First Horizon (FHN) risk factors, FY2025 10-K

What changed since the prior 10-K

New

• New

  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

  We face intense competition for talent, equity, and debt capital from both regulated traditional banks and less-regulated non-bank competitors.

• New

  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 struggle to successfully execute business dispositions, wind-downs, or post-merger integration, potentially harming stakeholder sentiment and financial results.

• NewOperational Risks

  challenges as we strive to maintain client service and compliance at high quality and low cost

  Multi-year investments in operational systems and infrastructure may fail to yield immediate financial returns or could result in service disruptions.

• NewOperational Risks

  private banking, consumer, small business, wealth and trust management, retail brokerage, capital markets, fixed income, and mortgage banking services, among others. We manage these risks primarily through training programs, compliance programs, and supervision processes

  Controlling operational expenses is subject to external uncertainties such as structural reorganizations, workforce adjustments, and changing regulations.

• NewOperational Risks

  We have also employed economic profit analysis, which attempts to relate ordinary profit to the capital employed to create that profit, with the goal of achieving higher risk-adjusted (more efficient) returns on capital employed overall

  Approaching and surpassing $100 billion in assets will increase our regulatory compliance expenses, though the exact cost remains uncertain.

• NewCybersecurity Risks

  We record loan and lease charge-offs in accordance with accounting and regulatory guidelines and rules. As

  Changes in accounting guidelines, SEC or PCAOB positions, and inaccurate credit models could increase provision expense volatility.

• NewCybersecurity Risks

  misguided or otherwise affected with substantial adverse consequences to us

  Lagged effects of 2022-2023 interest rate hikes and potential declines in rates could lead to higher consumer and commercial loan default rates.

• NewCybersecurity Risks

  The composition of our loans inherently increases our sensitivity to certain credit risks. Our total loans and leases consist of the commercial, financial, and industrial (C&I) portfolio, the commercial real estate (CRE) portfolio, and the consumer loan portfolio

  Approximately 25% of our C&I portfolio is concentrated in financial services, and our CRE portfolio is exposed to traditional office space vacancies.

• NewCybersecurity Risks

  The consumer real estate category is highly sensitive to economic impacts on consumer clients and on residential real estate values

  About 2% of our total loans are tied to the oil and gas industry, exposing us to commodity price volatility and environmental regulations.

• NewRegulatory, Legislative, & Legal Risks

  Legal disputes are an unavoidable part of business, and the outcome of pending or threatened litigation cannot

  Unpredictable legal disputes with clients, vendors, or regulators can create uneven loss exposure and financial unpredictability.

• NewRegulatory, Legislative, & Legal Risks

  1 of this report. Should these laws become effective as adopted, they could impose significant direct and indirect costs on us, including creating systems to capture relevant data and engaging vendors to provide required assurances

  Our heavy economic concentration in the southeastern and south-central U.S. exposes us to regional weather, cost increases, and regulatory events.

• NewRegulatory, Legislative, & Legal Risks

  which we manage by reviewing the insurers that we use and by striving to use more than one insurer when practical. The risk of refusal, whether due to honest disagreement or bad faith, is inherent in any contractual situation

  Insolvency or credit downgrades of mortgage default insurers could force us to immediately increase our loan loss provisions.

• NewRegulatory, Legislative, & Legal Risks

  balance sheet and, in either case, a corresponding impact on our financial results. If many default insurers were to experience downgrades or insolvency at the same time, the risk of a financial impact would be amplified

• NewRegulatory, Legislative, & Legal Risks

  In the first half of 2023, following the failure of three large U.S. regional banks, we experienced significant but much more modest levels of run-off, which we successfully countered with a significant deposit campaign

• NewRegulatory, Legislative, & Legal Risks

  A number of more general factors could make funding more difficult, more expensive, or unavailable on

• NewRegulatory, Legislative, & Legal Risks

  Reductions in our credit ratings could result in counterparties reducing or terminating their relationships with us. Some parties with whom we do business have internal policies restricting the business that can be done with financial institutions that have credit ratings lower than a certain threshold

• NewRegulatory, Legislative, & Legal Risks

  volatile, which tends to partially offset net interest margin compression

• NewRegulatory, Legislative, & Legal Risks

  tends to reduce demand for long-term debt securities, which adversely impacts the revenues of our fixed income business

• NewRegulatory, Legislative, & Legal Risks

  continued through 2023. The improvement in the shape of the yield curve in the second half of 2024, which continued in 2025, subsequently resulted in an increase in fixed income values and revenues

Dropped

• Dropped

  This Item highlights risks that could impact us in material ways by causing future results to differ materially from

  General introductory boilerplate regarding forward-looking statements and emerging risks.

• DroppedRegulatory, Legislative, and Legal Risks

  companies efficiently in a reasonable amount of time; and

• DroppedRegulatory, Legislative, and Legal Risks

  The IBKC merger in 2020 presented those risks. In fact, the completion of systems integration was delayed several

• DroppedRegulatory, Legislative, and Legal Risks

  accept, but value, and which aligns with regulatory and compliance expectations

• DroppedRegulatory, Legislative, and Legal Risks

  To thrive as our industry is disrupted, we will need to continue to embrace some of the attitudes of a

  Time horizon details for realizing economies of scale after mergers.

• DroppedRisks Related to Businesses We May Exit

  may result in greater regulatory and/or legislative scrutiny, which may lead to laws or regulations that change or constrain our business or operations. Events that result in damage to our reputation also may increase our litigation risk

  Specific integration delay details regarding the 2020 IBKC merger and a 2021 hurricane.

• DroppedRisks Related to Businesses We May Exit

  difficult for banks, and for investors, to know when an upturn or downturn in credit loss is merely idiosyncratic or instead portends a major credit cycle change

• DroppedRegulatory, Legislative, & Legal Risks

  ons could further limit the amount of interest or fees we can charge, could further restrict our ability to collect loans or realize on collateral, could affect the terms or profitability of the products and services we offer, and could materially affect us in other ways

  Limitations on outspending large U.S. banks on proprietary data analytics solutions.

• DroppedRegulatory, Legislative, & Legal Risks

  s that are adverse to those of the holders of our existing classes of common or preferred stock

  Cultural evolution challenges in shifting from traditional banking to technology mindsets.

• DroppedRegulatory, Legislative, & Legal Risks

  Banks in the U.S. already operate under privacy-protection laws and rules, but banking industry regulations in this area might be enlarged in response to this concern

• DroppedRegulatory, Legislative, & Legal Risks

  Additional information concerning these risks, which is incorporated into this Item 1A by this reference, appears under the caption Greenhouse Gas (GHG) Reporting Regimes within the section captioned Market Uncertainties and Prospective Trends beginning on page 97 of our 2024 MD&A (Item 7)

• DroppedRegulatory, Legislative, & Legal Risks

  form of technology purchases and implementation, facility closure or renovation costs, and severance costs, while expected benefits typically are realized with some uncertainty in the future

• DroppedRegulatory, Legislative, & Legal Risks

  Despite our efforts, our costs could rise due to adverse structural changes, market shifts, or inflationary pressures. For example: in 2021 and 2022, compensation costs rose markedly due to high-demand/low-supply circumstances beyond our control

  Reputation risks driven by U.S. political and social fragmentation on social media.

• DroppedRegulatory, Legislative, & Legal Risks

  landfall in a relatively unpopulated area. Now, the chances of directly hitting a population center are much higher, the average population in that center is much higher, and the average value per building is much higher

  Granularity and diversification methods used to manage credit and counterparties.

• DroppedRegulatory, Legislative, & Legal Risks

  State and local building and water-control codes are being revised, but often unevenly and often not retroactive to pre-existing structures and developments. The current transition period could be lengthy

• DroppedRegulatory, Legislative, & Legal Risks

  Additional information concerning these risks, which is incorporated into this Item 1A by this reference, appears under the caption Coastal Market Growth and Rising Costs within the section captioned Market Uncertainties and Prospective Trends beginning on page 97 of our 2024 MD&A (Item 7)

  Specific regulatory capital level requirements and interest fee limit warnings.

• DroppedRegulatory, Legislative, & Legal Risks

  forced to raise interest we pay on our deposits, raising costs appreciably. In a severe case, deposit flight could render the Bank insolvent

  Cross-references to capital adequacy and market uncertainty disclosures in Item 1 and Item 7.

• DroppedRegulatory, Legislative, & Legal Risks

  to buy, sell, or hold securities, is subject to revision or withdrawal at any time, and should be evaluated independently of any other rating

  General public expectations regarding corporate greenhouse gas emission controls.

• DroppedRegulatory, Legislative, & Legal Risks

  expanding as compared with both the third quarter of 2024 and the fourth quarter of 2023

  Cross-reference to greenhouse gas reporting regimes in the 2024 MD&A.

• DroppedRegulatory, Legislative, & Legal Risks

  Hedging creates certain risks for us, including the risk that the other party to the hedge transaction will fail to

  Economic profit analysis definitions and capital usage allocation burdens.

• DroppedRegulatory, Legislative, & Legal Risks

  Pre-2009 Mortgage Business Risks

• DroppedRegulatory, Legislative, & Legal Risks

  Also, we are required to provide financial support to the Bank. Accordingly, at any given time a portion of our funds may need to be used for that purpose and therefore would be unavailable for dividends

• DroppedRegulatory, Legislative, & Legal Risks

  former IBKC shareholders common shares representing about 44% of our post-closing outstanding shares

Reworded

• 96% rewritten

  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

  Expanded to include risks around executing strategic dispositions, business wind-downs, and post-merger retention challenges.

• 96% rewritten

  We seek to meet these competitive challenges through increased investments in our own digital platforms, and through strategic equity investments, but there can be no assurance that these efforts will be successful

  Added specific risks regarding artificial intelligence adoption, including non-transparent models, flawed datasets, and insufficient algorithms.

• 93% rewrittenRegulatory, Legislative, & Legal Risks

  Share Owning & Governance Risks

  Updated to explicitly state that the company is required to provide financial support to the Bank.

• 91% rewrittenCybersecurity Risks

  The consumer real estate portfolio contains a number of concentrations which affect credit risk assessment of the portfolio

  Streamlined consumer real estate portfolio details by combining product and collateral concentration descriptions.

• 85% rewritten

  Traditional Strategic Risks

  Shifted focus from broad acquisition and growth strategies to specific organic growth execution requirements.

• 85% rewrittenRegulatory, Legislative, & Legal Risks

  Asset Inventories & Market Risks

  Added a direct cross-reference to market risk management disclosures on page 68 of the 2025 MD&A.

• 81% rewritten

  Traditional Competition Risks

  Removed extensive lists of specific competitor types and added a direct reference to the new Industry Disruption risk.

• 76% rewrittenRegulatory, Legislative, & Legal Risks

  Interest Rate & Yield Curve Risks

  Truncated the discussion regarding how fixed income businesses offset net interest margin compression during rate declines.

• 71% rewrittenCybersecurity Risks

  Risks Associated with Monetary Events

• 32% rewrittenCybersecurity Risks

  Additional information concerning cybersecurity risks and our management of them, all of which is incorporated into this Item 1A by this reference, appears under the caption Cybersecurity Risk Management beginning on page 72 of our 2025 MD&A (Item 7)

  Was: Additional information concerning cybersecurity risks and our management of them, all of which is incorporated into this Item 1A by this reference, appears under the caption Cybersecurity Risk Management beginning on page 91 of our 2024 MD&A (Item 7)

• 28% rewrittenRegulatory, Legislative, & Legal Risks

  Liquidity & Funding Risks

• 22% rewrittenCybersecurity Risks

  Risks from Economic Downturns & Changes

All 31 risk factors

Headings as the filing states them, in filing order.

Other First Horizon 10-Ks

• FY2024 10-K risk factors

  35 risks

  First Horizon Corporation faces intense competition in deposits and loans, managing asset growth toward the $100 billion regulatory threshold.

  Filed Feb 27, 2025

About this page

The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.