FIRST HORIZON CORP

FHN’s future results could be affected both positively and negatively by several known trends. Key among those are changes in the U.S. and global economy and outlook, government actions affecting interest rates, and government actions and proposals which could have positive or negative impacts on the economy at large or on certain businesses, industries, or sectors, including changes in fiscal policy and changes in trade policy, such as the imposition of tariffs and related retaliatory responses. Additional risks relate to geopolitical instability

and conflict, political uncertainty, changes in federal policies (including those publicly discussed, formally proposed, or recently implemented) and the potential impacts of those changes on our businesses and clients, and the success or failure of FHN’s strategic initiatives.

In addition to trends and events noted elsewhere in this MD&A, FHN believes the following trends and events are noteworthy at this time.

Federal Reserve Policy, the Yield Curve, Trade Policy, Other Events

Federal Reserve and Rates

The Federal Reserve began to reduce short-term rates in the third quarter of 2024, reducing its target range from a high of 5.25% to 5.50% in the summer of 2024 to a low of 3.50% to 3.75% by the end of 2025. Although the Federal

Reserve held the target range steady through the first two quarters of 2026, the Federal Reserve increased its target range to 3.75% to 4.00% in September 2026. In its statement announcing its September 2026 rate increase, the Federal Reserve noted that, while economic activity

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continued to expand at a solid pace despite elevated uncertainty due, in part, to geopolitical developments, inflation remained elevated relative to the Federal Reserve's 2% goal. In October 2026, the Federal Reserve decided to maintain its target range at 3.75% to 4.00%, noting that the accumulation of more information will be helpful in determining the policy stance appropriate to return inflation to the Federal Reserve's 2% goal.

FHN continues to closely monitor economic developments and assess potential exposures. FHN cannot predict when or how much short-term rates will be changed, how market-driven long-term rates will behave, or how those actions may affect economic or business conditions or financial markets.

Yield Curve

Historically, the yield curve is usually upward sloping (higher rates for longer terms and lower rates for shorter terms). However, the yield curve can be relatively flat or inverted (downward sloping). Inversion normally is rare but has happened several times in the past, including most recently from the summer of 2022 until September 2024. Since the fall of 2024, the yield curve has continued to exhibit a positive, upward slope, though the steepness of the curve has varied. During most of 2025 and 2026, the curve has been moderately upward sloping, but the curve has generally been less steep since mid-2026.

Yield curve flattening and inversion generally reduce the profit FHN can make from lending by compressing FHN's net interest margin, and also generally reduce FHN's revenues from its fixed income bond trading. Both of those impacts occurred from 2022 through 2024, with fluctuations. Since the first quarter of 2025, net interest margin has consistently exceeded 2024 levels, as the yield curve has maintained its more typical upward slope, while fixed income bond trading revenues have fluctuated due to changing market conditions.

FHN cannot predict how the yield curve will change or whether the relationship between the yield curve, on the one hand, and FHN's net interest margin and fixed income bond trading revenues, on the other, will continue.

Mortgage Rates

Rate increases pushed home mortgage rates in the U.S. much higher in 2022 and 2023, reducing demand. FHN's direct mortgage lending and lending to mortgage companies saw business decline significantly in 2022 and 2023. Mortgage rates have generally remained elevated since 2023, with rates modestly abating in the latter part of 2025, but increasing once again in 2026. While the negative impacts of higher rates have been partially offset by market share gains in lending to mortgage companies, changes in interest rates and interest rate policy could continue to have a material impact on our mortgage lending and lending to mortgage companies.

Trade Policy

In 2025, the U.S. government announced new tariffs on a variety of goods and services. Subsequently, in February 2026, the U.S. Supreme Court ruled that the International Emergency Economic Powers Act ("IEEPA"), which the U.S. administration relied on to impose certain tariffs, does not authorize the administration to impose tariffs. In March 2026, the U.S. Court of International Trade ordered the U.S. Customs and Border Protection ("CBP") to process refunds of the IEEPA tariffs, although the court suspended immediate compliance with its order to permit the development of an automated refund process. Since March 2026, U.S. trade policy has continued to evolve, including the imposition of new tariffs on selected imported products under alternative sources of statutory authority, modifications to tariffs affecting certain trading partners, and negotiations concerning potential reductions in tariffs on trade between the United States and China. The CBP has also made substantial progress in processing refunds of tariffs previously imposed under the IEEPA, although litigation continues concerning the scope of required refunds. These developments, together with continuing legal challenges to certain tariff measures and uncertainty regarding future trade negotiations, have contributed to an evolving trade policy environment for U.S. businesses. As of early November 2026, the full impact of the U.S. Supreme Court's ruling and the administration's response; the timing, scope and duration of tariffs; and the timing, scope and duration of any retaliatory measures by foreign governments remain uncertain, as does the impact of tariffs on economic growth, inflation rates, and employment rates. Any significant change in economic conditions related to tariffs could materially affect our financial condition and results of operations.

Conflict in the Middle East

During 2026, military conflict involving Iran and the United States, together with related disruptions in the Middle East, has contributed to increased volatility in global energy markets, commodity prices and financial markets. Geopolitical tensions remain elevated, and additional disruptions could contribute to higher inflation, slower economic growth, continued market volatility and changes in monetary policy expectations. These conditions could result in higher funding costs, reduced loan demand, increased credit stress in certain industries and continued uncertainty regarding the path of interest rates. FHN continues to monitor these developments, although the ultimate magnitude and duration of any economic effects remain uncertain.

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Other Regulatory Proposals

In 2023, the Board of Governors of the Federal Reserve and other U.S. banking regulators issued a proposal to implement the final components of the Basel III framework ("Basel III Endgame"), which, if implemented, would have created some new requirements for banks, like FHN, with assets over $50 billion, but also would have created significantly increased regulatory constraints and compliance costs on all U.S. banks with assets over $100 billion.

In March 2026, the U.S. banking agencies rescinded the 2023 proposal and issued a revised proposal to implement

the Basel III Endgame, which would revise certain capital requirements, including risk-weighted asset calculations and the treatment of specific exposures. The notice-and-comment period for the 2026 proposal closed on June 18, 2026. The agencies have not yet adopted final rules, and the ultimate terms and timing of implementation remain uncertain. FHN is currently evaluating the potential impact of the proposed changes on its regulatory capital ratios and overall capital management strategy.

Greenhouse Gas (GHG) Reporting Regimes

Regulatory Enactments and Proposals

In 2023, California enacted two laws which, taken together, will require most larger companies doing business in California to report annually their greenhouse gas (GHG) emissions (SB 253) and to report biennially their climate-related financial risks and risk-mitigation measures (SB 261). In October 2026, the California Office of Administrative Law approved implementing regulations for GHG emissions reporting under SB 253, with the first reports of Scope 1 and Scope 2 GHG emissions required by November 10, 2026, and Scope 3 emissions reporting scheduled to begin in 2027.

California's GHG disclosure requirements are subject to pending federal litigation challenging their constitutionality. Although a federal appellate court has enjoined enforcement of California's separate climate-related financial risk disclosure law, SB 261, it has not enjoined enforcement of SB 253. The ultimate outcome of litigation challenging SB 253 and SB 261, and its effect on the scope and timing of the reporting requirements, remains uncertain.

Other states have considered, but not yet adopted, similar climate-related disclosure requirements.

In March 2024, the SEC adopted final rules which would require all U.S. companies with publicly traded securities to report annually their Scope 1 and 2 GHG emissions and related risk-management processes, and would include a related financial statement and audit requirement, among other things. Those rules, however, have yet to come into effect because the SEC suspended their effectiveness in April 2024 pending the resolution of legal challenges. In May 2026, the SEC issued a proposed rule to rescind its Climate Disclosure Rules. The SEC has not yet taken final action on that proposal.

Potential Business Impacts

Direct compliance costs related to California's GHG reporting regime and to the SEC's Climate Disclosure Rules, if implemented, will include creating systems to measure or estimate and capture relevant data, staffing, and engaging vendors, including a firm to provide required assurances.

Market Growth and Weather Events

FHN's principal markets are in the southern and southeastern United States, including most of the major Gulf Coast markets and several markets on the southern Atlantic seacoast. Many of these markets, both coastal and non-coastal, have experienced significant population growth over at least the past twenty years, generally accompanied by economic growth.

Many of FHN's fastest growing markets, including most significantly those in Florida, can be impacted significantly by hurricanes and other severe coastal and inland weather events.

In recent years, weather-related economic losses in the Southeast have remained elevated, and beyond hurricanes, severe convective storms (hail, tornadoes, and straight‑line winds) have been a meaningful driver of losses.

The availability, reliability, and cost of adequate property insurance are significant concerns for FHN and FHN's clients in affected markets. Although legislative reforms and other developments in insurance markets have generally stabilized market conditions compared to recent years, availability and pricing remain subject to reinsurance costs, loss experience, and regulatory changes, and conditions could re‑tighten following severe weather events. In addition, conditions continue to vary across state and local markets, and improvements in one jurisdiction may not generalize to others. This instability in property insurance markets increases FHN's risks of loan loss and business downturn.

More fundamentally, elevated insurance and casualty costs blunt a key factor driving growth in many of these high-growth markets: lower costs of living. If market growth slows, FHN's business could be impacted.