First Horizon Announces Results of its 2022 Company-Run Stress Test

Rhea-AI Summary

First Horizon Corporation (NYSE: FHN) reported robust results from its 2022 capital stress test, showcasing its resilience amid economic challenges. The company's common equity tier 1 capital ratio stood at 8.4%, with a pre-tax loss absorption capacity of $3.3 billion beyond regulatory minimums. Stress test results highlighted a loan portfolio stressed loss rate of 2.5%, significantly lower than the Federal Reserve's median. Additionally, First Horizon's pre-provision net revenue as a percentage of total assets was 2.3%, surpassing the peer median of 2.1%. These results affirm First Horizon's strong capital position and risk management practices.

Positive

• Common equity tier 1 capital ratio of 8.4%, exceeding regulatory minimums.
• $3.3 billion in pre-tax loss absorption capacity beyond required levels.
• Loan portfolio stressed loss rate of 2.5%, 3.9 percentage points below the median.
• Pre-provision net revenue of 2.3% of total assets, exceeding the peer median of 2.1%.

Negative

• None.

MEMPHIS, Tenn., Aug. 8, 2022 /PRNewswire/ -- First Horizon Corporation (NYSE: FHN) ("First Horizon" or "the Company") announced today the results of its 2022 Bank Holding Company-run capital stress test results which demonstrate the ability to successfully navigate periods of economic stress and maintain capital ratios well above regulatory-required minimums. These internally generated results, which utilized the 2022 Severely Adverse Scenario published by the Federal Reserve on February 10, 2022, reflect continued strong risk discipline.

"Our 2022 stress test results illustrate the resilience of our business model, commitment to prudent risk management and strong capital position," said Chief Financial Officer Hope Dmuchowski. "Our minimum common equity tier 1 capital ratio of 8.4% reflects an additional $3.3 billion of pre-tax loss absorption capacity beyond the required regulatory minimums and our stressed loss rates and pre-provision net revenue results once again outperformed the Federal Reserve published CCAR-bank median."

The following table reflects the Company's ending and minimum capital ratios under the Federal Reserve's Severely Adverse Scenario compared to the required regulatory minimums.

% Regulatory Ratio	Actual	Projected Stressed Capital Ratios		Minimum Regulatory Capital Ratios
	4Q21	Ending	Minimum
Common equity tier 1 capital ratio	9.9 %	8.7 %	8.4 %	4.5 %
Tier 1 risk-based capital ratio	11.0 %	10.5 %	10.3 %	6.0 %
Total risk-based capital ratio	12.3 %	12.7 %	12.4 %	8.0 %
Tier 1 leverage ratio	8.1 %	7.9 %	7.6 %	4.0 %

The Company's minimum common equity tier 1 ratio under stress of 8.4% reflects an additional $3.3 billion in pre-tax loss absorption capacity above the 4.5% regulatory required minimum. These results include a $0.15 quarterly common stock dividend throughout the nine-quarter forecast horizon. 

First Horizon's loan portfolio stressed loss rate of 2.5% was 3.9 percentage points below the Federal Reserve-published median CCAR-bank result. The Company's stress test utilized Current Expected Credit Loss-based models for allowance and credit losses and reflected total cumulative losses of $1.3 billion. Additionally, the Company's pre-provision net revenue as a percentage of total assets of 2.3% exceeded the peer median of 2.1%.

For more information, please see First Horizon's 2022 stress test disclosure at https://ir.firsthorizon.com/investor-relations/news-and-events/stress-testing-results/default.aspx.

About First Horizon
First Horizon Corp. (NYSE: FHN), with $85.1 billion in assets as of June 30, 2022, is a leading regional financial services company, dedicated to helping our clients, communities and associates unlock their full potential with capital and counsel. Headquartered in Memphis, TN, the banking subsidiary First Horizon Bank operates in 12 states across the southern U.S. The Company and its subsidiaries offer commercial, private banking, consumer, small business, wealth and trust management, retail brokerage, capital markets, fixed income, mortgage, and title insurance services. First Horizon has been recognized as one of the nation's best employers by Fortune and Forbes magazines and a Top 10 Most Reputable U.S. Bank. More information is available at www.FirstHorizon.com.

FHN-G

CONTACT:	Investor Relations, Ellen Taylor, (901) 523-4450
	Media Relations, Beth Ardoin, (337) 278-6868

 

 

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SOURCE First Horizon Corporation

FAQ

What were the results of First Horizon's 2022 stress test?

First Horizon's 2022 stress test results showed a common equity tier 1 capital ratio of 8.4% and a loan portfolio stressed loss rate of 2.5%, significantly below the Federal Reserve's median.

How much loss absorption capacity does First Horizon have?

First Horizon has $3.3 billion in pre-tax loss absorption capacity beyond the regulatory minimums.

What is First Horizon's pre-provision net revenue?

First Horizon's pre-provision net revenue as a percentage of total assets is 2.3%, higher than the peer median of 2.1%.

When was First Horizon's stress test report released?

First Horizon's stress test results were announced on August 8, 2022.

How does First Horizon's capital position compare to regulatory requirements?

First Horizon maintains a strong capital position with its common equity tier 1 ratio of 8.4%, well above the regulatory minimum of 4.5%.