First Horizon Announces Results of its 2023 Company-Run Stress Test

Rhea-AI Summary

First Horizon Corporation announces strong stress test results, maintaining capital ratios well above regulatory minimums.

Positive

• Minimum common equity tier 1 capital ratio of 8.7% reflects $4 billion pre-tax loss absorption capacity beyond required minimums.
• Loan portfolio stressed loss rate of 2.3% outperforms Federal Reserve-published median CCAR-bank result.
• Pre-provision net revenue as a percentage of total assets of 2.7% exceeds peer median of 2.1%.

Negative

• None.

MEMPHIS, Tenn., Sept. 29, 2023 /PRNewswire/ -- First Horizon Corporation (NYSE: FHN) ("First Horizon" or "the Company") announced today its 2023 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 2023 Severely Adverse Scenario published by the Federal Reserve on February 9, 2023, reflect continued strong risk discipline.

"Our 2023 stress test results demonstrate the resilience of our diversified business model, strong capital position and commitment to prudent risk management through all economic environments," said Chief Financial Officer Hope Dmuchowski. "Our minimum common equity tier 1 capital ratio of 8.7% reflects an additional $4 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
	4Q22	Ending	Minimum
Common equity tier 1 capital ratio	10.2 %	8.8 %	8.7 %	4.5 %
Tier 1 risk-based capital ratio	11.9 %	10.4 %	10.4 %	6.0 %
Total risk-based capital ratio	13.3 %	12.6 %	12.6 %	8.0 %
Tier 1 leverage ratio	10.4 %	9.5 %	9.4 %	4.0 %

 

The Company's minimum common equity tier 1 ratio under stress of 8.7% reflects an additional $4.0 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 2.3% 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 2.7% exceeded the peer median of 2.1%.

For more information, please see First Horizon's 2023 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, 2023, 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.

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SOURCE First Horizon Corporation