DEF: First Horizon Proxy Details Strong 2025, 2026 Meeting

First Horizon's definitive proxy statement announces the 2026 annual meeting, highlights strong 2025 financial performance, and details executive compensation and governance.

Summary

• The 2026 annual meeting of shareholders will be held on April 28, 2026, at 8:00 a.m. Central Time in Memphis, Tennessee.
• Shareholders will vote on the election of 12 directors, an advisory resolution to approve executive compensation (say on pay), and the ratification of KPMG LLP as auditors for 2026.
• Full year 2025 net income available to common shareholders (NIAC) increased 29% to $956 million.
• Full year earnings per share (EPS) was $1.87, up 38% from 2024.
• The net charge-off ratio for 2025 was 19 basis points, consistent with 2024's 18 basis points.
• Maintained strong capital levels, ending 2025 with a CET1 ratio of 10.63%.
• Returned $894 million through share repurchases and over $1.2 billion in total capital to shareholders, including dividends, in 2025.
• The quarterly cash dividend on common stock was increased from $0.15 to $0.17 per share, beginning in April 2026.
• One-year total shareholder return (TSR) was 22.12% as of December 31, 2025, and five-year TSR exceeded the S&P 500, KBW Nasdaq Regional Banking Index (KRX), and KBW Nasdaq Bank Index (BKX).
• Net loans and leases grew $1.7 billion (2.7%) compared to year-end 2024, and total deposits grew $1.9 billion.
• Net interest income for 2025 increased 4.4% ($111 million) to $2,622 million, driven by lower deposit pricing partially offset by lower loan yields.
• Noninterest income increased 17.4% ($118 million) to $797 million, partly due to improvements in fixed income and mortgage banking businesses.
• Noninterest expense increased 1.9% ($39 million) to $2,074 million, primarily due to higher variable compensation and an increased contribution to the First Horizon Foundation.
• Return on tangible common equity (ROTCE) increased 27.5% to 14.0% in 2025 from 11.0% in 2024.
• Pretax net income (PTI) increased 27.4% to $1,281 million in 2025.
• The efficiency ratio improved to 60.7% in 2025 from 62.1% in 2024.
• Strategic initiatives advanced, including digital system transformation, building an enterprise data hub, enhancing client experiences, strategic hiring, and implementing an enhanced performance management process and HorizonU learning platform.
• Foundations distributed over $21 million to nonprofit organizations in 2025.
• The 2025 'say on pay' advisory resolution on executive compensation received a 97% FOR vote from shareholders.
• 86% of the CEO's 2025 total direct compensation was at risk for market or financial performance.

Sentiment

Score: 8

Explanation: StockSavvy.ai views this as a strong positive filing, reflecting robust financial growth, effective capital management through share repurchases and dividend increases, and clear strategic execution in digital transformation and talent investment. The outperformance against key financial metrics and peer indices for long-term TSR indicates solid operational health.

Positives

• Strong financial performance in 2025, with net income available to common shareholders increasing 29% to $956 million and EPS rising 38% to $1.87.
• Maintained excellent asset quality with a net charge-off ratio of 19 basis points, consistent with the prior year.
• Robust capital position demonstrated by a CET1 ratio of 10.63% at year-end 2025.
• Significant capital return to shareholders, including $894 million in share repurchases and over $1.2 billion total when dividends are included.
• Increased quarterly cash dividend from $0.15 to $0.17 per share, effective April 2026, signaling confidence in future earnings.
• Superior shareholder returns, with a one-year TSR of 22.12% and a five-year TSR that outperformed the S&P 500 and key regional banking indices (KRX, BKX).
• Improved profitability metrics, including a 27.5% increase in ROTCE to 14.0% and a 27.4% rise in PTI to $1,281 million.
• Enhanced operational efficiency, with the efficiency ratio improving to 60.7% from 62.1% in 2024.
• Growth in net loans and leases by $1.7 billion (2.7%) and total deposits by $1.9 billion.
• Substantial progress in digital transformation initiatives, including the development of an Enterprise Data Hub and modernization of client-facing technologies.
• Strategic hiring efforts to bolster banker talent and enhance product offerings, supporting future growth.
• Commitment to corporate responsibility, with over $21 million distributed to nonprofit organizations and significant community development investments.

Risks

• Uncertain and evolving economic environment, including competitive market conditions, tariffs, and interest rate fluctuations, which could impact loan and deposit growth.
• Strategic risks, which are continuously overseen by the Board of Directors.
• Major risk exposures, risk management deficiencies, and emerging risks, which are monitored and reported by the Chief Risk Officer to the Risk Committee.
• Artificial intelligence and information security (including cybersecurity) risks, with steps taken to monitor, mitigate, and control them.
• Compliance and regulatory risks that may materially affect financial statements or internal controls, reviewed by the Audit Committee.
• Risks associated with incentive compensation programs and arrangements, overseen by the Compensation Committee to ensure appropriate management and compliance.
• Operational risks related to scalability, efficiency, and controls, addressed through process optimization and technology investments.
• Risks from unusual shortfalls or windfalls in revenues associated with interest rate movements, asset sales, and other uncontrollable or unusual events, considered in quality of earnings assessments.
• Personal uncertainties for associates during periods of significant industry consolidation, addressed by Change in Control severance plans and agreements.

Future Outlook

The company plans to continue its multi-year digital transformation by building an enterprise data hub, improving client experiences through enhanced technology, setting up a scalable future-state technology architecture, and introducing new product and banking capabilities. Strategic hiring will focus on adding banker talent, enhancing specific products and groups, serving retail markets, and providing leadership for the consumer business. Investments in associates will continue through updated performance management processes and new technology tools. The Executive Change in Control Severance Plan is expected to gradually replace legacy agreements through attrition.

Management Comments

• "On behalf of the Board of Directors, we are pleased to invite you to attend our 2026 annual meeting of shareholders."
• "We thank you for your continued support of First Horizon and for the trust and confidence you place in our company."
• "We thoughtfully developed new methods, processes, and systems while preserving the high level of service our associates bring to clients, striving to live up to the promise of our marketing slogan: Big Bank Muscle, Small Bank Hustle."
• "As we celebrated our 161st year in business, we strove to live out our commitment to be Here for Good for all our stakeholders."
• "Holding ourselves to high standards of ethical conduct and operational excellence, we continue to focus on building a company that serves our associates, clients, communities, and shareholders well both now and into the future."

Industry Context

StockSavvy.ai notes that First Horizon's strong 2025 financial performance, particularly in net income, EPS, and ROTCE, demonstrates resilience and effective strategy execution in an "uncertain and evolving economic environment" and "competitive market conditions." The outperformance of its five-year TSR against the S&P 500 and regional banking indices (KRX, BKX) suggests a strong competitive position relative to its peers. The focus on digital transformation and strategic hiring aligns with broader industry trends towards technological advancement and talent acquisition to enhance client experience and operational efficiency in the banking sector.

Comparison to Industry Standards

• The five-year Total Shareholder Return (TSR) exceeded that of the S&P 500, the KBW Nasdaq Regional Banking Index (KRX), and the KBW Nasdaq Bank Index (BKX), indicating strong long-term performance relative to broader markets and regional banking peers.
• The 2022-2024 average Return on Tangible Common Equity (ROTCE) of 18.43% significantly outperformed the KRX index median of 15.17%, placing the company in the top quartile for this key profitability metric.
• The 2022-2025 TSR of 5% was below the KRX index median of 8% for the same period, placing the company in the 3rd quartile for this specific three-year TSR metric, suggesting some variability in short-to-medium term relative market performance.
• The efficiency ratio improved to 60.7% in 2025 from 62.1% in 2024, demonstrating better cost management and operational leverage, which is a positive trend compared to industry benchmarks.
• The net charge-off ratio of 19 basis points in 2025 remained consistent with 2024's 18 basis points, highlighting disciplined client selection and underwriting processes that are competitive within the banking industry.
• The CET1 ratio of 10.63% at year-end 2025 indicates strong capital levels, which is a critical benchmark for financial stability and regulatory compliance, positioning the company favorably against its peers.

Management Changes

Corporate Governance

Legal Proceedings

• The Audit Committee receives reports from the Chief Audit Executive regarding risk governance, risk assessment, and risk management, including compliance with legal and regulatory requirements.
• The Audit Committee reviews associate complaints or material reports or inquiries received from regulators or government agencies and management's responses.
• The Audit Committee discusses any significant compliance issues raised in reports or inquiries received from regulators or government agencies.
• The Audit Committee discusses with the General Counsel pending and threatened claims that may have a material impact on the financial statements.

Related Party Transactions

• Lending transactions and other banking or financial services transactions are conducted in the ordinary course of business with executive officers, directors, nominees, their immediate family members, affiliated entities, and persons beneficially owning more than five percent of common stock.
• Such transactions are made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with non-affiliated persons, and do not involve more than the normal risk of collectability or present other unfavorable features.
• The company offers all associates, including executive officers (except for credit extended while serving as an executive officer), discounts on certain financial services, such as no-fee domestic wire transfers.
• Payments are made by the company to business entities or charitable, educational, industry, or professional organizations affiliated with a director or their immediate family member for sponsorships, membership dues, shipping and print services, and accommodation expenses for business travel, provided these are in the ordinary course of business and on substantially the same terms as with non-affiliated persons.
• Charitable contributions are made by the company or its foundations to charitable organizations with which a director or immediate family member is affiliated, provided the amount does not exceed the greater of $500,000 or 2% of the charitable organization's consolidated gross revenue in a fiscal year.

Stakeholder Impact

• Shareholders benefit from increased quarterly cash dividends (from $0.15 to $0.17 per share), substantial share repurchases ($894 million), and strong one-year (22.12%) and five-year TSR performance, along with enhanced corporate governance through proxy access and director accountability policies.
• Employees (associates) benefit from continued investment in talent, an updated performance management process, new technology tools (HorizonU), competitive health and welfare programs, professional development opportunities, and a people-focused 'Firstpower Culture.' The Executive Change in Control Severance Plan aims to mitigate personal risk during industry consolidation.
• Clients are positively impacted by the company's focus on delivering premium service and value, enhanced digital experiences, modernized account opening, improved payments capabilities, and strengthened fraud prevention, aligning with the 'Big Bank Muscle, Small Bank Hustle' marketing slogan.
• Communities receive significant support through over $21 million distributed to nonprofit organizations by the company's foundations in 2025, including over $16 million dedicated to lowand moderate-income communities, and support for financial literacy programs.
• Creditors are reassured by the company's maintained strong capital levels, evidenced by a CET1 ratio of 10.63%, indicating financial stability and prudent risk management.

Next Steps

• Hold the 2026 annual meeting of shareholders on April 28, 2026, to vote on director elections, executive compensation, and auditor ratification.
• Continue the multi-year plan to transform digital systems, including building an enterprise data hub and enhancing client experiences.
• Continue strategic hiring to add banker talent and enhance product groups.
• Continue investing in associates through updated performance management and new technology tools like HorizonU.
• The Board will annually evaluate the company's leadership structure to ensure its appropriateness.
• Mr. Compton is designated to serve as Lead Director effective upon Mr. Reed's departure at the 2026 annual meeting.
• The increased quarterly cash dividend of $0.17 per share will begin in April 2026.

Key Dates

Recommendation

The filing details robust financial performance in 2025, including significant increases in net income, EPS, and ROTCE, coupled with strong capital management through substantial share repurchases and a dividend increase. The company's five-year TSR outperformance against major indices, combined with strategic investments in digital transformation and talent, positions it well for continued growth. While some PSU metrics had mixed TSR performance, the overall financial health and strategic direction outlined in the proxy statement suggest a compelling investment opportunity.

Keywords

First Horizon, FHN, Banking, Financial Services, Regional Bank, Proxy Statement, Corporate Governance, Executive Compensation, Risk Management, Shareholder Return, Dividends, Capital, Digital Transformation, Cybersecurity, ESG, Net Income, EPS, ROTCE, CET1, Say on Pay