FIRST HORIZON CORP

PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)

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Results of Operations

Net Interest Income

Net interest income is FHN's largest source of revenue and is the difference between the interest earned on interest-earning assets (generally loans, leases and investment securities) and the interest expense incurred in connection with interest-bearing liabilities (generally deposits and borrowed funds). The level of net interest income is primarily a function of the difference between the effective yield on average interest-earning assets and the effective cost of interest-bearing liabilities. These factors are influenced by the pricing and mix of interest-earning assets and interest-bearing liabilities which, in turn, are impacted by external factors such as economic conditions, competition for loans and deposits, the monetary policy of the FRB and market interest rates.

The following tables present the major components of net interest income and net interest margin for the three and six months ended June 30, 2026 and 2025.

PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)

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Table I.2.2

QUARTER-TO-DATE AVERAGE BALANCES, NET INTEREST INCOME & YIELDS/RATES

(a) Calculated using total net interest income adjusted for FTE assuming a statutory federal income tax rate of 21% and, where applicable, state income taxes.

PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)

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Net interest income increased $35 million from second quarter 2025 and net interest margin increased 9 basis points to 3.49% in second quarter 2026. Net interest income benefited from lower funding costs as well as loan growth. The rate on interest-bearing liabilities decreased 45 basis points from second quarter 2025. These benefits were partially offset by the impact of lower loan yields, which decreased 25 basis points compared to the same period of 2025.

Average earning assets increased $2.1 billion from second quarter 2025, driven by average loan growth of $2.1 billion as a $2.6 billion increase in average commercial loans and leases was partially offset by a $408 million decline in average consumer loans. Average interest-bearing liabilities increased $2.0 billion, primarily driven by an increase of $2.1 billion in average interest-bearing deposits, as increases of $1.9 billion in average time deposits and $552 million in average other interest-bearing deposits were partially offset by a decrease of $281 million in average savings deposits compared to second quarter 2025.

PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)

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Table I.2.3

YEAR-TO-DATE AVERAGE BALANCES, NET INTEREST INCOME & YIELDS/RATES

(a) Calculated using total net interest income adjusted for FTE assuming a statutory federal income tax rate of 21% and, where applicable, state income taxes.

PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)

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For the six months ended June 30, 2026, net interest income of $1.3 billion increased $72 million from the same period in 2025, largely driven by lower funding costs and loan growth, partially offset by lower loan yields.

Total average earning assets increased $2.1 billion for the six months ended June 30, 2026 compared to the same period in 2025, largely driven by average loan growth of $1.8 billion and higher average trading securities balances of $210 million.

The year-to-date net interest margin of 3.50% increased 9 basis points compared to 3.41% for the same period of 2025 as an improvement in the rate paid on interest-bearing deposits was partially offset by lower loan yields. The cost of interest-bearing deposits decreased 44 basis points and loan yields decreased 23 basis points.

Noninterest Income

The following table presents the significant components of noninterest income for the three months ended June 30, 2026 and 2025.

Table I.2.4

NONINTEREST INCOME

Noninterest income for second quarter 2026 increased $22 million, or 12%, compared to second quarter 2025.

Fixed income of $46 million increased $4 million compared to second quarter 2025. Fixed income product revenue increased $3 million and revenue from other products increased $1 million. Average daily revenue was $594 thousand compared to $550 thousand for the same quarter of 2025, reflecting more favorable market conditions.

Brokerage, management fees and commissions increased $5 million, or 19%, largely reflecting improvements related to the outsourcing of FHN's retail brokerage and wealth management operations in second quarter 2025.

Deferred compensation income of $15 million increased $7 million, reflecting fluctuations in equity market valuations relative to the prior year.

PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)

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The following table presents the significant components of noninterest income for the six months ended June 30, 2026 and 2025.

Table I.2.5

NONINTEREST INCOME

For the six months ended June 30, 2026, noninterest income of $405 million increased $35 million, or 9%, compared to the same period of 2025.

Fixed income increased $8 million for the six months ended June 30, 2026, compared to the same period of 2025. Fixed income product revenue increased $13 million largely driven by more favorable market conditions. Revenue from other products decreased $5 million primarily driven by decreases in revenues from loan sales.

Deposit transactions and cash management fees increased $5 million, largely driven by higher cash management fees.

Brokerage, management fees and commissions increased $8 million, or 15%, largely reflecting improvements related to the outsourcing of FHN's retail brokerage and wealth management operations in second quarter 2025.

Other service charges and fees increased $5 million, largely driven by elevated income related to the equipment finance lease business.

Deferred compensation income of $12 million increased $7 million, reflecting fluctuations in equity market valuations relative to the prior year.

PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)

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Noninterest Expense

The following table presents the significant components of noninterest expense for the three months ended June 30, 2026 and 2025.

Table I.2.6

NONINTEREST EXPENSE

Noninterest expense of $532 million increased $41 million, or 8%, compared to second quarter 2025.

Personnel expense increased $22 million in second quarter 2026, largely reflecting a $9 million increase in salaries and benefits expense tied to higher associate headcount compared to second quarter 2025. Incentives and commissions expense increased $3 million, largely attributable to higher incentive-based compensation expense tied to the increase in fixed income revenue. Deferred compensation expense increased $10 million, reflecting higher equity market fluctuations relative to the prior year.

Computer software expense increased $6 million, largely attributable to the timing of technology-related expenditures.

The $6 million increase in other expense compared to the prior year quarter was largely attributable to $5 million in Visa derivative valuation expenses in second quarter 2026.

PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)

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The following table presents the significant components of noninterest expense for the six months ended June 30, 2026 and 2025.

Table I.2.7

NONINTEREST EXPENSE

For the six months ended June 30, 2026, noninterest expense increased $58 million compared to the same period of 2025.

Personnel expense of $593 million increased $32 million, largely reflecting higher salaries and deferred compensation expenses. Higher incentive-based compensation expense tied to increased fixed income revenue was partially offset by lower equity-based compensation expense.

Computer software expense increased $11 million for the year-to-date period, largely from increased spending related to technology projects.

Operations services increased $6 million, largely attributable to higher outside computer services expense.

The $5 million increase in other expense was primarily attributable to higher contract employment and outsourcing expense in 2026. Other expense results also included $5 million in Visa derivative valuation expense in both periods.

Provision for Credit Losses

Provision for credit losses includes the provision for loan and lease losses and the provision for unfunded lending commitments. The provision for credit losses is the expense necessary to maintain the ALLL and the accrual for unfunded lending commitments at levels appropriate to absorb management’s estimate of credit losses expected over the life of the loan and lease portfolio and the portfolio of unfunded loan commitments.

Provision for credit losses was $15 million for the second quarter 2026, compared to $30 million for second quarter 2025. Net charge-offs in second quarter 2026 were $33 million, or 20 basis points, compared to $34 million, or 22 basis points, in second quarter 2025. Provision for credit losses was $30 million and $70 million for the six months ended June 30, 2026 and June 30, 2025, respectively.

The ACL to total loans and leases ratio decreased 7 basis points to 1.24% as of June 30, 2026 from 1.31% as of December 31, 2025, driven by improvements in certain macroeconomic factors and improved CRE credit quality. For additional information about the allowance for credit losses and general asset quality trends, refer to the Asset Quality section in this MD&A.

PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)

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Income Taxes

FHN recorded income tax expense of $66 million in second quarter 2026, compared to $64 million in second quarter 2025. For thesix months ended June 30, 2026 and 2025, FHN recorded income tax expense of$142 million and$127 million, respectively.

The effective tax rate was approximately 19.5% and 20.8% for the three months ended June 30, 2026 and June 30, 2025, respectively. The effective tax rate was approximately 20.8% and 21.3% for thesix months ended June 30, 2026 and 2025, respectively. The effective tax rate decreased compared to the prior year period due to a higher volume of discrete excess tax benefits realized from stock-based compensation vesting events in the quarter.

FHN’s effec tive tax rate is favorably affected by recurring items such as tax credits and other tax benefits from tax credit investments, tax-exempt income, and bank-owned life insurance. The effective rate is unfavorably affected by the non-deductible portions of FDIC premium and executive compensation. FHN’s effective tax rate also may be affected by items that may occur in any given period but are not consistent from period to period, such as changes in unrecognized tax benefits. The rate also may be affected by items resulting from business combinations.

A deferred tax asset ("DTA") or deferred tax liability ("DTL") is recognized for the tax consequences of temporary differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. The tax consequence is calculated by applying current enacted statutory tax rates to these temporary differences in future years. As of June 30, 2026, FHN’s gross DTA after valuation allowance and gross DTL were $615 million and $580 million, respectively, resulting in a net DTA of $35 million at June 30, 2026, compared with a net DTA of $92 million at December 31, 2025.

As of June 30, 2026, FHN had DTA balances related to federal and state income tax carryforwards of $22 million and $3 million, respectively, which will expire at various dates.

Based on current analysis, FHN believes that its ability to realize the net DTA is more likely than not. FHN monitors its net DTA and the needfor a valuation allowance on a quarterly basis. A significant adverse change in FHN’s taxable earnings outlook could result in the need for a valuation allowance.

Business Segment Results

FHN's reportable segments include Commercial, Consumer & Wealth; Wholesale; and Corporate. See Note 12 - Business Segment Information to the Consolidated Financial Statements in Part I, Item 1 of this report for additional disclosures related to FHN's segments.

Commercial, Consumer & Wealth

Pre-tax income for second quarter 2026 increased $12 million to $400 million, compared to $388 million for second quarter 2025, largely driven by a $12 million decrease in the provision for credit losses. Total revenue increased $21 million as net interest income increased $11 million and noninterest income increased $10 million compared to second quarter 2025. The increase in net interest income was largely driven by lower rates paid on interest-bearing deposits. The increase in noninterest income was largely driven by higher brokerage, management fees and commissions; deposit transactions and cash management fees; and other service charges and fees. Noninterest expense increased $21 million compared to second quarter 2025, largely due to increased advertising and public relations and technology expenses allocated to the segment in the current year, as well as higher personnel expense tied to increased incentive-based compensation and increased salary expense reflecting higher associate headcount.

Pre-tax income of $793 million for the six months ended June 30, 2026 increased $44 million compared to the same period of 2025, largely from a $42 million decrease in the provision for credit losses. Total revenue increased $47 million, as net interest income increased $28 million and noninterest income increased $19 million. The increase in net interest income was largely driven by improvement in the cost of interest-bearing deposits. The increase in noninterest income was largely driven by higher brokerage, management fees and commissions; deposit transactions and cash management fees; and other service charges and fees. Noninterest expense increased $45 million, largely attributable to increased advertising and public relations and technology expenses allocated to the segment in the current year, as well as higher personnel expense tied to increased incentive-based compensation and increased salary expense reflecting higher associate headcount, partially offset by lower other expenses.

Wholesale

Pre-tax income in the Wholesale segment decreased $7 million compared to second quarter 2025. Revenue increased $14 million, as net interest income increased $9 million and noninterest income increased $5 million compared to second quarter 2025. The increase in net interest income was largely driven by commercial loan

PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)

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growth, primarily loans to mortgage companies. The increase in noninterest income was largely driven by a $4 million increase in fixed income, reflecting higher ADR tied to more favorable market conditions during second quarter 2026 and higher other product revenue. Provision for credit losses increased $17 million and noninterest expense increased $4 million compared to second quarter 2025.

Pre-tax income of $57 million for the six months ended June 30, 2026 decreased $4 million from the same period of 2025, largely reflecting a $23 million increase in the provision for credit losses and a $12 million increase in noninterest expense, partially offset by a $31 million increase in revenue. The increase in noninterest expense was largely attributable to higher personnel expense tied to an increase in incentive-based compensation from growth in fixed income. The increase in revenue was largely a result of higher net interest income of $22 million, primarily driven by growth in loans to mortgage companies. Noninterest income also increased $9 million, driven by higher fixed income of $8 million.

Corporate

Pre-tax loss for the Corporate segment was $83 million for second quarter 2026 compared to $109 million for second quarter 2025, reflecting a $22 million increase in total revenues and a $20 million decrease in the provision for credit losses, partially offset by a $16 million increase in noninterest expense. The increase in revenue was driven by lower net interest expense of $15 million and higher noninterest income of $7 million. The increase in noninterest expense was largely attributable to higher personnel expense as a result of increased deferred compensation expense and higher Visa derivative valuation expenses of $5 million compared to second quarter 2025.

Pre-tax loss was $167 million for the six months ended June 30, 2026 compared to $216 million for the same period of 2025. The decrease in loss was driven by higher total revenues of $29 million and a decrease in provision for credit losses of $21 million, partially offset by a $1 million increase in noninterest expense. The increase in revenue was driven by lower net interest expense of $22 million and higher noninterest income of $7 million. Noninterest expense results reflect a $4 million expense credit related to an accrual release in deferred compensation in the prior year and Visa derivative valuation expenses of $5 million in both 2026 and 2025.