 31, 2024
(Dollars in millions)	Overnight and Continuous		Up to 30 Days		Total
Securities sold under agreements to repurchase:
Government agency issued MBS	$1,535		$—		$1,535
Government agency issued CMO	561		—		561
Total securities sold under agreements to repurchase	$2,096		$—		$2,096
	December 31, 2023
(Dollars in millions)	Overnight and Continuous		Up to 30 Days		Total
Securities sold under agreements to repurchase:
Government agency issued MBS	$1,717		$—		$1,717
Government agency issued CMO	161		—		161
Other U.S. government agencies	43		—		43
Total securities sold under agreements to repurchase	$1,921		$—		$1,921

   

	194	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 23—FAIR VALUE OF ASSETS AND LIABILITIES

Note 23—Fair Value of Assets and Liabilities

FHN groups its assets and liabilities measured at fair value

in three levels, based on the markets in which the assets

and liabilities are traded and the reliability of the

assumptions used to determine fair value. This hierarchy

requires FHN to maximize the use of observable market

data, when available, and to minimize the use of

unobservable inputs when determining fair value. Each

fair value measurement is placed into the proper level

based on the lowest level of significant input. These levels

are:

• Level 1—Valuation is based upon quoted prices for

identical instruments traded in active markets.

• Level 2—Valuation is based upon quoted prices for

similar instruments in active markets, quoted prices

for identical or similar instruments in markets that are

not active, and model-based valuation techniques for

which all significant assumptions are observable in

the market.

• Level 3—Valuation is generated from model-based

techniques that use significant assumptions not

observable in the market. These unobservable

assumptions reflect management’s estimates of

assumptions that market participants would use in

pricing the asset or liability. Valuation techniques

include the use of option pricing models, discounted

cash flow models, and similar techniques.

   

	195	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 23—FAIR VALUE OF ASSETS AND LIABILITIES

Recurring Fair Value Measurements

The following table presents the balances of assets and liabilities measured at fair value on a recurring basis as of

December 31, 2024 and 2023.

Table 8.23.1

BALANCES OF ASSETS & LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS

		December 31, 2024
(Dollars in millions)		Level 1		Level 2		Level 3		Total
Trading securities:
U.S. treasuries		$—		$3		$—		$3
Government agency issued MBS		—		98		—		98
Government agency issued CMO		—		180		—		180
Other U.S. government agencies		—		252		—		252
States and municipalities		—		64		—		64
Corporate and other debt		—		767		—		767
SBA interest-only strips		—		—		23		23
Total trading securities		—		1,364		23		1,387
Loans held for sale (elected fair value)		—		69		16		85
Securities available for sale:
Government agency issued MBS		—		3,702		—		3,702
Government agency issued CMO		—		2,767		—		2,767
Other U.S. government agencies		—		1,073		—		1,073
States and municipalities		—		354		—		354
Total securities available for sale		—		7,896		—		7,896
Other assets:
Deferred compensation mutual funds		111		—		—		111
Equity, mutual funds, and other		35		—		—		35
Derivatives, forwards and futures		8		—		—		8
Derivatives, interest rate contracts		—		522		—		522
Derivatives, other		—		1		—		1
Total other assets		154		523		—		677
Total assets		$154		$9,852		$39		$10,045
Trading liabilities:
U.S. treasuries		$—		$440		$—		$440
Other U.S. government agencies		—		7		—		7
Corporate and other debt		—		103		—		103
Total trading liabilities		—		550		—		550
Other liabilities:
Derivatives, forwards and futures		6		—		—		6
Derivatives, interest rate contracts		—		649		—		649
Derivatives, other		—		1		15		16
Total other liabilities		6		650		15		671
Total liabilities		$6		$1,200		$15		$1,221

   

	196	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 23—FAIR VALUE OF ASSETS AND LIABILITIES

		December 31, 2023
(Dollars in millions)		Level 1		Level 2		Level 3		Total
Trading securities:
U.S. treasuries		$—		$3		$—		$3
Government agency issued MBS		—		114		—		114
Government agency issued CMO		—		336		—		336
Other U.S. government agencies		—		152		—		152
States and municipalities		—		17		—		17
Corporate and other debt		—		777		—		777
SBA interest-only strips		—		—		13		13
Total trading securities		—		1,399		13		1,412
Loans held for sale (elected fair value)		—		42		26		68
Securities available for sale:
Government agency issued MBS		—		4,484		—		4,484
Government agency issued CMO		—		2,146		—		2,146
Other U.S. government agencies		—		1,172		—		1,172
States and municipalities		—		589		—		589
Total securities available for sale		—		8,391		—		8,391
Other assets:
Deferred compensation mutual funds		102		—		—		102
Equity, mutual funds, and other		34		—		—		34
Derivatives, forwards and futures		9		—		—		9
Derivatives, interest rate contracts		—		568		—		568
Total other assets		145		568		—		713
Total assets		$145		$10,400		$39		$10,584
Trading liabilities:
U.S. treasuries		$—		$426		$—		$426
Government agency issued MBS		—		1		—		1
Corporate and other debt		—		82		—		82
Total trading liabilities		—		509		—		509
Other liabilities:
Derivatives, forwards and futures		10		—		—		10
Derivatives, interest rate contracts		—		666		—		666
Derivatives, other		—		—		23		23
Total other liabilities		10		666		23		699
Total liabilities		$10		$1,175		$23		$1,208

   

	197	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 23—FAIR VALUE OF ASSETS AND LIABILITIES

Changes in Recurring Level 3 Fair Value Measurements

The changes in Level 3 assets and liabilities measured at fair value for the years ended December 31, 2024, 2023 and 2022 on

a recurring basis are summarized as follows.

Table 8.23.2

CHANGES IN LEVEL 3 ASSETS & LIABILITIES MEASURED AT FAIR VALUE

	Year Ended December 31, 2024
(Dollars in millions)		SBA interest- only strips		Loans held for sale		Net  derivative liabilities
Balance on January 1, 2024		$13		$26		$(23)
Total net gains (losses) included in net income		(5)		1		(15)
Purchases		—		2		—
Sales		(17)		(13)		—
Settlements		—		(2)		23
Net transfers into (out of) Level 3		32	(b)	2		—
Balance on December 31, 2024		$23		$16		$(15)
Net unrealized gains (losses) included in net income		$(2)	(c)	$1	(a)	$(15)	(d)

	Year Ended December 31, 2023
(Dollars in millions)		SBA interest- only strips		Loans held for sale		Net  derivative liabilities
Balance on January 1, 2023		$25		$22		$(27)
Total net gains (losses) included in net income		(12)		4		(15)
Purchases		—		3		—
Sales		(54)		(3)		—
Settlements		—		(2)		19
Net transfers into (out of) Level 3		54	(b)	2		—
Balance on December 31, 2023		$13		$26		$(23)
Net unrealized gains (losses) included in net income		$(1)	(c)	$4	(a)	$(15)	(d)

	Year Ended December 31, 2022
(Dollars in millions)		SBA interest- only strips		Loans held for sale		Net  derivative liabilities
Balance on January 1, 2022		$38		$28		$(23)
Total net gains (losses) included in net income		(7)		—		(23)
Purchases		—		2		—
Sales		(76)		(12)		—
Settlements		—		(2)		19
Repayments		—		(1)		—
Net transfers into (out of) Level 3		70	(b)	7		—
Balance on December 31, 2022		$25		$22		$(27)
Net unrealized gains (losses) included in net income		$(2)	(c)	$—	(a)	$(23)	(d)

(a) Primarily included in mortgage banking income on the Consolidated Statements of Income.

(b) Transfers into Level 3 SBA interest-only strips reflect transfers out of SBA loans held for sale, which are Level 2 assets measured on a nonrecurring basis.

Refer to Table 8.23.3.

(c) Primarily included in fixed income on the Consolidated Statements of Income.

(d) Included in other expense on the Consolidated Statements of Income.

There were no net unrealized gains (losses) for Level 3 assets and liabilities included in other comprehensive income as of

December 31, 2024, 2023 and 2022.

   

	198	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 23—FAIR VALUE OF ASSETS AND LIABILITIES

Nonrecurring Fair Value Measurements

From time to time, FHN may be required to measure

certain other financial assets at fair value on a

nonrecurring basis in accordance with GAAP. These

adjustments to fair value usually result from the

application of lower of cost or market ("LOCOM")

accounting or write-downs of individual assets. For assets

measured at fair value on a nonrecurring basis which were

still held on the Consolidated Balance Sheets at

December 31, 2024, 2023 and 2022, respectively, the

following table provides the level of valuation

assumptions used to determine each adjustment and the

related carrying value.

Table 8.23.3

LEVEL OF VALUATION ASSUMPTIONS FOR ASSETS

MEASURED AT FAIR VALUE ON A NONRECURRING BASIS

		Carrying value at December 31, 2024								Year Ended December 31, 2024
(Dollars in millions)		Level 1		Level 2		Level 3		Total		Net gains (losses)
Loans held for sale—SBAs and USDA		$—		$438		$—		$438		$(1)
Loans and leases (a)		—		—		344		344		(73)
OREO (b)		—		—		3		3		—
										$(74)

		Carrying value at December 31, 2023								Year Ended December 31, 2023
(Dollars in millions)		Level 1		Level 2		Level 3		Total		Net gains (losses)
Loans held for sale—SBAs and USDA		$—		$406		$—		$406		$(3)
Loans and leases (a)		—		—		245		245		(42)
OREO (b)		—		—		4		4		—
Other assets (c)		—		—		90		90		(7)
										$(52)

		Carrying value at December 31, 2022								Year Ended December 31, 2022
(Dollars in millions)		Level 1		Level 2		Level 3		Total		Net gains (losses)
Loans held for sale—SBAs and USDA		$—		$506		$—		$506		$(3)
Loans and leases (a)		—		—		135		135		(19)
OREO (b)		—		—		3		3		—
Other assets (c)		—		—		91		91		(10)
										$(32)

(a) Represents carrying value of loans for which adjustments are required to be based on the appraised value of the collateral less estimated costs to sell.

Write-downs on these loans are recognized as part of provision for credit losses.

(b) Represents the fair value and related losses of foreclosed properties that were measured subsequent to their initial classification as OREO. Balance

excludes OREO related to government-insured mortgages.

(c) Represents tax credit investments accounted for under the equity method.

Lease asset impairments recognized represent the

reduction in value of the right-of-use assets associated

with leases that are being exited in advance of the

contractual lease expiration.

Impairments are measured using a discounted cash flow

methodology, which is considered a Level 3 valuation.

Impairments of long-lived tangible assets reflect locations

where the associated land and building are either owned

or leased. The fair values of owned sites were determined

using estimated sales prices from appraisals and broker

opinions less estimated costs to sell with adjustments

upon final disposition. The fair values of owned assets in

leased sites (e.g., leasehold improvements) were

determined using a discounted cash flow approach, based

on the revised estimated useful lives of the related assets.

Both measurement methodologies are considered Level 3

valuations. Impairment adjustments recognized upon

disposition of a location are considered Level 2 valuations.

Fixed asset and leased asset impairments were immaterial

for the years ended December 31, 2024, 2023, and 2022.

   

	199	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 23—FAIR VALUE OF ASSETS AND LIABILITIES

Level 3 Measurements

The following table provides information regarding the unobservable inputs utilized in determining the fair value of Level 3

recurring and nonrecurring measurements as of December 31, 2024 and 2023.

Table 8.23.4

UNOBSERVABLE INPUTS USED IN LEVEL 3 FAIR VALUE MEASUREMENTS

(Dollars in millions)								Values Utilized
Level 3 Class		Fair Value at December 31, 2024		Valuation Techniques		Unobservable Input		Range		Weighted Average (c)
Trading securities - SBA interest-only strips		$23		Discounted cash flow		Constant prepayment rate		16% - 30%		17%
						Bond equivalent yield		3% - 18%		17%
Loans held for sale - residential real estate		$16		Discounted cash flow		Prepayment speeds - First mortgage		2% - 6%		3%
						Foreclosure losses		63% - 71%		64%
						Loss severity trends - First mortgage		0.0% - 0.2% of UPB		0.1%
Derivative liabilities, other		$15		Discounted cash flow		Visa covered litigation resolution amount		$3.1 billion -  $4.1 billion		$3.8 billion
						Probability of resolution scenarios		10% - 25%		18%
						Time until resolution		6 - 36 months		23 months
Loans and leases (a)		$344		Appraisals from comparable properties		Marketability adjustments for specific properties		0% - 25% of appraisal		NM
				Other collateral valuations		Borrowing base certificates liquidation adjustment		25% - 50% of gross value		NM
						Financial Statements liquidation adjustment		50% - 100% of reported value		NM
						Auction appraisals marketability adjustment		0% - 10% of reported value		NM
OREO (b)		$3		Appraisals from comparable properties		Adjustment for value changes since appraisal		0% - 10% of appraisal		NM

NM - Not meaningful

(a) Represents carrying value of loans for which adjustments are required to be based on the appraised value of the collateral less estimated costs to sell.

Write-downs on these loans are recognized as part of provision for credit losses.

(b) Represents the fair value of foreclosed properties that were measured subsequent to their initial classification as OREO. Balance excludes OREO related

to government-insured mortgages.

(c) Weighted averages are determined by the relative fair value of the instruments or the relative contribution to an instrument's fair value.

   

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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 23—FAIR VALUE OF ASSETS AND LIABILITIES

(Dollars in millions)								Values Utilized
Level 3 Class		Fair Value at December 31, 2023		Valuation Techniques		Unobservable Input		Range		Weighted Average (c)
Trading securities - SBA interest-only strips		$13		Discounted cash flow		Constant prepayment rate		14% - 15%		14%
						Bond equivalent yield		18% - 21%		18%
Loans held for sale - residential real estate		$26		Discounted cash flow		Prepayment speeds - First mortgage		2% - 7%		3%
						Foreclosure losses		64% - 68%		65%
						Loss severity trends - First mortgage		0.0% - 2.8% of UPB		1.6%
Derivative liabilities, other		$23		Discounted cash flow		Visa covered litigation resolution amount		$5.7 billion -  $6.7 billion		$6.3 billion
						Probability of resolution scenarios		10% - 25%		18%
						Time until resolution		6 - 36 months		24 months
Loans and leases (a)		$245		Appraisals from comparable properties		Marketability adjustments for specific properties		0% - 25% of appraisal		NM
				Other collateral valuations		Borrowing base certificates liquidation adjustment		25% - 50% of gross value		NM
						Financial Statements liquidation adjustment		50% - 100% of reported value		NM
						Auction appraisals marketability adjustment		0% - 10% of reported value		NM
OREO (b)		$4		Appraisals from comparable properties		Adjustment for value changes since appraisal		0% - 10% of appraisal		NM
Other assets (d)		$90		Discounted cash flow		Adjustments to current sales yields for specific properties		0% - 15% adjustment to yield		NM
				Appraisals from comparable properties		Marketability adjustments for specific properties		0% - 25% of appraisal		NM

NM - Not meaningful

(a) Represents carrying value of loans for which adjustments are required to be based on the appraised value of the collateral less estimated costs to sell.

Write-downs on these loans are recognized as part of provision for credit losses.

(b) Represents the fair value of foreclosed properties that were measured subsequent to their initial classification as OREO. Balance excludes OREO related

to government-insured mortgages.

(c) Weighted averages are determined by the relative fair value of the instruments or the relative contribution to an instrument's fair value.

(d) Represents tax credit investments accounted for under the equity method.

   

	201	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 23—FAIR VALUE OF ASSETS AND LIABILITIES

Trading Securities - SBA interest-only strips

Increases (decreases) in estimated prepayment rates and

bond equivalent yields negatively (positively) affect the

value of SBA interest-only strips. Management additionally

considers whether the loans underlying related SBA

interest-only strips are delinquent, in default or prepaying,

and adjusts the fair value down 20 - 100% depending on

the length of time in default.

Loans held for sale

Foreclosure losses and prepayment rates are significant

unobservable inputs used in the fair value measurement

of FHN’s residential real estate loans held for sale. Loss

severity trends are also assessed to evaluate the

reasonableness of fair value estimates resulting from

discounted cash flows methodologies as well as to

estimate fair value for newly repurchased loans and loans

that are near foreclosure. Significant increases (decreases)

in any of these inputs in isolation would result in

significantly lower (higher) fair value measurements. All

observable and unobservable inputs are re-assessed

quarterly.

Increases (decreases) in estimated prepayment rates and

bond equivalent yields negatively (positively) affect the

value of unguaranteed interests in SBA loans.

Unguaranteed interest in SBA loans held for sale are

carried at less than the outstanding balance due to credit

risk estimates. Credit risk adjustments may be reduced if

prepayment is likely, or as consistent payment history is

realized. Management also considers other factors such as

delinquency or default and adjusts the fair value

accordingly.

Derivative liabilities

In conjunction with pre-2020 sales of Visa Class B shares,

FHN and the purchasers entered into derivative

transactions whereby FHN will make, or receive, cash

payments whenever the conversion ratio of the Visa Class

B shares into Visa Class A shares is adjusted. FHN uses a

discounted cash flow methodology in order to estimate

the fair value of FHN’s derivative liabilities associated with

its prior sales of Visa Class B shares. The methodology

includes estimation of both the resolution amount for

Visa’s Covered Litigation matters as well as the length of

time until the resolution occurs. Significant increases

(decreases) in either of these inputs in isolation would

result in significantly higher (lower) fair value

measurements for the derivative liabilities. Additionally,

FHN performs a probability weighted multiple resolution

scenario to calculate the estimated fair value of these

derivative liabilities. Assignment of higher (lower)

probabilities to the larger potential resolution scenarios

would result in an increase (decrease) in the estimated fair

value of the derivative liabilities. Since this estimation

process requires application of judgment in developing

significant unobservable inputs used to determine the

possible outcomes and the probability weighting assigned

to each scenario, these derivatives have been classified

within Level 3 in fair value measurements disclosures.

Loans and leases and Other Real Estate Owned

Collateral-dependent loans and OREO are primarily valued

using appraisals based on sales of comparable properties

in the same or similar markets. Other collateral

(receivables, inventory, equipment, etc.) is valued through

borrowing base certificates, financial statements and/or

auction valuations. These valuations are discounted based

on the quality of reporting, knowledge of the

marketability/collectability of the collateral and historical

disposition rates.

Other assets – tax credit investments

Prior to 2024, the estimated fair value of tax credit

investments accounted for under the equity method was

generally determined in relation to the yield (i.e., future

tax credits to be received) an acquirer of these

investments expected in relation to the yields experienced

on current new issue and/or secondary market

transactions. Thus, as tax credits were recognized, the

future yield to a market participant was reduced, resulting

in consistent impairment of the individual investments.

Individual investments were reviewed for impairment

quarterly, which included the consideration of additional

marketability discounts related to specific investments

which typically included consideration of the underlying

property’s appraised value.

Fair Value Option

FHN previously elected the fair value option on a

prospective basis for substantially all types of mortgage

loans originated for sale purposes. FHN determined that

the election reduces certain timing differences and better

matches changes in the value of such loans with changes

in the value of derivatives and forward delivery

commitments used as economic hedges for these assets at

the time of election.

Repurchased loans relating to mortgage banking

operations conducted prior to the IBKC merger are

recognized within loans held for sale at fair value at the

time of repurchase, which includes consideration of the

credit status of the loans and the estimated liquidation

value. FHN has elected to continue recognition of these

loans at fair value in periods subsequent to reacquisition.

Due to the credit-distressed nature of the vast majority of

repurchased loans and the related loss severities

experienced upon repurchase, FHN believes that the fair

value election provides a more timely recognition of

changes in value for these loans that occur subsequent to

repurchase. Absent the fair value election, these loans

would be subject to valuation at the LOCOM value, which

would prevent subsequent values from exceeding the

initial fair value, determined at the time of repurchase,

but would require recognition of subsequent declines in

value. Thus, the fair value election provides for a more

   

	202	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 23—FAIR VALUE OF ASSETS AND LIABILITIES

timely recognition of any potential future recoveries in

asset values while not affecting the requirement to

recognize subsequent declines in value.

The following table reflects the differences between the fair value carrying amount of residential real estate loans held for

sale measured at fair value in accordance with management’s election and the aggregate unpaid principal amount FHN is

contractually entitled to receive at maturity.

Table 8.23.5

DIFFERENCES BETWEEN FAIR VALUE CARRYING AMOUNTS AND CONTRACTUAL AMOUNTS OF RESIDENTIAL

REAL ESTATE LOANS REPORTED AT FAIR VALUE

		December 31, 2024
(Dollars in millions)		Fair value carrying amount		Aggregate unpaid principal		Fair value carrying amount less aggregate unpaid principal
Residential real estate loans held for sale reported at fair value:
Total loans		$85		$89		$(4)
Nonaccrual loans		3		5		(2)
		December 31, 2023
(Dollars in millions)		Fair value carrying amount		Aggregate unpaid principal		Fair value carrying amount less aggregate unpaid principal
Residential real estate loans held for sale reported at fair value:
Total loans		$68		$73		$(5)
Nonaccrual loans		2		5		(3)
Loans 90 days or more past due and still accruing		1		1		—

Assets and liabilities accounted for under the fair value election are initially measured at fair value with subsequent changes in

fair value recognized in earnings. Such changes in the fair value of assets and liabilities for which FHN elected the fair value

option are included in current period earnings with classification in the income statement line item reflected in the following

table.

Table 8.23.6

CHANGES IN FAIR VALUE RECOGNIZED IN NET INCOME

	Year Ended December 31,
(Dollars in millions)	2024		2023		2022
Changes in fair value included in net income:
Mortgage banking noninterest income
Loans held for sale	$1		$1		$(9)

For the years ended December 31, 2024 , 2023 and 2022,

the amount for residential real estate loans held for sale

included an insignificant amount of gains in pre-tax

earnings that are attributable to changes in instrument-

specific credit risk. The portion of the fair value

adjustments related to credit risk was determined based

on estimated default rates and estimated loss severities.

Interest income on residential real estate loans held for

sale measured at fair value is calculated based on the note

rate of the loan and is recorded in the interest income

section of the Consolidated Statements of Income as

interest on loans held for sale.

Determination of Fair Value

Fair values are based on the price that would be received

to sell an asset or paid to transfer a liability in an orderly

transaction between market participants at the

measurement date. The following describes the

assumptions and methodologies used to estimate the fair

value of financial instruments recorded at fair value in the

Consolidated Balance Sheets and for estimating the fair

value of financial instruments for which fair value is

disclosed.

Short-term financial assets

Federal funds sold, securities purchased under

agreements to resell, and interest-bearing deposits with

   

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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 23—FAIR VALUE OF ASSETS AND LIABILITIES

other financial institutions and the Federal Reserve are

carried at historical cost. The carrying amount is a

reasonable estimate of fair value because of the relatively

short time between the origination of the instrument and

its expected realization.

Trading securities and trading liabilities

Trading securities and trading liabilities are recognized at

fair value through current earnings. Trading inventory held

for broker-dealer operations is included in trading

securities and trading liabilities. Broker-dealer long

positions are valued at bid price in the bid-ask spread.

Short positions are valued at the ask price. Inventory

positions are valued using observable inputs including

current market transactions, benchmark yields, credit

spreads, and consensus prepayment speeds. Trading loans

are valued using observable inputs including current

market transactions, swap rates, mortgage rates, and

consensus prepayment speeds.

Trading securities - SBA interest-only strips

Interest-only strips are valued at fair value based on an

income approach using an internal valuation model. The

internal valuation model includes assumptions regarding

projections of future cash flows, prepayment rates,

default rates and interest-only strip terms. These

securities bear the risk of loan prepayment or default that

may result in FHN not recovering all or a portion of its

recorded investment. When appropriate, valuations are

adjusted for various factors including default or

prepayment status of the underlying SBA loans. Because

of the inherent uncertainty of valuation, those estimated

values may be higher or lower than the values that would

have been used had a ready market for the securities

existed and may change in the near term.

Securities available for sale and held to maturity

Valuations of debt securities are performed using

observable inputs obtained from market transactions in

similar securities. Typical inputs include benchmark yields,

consensus prepayment speeds, and credit spreads. Trades

from similar securities and broker quotes are used to

support these valuations.

Loans held for sale

FHN determines the fair value of loans held for sale using

either current transaction prices or discounted cash flow

models. Fair values are determined using current

transaction prices and/or values on similar assets when

available, including committed bids for specific loans or

loan portfolios. Uncommitted bids may be adjusted based

on other available market information.

The fair value of residential real estate loans held for sale

is determined using a discounted cash flow model that

incorporates both observable and unobservable inputs.

Inputs in the discounted cash flow model include current

mortgage rates for similar products, estimated

prepayment rates, foreclosure losses, and various loan

performance measures (delinquency, LTV, credit score).

Adjustments for delinquency and other differences in loan

characteristics are typically reflected in the model’s

discount rates. Loss severity trends and the value of

underlying collateral are also considered in assessing the

appropriate fair value for severely delinquent loans and

loans in foreclosure. The valuation of HELOCs also

incorporates estimated cancellation rates for loans

expected to become delinquent.

Non-mortgage consumer loans held for sale are valued

using committed bids for specific loans or loan portfolios

or current market pricing for similar assets with

adjustments for differences in credit standing

(delinquency, historical default rates for similar loans),

yield, collateral values and prepayment rates. If pricing for

similar assets is not available, a discounted cash flow

methodology is utilized, which incorporates all of these

factors into an estimate of investor required yield for the

discount rate.

FHN utilizes quoted market prices of similar instruments

or broker and dealer quotations to value the SBA and

USDA guaranteed loans. FHN values SBA-unguaranteed

interests in loans held for sale based on individual loan

characteristics, such as industry type and pay history

which generally follows an income approach.

Furthermore, these valuations are adjusted for changes in

prepayment estimates and are reduced due to restrictions

on trading. The fair value of other non-residential real

estate loans held for sale is approximated by their carrying

values based on current transaction values.

Mortgage loans held for investment at fair value option

The fair value of mortgage loans held for investment at

fair value option is determined by a third party using a

discounted cash flow model using various assumptions

about future loan performance (constant prepayment

rate, constant default rate and loss severity trends) and

market discount rates.

Loans held for investment

The fair values of mortgage loans are estimated using an

exit price methodology that is based on present values

using the interest rate that would be charged for a similar

loan to a borrower with similar risk, weighted for varying

maturity dates and adjusted for a liquidity discount based

on the estimated time period to complete a sale

transaction with a market participant.

Other loans and leases are valued based on present values

using the interest rate that would be charged for a similar

instrument to a borrower with similar risk, applicable to

each category of instruments, and adjusted for a liquidity

discount based on the estimated time period to complete

a sale transaction with a market participant.

   

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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 23—FAIR VALUE OF ASSETS AND LIABILITIES

For loans measured using the estimated fair value of

collateral less costs to sell, fair value is estimated using

appraisals of the collateral. Collateral values are

monitored and additional write-downs are recognized if it

is determined that the estimated collateral values have

declined further. Estimated costs to sell are based on

current amounts of disposal costs for similar assets.

Carrying value is considered to reflect fair value for these

loans.

Derivative assets and liabilities

The fair value for forwards and futures contracts is based

on current transactions involving identical securities.

Futures contracts are exchange-traded and thus have no

credit risk factor assigned as the risk of non-performance

is limited to the clearinghouse used.

Valuations of other derivatives (primarily interest rate

contracts) are based on inputs observed in active markets

for similar instruments. Typical inputs include benchmark

yields, option volatility and option skew. Centrally cleared

derivatives are discounted using SOFR as required by

clearinghouses. In measuring the fair value of these

derivative assets and liabilities, FHN has elected to

consider credit risk based on the net exposure to

individual counterparties. Credit risk is mitigated for these

instruments through the use of mutual margining and

master netting agreements as well as collateral posting

requirements. For derivative contracts with daily cash

margin requirements that are considered settlements, the

daily margin amount is netted within derivative assets or

liabilities. Any remaining credit risk related to interest rate

derivatives is considered in determining fair value through

evaluation of additional factors such as client loan grades

and debt ratings. Foreign currency related derivatives also

utilize observable exchange rates in the determination of

fair value. The determination of fair value for

FHN’s derivative liabilities associated with its prior sales of

Visa Class B shares are classified within Level 3 in the fair

value measurements disclosure as previously discussed in

the unobservable inputs discussion.

The fair value of risk participations is determined in

reference to the fair value of the related derivative

contract between the borrower and the lead bank in the

participation structure, which is determined consistent

with the valuation process discussed above. This value is

adjusted for the pro rata portion of the reference

derivative’s notional value and an assessment of credit

risk for the referenced borrower.

OREO

OREO primarily consists of properties that have been

acquired in satisfaction of debt. These properties are

carried at the lower of the outstanding loan amount or

estimated fair value less estimated costs to sell the real

estate. Estimated fair value is determined using appraised

values with subsequent adjustments for deterioration in

values that are not reflected in the most recent appraisal.

Other assets

For disclosure purposes, other assets consist of tax credit

investments, FRB and FHLB Stock, deferred compensation

mutual funds and equity investments (including other

mutual funds) with readily determinable fair values. For

periods prior to 2024, tax credit investments accounted

for under the equity method were written down to

estimated fair value quarterly based on the estimated

value of the associated tax credits which incorporated

estimates of required yield for hypothetical investors.

Subsequent to 2023, the fair value of tax credit

investments is estimated using recent transaction

information with adjustments for differences in individual

investments. Deferred compensation mutual funds are

recognized at fair value, which is based on quoted prices

in active markets. Investments in the stock of the Federal

Reserve Bank and Federal Home Loan Banks are

recognized at historical cost in the Consolidated Balance

Sheets which is considered to approximate fair value.

Investments in mutual funds are measured at the funds’

reported closing net asset values. Investments in equity

securities are valued using quoted market prices when

available.

Defined maturity deposits

The fair value of these deposits is estimated by

discounting future cash flows to their present value.

Future cash flows are discounted by using the current

market rates of similar instruments applicable to the

remaining maturity. For disclosure purposes, defined

maturity deposits include all time deposits.

Short-term financial liabilities

The fair value of federal funds purchased, securities sold

under agreements to repurchase, and other short-term

borrowings are approximated by the book value. The

carrying amount is a reasonable estimate of fair value

because of the relatively short time between the

origination of the instrument and its expected realization.

Loan commitments

Fair values of these commitments are based on fees

charged to enter into similar agreements taking into

account the remaining terms of the agreements and the

counterparties’ credit standing.

Other commitments

Fair values of these commitments are based on fees

charged to enter into similar agreements.

The following fair value estimates are determined as of a

specific point in time utilizing various assumptions and

estimates. The use of assumptions and various valuation

techniques, as well as the absence of secondary markets

for certain financial instruments, reduces the

   

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ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 23—FAIR VALUE OF ASSETS AND LIABILITIES

comparability of fair value disclosures between financial

institutions. Due to market illiquidity, the fair values for

loans and leases, loans held for sale, and term borrowings

as of December 31, 2024 and 2023 involve the use of

significant internally developed pricing assumptions for

certain components of these line items. The assumptions

and valuations utilized for this disclosure are considered

to reflect inputs that market participants would use in

transactions involving these instruments as of the

measurement date. The valuations of legacy assets,

particularly consumer loans and TRUPs loans within the

Corporate segment, are influenced by changes in

economic conditions since origination and risk perceptions

of the financial sector. These considerations affect the

estimate of a potential acquirer’s cost of capital and cash

flow volatility assumptions from these assets and the

resulting fair value measurements may depart significantly

from FHN’s internal estimates of the intrinsic value of

these assets.

Assets and liabilities that are not financial instruments —

such as premises and equipment, goodwill, other

intangible assets such as the value of long-term

relationships with deposit and trust clients, deferred

taxes, and certain other assets and other liabilities — have

not been included in the following table. Additionally, the

fair value measurements presented in the following table

are solely for financial instruments as of the measurement

date and do not consider the earnings potential of our

various business lines. Accordingly, the total of the fair

value amounts does not represent, and should not be

construed to represent, the underlying value of FHN.

The following table summarizes the book value and

estimated fair value of financial instruments recorded in

the Consolidated Balance Sheets as of December 31, 2024

and 2023.

   

	206	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 23—FAIR VALUE OF ASSETS AND LIABILITIES

Table 8.23.7

BOOK VALUE AND ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS

		December 31, 2024
		Book Value		Fair Value
(Dollars in millions)				Level 1		Level 2		Level 3		Total
Assets:
Loans and leases, net of allowance for loan and lease losses
Commercial:
Commercial, financial and industrial		$33,083		$—		$—		$32,511		$32,511
Commercial real estate		14,194		—		—		13,894		13,894
Consumer:
Consumer real estate		13,826		—		—		13,262		13,262
Credit card and other		647		—		—		657		657
Total loans and leases, net of allowance for loan and lease losses		61,750		—		—		60,324		60,324
Short-term financial assets:
Interest-bearing deposits with banks		1,538		1,538		—		—		1,538
Federal funds sold		59		—		59		—		59
Securities purchased under agreements to resell		572		—		572		—		572
Total short-term financial assets		2,169		1,538		631		—		2,169
Trading securities (a)		1,387		—		1,364		23		1,387
Loans held for sale:
Mortgage loans (elected fair value) (a)		85		—		69		16		85
USDA & SBA loans - LOCOM		439		—		439		—		439
Mortgage loans - LOCOM		27		—		—		27		27
Total loans held for sale		551		—		508		43		551
Securities available for sale (a)		7,896		—		7,896		—		7,896
Securities held to maturity		1,270		—		1,083		—		1,083
Derivative assets (a)		531		8		523		—		531
Other assets:
Tax credit investments		706		—		—		692		692
Deferred compensation mutual funds		111		111		—		—		111
Equity, mutual funds, and other (b)		289		35		—		254		289
Total other assets		1,106		146		—		946		1,092
Total assets		$76,660		$1,692		$12,005		$61,336		$75,033
Liabilities:
Defined maturity deposits		$6,613		$—		$6,591		$—		$6,591
Trading liabilities (a)		550		—		550		—		550
Short-term financial liabilities:
Federal funds purchased		259		—		259		—		259
Securities sold under agreements to repurchase		2,096		—		2,096		—		2,096
Other short-term borrowings		1,045		—		1,045		—		1,045
Total short-term financial liabilities		3,400		—		3,400		—		3,400
Term borrowings:
Real estate investment trust-preferred		47		—		—		47		47
Term borrowings—new market tax credit investments		74		—		—		70		70
Secured borrowings		37		—		—		37		37
Junior subordinated debentures		151		—		—		142		142
Other long-term borrowings		886		—		866		—		866
Total term borrowings		1,195		—		866		296		1,162
Derivative liabilities (a)		671		6		650		15		671
Total liabilities		$12,429		$6		$12,057		$311		$12,374

(a) Classes are detailed in the recurring measurement table.

(b) Level 1 primarily consists of mutual funds with readily determinable fair values. Level 3 includes restricted investments in FHLB-Cincinnati stock of $51

million and FRB stock of $203 million.

   

	207	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 23—FAIR VALUE OF ASSETS AND LIABILITIES

		December 31, 2023
		Book Value		Fair Value
(Dollars in millions)				Level 1		Level 2		Level 3		Total
Assets:
Loans and leases, net of allowance for loan and lease losses
Commercial:
Commercial, financial and industrial		$32,294		$—		$—		$31,673		$31,673
Commercial real estate		14,044		—		—		13,831		13,831
Consumer:
Consumer real estate		13,417		—		—		12,605		12,605
Credit card and other		764		—		—		742		742
Total loans and leases, net of allowance for loan and lease losses		60,519		—		—		58,851		58,851
Short-term financial assets:
Interest-bearing deposits with banks		1,328		1,328		—		—		1,328
Federal funds sold		200		—		200		—		200
Securities purchased under agreements to resell		519		—		519		—		519
Total short-term financial assets		2,047		1,328		719		—		2,047
Trading securities (a)		1,412		—		1,399		13		1,412
Loans held for sale:
Mortgage loans (elected fair value) (a)		68		—		42		26		68
USDA & SBA loans - LOCOM		406		—		407		—		407
Mortgage loans - LOCOM		28		—		—		28		28
Total loans held for sale		502		—		449		54		503
Securities available for sale (a)		8,391		—		8,391		—		8,391
Securities held to maturity		1,323		—		1,161		—		1,161
Derivative assets (a)		577		9		568		—		577
Other assets:
Tax credit investments		665		—		—		653		653
Deferred compensation mutual funds		102		102		—		—		102
Equity, mutual funds, and other (b)		261		34		—		227		261
Total other assets		1,028		136		—		880		1,016
Total assets		$75,799		$1,473		$12,687		$59,798		$73,958
Liabilities:
Defined maturity deposits		$6,804		$—		$6,851		$—		$6,851
Trading liabilities (a)		509		—		509		—		509
Short-term financial liabilities:
Federal funds purchased		302		—		302		—		302
Securities sold under agreements to repurchase		1,921		—		1,921		—		1,921
Other short-term borrowings		326		—		326		—		326
Total short-term financial liabilities		2,549		—		2,549		—		2,549
Term borrowings:
Real estate investment trust-preferred		47		—		—		47		47
Term borrowings—new market tax credit investments		65		—		—		60		60
Secured borrowings		3		—		—		3		3
Junior subordinated debentures		150		—		—		150		150
Other long-term borrowings		885		—		824		—		824
Total term borrowings		1,150		—		824		260		1,084
Derivative liabilities (a)		699		10		666		23		699
Total liabilities		$11,711		$10		$11,399		$283		$11,692

(a) Classes are detailed in the recurring measurement table.

(b) Level 1 primarily consists of mutual funds with readily determinable fair values. Level 3 includes restricted investments in FHLB-Cincinnati stock of $24

million and FRB stock of $203 million.

   

	208	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 23—FAIR VALUE OF ASSETS AND LIABILITIES

The following table presents the contractual amount and fair value of unfunded loan commitments and standby and other

commitments as of December 31, 2024 and 2023.

Table 8.23.8

UNFUNDED COMMITMENTS

		Contractual Amount				Fair Value
(Dollars in millions)		December 31, 2024		December 31, 2023		December 31, 2024		December 31, 2023
Unfunded Commitments:
Loan commitments		$20,992		$24,579		$1		$1
Standby and other commitments		753		746		9		8

   

	209	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 24—PARENT COMPANY FINANCIAL INFORMATION

Note 24—Parent Company Financial Information

Following are statements of the parent company.

Parent Company Balance Sheets

Balance Sheets		December 31,
(Dollars in millions)		2024		2023
Assets:
Cash		$837		$854
Notes receivable		3		3
Investments in subsidiaries:
Bank		8,487		8,658
Non-bank		61		49
Other assets		251		256
Total assets		$9,639		$9,820
Liabilities and equity:
Accrued employee benefits and other liabilities		$473		$324
Term borrowings		350		500
Total liabilities		823		824
Total equity		8,816		8,996
Total liabilities and equity		$9,639		$9,820

Parent Company Statements of Income

		Year Ended December 31,
(Dollars in millions)		2024		2023		2022
Dividend income:
Bank		$1,110		$220		$435
Non-bank		—		—		16
Total dividend income		1,110		220		451
Other income		1		226		22
Total income		1,111		446		473
Interest expense - term borrowings		15		21		31
Personnel and other expense		111		114		128
Total expense		126		135		159
Income before income taxes		985		311		314
Income tax expense (benefit)		(27)		24		(31)
Income before equity in undistributed net income (loss) of subsidiaries		1,012		287		345
Equity in undistributed net income (loss) of subsidiaries:
Bank		(238)		613		561
Non-bank		1		(3)		(6)
Net income attributable to the controlling interest		$775		$897		$900

   

	210	2024 FORM 10-K ANNUAL REPORT

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 24—PARENT COMPANY FINANCIAL INFORMATION

Parent Company Statements of Cash Flows

		Year Ended December 31,
(Dollars in millions)		2024		2023		2022
Operating activities:
Net income		$775		$897		$900
Less undistributed net income (loss) of subsidiaries		(237)		610		555
Income before undistributed net income (loss) of subsidiaries		1,012		287		345
Adjustments to reconcile income to net cash provided by operating activities:
Deferred income tax expense		15		8		7
Stock-based compensation expense		59		36		76
Gain on sale of title services business		—		—		(22)
Other operating activities, net		(18)		—		2
Total adjustments		56		44		63
Net cash provided by operating activities		1,068		331		408
Investing activities:
Proceeds from sales and prepayments of securities		3		21		8
Purchases of securities		(1)		(1)		(1)
(Investment in) return on subsidiary		(9)		(10)		13
Proceeds from business divestitures, net		—		—		22
Net cash (used in) provided by investing activities		(7)		10		42
Financing activities:
Proceeds from issuance of preferred stock		—		—		494
Call of preferred stock		(100)		—		—
Cash dividends paid - preferred stock		(29)		(32)		(32)
Common stock:
Stock options exercised		9		5		36
Cash dividends paid		(332)		(335)		(324)
Repurchase of shares		(626)		(10)		(13)
Repayment of term borrowings		—		(450)		—
Net cash (used in) provided by financing activities		(1,078)		(822)		161
Net (decrease) increase  in cash and cash equivalents		(17)		(481)		611
Cash and cash equivalents at beginning of year		854		1,335		724
Cash and cash equivalents at end of year		$837		$854		$1,335
Total interest paid		$26		$33		$35
Income taxes received from (paid to) subsidiaries		60		(46)		42

   

	211	2024 FORM 10-K ANNUAL REPORT

ITEM 9. ACCOUNTANTS, ITEM 9A. CONTROLS & PROCEDURES, ITEM 9B. OTHER INFO, AND ITEM 9C. FOREIGN INSPECTIONS
Table of Contents

Item 9.Changes in and Disagreements with

Accountants on Accounting and

Financial Disclosure

Not applicable.

Item 9A.Controls and Procedures

Evaluation of Disclosure Controls & 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 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.

Reports on Internal Control over Financial Reporting

The report of management required by Item 308(a) of

Regulation S-K appears at page 107, and the attestation

report required by Item 308(b) of Regulation S-K appears

starting at page 108, of our 2024 Financial Statements

(Item 8). Both are incorporated herein by this reference.

Changes in Internal Control over Financial Reporting

There have not been any changes in our internal control

over financial reporting during our fourth fiscal quarter

that have materially affected, or are reasonably likely to

materially affect, our internal control over financial

reporting.

Item 9B.Other Information

Form 8-K Information not previously reported

Not applicable.

Trading Plans of Directors and Executive Officers

During our most recent fiscal quarter, no director (see

Item 10 beginning on page 212) or executive officer (see

the Supplemental Part I Information beginning on page 53 )

adopted or terminated (i) any contract, instruction, or

written plan for the purchase or sale of our securities

intended to satisfy the affirmative defense conditions of

SEC Rule 10b5-1(c) (a "Rule 10b5-1 trading arrangement");

and/or (ii) any "non-Rule 10b5-1 trading arrangement" as

defined in SEC Reg. S-K Item 408(c).

Item 9C.Disclosure Regarding Foreign

Jurisdictions that Prevent Inspections

Not applicable.

   

	212	2024 FORM 10-K ANNUAL REPORT

ITEM 10. DIRECTORS & EXECUTIVE OFFICERS
Table of Contents

PART III

Item 10.Directors, Executive Officers and

Corporate Governance

Required Item 10 Information

In 2024, there were no material amendments to the

procedures described in our 2025 Proxy Statement under

the caption Shareholder Recommendations and

Nominations, especially under the sub-caption Committee

Consideration of Shareholder Recommendations of

Nominees, by which security holders may recommend

nominees to our Board of Directors.

Our bylaws contain a process, if certain conditions are

met, for a shareholder to nominate a person for election

to the Board in advance of an annual meeting, and to

require us to include that nomination in our annual

meeting proxy statement. Additional information

regarding this process is available in our 2025 Proxy

Statement under the captions S hareholder

Recommendations and Nominations and 2026 Annual

Meeting—Proposal & Nomination Deadlines, which

information is incorporated herein by reference.

Our Board of Directors has adopted a Code of Ethics for

Senior Financial Officers that applies to the Chief

Executive Officer, Chief Financial Officer, and Chief

Accounting Officer and also applies to all professionals

serving in the financial, accounting, or audit areas of FHN

and its subsidiaries. A copy of the Code has been filed or

incorporated by reference as Exhibit 14 to this report and

is posted on our current internet website at

www.firsthorizon.com: click on “Investor Relations” at the

bottom of the web page, then hover over “Corporate

Governance” near the top of the page, then click on

“Governance Documents.” Scroll down the Governance

Documents page to find a link to the Code.  A paper copy

of the Code is available without charge upon written

request addressed to our Corporate Secretary at our main

office, 165 Madison Avenue, Memphis, Tennessee 38103.

We intend to satisfy our disclosure obligations under Item

5.05 of Form 8-K related to Code amendments or waivers

by posting such information on our internet website, the

address for which is listed in this paragraph above.

We have adopted an Inside Information Policy and related

written Procedures for that Policy (collectively, our

"Insider Policy"). Our Insider Policy governs the purchase,

sale, and/or other dispositions of our securities by our

directors, officers, associates and certain other persons. It

is designed to promote compliance with insider trading

laws, rules, and regulations, and listing standards

applicable to us. By its terms as written, our Insider Policy

applies only to insiders (directors, officers, associates, and

certain other persons). In practice, senior management

applies the periodic and ad hoc blackout provisions to our

purchases of our securities in all market transactions, and

in all off-market transactions other than share-

withholding related to employee stock plan awards.

Exceptions to the blackout provisions must be approved

by our Chief Executive Officer in consultation with our

General Counsel. Our Inside Information Policy and its

Procedures have been filed or incorporated by reference

as Exhibits 19.1 and 19.2 to this report. In addition, the

following section of our 2025 Proxy Statement is

incorporated herein by reference: Policies on Insider

Trading and Hedging.

Other information required by this Item related to the

topics mentioned in Table 10.1 is incorporated herein by

reference to the disclosures indicated in the Table or is

provided in that Table.

   

	213	2024 FORM 10-K ANNUAL REPORT

ITEM 10. DIRECTORS & EXECUTIVE OFFICERS
Table of Contents

Table 10.1

ITEM 10 TOPICS TABLE

Item 10 Topics	Responses or Incorporated Disclosures
Directors and nominees for director of FHN, the Audit Committee of our Board of Directors, members of the Audit Committee, and Audit Committee financial experts	In our 2025 Proxy Statement: Independence & Categorical Standards, Committee Charters & Composition, Audit Committee, and Vote Item 1—Election of Directors (excluding the Audit Committee Report and the statements regarding the existence and location of the Audit Committee’s charter)
Executive officers	In the Supplemental Part I Information following Item 4 of this report: Executive Officers of the Registrant, begin ning on page 53
Compliance with Section 16(a) of the Securities Exchange Act of 1934	not applicable

First Horizon Directors

Table 10.2

OUR BOARD OF DIRECTORS

(at February 20, 2025)

Harry V. Barton, Jr.* Age 70 CPA and Owner, Barton Advisory Services, LLC, an investment advisory firm		Jeffrey J. Brown Age 51 President, Hendrick Automotive Group, LLC, a privately held automotive retail organization		Velia Carboni Age 54 Chief Information Officer, SharkNinja, Inc., a global product design and technology company
John C. Compton Age 63 Partner, Clayton, Dubilier & Rice a private equity firm		Wendy P. Davidson Age 55 President and Chief Executive Officer The Hain Celestial Group, Inc., an organic and natural products company		John W. Dietrich Age 60 Executive Vice President and Chief Financial Officer, FedEx Corporation, a provider of transportation, e- commerce and business services
D. Bryan Jordan Age 63 Chairman of the Board, President & Chief Executive Officer, First Horizon Corporation, a financial services company		J. Michael Kemp, Sr. Age 54 Founder and Chief Executive Officer, Kemp Management Solutions, a program management and consulting firm		Rick E. Maples Age 66 Retired Co-Head of Investment Banking, Stifel, Nicolaus and Company, Incorporated, a financial services company
Vicki R. Palmer Age 71 President, The Palmer Group, LLC a general consulting firm		Colin V. Reed Age 77 Executive Chairman, Ryman Hospitality Properties, Inc. a real estate investment trust		Cecelia D. Stewart Age 66 Retired President, U.S. Consumer & Commercial Banking, Citigroup, Inc. a financial services company
Rosa Sugrañes* Age 67 Founder and former Chief Executive Officer, Iberia Tiles, a ceramic tile distributor				R. Eugene Taylor Age 77 Retired Chairman of the Board and Chief Executive Officer, Capital Bank Financial Corp., a financial services company

* Indicates a director who will retire when directors are elected for 2025-2026 at the 2025 Annual Meeting of Shareholders.

   

	214	2024 FORM 10-K ANNUAL REPORT

ITEM 11. EXECUTIVE COMPENSATION
Table of Contents

Item 11.Executive Compensation

The information called for by this Item is incorporated

herein by reference to the following sections of our 2025

Proxy Statement: Compensation Committee,

Compensation Committee Interlocks & Insider

Participation, Director Compensation, Policies on Insider

Trading and Hedging, Compensation Discussion &

Analysis, Recent Compensation, Post-Employment

Compensation, Pay Ratio of CEO to Median Employee,

Equity Grant Processes, and any Appendix to our Proxy

Statement referenced in those sections.

The subsection of our 2025 Proxy Statement captioned

Compensation Risk, within the Compensation Committee

section, provides information concerning our

management of certain risks associated with our

compensation policies and practices. We do not believe

those risks are reasonably likely to have a material

adverse effect upon us; accordingly, we do not believe

that information is required to be provided in this Item.

The information required by Item 407(e)(5) of Regulation

S-K is provided in our 2025 Proxy Statement within the

Compensation Committee section under the sub-section

captioned Compensation Committee Report.  As permitted

by the instructions for that Item, the information under

that subsection is not “filed” with this report.

As to the information required by Item 402(w) of

Regulation S-K: (i) refer to Clawback Policies & Practices

within Compensation Discussion & Analysis in our 2025

Proxy Statement; and (ii) the conditions for disclosures

beyond those incorporated by reference above have not

occurred. Our Erroneously Awarded Compensation

Recovery Policy has been filed as Exhibit 97 to this report,

as shown in Item 15.

   

	215	2024 FORM 10-K ANNUAL REPORT

ITEM 12. SECURITY OWNERSHIP & RELATED STOCKHOLDER MATTERS
Table of Contents

Item 12.Security Ownership of Certain

Beneficial Owners and Management and

Related Stockholder Matters

Securities Authorized for Issuance under Equity Compensation

Plans

Equity Compensation Plan Information

Table 12.1 provides information as of December 31, 2024 

regarding shares of our common stock that may be issued

under the following plans:

• 2021 Incentive Plan, as amended February 25, 2024

("2021 Plan")

• Equity Compensation Plan (“ECP”)

• IBERIABANK Corporation 2019 Stock Incentive Plan

("SIP")

• The following IBERIABANK Corporation plans

(together with the SIP, the “IBKC Plans”): 2016 Stock

Incentive Plan; and Amended and Restated 2010

Stock Incentive Plan

• The following Capital Bank Financial Corp. plans (“CBF

Plans”): Capital Bank Financial Corp. 2013 Omnibus

Compensation Plan; and FNB United Corp. 2012

Incentive Plan

Table 12.1

EQUITY COMPENSATION PLAN INFORMATION

As of December 31, 2024

		A		B		C
Plan Category		Number of Securities to be Issued upon Exercise of Outstanding Options		Weighted Average Exercise Price of Outstanding Options		Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (excluding securities reflected in Col. A)
Equity Compensation Plans Approved by Shareholders (1)		958,622	(2)	$16.16		13,173,672
Equity Compensation Plans Not Approved by Shareholders		—		—		—
Total		958,622		$16.16		13,173,672

(1)Consists of the 2021 Plan, the ECP, the IBKC Plans, and the CBF Plans. The 2021 Plan was approved by shareholders in 2021 and, as amended, in 2024 and

remains active. The number of shares in Column C is entirely under the 2021 Plan; as provided in the 2021 Plan, the Column C number includes the new/

additional shares originally authorized under the 2021 Plan along with shares underlying ECP awards that have been forfeited or cancelled since the 2021

Plan was initially approved by shareholders, net of shares underlying 2021 Plan awards that are outstanding or have been paid. The ECP initially was

approved by shareholders in 2003, most recently was re-approved in 2016, and has terminated. The IBKC Plans were approved by IBKC's shareholders in

2020, 2011, 2014, 2016, and 2019, and all have terminated. FHN and IBKC closed a merger-of-equals transaction in 2020, as a result of which FHN

became the plan sponsor for the IBKC Plans and their awards. The CBF Plans were approved by shareholders of CBF or certain other predecessor

companies, and all have terminated. FHN merged with CBF in 2017, as a result of which FHN became the plan sponsor for the CBF Plans and their awards.

"Terminated" means no new awards may be granted under the plan.

(2)Consists entirely of outstanding options issued under terminated plans approved by shareholders.

Only the 2021 Plan permits new awards to be granted; all

other plans have terminated. At December 31, 2024, there

were no shares issuable upon exercise of outstanding

options under the 2021 Plan, and the total number of

shares issuable upon exercise of outstanding options

under the terminated plans was 958,622 shares.

Shares covered by outstanding options are shown in

column A of Table 12.1. Outstanding equity awards other

than options ("full-value awards"), consisting of unpaid

stock units and restricted stock, are not included in any

column in that Table. In total, 11,840,085 shares are

covered by unpaid full-value awards, all granted under the

2021 Plan, the ECP, or the SIP. Of those, 11,003,999 are

covered by unvested awards, and 836,086 are covered by

awards that have vested but are subject to an unfulfilled

mandatory deferral period.

Column C of Table 12.1 presents the total number of

shares available for new awards under the 2021 Plan at

   

	216	2024 FORM 10-K ANNUAL REPORT

ITEM 12. SECURITY OWNERSHIP & RELATED STOCKHOLDER MATTERS
Table of Contents

December 31, 2024, assuming eventual full exercise or

vesting of all shares covered by awards outstanding on

that date. The 2021 Plan permits the grant of options and

full-value awards, as well as stock appreciation rights

(none of which have been granted).

Beneficial Ownership of Corporation Stock

The information required for this Item pursuant to Item

403(a) and (b) of Regulation S-K is presented in our 2025

Proxy Statement under the heading Stock Ownership

Information. That information is incorporated into this

Item by reference.

Change in Control Arrangements

We are not aware of any arrangements which may result in a change in control of First Horizon Corporation.

   

	217	2024 FORM 10-K ANNUAL REPORT

ITEM 13. CERTAIN RELATIONSHIPS & RELATED TRANSACTIONS  AND  ITEM 14. PRINCIPAL ACCOUNTANT FEES & SERVICES
Table of Contents

Item 13.Certain Relationships and Related

Transactions, and Director

Independence

The information called for by this Item is presented in the

following sections of our 2025 Proxy Statement:

• within the Corporate Governance section: Related

Party Transaction Procedures and Transactions with

Related Persons

• within the Board Matters section: Independence &

Categorical Standards.

That information is incorporated into this Item by

reference.

Our independent directors and nominees are identified in

the Independence discussion within the Independence &

Categorical Standards section of our 2025 Proxy

Statement, referenced above.

Item 14.Principal Accountant Fees and Services

The Audit Committee of the Board of Directors has a

policy providing for pre-approval of all audit and non-audit

services to be performed by our registered public

accounting firm that performs the audit of our

consolidated financial statements (our “Auditor”). Services

either may be approved in advance by the Audit

Committee specifically on a case-by-case basis (“specific

pre-approval”) or may be approved in advance (“advance

pre-approval”). Advance pre-approval requires the

Committee to identify in advance the specific types of

service that may be provided and the fee limits applicable

to such types of service, which limits may be expressed as

a limit by type of service or by category of services. All

requests to provide services that have been pre-approved

in advance must be submitted to the Chief Accounting

Officer prior to the provision of such services for a

determination that the service to be provided is of the

type and within the fee limit that has been pre-approved.

Unless the type of service to be provided by our Auditor

has received advance pre-approval under the policy and

the fee for such service is within the limit pre-approved,

the service will require specific pre-approval by the

Committee.

The terms of and fee for the annual audit engagement

must receive the specific pre-approval of the Committee.

“Audit,” “Audit-related,” “Tax,” and “All Other” services,

as those terms are defined in the policy, have the advance

pre-approval of the Committee, but only to the extent

those services have been specified by the Committee and

only in amounts that do not exceed the fee limits specified

by the Committee. Such advance pre-approval is to be for

a term of 12 months following the date of pre-approval

unless the Committee specifically provides for a different

term. Unless the Committee specifically determines

otherwise, the aggregate amount of the fees pre-

approved for All Other services for the fiscal year must not

exceed seventy-five percent (75%) of the aggregate

amount of the fees pre-approved for the fiscal year for

Audit services, Audit-related services, and those types of

Tax services that represent tax compliance or tax return

preparation. The policy delegates the authority to pre-

approve services to be provided by our Auditor, other

than the annual audit engagement and any changes

thereto, to the chair of the Committee. The chair may not,

however, make a determination that causes the 75% limit

described above to be exceeded. Any service pre-

approved by the chair will be reported to the Committee

at its next regularly scheduled meeting.

Information regarding fees billed to FHN by our Auditor,

KPMG LLP, for the two most recent fiscal years, as well as

other information related to our Auditor, is incorporated

herein by reference to the section of our 2025 Proxy

Statement captioned Vote Item 3—Auditor Ratification.

No services were approved by the Audit Committee

pursuant to Rule 2-01(c)(7)(i)(C) of Regulation S-X.

   

	218	2024 FORM 10-K ANNUAL REPORT

ITEM 15. EXHIBITS & FINANCIAL STATEMENT SCHEDULES
Table of Contents

PART IV

Item 15.Exhibits and Financial Statement

Schedules

Financial Statements & Related Reports

Our consolidated financial statements, the notes thereto,

and the reports of management and independent public

accountants, as listed below, are incorporated herein by

reference to the pages of 2024 Financial Statements (Item

8) indicated in Table 15.1.

Table 15.1

Item 8 Page	Statement, Note, or Report Incorporated into Item 15
107	Report of Management on Internal Control over Financial Reporting
108	Reports of Independent Registered Public Accounting Firm
112	Consolidated Balance Sheets as of December 31, 2024 and 2023
113	Consolidated Statements of Income for the years ended December 31, 2024, 2023, and 2022
115	Consolidated Statements of Comprehensive Income for the years ended December 31, 2024, 2023, and 2022
116	Consolidated Statements of Changes in Equity for the years ended December 31, 2024, 2023, and 2022
117	Consolidated Statements of Cash Flows for the years ended December 31, 2024, 2023, and 2022
119	Notes to the Consolidated Financial Statements

Financial Statement Schedules

Not applicable.

Exhibits

In the Exhibit Table that follows: the “Filed Here” column

denotes each exhibit which is filed or furnished (as

applicable) with this report; the “Mngt Exh” column

denotes each exhibit that represents a management

contract or compensatory plan or arrangement required

to be identified as such; the “Furnished” column denotes

each exhibit that is “furnished” pursuant to 18 U.S.C.

Section 1350 or otherwise, and is not “filed” as part of this

report or as a separate disclosure document; and the

phrase “2024 named executive officers” refers to those

executive officers whose 2024 compensation is described

in our 2025 Proxy Statement. All references to “First

Horizon National Corporation” or to "First Tennessee

National Corporation" refer to us, under previous

corporate names.

In many agreements filed as exhibits, each party makes

representations and warranties to other parties. Those

representations and warranties are made only to and for

the benefit of those other parties in the context of a

business contract. Exceptions to such representations and

warranties may be partially or fully waived by such parties,

or not enforced by such parties, in their discretion. No

such representation or warranty may be relied upon by

any other person for any purpose.

   

	219	2024 FORM 10-K ANNUAL REPORT

ITEM 15. EXHIBITS & FINANCIAL STATEMENT SCHEDULES
Table of Contents

Table 15.2

10-K EXHIBIT TABLE

Exh No	Description of Exhibit to this 10-K Report	Filed Here	Mngt Exh	Furnis hed	Incorporated by Reference to
					Form	Exh No	Filing Date
	Corporate Exhibits
3.1	Amended and Restated Charter of First Horizon Corporation [2024]				8-K	3.1	7/24/2024
3.2	Bylaws of First Horizon Corporation, as amended and restated January 27, 2025				8-K	3.1	1/30/2025
4.1	Deposit Agreement, dated as of July 1, 2020, by and among First Horizon National Corporation, Equiniti Trust Company, as depositary, and the holders from time to time of the depositary receipts described therein [Series B]				8-K	4.1	7/2/2020
4.2	Form of Depositary Receipt--Series B (included as part of Exhibit 4.1 to this report)				8-K	4.1	7/2/2020
4.3	Deposit Agreement, dated as of July 1, 2020, by and among First Horizon National Corporation, Equiniti Trust Company, as depositary, and the holders from time to time of the depositary receipts described therein [Series C]				8-K	4.2	7/2/2020
4.4	Form of Depositary Receipt--Series C (included as part of Exhibit 4.3 to this report)				8-K	4.2	7/2/2020
4.5	Deposit Agreement, dated as of May 28, 2020, by and among First Horizon National Corporation, Equiniti Trust Company, as depositary, and the holders from time to time of the depositary receipts described therein [Series E]				8-K	4.1	5/28/2020
4.6	Form of certificate representing Series E Preferred Stock				8-K	4.2	5/28/2020
4.7	Form of Depositary Receipt--Series E (included as part of Exhibit 4.7 to this report)				8-K	4.1	5/28/2020
4.8	Deposit Agreement, dated as of May 3, 2021, by and among First Horizon Corporation, Equiniti Trust Company, as depositary, and the holders from time to time of the depositary receipts described therein [Series F]				8-K	4.1	5/03/2021
4.9	Form of certificate representing the Series F Preferred Stock				8-K	4.2	5/03/2021
4.10	Form of Depositary Receipt-Series F representing the Depositary Shares (included as part of Exhibit 4.10 to this report)				8-K	4.1	5/03/2021
4.11	Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934				10-Q 2Q24	4.1	8/2/2024
4.12	FHN agrees to furnish to the Securities and Exchange Commission upon request a copy of each instrument defining the rights of the holders of the senior and subordinated long- term debt of FHN and its consolidated subsidiaries
	Equity-Based Award Plans
10.1 (a)	2021 Incentive Plan (as amended February 25, 2024)		X		Proxy 2024	App. A	3/11/2024
10.1 (b)	Equity Compensation Plan (as amended and restated April 26, 2016)		X		Proxy 2016	App. A	3/14/2016
10.1 (c)	IBERIABANK Corporation 2019 Stock Incentive Plan		X		10-K 2020	10.1(b)	2/25/2021
10.1 (d)	IBERIABANK Corporation 2016 Stock Incentive Plan		X		10-K 2020	10.1(c)	2/25/2021
	Performance-Based Equity Award Documents
10.2 (a)	Form of Grant Notice for Executive Performance Stock Units [2022]		X		10-Q 1Q22	10.1	5/6/2022
10.2 (b)	Form of Grant Notice for Executive Performance Stock Units [2023]		X		10-K 2022	10.2(e)	3/1/2023
10.2 (c)	Form of Grant Notice for CEO Special Equity Performance Stock Units [2023]		X		8-K	10.3	8/4/2023

   

	220	2024 FORM 10-K ANNUAL REPORT

ITEM 15. EXHIBITS & FINANCIAL STATEMENT SCHEDULES
Table of Contents

Exh No	Description of Exhibit to this 10-K Report	Filed Here	Mngt Exh	Furnis hed	Incorporated by Reference to
					Form	Exh No	Filing Date
10.2 (d)	Form of Grant Notice for Executive Performance Stock Units [2024]		X		10-K 2023	10.2(e)	2/22/2024
10.2 (e)	Form of Grant Notice for Executive Special Performance Stock Units [2024]		X		10-K 2023	10.2(f)	2/22/2024
10.2 (f)	Form of Grant Notice for Executive Performance Stock Units [2025]	X	X
	Stock Option Award Documents
10.3 (a)	Form of Grant Notice for Executive Stock Options [2018]		X		10-Q 1Q18	10.2	5/8/2018
10.3 (b)	Form of Grant Notice for Executive Stock Options [2019]		X		10-Q 1Q19	10.2	5/8/2019
10.3  (c)	Form of Grant Notice for Executive Stock Options [2020]		X		10-Q 1Q20	10.2	5/8/2020
10.3  (d)	Form of IBERIABANK Corporation Stock Option Agreement		X		10-K 2020	10.3(l)	2/25/2021
	Other Equity-Based Award Documents
10.4 (a)	Form of Grant Notice for Executive Restricted Stock Units [2022]		X		10-Q 1Q22	10.2	5/6/2022
10.4 (b)	Form of Grant Notice for Executive Restricted Stock Units [2023]		X		10-K 2022	10.4(e)	3/1/2023
10.4 (c)	Form of Grant Notice for Executive Restricted Stock Units [2024]		X		10-K 2023	10.2(e)	2/22/2024
10.4 (d)	Form of Grant Notice for Executive Restricted Stock Units [2025]	X	X
10.4 (e)	Form of Grant Notice for Executive Special Restricted Stock Units [2024]		X		10-K 2023	10.2(f)	2/22/2024
10.4 (f)	Form of Grant Notice for CEO Special Equity Restricted Stock Units [2023]		X		8-K	10.4	8/4/2023
10.4 (g)	Form of Grant Notice for Restricted Cash Units (Modified Retention Program, Cliff Vesting) [2023]		X		10-K 2023	10.2(h)	2/22/2024
10.4 (h)	Director Compensation Policy (as amended April 2024)		X		10-Q 2Q24	10.1	8/2/2024
	Management Cash Incentive Plan Documents
10.5 (a)	Executive Bonus Plan		X		8-K	10.1	10/27/2021
	Other Exhibits relating to Employment, Retirement, Severance, or Separation
10.6 (a)	Executive Change in Control Severance Plan		X		8-K	10.1	1/29/2021
10.6 (b)	Form of Pension Restoration Plan (amended and restated as of January 1, 2008)		X		10-Q 3Q07	10.7(e)	11/7/2007
10.6 (c)	Form of Amendment to Pension Restoration Plan		X		10-K 2009	10.7(d2)	2/26/2010
10.6 (d)	Form of Amendment No. 3 to Pension Restoration Plan		X		10-Q 3Q11	10.2	11/8/2011
10.6  (e)	Form of First Horizon Corporation Savings Restoration Plan		X		8-K	10.1	7/17/2012
10.6 (f)	Conformed copy of Employment Agreement dated August 3, 2023 with D. Bryan Jordan		X		8-K	10.2	8/4/2023
10.6 (g)	Retention Agreement of Anthony J. Restel, dated November 3, 2019		X		8-K	10.1	7/2/2020
	Documents Related to Other Deferral Plans and Programs
10.7 (a)	Directors and Executives Deferred Compensation Plan [originally adopted 1985], as amended and restated [2017], with forms of deferral agreement and 2007 addendum to deferral agreement		X		10-Q 2Q17	10.4	8/8/2017

   

	221	2024 FORM 10-K ANNUAL REPORT

ITEM 15. EXHIBITS & FINANCIAL STATEMENT SCHEDULES
Table of Contents

Exh No	Description of Exhibit to this 10-K Report	Filed Here	Mngt Exh	Furnis hed	Incorporated by Reference to
					Form	Exh No	Filing Date
10.7 (b)	Form of Amendment to Directors and Executives Deferred Compensation Plan		X		10-Q 3Q07	10.1(a3)	11/7/2007
10.7 (c)	Rate Applicable to Participating Directors under the Directors and Executives Deferred Compensation Plan		X		10-Q 3Q23	10.1	11/7/2023
10.7 (d)	Schedule of Deferral Agreements [Non-Employee Directors, 1995]		X		10-K 2018	10.7(d)	2/28/2019
10.7 (e)	Form of First Horizon National Corporation Deferred Compensation Plan as Amended and Restated [formerly known as First Tennessee National Corporation Nonqualified Deferred Compensation Plan]		X		10-Q 3Q07	10.1(c)	11/7/2007
10.7 (f)	Conformed copy of Amendment No. 1 to the First Horizon National Corporation Deferred Compensation Plan [removing "National" from the plan name]		X		S-8 333- 273513	4.5	7/28/2023
10.7 (g)	Form of Deferred Compensation Agreement used under FHN’s Equity Compensation Plan and First Tennessee National Corporation Non-Qualified Deferred Compensation Plan, along with form of Salary, Commission, and Annual Bonus Deferral Programs Overview, form of Deferred Stock Option (“DSO”) Program Summary, and description of share receipt deferral feature		X		8-K	10(z)	1/3/2005
	Other Exhibits related to Management or Directors
10.8 (a)	Survivor Benefits Plan, as amended and restated July 18, 2006		X		10-Q 3Q06	10.8	11/8/2006
10.8 (b)	Other Compensation and Benefit Arrangements for Non- employee Directors		X		10-K 2020	10.8(b)	2/25/2021
10.8 (c)	Description of Long-Term Disability Program		X		10-Q 2Q17	10.2	8/8/2017
10.8 (d)	Form of Indemnity Agreement with directors and executive officers [2004 form]		X		10-Q 2Q17	10.3	8/8/2017
10.8 (e)	Form of amendment to 2004 form of Indemnity Agreement with directors and executive officers		X		8-K	10.4	4/28/2008
10.8 (f)	Form of Indemnity Agreement with directors and executive officers (April 2008 revision)		X		8-K	10.5	4/28/2008
10.8 (g)	List of Certain Benefits Available to Certain Executive Officers	X	X
10.8 (h)	Description of 2025 Salary Rates for 2024 Named Executive Officers	X	X
	Other Exhibits
14	Code of Ethics for Senior Financial Officers				10-K 2022	14	3/1/2023
19.1	Inside Information Policy				10-Q 2Q23	19.1	8/4/2023
19.2	Inside Information Procedures	X
21	Subsidiaries of First Horizon Corporation	X
23	Accountant’s Consents	X
24	Power of Attorney	X
31(a)	Rule 13a-14(a) Certifications of CEO (pursuant to Section 302 of Sarbanes-Oxley Act of 2002)	X
31(b)	Rule 13a-14(a) Certifications of CFO (pursuant to Section 302 of Sarbanes-Oxley Act of 2002)	X
32(a)	18 USC 1350 Certifications of CEO (pursuant to Section 906 of Sarbanes-Oxley Act of 2002)	X		X
32(b)	18 USC 1350 Certifications of CFO (pursuant to Section 906 of Sarbanes-Oxley Act of 2002)	X		X

   

	222	2024 FORM 10-K ANNUAL REPORT

ITEM 15. EXHIBITS & FINANCIAL STATEMENT SCHEDULES
Table of Contents

Exh No	Description of Exhibit to this 10-K Report	Filed Here	Mngt Exh	Furnis hed	Incorporated by Reference to
					Form	Exh No	Filing Date
97	Erroneously Awarded Compensation Recovery Policy				10-K 2023	97	2/22/2024
	XBRL Exhibits
101	The following financial information from First Horizon Corporation’s Annual Report on Form 10-K for the year ended December 31, 2024, formatted in Inline XBRL: (i) Consolidated Balance Sheets at December 31, 2024 and 2023; (ii) Consolidated Statements of Income for the Years Ended December 31, 2024, 2023, and 2022; (iii) Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2024, 2023, and 2022;  (iv) Consolidated Statements of Changes in Equity for the Years Ended December 31, 2024, 2023, and 2022 ; (v) Consolidated Statements of Cash Flows for the Years Ended December 31, 2024, 2023, and 2022; and (vi) Notes to the Consolidated Financial Statements.	X
101. INS	XBRL Instance Document-the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document	X
101. SCH	Inline XBRL Taxonomy Extension Schema	X
101. CAL	Inline XBRL Taxonomy Extension Calculation Linkbase	X
101. DEF	Inline XBRL Taxonomy Extension Definition Linkbase	X
101. LAB	Inline XBRL Taxonomy Extension Label Linkbase	X
101. PRE	Inline XBRL Taxonomy Extension Presentation Linkbase	X
104	Cover Page Interactive Data File, formatted in Inline XBRL (included in Exhibit 101)	X

Item 16. Form 10-K Summary

Not applicable.

   

	223	2024 FORM 10-K ANNUAL REPORT

SIGNATURES
Table of Contents

Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this

report to be signed on its behalf by the undersigned, thereunto duly authorized.

		FIRST HORIZON CORPORATION
Date: February 27, 2025		By:		/s/ Hope Dmuchowski
		Name:		Hope Dmuchowski
		Title:		Senior Executive Vice President and Chief Financial Officer
				(Duly Authorized Officer and Principal Financial Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following

persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature*	Title	Date*		Signature*	Title	Date*
D. Bryan Jordan D. Bryan Jordan	Chairman of the Board, President & Chief Executive Officer, and a Director (principal executive officer)	*		Hope Dmuchowski Hope Dmuchowski	Senior Executive Vice President and Chief Financial Officer (principal financial officer)	*
Jeff L. Fleming Jeff L. Fleming	Executive Vice President and Chief Accounting Officer (principal accounting officer)	*		Harry V. Barton, Jr. Harry V. Barton, Jr.	Director	*
Jeffrey J. Brown Jeffrey J. Brown	Director	*		Velia Carboni Velia Carboni	Director	*
John C. Compton John C. Compton	Director	*		Wendy P. Davidson Wendy P. Davidson	Director	*
John W. Dietrich John W. Dietrich	Director	*		J. Michael Kemp, Sr. J. Michael Kemp, Sr.	Director	*
Rick E. Maples Rick E. Maples	Director	*		Vicki R. Palmer Vicki R. Palmer	Director	*
Colin V. Reed Colin V. Reed	Director	*		Cecelia D. Stewart Cecelia D. Stewart	Director	*
Rosa Sugrañes Rosa Sugrañes	Director	*		R. Eugene Taylor R. Eugene Taylor	Director	*

	*By: /s/ Shannon M. Hernandez	February 27, 2025
	Shannon M. Hernandez
	As Attorney-in-Fact