#United States #Memphis #First Horizon #Stress Test #Capital Ratios

First Horizon Corporation: 2025 Stress Test Results

Introduction
On July 30, 2025, First Horizon Corporation (NYSE: FHN), a leading financial services company, unveiled its results from the 2025 company-run capital stress test. This assessment explored how the company could perform under extreme economic conditions, and the results underline its robust capital management and diverse business model. The stress test utilized the 2025 Dodd-Frank Act Stress Test Severely Adverse Scenario, which was published by the Federal Reserve earlier this year.

Highlights of the Stress Test Results
First Horizon demonstrated exceptional capital ratios, with the Chief Financial Officer, Hope Dmuchowski, stating that the results reflect both the company's resilient business practices as well as its strategic risk management. Notably, the minimum Common Equity Tier 1 (CET1) capital ratio stood at an impressive 9.7%, significantly above the regulatory minimum requirement of 4.5%. This equates to around $4 billion in pre-tax loss absorption capacity, showcasing the firm's ability to withstand financial pressures.

The stress test results are a testament to First Horizon's commitment to maintaining safety and soundness while also supporting clients across various economic scenarios. The company has set a near-term target CET1 ratio of 10.75%, further demonstrating its proactive approach in capital management.



Comparative Analysis of Capital Ratios
The following table illustrates First Horizon's actual and projected stressed capital ratios under the Federal Reserve's Severely Adverse Scenario compared to required regulatory minimums:


Throughout the nine-quarter scenario horizon tested, First Horizon has committed to a consistent dividend of $0.15 per common stock quarterly.

Loan Portfolio Resilience
The company’s loan portfolio displayed a stressed loss rate of 2.3%, significantly lower than the Federal Reserve's median DFAST results of 6.1%. This impressive performance can be primarily attributed to First Horizon’s strategic portfolio mix, which includes lower-loss loans to mortgage companies and limited exposure to high-risk credit cards. Furthermore, the company's pre-provision net revenue as a percentage of total assets achieved 4.7%, exceeding the peer median of 2.3%.

This strong performance is bolstered by First Horizon’s counter-cyclical business segments in fixed income, loans to mortgage companies, and mortgage banking, which provide additional support during economic downturns.

Conclusion
Overall, the 2025 stress test results present a positive outlook for First Horizon Corporation, emphasizing its prudent financial management and robust business strategies. The findings reinforce the company's position as a stable provider of financial services, dedicated to helping clients realize their full potential amid varying economic circumstances. For further information, interested parties can review First Horizon's complete stress test disclosure on their official website.

About First Horizon
First Horizon Corporation, as of June 30, 2025, possesses assets totaling $82.1 billion, making it a significant player in the regional financial services landscape. The company prides itself on offering a wide range of services, including commercial and consumer banking, wealth and trust management, and mortgage services. Headquartered in Memphis, Tennessee, First Horizon is committed to fostering economic resilience and trust within the communities it serves, having been recognized by reputable sources as one of the nation's best employers and most reputable banks.