First Horizon Corporation's 2026 Stress Test Results: A Testament to Resilience and Capital Strength
In a recent announcement, First Horizon Corporation (NYSE: FHN) revealed the results of its 2026 company-run capital stress test, affirming its strong financial foundation in the face of hypothetical severe economic downturns. Under this rigorous assessment, First Horizon demonstrated the capability to maintain capital ratios significantly higher than the regulatory minimum requirements, underscoring its commitment to robust risk management and operational discipline.
The stress test's results were particularly noteworthy, as they incorporated the 2026 Dodd-Frank Act Stress Test's 'Severely Adverse Scenario' published by the Federal Reserve earlier this year. Hope Dmuchowski, the Chief Financial Officer of First Horizon, expressed confidence in the results, stating, "The 2026 stress test results reinforce the strength of our capital position and the resilience built into our business model."
During the test, First Horizon reported a Common Equity Tier 1 (CET1) capital ratio of 9.3% and a loan loss rate that stood at less than half the median experienced by its peers. Such statistics illustrate the effectiveness of its diversified revenue streams and prudent risk culture. This level of performance during a potential severe recession reflects the company’s ability to navigate economic turbulence while continuing to meet its obligations to clients and stakeholders.
The presented data revealed First Horizon's projected and actual capital ratios under extreme economic stress. The Common Equity Tier 1 Capital ratio was recorded at 10.6% in Q4 2025, with a projected stressed capital ratio of 9.3%, exceeding the regulatory requirement of 4.5%. This trend continued across various capital metrics, where the Tier 1 Risk-based Capital ratio and Total Risk-based Capital ratio also maintained values well over the minimum thresholds.
Notably, First Horizon committed to sustaining its $0.17 quarterly common stock dividend throughout the nine-quarter stress test horizon, showcasing its dedication to returning value to shareholders even in adverse financial conditions. The company’s strategy focuses on maintaining sound capital management practices that allow it to thrive irrespective of fluctuations in the economic landscape.
First Horizon’s loan portfolio also exhibited impressive resilience, with a stressed loss rate of 2.3%, significantly lower than the Federal Reserve-published median loss rate of 6.7%. This favorable position arises from the company's diverse loan categories, particularly its lower-loss allocations to mortgage companies while limiting exposure to high-loss credit cards. The pre-provision net revenue as a percentage of total assets was another positive indicator, pegged at 5.1%, which notably exceeded the peer median of 3.0%. Such strong metrics in the face of a stress scenario reflect the benefits of First Horizon's well-structured risk policies and counter-cyclical businesses, which include fixed income and mortgage services.
In summary, First Horizon Corporation's 2026 stress test results serve not only as a testament to its solid financial standing but also affirm the efficacy of its cautious yet forward-thinking approach to growth and sustainability in the competitive finance sector. With $84.4 billion in assets as of June 30, 2026, First Horizon remains steadfast in its mission to support its clients and communities with a blend of capital and expert counsel.
For those interested in further details, First Horizon’s comprehensive disclosure regarding the 2026 stress test can be found on their official investor relations webpage.
The stress test's results were particularly noteworthy, as they incorporated the 2026 Dodd-Frank Act Stress Test's 'Severely Adverse Scenario' published by the Federal Reserve earlier this year. Hope Dmuchowski, the Chief Financial Officer of First Horizon, expressed confidence in the results, stating, "The 2026 stress test results reinforce the strength of our capital position and the resilience built into our business model."
During the test, First Horizon reported a Common Equity Tier 1 (CET1) capital ratio of 9.3% and a loan loss rate that stood at less than half the median experienced by its peers. Such statistics illustrate the effectiveness of its diversified revenue streams and prudent risk culture. This level of performance during a potential severe recession reflects the company’s ability to navigate economic turbulence while continuing to meet its obligations to clients and stakeholders.
The presented data revealed First Horizon's projected and actual capital ratios under extreme economic stress. The Common Equity Tier 1 Capital ratio was recorded at 10.6% in Q4 2025, with a projected stressed capital ratio of 9.3%, exceeding the regulatory requirement of 4.5%. This trend continued across various capital metrics, where the Tier 1 Risk-based Capital ratio and Total Risk-based Capital ratio also maintained values well over the minimum thresholds.
Notably, First Horizon committed to sustaining its $0.17 quarterly common stock dividend throughout the nine-quarter stress test horizon, showcasing its dedication to returning value to shareholders even in adverse financial conditions. The company’s strategy focuses on maintaining sound capital management practices that allow it to thrive irrespective of fluctuations in the economic landscape.
First Horizon’s loan portfolio also exhibited impressive resilience, with a stressed loss rate of 2.3%, significantly lower than the Federal Reserve-published median loss rate of 6.7%. This favorable position arises from the company's diverse loan categories, particularly its lower-loss allocations to mortgage companies while limiting exposure to high-loss credit cards. The pre-provision net revenue as a percentage of total assets was another positive indicator, pegged at 5.1%, which notably exceeded the peer median of 3.0%. Such strong metrics in the face of a stress scenario reflect the benefits of First Horizon's well-structured risk policies and counter-cyclical businesses, which include fixed income and mortgage services.
In summary, First Horizon Corporation's 2026 stress test results serve not only as a testament to its solid financial standing but also affirm the efficacy of its cautious yet forward-thinking approach to growth and sustainability in the competitive finance sector. With $84.4 billion in assets as of June 30, 2026, First Horizon remains steadfast in its mission to support its clients and communities with a blend of capital and expert counsel.
For those interested in further details, First Horizon’s comprehensive disclosure regarding the 2026 stress test can be found on their official investor relations webpage.
Topics Financial Services & Investing）
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