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 nine months ended September 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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In third quarter 2026, net interest income increased $9 million compared to third quarter 2025 while net interest margin decreased 7 basis points to 3.48%. Net interest income benefited from lower funding costs as well as commercial loan growth, partially offset by the impact of lower loan yields. The rate on interest-bearing liabilities decreased 33 basis points and loan yields decreased 33 basis points compared to third quarter 2025.

Average earning assets increased $2.4 billion compared to third quarter 2025, largely driven by average loan growth of $1.7 billion. Average loan growth during the period reflected a $2.4 billion increase in average commercial loans and leases, partially offset by a $699 million decline in average consumer loans. Average earning asset growth was also driven by a $710 million increase in average interest-bearing deposits with banks.

Average interest-bearing liabilities increased $2.1 billion compared to third quarter 2025, primarily driven by an increase of $2.6 billion in average interest-bearing deposits, largely due to a $2.5 billion increase in average time deposits from higher levels of brokered deposits during the quarter. In addition, a $273 million increase in average other short-term borrowings was partially offset by decreases of $489 million in average securities sold under agreements to repurchase and $344 million in average federal funds purchased.

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 nine months ended September 30, 2026, net interest income of $2.0 billion increased $80 million from the same period in 2025, largely driven by lower funding costs and commercial loan growth, partially offset by lower loan yields.

Total average earning assets increased $2.2 billion for the nine months ended September 30, 2026 compared to the same period in 2025, largely driven by average loan growth of $1.8 billion, higher average interest-bearing deposits with banks of $199 million, and higher average trading securities balances of $152 million. 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 $1.6 billion in average time deposits and $817 million in average other interest-bearing deposits were partially offset by a decrease of $319 million in average savings deposits compared to the same period in 2025.

The year-to-date net interest margin of 3.50% increased 4 basis points compared to 3.46% for the same period of 2025 as a 41 basis point improvement in funding costs was partially offset by a decline of 27 basis points in loan yields.

Noninterest Income

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

Table I.2.4

NONINTEREST INCOME

Noninterest income for third quarter 2026 decreased $491 million, compared to third quarter 2025, primarily due to a $473 million loss related to the pending sale of select mortgage loans.

Fixed income of $49 million decreased $8 million compared to third quarter 2025. Fixed income product revenue decreased $9 million and revenue from other products increased $1 million. Average daily revenue was $629 thousand compared to $771 thousand for the same quarter of 2025, reflecting less favorable market conditions.

Brokerage, management fees and commissions increased $6 million, or 23%, largely reflecting improvements related to the outsourcing of FHN's retail brokerage and wealth management operations in third quarter 2025.

Mortgage banking income decreased $7 million compared to third quarter 2025, largely attributable to a $5 million pre-tax gain from a sale of mortgage servicing rights recognized during third quarter 2025.

Other income decreased $10 million, largely reflective of a decline in deferred compensation income tied to 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 nine months ended September 30, 2026 and 2025.

Table I.2.5

NONINTEREST INCOME

For the nine months ended September 30, 2026, noninterest income of $129 million decreased $456 million compared to the same period of 2025, primarily due to a $473 million loss related to the pending sale of select mortgage loans.

Fixed income decreased $1 million for the nine months ended September 30, 2026, compared to the same period of 2025. Fixed income product revenue increased $4 million, largely driven by more favorable market conditions, while revenue from other products decreased $5 million.

Deposit transactions and cash management fees increased $6 million, largely driven by higher cash management fees.

Brokerage, management fees and commissions increased $16 million, or 21%, largely reflecting improvements related to the outsourcing of FHN's retail brokerage and wealth management operations in third quarter 2025.

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

Mortgage banking income of $26 million decreased $7 million, largely attributable to a $5 million pre-tax gain from a sale of mortgage servicing rights recognized during third quarter 2025.

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 September 30, 2026 and 2025.

Table I.2.6

NONINTEREST EXPENSE

Noninterest expense of $529 million decreased $21 million, or 4%, compared to third quarter 2025.

Personnel expense decreased $1 million in third quarter 2026, largely reflecting a $7 million increase in salaries and benefits expense compared to third quarter 2025, offset by lower deferred compensation expense of $8 million, reflecting equity market fluctuations relative to the prior year.

Computer software expense increased $8 million, largely attributable to the timing of technology-related expenditures.

Legal and professional fees decreased $8 million, largely due to project expenses in technology and risk in the prior year.

The $28 million decrease in other expense compared to the prior year quarter was largely attributable to a $20 million contribution to the First Horizon Foundation in third quarter 2025. In addition, Visa derivative valuation expense was $5 million in third quarter 2026 compared to $10 million in third quarter 2025.

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 nine months ended September 30, 2026 and 2025.

Table I.2.7

NONINTEREST EXPENSE

For the nine months ended September 30, 2026, noninterest expense increased $35 million compared to the same period of 2025.

Personnel expense of $888 million increased $32 million, largely reflecting an increase in salaries tied to higher associate headcount. In addition, higher incentive-based compensation, bonus, and deferred compensation expenses were partially offset by lower equity-based compensation expense.

Computer software expense increased $20 million for the year-to-date period, largely from increased spending related to technology projects.

Operations services increased $8 million, largely attributable to higher outside computer services and cloud hosting expenses related to technology projects.

The $28 million decrease in other expense was primarily attributable to lower contributions expense tied to the $20 million contribution to the First Horizon Foundation in third quarter 2025 as well as lower Visa derivative valuation expenses of $5 million in the year-to-date period of 2026.

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 a benefit of $25 million for the third quarter 2026, compared to a benefit of $5 million for the third quarter 2025. The provision for credit losses in third quarter 2026 included an allowance reversal of $45 million related to the reclassification of certain mortgage loans to held for sale from the pending mortgage portfolio sale transaction that closed in October 2026. Net charge-offs in third quarter 2026 were $36 million, or 22 basis points, compared to $26 million, or 17

basis points, in third quarter 2025. Provision for credit losses was $5 million and $65 million for the nine months ended September 30, 2026 and September 30, 2025, respectively.

For 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 an income tax benefit of $18 million in third quarter 2026, compared to income tax expense of $78 million in third quarter 2025. For thenine months ended September 30, 2026 and 2025, FHN recorded income tax expense of$125 million and$205 million, respectively.

The effective tax rate was approximately 18.4% and 22.7% for the three months ended September 30, 2026 and September 30, 2025, respectively. The effective tax rate was approximately 21.2% and 21.8% for thenine months ended September 30, 2026 and 2025, respectively. The effective tax rate decreased compared to third quarter 2025 due to the loss on pending sale of mortgage loans in third quarter 2026.

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 non-deductible portions of the FDIC premium and executive compensation. FHN’s effective tax rate may also be affected by items that occur in any given period but are not consistent from period to period, such as changes in unrecognized tax benefits. The rate may also 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 currently enacted statutory tax rates to these temporary differences in future years. As of September 30, 2026, FHN’s gross DTA after valuation allowance and gross DTL were $785 million and $598 million, respectively, resulting in a net DTA of $187 million at September 30, 2026, compared with a net DTA of $92 million at December 31, 2025.

As of September 30, 2026, FHN had DTA balances related to federal and state income tax carryforwards of $149 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 third quarter 2026 decreased $25 million to $395 million, compared to $420 million for third quarter 2025. Total revenue increased $5 million, as noninterest income increased $9 million, largely driven by higher brokerage, management fees and commissions and deposit transactions and cash management fees, while net interest income decreased $4 million largely due to lower loan yields. The provision for credit losses increased $13 million compared to third quarter 2025. Noninterest expense increased $17 million, 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 salary rate increases and higher associate headcount.

Pre-tax income of $1.2 billion for the nine months ended September 30, 2026 increased $19 million compared to the same period of 2025, reflecting a $51 million increase in total revenue and $29 million decrease in the provision for credit losses, partially offset by a $61 million increase

in noninterest expense. Net interest income increased $24 million, largely due to improvement in the cost of interest-bearing deposits. Noninterest income increased $27 million, largely driven by higher brokerage, management fees and commissions; deposit transactions and cash management fees; and other service charges and fees. The increase in noninterest expense was 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 salary rate increases and higher associate headcount, partially offset by lower other expenses.

Wholesale

Pre-tax income in the Wholesale segment decreased $11 million compared to third quarter 2025. Revenue decreased $8 million, as a $6 million increase in net interest income was offset by a $14 million decrease in noninterest income. The increase in net interest income was largely driven by commercial loan growth. The decrease in noninterest income was largely driven by an $8 million decrease in fixed income reflecting lower ADR tied to less favorable market conditions during third quarter 2026, as well as a $7 million decrease in mortgage banking income reflecting a $5 million gain on sale of mortgage servicing rights in third quarter 2025. Provision for credit losses increased $8 million and noninterest

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

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expense decreased $5 million compared to third quarter 2025.

Pre-tax income of $98 million for the nine months ended September 30, 2026 decreased $15 million from the same period of 2025, largely reflecting a $31 million increase in the provision for credit losses and a $7 million increase in noninterest expense, partially offset by a $23 million increase in revenue. The increase in noninterest expense was largely attributable to higher outside services and expenses allocated to the mortgage business in the current year. The increase in revenue was largely a result of higher net interest income of $29 million, primarily driven by higher average loans to mortgage companies balances. Noninterest income decreased $6 million, driven by lower mortgage banking income due to the $5 million gain on sale of mortgage servicing rights during the previous year.

Corporate

Pre-tax loss for the Corporate segment increased $405 million to $533 million for third quarter 2026, compared to $128 million for third quarter 2025. Total revenues decreased $479 million, reflecting a $473 million loss recognized from the pending sale of select mortgage loans. The decrease in revenue was partially offset by a $41 million decrease in the provision for credit losses and a $33 million decrease in noninterest expense. The lower provision for credit losses reflected a $45 million benefit recognized from the reversal of allowance for select mortgage loans reclassified to held for sale. The decrease in noninterest expense largely reflects a decline in other expenses due to a $20 million contribution to the First Horizon Foundation in third quarter 2025 and a $5 million decrease in Visa derivative valuation expenses. Third quarter 2026 results also reflect restructuring costs of $3 million, while third quarter 2025 results include an FDIC special assessment expense credit of $2 million.

Pre-tax loss was $700 million for the nine months ended September 30, 2026 compared to $345 million for the same period of 2025. Total revenues decreased $450 million primarily due to the $473 million loss from the pending sale of select mortgage loans. The decrease in revenue was partially offset by a $62 million decrease in provision for credit losses and a $33 million decrease in noninterest expense. The lower provision for credit losses reflects the $45 million benefit recognized from the reversal of allowance for select mortgage loans reclassified to held for sale. Noninterest expense results reflect a decline in other expenses due to the $20 million contribution to the First Horizon Foundation during 2025 and a $5 million decrease in Visa derivative valuation expenses compared to the prior year. Year-to-date results for the current year reflect $3 million of restructuring costs, while 2025 results include a $4 million expense credit related to an accrual release in deferred compensation and a $2 million FDIC special assessment expense credit.