fhn-20240630

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________________________


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

For the quarterly period ended June 30, 2024


☐			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

(Former name, former address and former fiscal year, if changed since last report)

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

Title of Each Class

Trading Symbol(s)

Name of Exchange on which Registered

$0.625 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

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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Class						Outstanding on July 31, 2024
Common Stock, $0.625 par value						535,893,064


10-Q REPORT TABLE OF CONTENTS


GLOSSARY OF ACRONYMS & TERMS
Table of Contents

Glossary of Acronyms and Terms

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
Bank			First Horizon Bank
BOLI			Bank-owned life insurance

C&I			Commercial, financial, and industrial loan portfolio

CBF			Capital Bank Financial
CECL			Current expected credit loss
CEO			Chief Executive Officer
CMO			Collateralized mortgage obligations
CODM			Chief Operating Decision-Maker
Company			First Horizon Corporation
Corporation			First Horizon Corporation
CRE			Commercial Real Estate
CRMC			Credit Risk Management Committee
DTA			Deferred tax asset
DTL			Deferred tax liability
EAD			Exposure as default
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


GAAP			Generally accepted accounting principles (U.S.)
GHG			Greenhouse Gas
GNMA			Government National Mortgage Association or Ginnie Mae
GSE			Government sponsored enterprises, in this report references Fannie Mae and Freddie Mac
HELOC			Home equity line of credit
HFS			Held for Sale
HTC			Historic tax credit
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
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
LOCOM			Lower of cost or market
LRRD			Loan Rehab and Recovery Department
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
NM			Not meaningful
NMTC			New Market Tax Credit
NPA			Nonperforming asset
Non-PCD			Non-Purchased Credit Deteriorated Financial Assets
NPL			Nonperforming loan
OREO			Other Real Estate Owned
PAM			Proportional amortization method
PCAOB			Public Company Accounting Oversight Board
PCD			Purchased credit deteriorated financial assets
PCI			Purchased credit impaired
PD			Probability of default
PM			Portfolio managers


			1			2Q24 FORM 10-Q REPORT


GLOSSARY OF ACRONYMS & TERMS
Table of Contents


PPP			Paycheck Protection Program
PSU			Performance Stock Unit
RE			Real estate
RM			Relationship managers
ROA			Return on assets
RPL			Reasonably possible loss
SBA			Small Business Administration
SEC			Securities and Exchange Commission
SOFR			Secure Overnight Funding Rate
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 merger transactions contemplated by the TD Merger Agreement
TDR			Troubled Debt Restructuring
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


			2			2Q24 FORM 10-Q REPORT


FORWARD-LOOKING STATEMENTS AND NON-GAAP INFORMATION
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. The words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “should,” “is likely,” “will,” “going forward,” and other expressions that indicate future events and trends identify forward-looking statements.

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. Examples of uncertainties and contingencies include, among other important factors:

•global, general 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;

•competition within and outside the financial services industry;

•the occurrence of natural or man-made disasters, global 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 employee relationships; and

•other factors that may affect future results of FHN.

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 above along with the additional risk factors discussed in Item 2 of Part I and Item 1A of Part II of this report, and in the forepart, and in Items 1, 1A, and 7, of FHN’s most recent Annual Report on Form 10-K, among others.


			3			2Q24 FORM 10-Q REPORT


FORWARD-LOOKING STATEMENTS AND NON-GAAP INFORMATION
Table of Contents

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 financial condition, capital position, and 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, adjusted tangible common equity to risk-weighted assets, and tangible book value per common share. Table I.2.26 appearing in the MD&A (Item 2 of Part I) of this report 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, provide 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 report 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.


			4			2Q24 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents



PART I. FINANCIAL INFORMATION


			5			2Q24 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents

CONSOLIDATED BALANCE SHEETS



	(Unaudited)
	June 30,		December 31,
(Dollars in millions, except per share amounts)	2024		2023
Assets
Cash and due from banks	$	969	$	1,012
Interest-bearing deposits with banks	1,452		1,328
Federal funds sold and securities purchased under agreements to resell	487		719
Trading securities	1,249		1,412
Securities available for sale at fair value	7,924		8,391
Securities held to maturity (fair value of $1,108 and $1,161, respectively)	1,297		1,323
Loans held for sale (including $117 and $68 at fair value, respectively)	471		502
Loans and leases	62,781		61,292
Allowance for loan and lease losses	(821)		(773)
Net loans and leases	61,960		60,519
Premises and equipment	584		590
Goodwill	1,510		1,510
Other intangible assets	165		186
Other assets	4,162		4,169
Total assets	$	82,230	$	81,661

Liabilities
Noninterest-bearing deposits	$	16,348	$	17,204
Interest-bearing deposits	48,446		48,576
Total deposits	64,794		65,780
Trading liabilities	423		509
Short-term borrowings	4,515		2,549
Term borrowings	1,175		1,150
Other liabilities	2,368		2,382
Total liabilities	73,275		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 536,875,750 and 558,838,694 shares, respectively	336		349
Capital surplus	5,007		5,351
Retained earnings	4,172		3,964
Accumulated other comprehensive loss, net	(1,281)		(1,188)
FHN shareholders' equity	8,660		8,996
Noncontrolling interest	295		295
Total equity	8,955		9,291
Total liabilities and equity	$	82,230	$	81,661

See accompanying notes to consolidated financial statements.


			6			2Q24 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents

CONSOLIDATED STATEMENTS OF INCOME




	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in millions, except per share data; shares in thousands) (Unaudited)	2024		2023		2024		2023
Interest income
Interest and fees on loans and leases	$	975	$	877	$	1,927	$	1,683
Interest and fees on loans held for sale	9		14		17		24
Interest on investment securities	59		63		119		125
Interest on trading securities	21		18		42		38
Interest on other earning assets	29		43		60		64
Total interest income	1,093		1,015		2,165		1,934
Interest expense
Interest on deposits	399		265		797		436
Interest on trading liabilities	7		2		12		5
Interest on short-term borrowings	41		99		70		136
Interest on term borrowings	17		19		33		39
Total interest expense	464		385		912		616
Net interest income	629		630		1,253		1,318
Provision for credit losses	55		50		105		100
Net interest income after provision for credit losses	574		580		1,148		1,218
Noninterest income
Deposit transactions and cash management	44		45		88		87
Fixed income	40		30		92		69
Brokerage, management fees and commissions	25		22		49		44
Card and digital banking fees	20		21		38		40
Other service charges and fees	14		14		27		27
Trust services and investment management	12		12		24		24
Mortgage banking income	10		6		19		11

Gain on merger termination	—		225		—		225
Securities gains (losses), net	1		—		1		1
Other income	20		25		43		43
Total noninterest income	186		400		381		571
Noninterest expense
Personnel expense	279		285		580		556
Net occupancy expense	31		30		62		61
Computer software	29		28		59		55
Operations services	23		22		45		44
Legal and professional fees	18		12		33		20
Deposit insurance expense	16		13		40		26
Contract employment and outsourcing	14		12		28		24
Advertising and public relations	14		17		22		31
Amortization of intangible assets	11		12		22		24
Equipment expense	11		10		22		21
Communications and delivery	8		9		16		18
Contributions	1		53		2		57
Other expense	45		52		84		96
Total noninterest expense	500		555		1,015		1,033
Income before income taxes	260		425		514		756
Income tax expense	56		96		113		171
Net income	$	204	$	329	$	401	$	585
Net income attributable to noncontrolling interest	5		4		10		9
Net income attributable to controlling interest	$	199	$	325	$	391	$	576


Preferred stock dividends	15		8		23		16
Net income available to common shareholders	$	184	$	317	$	368	$	560


			7			2Q24 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents


CONSOLIDATED STATEMENTS OF INCOME (continued)

Basic earnings per common share	$	0.34	$	0.59	$	0.67	$	1.04
Diluted earnings per common share	$	0.34	$	0.56	$	0.67	$	1.00
Weighted average common shares	543,981		539,120		549,479		538,035
Diluted average common shares	547,093		560,878		552,539		562,188

See accompanying notes to consolidated financial statements.


			8			2Q24 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME



	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in millions) (Unaudited)	2024		2023		2024		2023
Net income	$	204	$	329	$	401	$	585
Other comprehensive income (loss), net of tax:
Net unrealized gains (losses) on securities available for sale	(10)		(105)		(65)		9
Net unrealized gains (losses) on cash flow hedges	(2)		(46)		(



Glossary of Acronyms and Terms			1
Forward-Looking Statements			3
Non-GAAP Information			4

Part I. Financial Information			5
Item 1. Financial Statements			5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			73
Item 3. Quantitative and Qualitative Disclosures about Market Risk			111
Item 4. Controls and Procedures			111

Part II. Other Information			112
Item 1. Legal Proceedings			112
Item 1A. Risk Factors			112
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities			112
Item 3. Defaults Upon Senior Securities			112
Item 4. Mine Safety Disclosures			112
Item 5. Other Information			112
Item 6. Exhibits			113









Signatures			115


Consolidated Balance Sheets (unaudited)			6

Consolidated Statements of Income (unaudited)			7

Consolidated Statements of Comprehensive Income (unaudited)			9

Consolidated Statements of Changes in Equity (unaudited)			10

Consolidated Statements of Cash Flows (unaudited)			12

Notes to the Consolidated Financial Statements (unaudited)			13
Note 1 Basis of Presentation and Accounting Policies			13

Note 2 Investment Securities			16
Note 3 Loans and Leases			19
Note 4 Allowance for Credit Losses			28
Note 5 Mortgage Banking Activity			31
Note 6 Goodwill and Other Intangible Assets			32

Note 7 Preferred Stock			33
Note 8 Components of Other Comprehensive Income (Loss)			34
Note 9 Earnings Per Share			36
Note 10 Contingencies and Other Disclosures			37
Note 11 Retirement Plans			39
Note 12 Business Segment Information			40
Note 13 Variable Interest Entities			45
Note 14 Derivatives			48
Note 15 Master Netting and Similar Agreements - Repurchase, Reverse Repurchase, and Securities Borrowing Transactions			55
Note 16 Fair Value of Assets and Liabilities			57