FHN

MKT CAP $11BP/E 11.2DIV YIELD —FCF YIELD 9.25%REV TTM $3.5B +10.3%NET INCOME $1.1B +25.3%NET DEBT $2.3B52W 20.56 – 26.23SEC XBRL · TTM TO Invalid Date

How FHN rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

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Risk Factors This Item highlights risks that could impact us in material ways.
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.
Before making an investment decision, you should carefully consider the risks and uncertainties together with all of the other information included or incorporated by reference in this report.
Traditional Competition Risks We are subject to intense competition for clients, and the nature of that competition is changing.
Our competitors 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 22 ) 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.
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 30 of this Item 1A for additional information concerning this risk.
Traditional Strategic Risks We may be unable to successfully implement our strategies to organically grow our businesses.
We believe that the successful execution of organic growth depends upon a number of key elements, including: • attracting and retaining clients in our commercial and consumer banking market areas and in our specialty banking markets; • achieving and maintaining growth in our earnings while pursuing new business opportunities; • maintaining a high level of client service while optimizing our operational infrastructures effectively and efficiently; • managing the liquidity and capital requirements associated with growth; and • managing effectively and efficiently the changes and adaptations necessitated by a complex 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.
We may fail to achieve one or more key elements needed for successful business acquisitions.
Our strategy for growth also includes consideration of acquisitions or strategic transactions if appropriate opportunities present themselves.
To the extent we engage in such transactions, we face various additional risks relating to our ability to: realize planned strategic and tactical objectives; correctly identify, analyze, and assess the risks in the transaction; integrate the acquired business quickly and cost-effectively; and retain core clients and key associates.
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.
We face various risks associated with exiting a business.
We may be unable to: price a sale transaction appropriately and otherwise negotiate acceptable terms; identify and implement key client, personnel, technology systems, and other transition actions to avoid or minimize negative effects on retained businesses; mitigate the loss of any pre-tax income that the exited business produced; assess and manage any loss of synergies that the exited business had with our retained businesses; or manage capital, liquidity, and other challenges that may arise if an exit results in significant legacy cash expenditures or financial loss.
Negative sentiment of stakeholders, including clients, associates, investors, regulators, and the communities we serve, could negatively impact our business.
One of our key assets is our stakeholders' perception that we are trustworthy, highly ethical and competent.
RISK FACTORS perception could be affected by our business practices, as well as by the practices of our competitors, our industry as a whole, and the parties with whom we have important relationships.
Senior management oversees processes for monitoring and actively reporting on stakeholder sentiment and for ensuring that the Company and its brand continue to be viewed positively by both internal and external stakeholders.
Negative sentiment among stakeholders 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, and could undermine our ability to attract and retain talented associates, among other things.
Negative sentiment regarding the reputation of our industry as a whole may result in greater regulatory and/or legislative scrutiny, which may lead to laws or regulations that change or constrain our business or operations.
Negative stakeholder sentiment also may increase our litigation risk.
In the most extreme cases, negative stakeholder sentiment could jeopardize the safety and soundness of an institution.
Political and social fragmentation in the U.S., combined with access to social media platforms, can increase the risk of negative stakeholder sentiment 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 perceptions by key stakeholders as trustworthy, highly ethical and competent, banks generally tend to avoid 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, could result in negative stakeholder sentiment which could lead to action by legislators or regulators.
Industry Disruption Technological innovations continue to change financial services at a rapid pace, creating new competitive challenges.
We provide a large number of services remotely (online and mobile).

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Risk Factors beginning on page 46 , f or 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.
MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A) 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.

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Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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