FIRST HORIZON CORP (FHN)

Item 2.     Management's Discussion and

Analysis of Financial Condition and Results of Operations

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 June 30, 2026, FHN had over 450 business locations in 23 states, including over 400 banking centers in 12 states, and employed approximately 7,400 associates.

This MD&A should be read in conjunction with the accompanying unaudited Consolidated Financial Statements and Notes to Consolidated Financial Statements in Part I, Item 1, as well as other information contained in this document and FHN's 2025 Annual Report on Form 10-K.

Executive Overview

Significant Events and Transactions

On May 1, 2026, FHN redeemed all outstanding shares of its Series C Preferred Stock with a carrying value of $59 million. Prior to the redemption, the Series C Preferred

Stock qualified as Tier 1 capital. For more information, see Note 7 — Preferred Stock in the Consolidated Financial Statements in Part I, Item 1 of this report.

Financial Performance Summary

Table I.2.1

SELECTED FINANCIAL DATA

(a)    Represents a non-GAAP measure which is reconciled in the non-GAAP to GAAP reconciliation in Table I.2.28.

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

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

(d)    Calculated using annualized net income available to common shareholders divided by average tangible common equity.

(e)    Net interest margin is computed using total net interest income adjusted to an FTE basis assuming a statutory federal income tax rate of 21% and, where applicable, state income taxes.

(f)    Ratio is noninterest income excluding securities gains (losses) to total revenue excluding securities gains (losses).

(g)    Ratio is noninterest expense to total revenue excluding securities gains (losses).

Second Quarter 2026 Financial Performance Review

Second Quarter 2026 Highlights

FHN reported second quarter 2026 net income available to common shareholders of $260 million, or $0.54 per diluted share, compared to $233 million, or $0.45 per diluted share, in second quarter 2025.

Net interest income increased $35 million compared to second quarter 2025, largely driven by lower funding costs and loan growth, partially offset by lower loan yields.

Provision for credit losses was $15 million for second quarter 2026 compared to $30 million for second quarter 2025. Net charge-offs were $33 million, or 20 basis points, compared to $34 million, or 22 basis points, in second quarter 2025.

Noninterest income of $211 million for second quarter 2026 increased $22 million compared to second quarter 2025, largely driven by increases in fixed income, brokerage, management fees and commissions and deferred compensation income.

Compared with second quarter 2025, noninterest expense of $532 million increased $41 million, largely attributable to a $22 million increase in personnel expenses tied to higher salaries and benefits expense from increased associate headcount, along with higher incentive-based compensation and deferred compensation. Second quarter 2026 results also reflected higher computer software expense of $6 million and $5 million in Visa derivative valuation expense.

Year-to-Date and Period End Highlights

For the six months ended June 30, 2026, net income available to common shareholders was $518 million, or $1.07 per diluted share, compared to $446 million, or $0.86 per diluted share, for the six months ended June 30, 2025.

Net interest income increased $72 million, largely driven by lower funding costs and loan growth, partially offset by lower loan yields.

Provision for credit losses of $30 million decreased $40 million for the year-to-date period of 2026 compared to the same period of 2025. Net charge-offs were $61 million for the year-to-date period of 2026 compared to $63 million for the same period of 2025. Nonperforming loans of $531 million declined $73 million compared to December 31, 2025, as nonperforming loans in both the C&I and CRE portfolios declined. The ACL to total loans and leases ratio decreased 7 basis points to 1.24% as of June 30, 2026, compared to December 31, 2025, driven by improvements in certain macroeconomic factors, continued loan resolutions, and positive grade migration in the CRE portfolio.

Noninterest income for the year-to-date period increased $35 million, or 9%, largely from higher fixed income

revenues, brokerage, management fees and commissions, and deposit transactions and cash management fees.

Noninterest expense for the year-to-date period increased $58 million, largely attributable to an increase of $32 million in personnel expense and an increase of $11 million in computer software expense.

Period-end loans and leases of $65.3 billion increased $1.2 billion from December 31, 2025. Commercial loans increased $1.4 billion, driven by increases of $1.4 billion in the C&I portfolio and $32 million in the CRE portfolio. Consumer loans contracted by $249 million for the year-to-date period.

Period-end deposits were $68.1 billion compared to $67.5 billion as of December 31, 2025, as interest-bearing deposits increased $425 million and noninterest-bearing deposits increased $171 million.

The Common Equity Tier 1 ratio decreased 17 basis points to 10.46% at June 30, 2026, compared to 10.63% at December 31, 2025, as capital was deployed into loan growth and share repurchases. The Tier 1 risk-based capital and total risk-based capital ratios increased to 11.77% and 13.39% at June 30, 2026, respectively, compared to 11.51% and 13.35% at December 31, 2025, respectively, largely driven by the Series H Preferred Stock issuance in March 2026, partially offset by the Series C Preferred Stock redemption in May 2026.

The following portions of this MD&A focus in more detail on the results of operations for the three and six months ended June 30, 2026 and June 30, 2025, and on information about FHN's financial condition, loan and lease portfolio, liquidity, funding sources, capital, and other matters.

Results of Operations

Net Interest Income

Net interest income is FHN's largest source of revenue and is the difference between the interest earned on interest-earning assets (generally loans, leases and investment securities) and the interest expense incurred in connection with interest-bearing liabilities (generally deposits and borrowed funds). The level of net interest income is primarily a function of the difference between the effective yield on average interest-earning assets and the effective cost of interest-bearing liabilities. These factors are influenced by the pricing and mix of interest-earning assets and interest-bearing liabilities which, in turn, are impacted by external factors such as economic conditions, competition for loans and deposits, the monetary policy of the FRB and market interest rates.

The following tables present the major components of net interest income and net interest margin for the three and six months ended June 30, 2026 and 2025.

Table I.2.2

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

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Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations

TABLE OF ITEM 7 TOPICS

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, 2025, FHN had over 450 business locations

in 23 states, including over 400 banking centers in 12 states, and employed approximately 7,400 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

Table 7.1

SELECTED FINANCIAL DATA

(a)Represents a non-GAAP measure which is reconciled in the non-GAAP to GAAP reconciliation in Table 7.33.

(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).

2025 Financial Performance Review

FHN reported net income available to common shareholders of $956 million, or $1.87 per diluted share, for the year ended December 31, 2025, an increase of $218 million compared to $738 million, or $1.36 per diluted share, for the same period of 2024.

Net interest income of $2.6 billion increased $111 million compared to 2024, largely driven by lower deposit pricing

and higher loan balances, specifically in high-yielding loans to mortgage companies. The net interest margin increased 12 basis points to 3.47% compared to 3.35% in 2024.

Provision for credit losses decreased to $65 million compared to $150 million in 2024, largely reflecting declines in criticized and classified loans and a more favorable portfolio mix. Net charge-offs were $120 million,

or 19 basis points, compared to $112 million, or 18 basis points in 2024. The ACL to loans ratio decreased to 1.31% from 1.43% in 2024, reflecting criticized and classified loan resolutions throughout the year as well as a favorable portfolio mix shift.

Noninterest income of $797 million increased $118 million, or 17%, from 2024, largely driven by the prior year impact of $91 million in net securities losses from a restructuring of the securities portfolio. In addition, the countercyclical businesses improved during 2025 as fixed income increased $19 million and mortgage banking income increased $8 million.

Noninterest expense of $2.1 billion increased $39 million, or 2%, from 2024, largely attributable to higher personnel expense from talent additions and increases in occupancy, software, and legal and professional fees, partially offset by lower deposit insurance expense.

Period-end loans and leases of $64.2 billion increased $1.6 billion from December 31, 2024, largely driven by commercial loan growth, as loans to mortgage companies and other C&I loans each grew $1.2 billion, offset by a decline in CRE loans of $858 million.

Period-end deposits of $67.5 billion increased $1.9 billion from December 31, 2024, as interest-bearing deposits increased $2.1 billion and noninterest-bearing deposits decreased $198 million.

Tier 1 risk-based capital and total risk-based capital ratios at December 31, 2025 were 11.51% and 13.35%, respectively, compared to 12.22% and 14.25% at December 31, 2024. The CET1 ratio was 10.63% at December 31, 2025 compared to 11.20% at December 31, 2024.

Results of Operations—2025 compared to 2024

Following is a discussion of FHN's results of operations for 2025 compared to 2024. For a description of FHN's results of operations for 2024, see Results of Operations - 2024 compared to 2023 in Item 7 in the 2024 Form 10-K which is incorporated herein by reference.

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 $2.6 billion in 2025 increased $111 million, or 4%, from 2024. The increase was largely attributable to lower deposit pricing, partially offset by lower loan yields. Interest income decreased $166 million, largely driven by lower interest on loans and leases of $176 million. Interest expense decreased $277 million, largely due to lower interest expense on deposits of $281 million.

FHN's net interest margin increased 12 basis points to 3.47% in 2025 compared to 2024 and the net interest spread increased 31 basis points to 2.69% over the same period. The increase in the margin was attributable to a 57 basis point decrease in the cost of interest-bearing liabilities, partially offset by a 26 basis point decrease in earning asset yields.

Total average earning assets increased $469 million in 2025, largely driven by average loan growth of $605 million and a $220 million increase in average trading securities, partially offset by lower average interest-bearing deposits with banks of $351 million. Total average interest-bearing liabilities increased $937 million, largely driven by an increase of $514 million in federal funds purchased and securities sold under agreements to repurchase, $206 million in term borrowings, and average interest-bearing deposit growth of $224 million.

The following table presents the major components of net interest income and net interest margin.

Table 7.2

AVERAGE BALANCES, NET INTEREST INCOME AND YIELDS/RATES

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