First Horizon's Credit Ratings Outlook Upgraded to Positive by Moody's
Moody's affirmed First Horizon's Baa3 long-term issuer rating, as well as the ratings and assessments of its lead bank, First Horizon Bank, and its subsidiary, First Tennessee Real Estate Securities Co Inc. (together known as First Horizon).
The upgraded credit ratings outlook reflects First Horizon's strengthening regional banking franchise in the Southeast, where it has leveraged its expansive footprint and made key investments in technology and marketing to increase market share while bolstering risk management. Additionally, the company has continued to improve its deposit franchise by attracting depositors and retaining a high proportion of relationships. Despite near-term uncertain economic conditions, Moody's expects these improvements in asset quality and funding to continue.
Moody's affirmed FHN's ratings based on its consistent performance over the past few years, which includes decent asset quality, strong capitalization and adequate liquidity. The bank benefits from increased diversification in both geography and lending, supported by its specialty commercial and industrial (C&I) lending platforms, which offer secured, lower-loss lending products nationwide. Although CRE exposure is concerning, Moody's views the portfolio as conservatively underwritten, with limited office and construction exposure.
Another rationale for the rating is First Horizon's deposit franchise, which has shown resilience and adaptability, particularly since the collapse of its planned merger with Toronto-Dominion Bank in 2023.
In terms of capital strength, FHN maintains solid buffers, with a Moody's-adjusted tangible common equity (TCE) ratio of 10.6% and a CET1 ratio of 10.9% as of March 2025 — both within or slightly above its target ranges. Moody's expects the bank to maintain this positioning through prudent capital management, balancing loan growth with shareholder returns. Profitability is recovering as well, aided by its specialty lending and ability to manage deposit pricing. However, fee income remains volatile, particularly due to its reliance on FHN Financial's trading operations and mortgage-related businesses, which are sensitive to market conditions.
Moody's believes the combination of solid financial metrics, better franchise strength and effective risk controls support the affirmation of current ratings, while ongoing improvements in capital, asset quality and funding diversification rationalize the positive outlook.
However, Moody's noted that an upgrade is likely if FHN continues to demonstrate prudent risk management, sustains strong capitalization and improves deposit quality without over-relying on brokered or wholesale funding. Conversely, the outlook can revert to stable if the bank's risk profile worsens, CRE exposure increases, or capital and deposit stability weakens.
Over the past year, shares of First Horizon have risen 36.5% compared with the industry's growth of 24.4%.
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Currently, FHN carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
In May 2025, Fitch Ratings revised the outlook of UBS Group AG UBS, UBS AG and UBS Switzerland AG to Positive from Stable. UBS's long-term Issuer Default Rating has been affirmed at 'A,' whereas UBS AG's and UBS Switzerland AG's have been affirmed at 'A+.'
This upgrade reflects Fitch's expectation that UBS's well-advanced integration of Credit Suisse will continue to reduce execution risks while improving profitability.
In March 2025, Hercules Capital, Inc. HTGC announced that Morningstar DBRS upgraded its investment grade credit and corporate ratings to BBB (high) from BBB. The trend revision has been revised from Positive to Stable.
The upgraded ratings with a stable outlook indicate HTGC's sustained solid operating performance in 2024 and a roughly 14% rise in assets under management on a year-over-year basis.
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