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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________________  
FORM 10-Q

 ______________________________________
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 20202021
or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from         to                     
Commission File Number 001-15185
____________________________________ 
fhn-20210331_g1.jpg
____________________________________
First Horizon National Corporation
(Exact name of registrant as specified in its charter)
______________________________________
TN62-0803242
(State or other jurisdiction

incorporation of organization)
(IRS Employer

Identification No.)
165 Madison Avenue
Memphis,Tennessee38103
(Address of principal executive office)(Zip Code)

(Registrant’s telephone number, including area code) (901) (901) 523-4444

(Former name, former address and former fiscal year, if changed since last report)



Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of Exchange on which Registered
$.625 Par Value Common Capital Stock FHNNew York Stock Exchange LLC
Depositary Shares, each representing a 1/4,000th interest in
a share of Non-Cumulative Perpetual Preferred Stock,
Series A
FHN PR ANew York Stock Exchange LLC
Depositary Shares, each representing a 1/400th interest in
a share of Non-Cumulative Perpetual Preferred Stock, Series B		FHN PR BNew York Stock Exchange LLC
Depositary Shares, each representing a 1/400th interest in
a share of Non-Cumulative Perpetual Preferred Stock, Series C		FHN PR CNew York Stock Exchange LLC
Depositary Shares, each representing a 1/400th interest in
a share of Non-Cumulative Perpetual Preferred Stock, Series D		FHN PR DNew York Stock Exchange LLC
Depositary Shares, each representing a 1/4,000th interest in
a share of Non-Cumulative Perpetual Preferred Stock, Series E		FHN PR ENew York Stock Exchange LLC
Depositary Shares, each representing a 1/4,000th interest in
a share of Non-Cumulative Perpetual Preferred Stock, Series F*		FHN PR FNew York Stock Exchange LLC
* Denotes class of security issued and outstanding on the date this report is filed, but not at March 31, 2021. Listing on the New York Stock Exchange is expected, but not final at time of filing.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    ☒  Yes    ☐  No
☒Yes☐  No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    ☒Yes☐  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer☒Accelerated filer☐Non-accelerated filer☐
Smaller reporting company☐Emerging Growth Company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No
☒ No

APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
ClassOutstanding on March 31, 20202021
Common Stock, $.625 par value311,862,565552,374,489




fhn-20210331_g1.jpg
Table of Contents
FIRST HORIZON NATIONAL CORPORATION
INDEX
1
3
4
15
Item 1. Financial Statements
15
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
7768
Item 3. Quantitative and Qualitative Disclosures about Market Risk
11799
Item 4. Controls and Procedures
11799
118100
Item 1. Legal Proceedings
118100
Item 1A. Risk Factors
118100
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
119100
Item 3. Defaults Upon Senior Securities
119100
Item 4. Mine Safety Disclosures
119100
Item 5. Other Information
119100
Item 6. Exhibits
120101
Exhibit 10.1
Exhibit 10.2
Exhibit 10.3
Exhibit 10.4
Exhibit 31(a)
Exhibit 31(b)
Exhibit 32(a)
Exhibit 32(b)
Signatures
121



---------------------------
PART 1. FINANCIAL INFORMATION
---------------------------
Item 1. Financial Statements
103


GLOSSARY OF ACRONYMS AND TERMS

The following is a list of common acronyms and terms used throughout this report:


ACLAllowance for credit losses
ADRAverage daily revenue
AFSAvailable for sale
AIRAccrued interest receivable
ALCOAsset/Liability Committee
ALLLAllowance for loan and lease losses
ALMAsset/liability management
AOCIAccumulated other comprehensive income
ASCFASB Accounting Standards Codification
AssociatePerson employed by FHN
ASUAccounting Standards Update
BankFirst Horizon Bank
BOLIBank-owned life insurance
C&ICommercial, financial, and industrial loan portfolio
CARES ActCoronavirus Aid, Relief, and Economic Security Act
CBFCapital Bank Financial
CCARComprehensive Capital Analysis and Review
CDCertificate of deposit
CECLCurrent expected credit loss
CEOChief Executive Officer
CFPBConsumer Financial Protection Bureau
CMOCollateralized mortgage obligations
CompanyFirst Horizon Corporation
CorporationFirst Horizon Corporation
CRACommunity Reinvestment Act
CRECommercial Real Estate
CRMCCredit Risk Management Committee
DSCRDebt service coverage ratios
DTADeferred tax asset
DTIDebt-to-income
DTLDeferred tax liability
EPSEarnings per share
ESOPEmployee stock ownership plan
FASBFinancial Accounting Standards Board
FDICFederal Deposit Insurance Corporation

Federal ReserveFederal Reserve Board
FFPFederal funds purchased
FFSFederal funds sold
FHAFederal Housing Administration
FHLBFederal Home Loan Bank
FHLMC /
Freddie Mac		Federal Home Loan Mortgage Corporation
FHNFirst Horizon Corporation
FHNFFHN Financial; FHN's fixed income division
FICOFair Isaac Corporation
FINRAFinancial Industry Regulatory Authority
FNMA / Fannie MaeFederal National Mortgage Association
First HorizonFirst Horizon Corporation
FRBFederal Reserve Bank or the Federal Reserve Board
FTBNAFirst Tennessee Bank National Association (former name of the Bank)
FTEFully taxable equivalent
FTHCFirst Tennessee Housing Corporation
FTNFFTN Financial (former name of FHNF)
FTNMCFirst Tennessee New Markets Corporation
FTRESCFT Real Estate Securities Company, Inc.
GAAPGenerally accepted accounting principles (U.S.)
GNMAGovernment National Mortgage Association or Ginnie Mae
GSEGovernment sponsored enterprises, in this report references Fannie Mae and Freddie Mac
HELOCHome equity line of credit
HFSHeld for Sale
HTMHeld to maturity
HUDDepartment of Housing and Urban Development
IBKCIBERIABANK Corporation
IBKC mergerFHN's merger of equals with IBKC that closed July 2020
ISDAInternational Swap and Derivatives Association
IRSInternal Revenue Service

FIRST HORIZON CORPORATION11Q21 FORM 10-Q REPORT

LGDLoss given default
LIBORLondon Inter-Bank Offered Rate
LIHTCLow Income Housing Tax Credit
LLCLimited Liability Company
LMCLoans to mortgage companies
LOCOMLower of cost or market
LRRDLoan Rehab and Recovery Department
LTVLoan-to-value
MBSMortgage-backed securities
MD&AManagement’s Discussion and Analysis of Financial Condition and Results of Operations
MSRMortgage servicing rights
MSRBMunicipal Securities Rulemaking Board
NAICSNorth American Industry Classification System
NIINet interest income
NIMNet interest margin
NMNot meaningful
NMTCNew Market Tax Credit
NOLNet operating loss
NPANonperforming asset
Non-PCDNon-Purchased Credit Deteriorated Financial Assets
NPLNonperforming loan
NSFNon-sufficient funds
OCCOffice of the Comptroller of the Currency
OISOvernight indexed swap
OREOOther Real Estate Owned
OTCOne-time close, a mortgage product which allowed simplified conversion of a construction loan to permanent financing
OTTIOther than temporary impairment
PCAOBPublic Company Accounting Oversight Board
PCDPurchased Credit Deteriorated Financial Assets
PCIPurchased credit impaired
PDProbability of default
PMPortfolio managers
PPPPaycheck Protection Program
PSUPerformance Stock Unit
REReal estate
RMRelationship managers
ROAReturn on assets
ROCEReturn on average common shareholders' equity

ROTCEReturn on tangible common equity
ROURight-of-use
RPLReasonably Possible Loss
RSURestricted stock unit
RULCReserve for unfunded lending commitments
RWARisk-weighted assets
SBASmall Business Administration
SECSecurities and Exchange Commission
SVaRStressed Value-at-Risk
TATangible assets
TCETangible common equity
TDRTroubled Debt Restructuring
TRUPTrust preferred loan
UPBUnpaid principal balance
USDAUnited States Department of Agriculture
VaRValue-at-Risk
VIEVariable Interest Entities
we / us / ourFirst Horizon Corporation
FIRST HORIZON CORPORATION21Q21 FORM 10-Q REPORT

Forward-Looking Statements
This report, including material incorporated into it, contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements pertain to FHN's beliefs, plans, goals, expectations, and estimates. Forward-looking statements are not a representation of historical information, but instead pertain to future operations, strategies, financial results, or other developments. Forward-looking statements can be identified by the words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “should,” “is likely,” “will,” “going forward,” and other expressions that indicate future events and trends.
Forward-looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, operational, economic, and competitive uncertainties and contingencies, many of which are beyond FHN’s control, and many of which, with respect to future business decisions and actions (including acquisitions and divestitures), are subject to change and could cause FHN’s actual future results and outcomes to differ materially from those contemplated or implied by forward-looking statements or historical performance. Examples of uncertainties and contingencies include, among other important factors:
•the possibility that the anticipated benefits of the IBKC merger will not be realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in any or all of FHN’s market areas;
•the possibility that the IBKC merger may be more expensive to integrate than anticipated, including as a result of unexpected factors or events;
•potential adverse reactions or changes to business or associate relationships resulting from the IBKC merger;
•the potential impacts on FHN’s businesses and clients of the COVID-19 pandemic, including negative impacts from quarantines and other public restrictions, market declines and volatility, and changes in client behavior;
•potential claims alleging mortgage servicing failures, individually, on a class basis, or as master servicer of securitized loans;
•potential claims relating to participation in government programs, especially lending or other financial services programs;
•global, general and local economic and business conditions, including economic recession or depression;
•the stability or volatility of values and activity in the residential housing and commercial real estate markets;
•expectations of and actual timing and amount of interest rate movements, including the slope and shape of the yield curve, which can have a significant impact on a financial services institution;
•market and monetary fluctuations, including fluctuations in mortgage markets;
•the financial condition of borrowers and other counterparties;
•competition within and outside the financial services industry;
•the occurrence of natural or man-made disasters, including pestilence, conflicts, or terrorist attacks, or other adverse external events;
•the effectiveness and cost-efficiency of FHN’s hedging practices;
•fraud, theft, or other incursions through conventional, electronic, or other means directly or indirectly affecting FHN or its clients, business counterparties, or competitors;
•FHN’s ability to adapt products and services to changing industry standards and client preferences;
•risks inherent in originating, selling, servicing, and holding loans and loan-based assets, including prepayment risks, pricing concessions, fluctuation in U.S. housing and other real estate prices, fluctuation of collateral values, and changes in client profiles;
FIRST HORIZON CORPORATION31Q21 FORM 10-Q REPORT

•changes in the regulation of the U.S. financial services industry;
•changes in laws, regulations, and administrative actions, including executive orders, whether or not specific to the financial services industry;
•changes in accounting policies, standards, and interpretations;
•evolving capital and liquidity standards under applicable regulatory rules;
•accounting policies and processes requiring management to make estimates about matters that are uncertain; and
•other factors that may affect the future results of FHN.
FHN cautions readers of this report that the list above is not exhaustive as of the date of this report. Further,
FHN assumes no obligation to update or revise any forward-looking statements that are made in this report or in any other statement, release, report, or filing from time to time. Actual results could differ and FHN’s estimates and expectations could change, possibly materially, because of one or more factors, including those factors listed above or presented elsewhere in this report or those factors listed in material incorporated by reference into this report. In evaluating forward-looking statements and assessing FHN’s prospects, readers of this report should carefully consider the factors mentioned above along with the additional risk and uncertainty factors discussed in Item 1A of Part II of this report and in the forepart, and in Items 1, 1A, and 7, of FHN’s most recent Annual Report on Form 10-K, along with any additional factors which might materially affect future results and outcomes.
Non-GAAP Information
Certain measures included in this report are “non-GAAP,” meaning they are not presented in accordance with U.S. GAAP and also are not codified in U.S. banking regulations currently applicable to FHN. Although other entities may use calculation methods that differ from those used by FHN for non-GAAP measures, FHN’s management believes such measures are relevant to understanding the financial condition, capital position, and financial results of FHN and its business segments. Non-GAAP measures are reported to FHN’s management and Board of Directors through various internal reports. The non-GAAP measures presented in this report are: pre-provision net revenue, return on average tangible common equity, tangible common equity to tangible assets, adjusted tangible common equity to risk-weighted assets, and tangible book value per common share. Table 20 appearing in the MD&A (Item 2 of Part I) of this report provides a reconciliation of non-GAAP items presented in this report to the most comparable GAAP presentation.
Presentation of regulatory measures, even those which are not GAAP, provide a meaningful base for comparability to other financial institutions subject to the same regulations as FHN, as demonstrated by their use by banking regulators in reviewing capital adequacy of financial institutions. Although not GAAP terms, these regulatory measures are not considered “non-GAAP” under U.S. financial reporting rules as long as their presentation conforms to regulatory standards. Regulatory measures used in this report include: common equity tier 1 capital, generally defined as common equity less goodwill, other intangibles, and certain other required regulatory deductions; tier 1 capital, generally defined as the sum of core capital (including common equity and instruments that cannot be redeemed at the option of the holder) adjusted for certain items under risk based capital regulations; and risk-weighted assets, which is a measure of total on- and off-balance sheet assets adjusted for credit and market risk, used to determine regulatory capital ratios.
FIRST HORIZON CORPORATION41Q21 FORM 10-Q REPORT

PART I. FINANCIAL INFORMATION
Item 1.     Financial Statements
Consolidated Balance Sheets (unaudited)
6
The Consolidated Condensed Statements of Income (unaudited)
37
The Consolidated Condensed Statements of Comprehensive Income (unaudited)
48
The Consolidated Condensed Statements of Changes in Equity (unaudited)
59
The Consolidated Condensed Statements of Cash Flows (unaudited)
610
The Notes to the Consolidated Condensed Financial Statements (unaudited)
811
Note 1 Financial InformationBasis of Presentation and Accounting Policies
811
Note 2 Acquisitions and Divestitures
1612
Note 3 Investment Securities
1814
Note 4 Loans and Leases
2117
Note 5 Allowance for LoanCredit Losses
3325
Note 6 Intangible AssetsMortgage Banking Activity
3627
Note 7 Other IncomeGoodwill and Other ExpenseIntangible Assets
3728
Note 8 Preferred Stock
29
Note 89 Components of Other Comprehensive Income/(loss)Income (Loss)
3830
Note 910 Earnings Per Share
3931
Note 1011 Contingencies and Other Disclosures
4032
Note 11 Pension, Savings, and Other Employee Benefits12 Retirement Plans
4335
Note 1213 Business Segment Information
4436
Note 1314 Variable Interest Entities
4739
Note 1415 Derivatives
5142
Note 1516 Master Netting and Similar Agreements - Repurchase, Reverse Repurchase, and Securities Borrowing Transactions
5849
Note 1617 Fair Value of Assets &and Liabilities
6051
Note 17 Restructuring, Repositioning, and Efficiency
75
Note 18 Other Events
7667
This financial information reflects all adjustments that are, in the opinion of management, necessary for a fair presentation of the financial condition and results of operations for the interim periods presented.



FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 1
FIRST HORIZON CORPORATION51Q21 FORM 10-Q REPORT




CONSOLIDATED CONDENSED STATEMENTS OF CONDITIONBALANCE SHEETS
(Unaudited)December 31,
March 31,
(Dollars in millions, except per share amounts)20212020
Assets
Cash and due from banks$1,169 $1,203 
Interest-bearing deposits with banks11,635 8,351 
Federal funds sold and securities purchased under agreements to resell520 445 
Trading securities1,076 1,176 
Securities available for sale at fair value8,351 8,047 
Loans held for sale (including $449 and $405 at fair value, respectively)811 1,022 
Loans and leases (including $17 and $16 at fair value, respectively)58,600 58,232 
Allowance for loan and lease losses(914)(963)
Net loans and leases57,686 57,269 
Premises and equipment719 759 
Goodwill1,511 1,511 
Other intangible assets339 354 
Other assets3,696 4,072 
Total assets$87,513 $84,209 
Liabilities
Noninterest-bearing deposits$25,046 $22,173 
Interest-bearing deposits48,120 47,809 
Total deposits73,166 69,982 
Trading liabilities454 353 
Short-term borrowings2,203 2,198 
Term borrowings1,671 1,670 
Other liabilities1,712 1,699 
Total liabilities79,206 75,902 
Equity
Preferred stock, Non-cumulative perpetual, no par value; authorized 5,000,000 shares; issued 26,250 shares470 470 
Common stock, $0.625 par value; authorized 700,000,000 shares; issued 552,374,489 and 555,030,652 shares, respectively345 347 
Capital surplus5,036 5,074 
Retained earnings2,402 2,261 
Accumulated other comprehensive loss, net(241)(140)
FHN shareholders' equity8,012 8,012 
Noncontrolling interest295 295 
Total equity8,307 8,307 
Total liabilities and equity$87,513 $84,209 
  First Horizon National Corporation
  (Unaudited) December 31
  March 31 
(Dollars in thousands, except per share amounts) 2020 2019
Assets:    
Cash and due from banks $537,564
 $633,728
Federal funds sold 30,050
 46,536
Securities purchased under agreements to resell (Note 15) 562,435
 586,629
Total cash and cash equivalents 1,130,049
 1,266,893
Interest-bearing cash 670,525
 482,405
Trading securities 1,877,514
 1,346,207
Loans held-for-sale (a) 595,601
 593,790
Securities available-for-sale (Note 3) 4,544,907
 4,445,403
Securities held-to-maturity (Note 3) 10,000
 10,000
Loans, net of unearned income (Note 4) (b) 33,378,303
 31,061,111
Less: Allowance for loan losses (Note 5) 444,490
 200,307
Total net loans 32,933,813
 30,860,804
Goodwill (Note 6) 1,432,787
 1,432,787
Other intangible assets, net (Note 6) 124,892
 130,200
Fixed income receivables 180,569
 40,114
Premises and equipment, net (March 31, 2020 and December 31, 2019 include $7.5 million and $9.7 million, respectively, classified as held-for-sale) 447,812
 455,006
Other real estate owned (“OREO”) (c) 15,837
 17,838
Derivative assets (Note 14) 696,250
 183,115
Other assets 2,536,822
 2,046,338
Total assets $47,197,378
 $43,310,900
Liabilities and equity:    
Deposits:    
Savings $13,860,342
 $11,664,906
Time deposits, net 3,058,198
 3,618,337
Other interest-bearing deposits 8,561,302
 8,717,341
Interest-bearing 25,479,842
 24,000,584
Noninterest-bearing 8,939,808
 8,428,951
Total deposits 34,419,650
 32,429,535
Federal funds purchased 476,013
 548,344
Securities sold under agreements to repurchase (Note 15) 788,595
 716,925
Trading liabilities 452,611
 505,581
Other short-term borrowings 4,060,673
 2,253,045
Term borrowings 792,751
 791,368
Fixed income payables 91,274
 49,535
Derivative liabilities (Note 14) 234,984
 67,480
Other liabilities 825,247
 873,079
Total liabilities 42,141,798
 38,234,892
Equity:    
First Horizon National Corporation Shareholders’ Equity:    
Preferred stock - Series A, non-cumulative perpetual, no par value, liquidation preference of $100,000 per share - (shares authorized - 1,000; shares issued - 1,000 on March 31, 2020 and December 31, 2019) 95,624
 95,624
Common stock - $.625 par value (shares authorized - 400,000,000; shares issued - 311,862,565 on March 31, 2020 and 311,469,056 on December 31, 2019) 194,914
 194,668
Capital surplus 2,938,670
 2,931,451
Undivided profits 1,667,105
 1,798,442
Accumulated other comprehensive loss, net (Note 8) (136,164) (239,608)
Total First Horizon National Corporation Shareholders’ Equity 4,760,149
 4,780,577
Noncontrolling interest 295,431
 295,431
Total equity 5,055,580
 5,076,008
Total liabilities and equity $47,197,378
 $43,310,900
See accompanying notes to consolidated condensed financial statements.
(a)FIRST HORIZON CORPORATIONMarch 31, 2020 and December 31, 2019 include $4.7 million and $6.8 million, respectively, of held-for-sale consumer mortgage loans secured by residential real estate in process of foreclosure.61Q21 FORM 10-Q REPORT
(b)March 31, 2020 and December 31, 2019 include $20.8 million and $18.8 million, respectively, of held-to-maturity consumer mortgage loans secured by residential real estate in process of foreclosure.
(c)March 31, 2020 and December 31, 2019 include $7.8 million and $9.2 million, respectively, of foreclosed residential real estate.


FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 2



CONSOLIDATED CONDENSED STATEMENTS OF INCOME
 First Horizon National Corporation
 Three Months Ended
March 31
(Dollars and shares in thousands except per share data, unless otherwise noted) (Unaudited)2020 2019
Interest income:   
Interest and fees on loans$326,599
 $331,938
Interest on investment securities available-for-sale27,756
 31,843
Interest on investment securities held-to-maturity131
 131
Interest on loans held-for-sale6,899
 9,877
Interest on trading securities13,117
 13,548
Interest on other earning assets3,866
 13,278
Total interest income378,368
 400,615
Interest expense:   
Interest on deposits:   
Savings26,333
 39,914
Time deposits13,943
 20,254
Other interest-bearing deposits14,213
 22,042
Interest on trading liabilities3,292
 2,816
Interest on short-term borrowings9,864
 6,744
Interest on term borrowings7,921
 14,337
Total interest expense75,566
 106,107
Net interest income302,802
 294,508
Provision/(provision credit) for loan losses145,000
 9,000
Net interest income after provision/(provision credit) for loan losses157,802
 285,508
Noninterest income:   
Fixed income95,635
 53,749
Deposit transactions and cash management30,290
 31,621
Brokerage, management fees and commissions15,405
 12,633
Bankcard income7,253
 6,952
Trust services and investment management
7,195
 7,026
Bank-owned life insurance ("BOLI")4,589
 4,402
Equity securities gains/(losses), net (Note 3)25
 31
All other income and commissions (Note 7)14,364
 24,631
Total noninterest income174,756
 141,045
Adjusted gross income after provision/(provision credit) for loan losses332,558
 426,553
Noninterest expense:   
Employee compensation, incentives, and benefits183,470
 177,925
Occupancy19,563
 20,693
Computer software16,027
 15,139
Operations services11,692
 11,488
Equipment rentals, depreciation, and maintenance8,552
 8,829
Advertising and public relations7,456
 7,242
Professional fees6,996
 12,299
FDIC premium expense6,742
 4,273
Communications and courier5,528
 6,453
Amortization of intangible assets5,308
 6,216
Contract employment and outsourcing4,936
 3,371
Legal fees1,823
 2,831
All other expense (Note 7)33,226
 19,331
Total noninterest expense311,319
 296,090
Income/(loss) before income taxes21,239
 130,463
Provision/(benefit) for income taxes4,767
 27,058
Net income/(loss)$16,472
 $103,405
Net income attributable to noncontrolling interest2,852
 2,820
Net income/(loss) attributable to controlling interest$13,620
 $100,585
Preferred stock dividends1,550
 1,550
Net income/(loss) available to common shareholders$12,070
 $99,035
Basic earnings/(loss) per share (Note 9)$0.04
 $0.31
Diluted earnings/(loss) per share (Note 9)$0.04
 $0.31
Weighted average common shares (Note 9)311,597
 317,435
Diluted average common shares (Note 9)313,170
 319,581

 Three Months Ended
March 31,
(Dollars in millions, except per share data; shares in thousands) (Unaudited)20212020
Interest income
Interest and fees on loans and leases$507 $327 
Interest and fees on loans held for sale7 7 
Interest on securities available for sale29 27 
Interest on trading securities7 13 
Interest on other earning assets2 4 
Total interest income552 378 
Interest expense
Interest on deposits24 54 
Interest on trading liabilities1 3 
Interest on short-term borrowings1 10 
Interest on term borrowings18 8 
Total interest expense44 75 
Net interest income508 303 
Provision for credit losses(45)154 
Net interest income after provision for credit losses553 149 
Noninterest income
Fixed income126 96 
Mortgage banking and title income53 2 
Deposit transactions and cash management42 30 
Brokerage, management fees and commissions20 16 
Trust services and investment management12 7 
Bankcard income11 7 
Other income34 16 
Total noninterest income298 174 
Noninterest expense
Personnel expense318 183 
Net occupancy expense37 20 
Computer software28 16 
Legal and professional fees14 9 
Operations services16 12 
Equipment expense11 9 
Amortization of intangible assets14 5 
Other expense106 48 
Total noninterest expense544 302 
Income before income taxes307 21 
Income tax expense71 5 
Net income236 16 
Net income attributable to noncontrolling interest3 3 
Net income attributable to controlling interest233 13 
Preferred stock dividends8 1 
Net income available to common shareholders225 12 
Basic earnings per common share$0.41 $0.04 
Diluted earnings per common share$0.40 $0.04 
Weighted average common shares552,249 311,597 
Diluted average common shares557,532 313,170 
Certain previously reported amounts have been reclassified to agree with current presentation.
See accompanying notes to consolidated condensed financial statements.



FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 3
FIRST HORIZON CORPORATION71Q21 FORM 10-Q REPORT



CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
 
 First Horizon National Corporation
 Three Months Ended
March 31
(Dollars in thousands) (Unaudited)2020 2019
Net income/(loss)$16,472
 $103,405
Other comprehensive income/(loss), net of tax:   
Net unrealized gains/(losses) on securities available-for-sale88,278
 48,615
Net unrealized gains/(losses) on cash flow hedges13,061
 5,387
Net unrealized gains/(losses) on pension and other postretirement plans2,105
 1,463
Other comprehensive income/(loss)103,444
 55,465
Comprehensive income119,916
 158,870
Comprehensive income attributable to noncontrolling interest2,852
 2,820
Comprehensive income attributable to controlling interest$117,064
 $156,050
Income tax expense/(benefit) of items included in Other comprehensive income:   
Net unrealized gains/(losses) on securities available-for-sale$28,787
 $15,958
Net unrealized gains/(losses) on cash flow hedges4,260
 1,768
Net unrealized gains/(losses) on pension and other postretirement plans686
 480
 Three Months Ended
March 31,
(Dollars in millions) (Unaudited)20212020
Net income$236 $16 
Other comprehensive income (loss), net of tax:
Net unrealized gains (losses) on securities available for sale(103)89 
Net unrealized gains (losses) on cash flow hedges(2)13 
Net unrealized gains (losses) on pension and other postretirement plans4 2 
Other comprehensive income (loss)(101)104 
Comprehensive income135 120 
Comprehensive income attributable to noncontrolling interest3 3 
Comprehensive income attributable to controlling interest$132 $117 
Income tax expense (benefit) of items included in Other comprehensive income:
Net unrealized gains (losses) on securities available for sale$(33)$29 
Net unrealized gains (losses) on cash flow hedges(1)4 
Net unrealized gains (losses) on pension and other postretirement plans1 1 
See accompanying notes to consolidated condensed financial statements.



FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 4



CONSOLIDATED CONDENSED STATEMENTS OF EQUITY

First Horizon National Corporation
Three months ended March 31, 2020
(Dollars and shares in thousands, except per share data) (unaudited) Common
Shares		      Total Preferred
Stock		 Common
Stock		 Capital
Surplus		 Undivided
Profits		 Accumulated
Other
Comprehensive
Income/(Loss) (a)		 Noncontrolling Interest
Balance, December 31, 2019 311,469
 $5,076,008
 $95,624
 $194,668
 $2,931,451
 $1,798,442
 $(239,608) $295,431
Adjustment to reflect adoption of ASU 2016-13 —
 (96,057) —
 —
 —
 (96,057) —
 —
Beginning balance, as adjusted 311,469
 4,979,951
 95,624
 194,668
 2,931,451
 1,702,385
 (239,608) 295,431
Net income/(loss) —
 16,472
 —
 —
 —
 13,620
 —
 2,852
Other comprehensive income/(loss) —
 103,444
 —
 —
 —
 —
 103,444
 —
Comprehensive income/(loss) —
 119,916
 —
 —
 —
 13,620
 103,444
 2,852
Cash dividends declared:                
Preferred stock ($1,550 per share) —
 (1,550) —
 —
 —
 (1,550) —
 —
Common stock ($.15 per share) —
 (47,350) —
 —
 —
 (47,350) —
 —
Common stock repurchased (141) (2,064) —
 (88) (1,976) —
 —
 —
Common stock issued for:                
Stock options and restricted stock - equity awards 652
 4,140
 —
 407
 3,733
 —
 —
 —
Stock-based compensation expense —
 7,281
 —
 —
 7,281
 —
 —
 —
Dividends declared - noncontrolling interest of subsidiary preferred stock —
 (2,852) —
 —
 —
 —
 —
 (2,852)
Other (b) (117) (1,892) —
 (73) (1,819) —
 —
 —
Balance, March 31, 2020 311,863
 $5,055,580
 $95,624
 $194,914
 $2,938,670
 $1,667,105
 $(136,164) $295,431

(a)FIRST HORIZON CORPORATIONDue to the nature of the preferred stock issued by FHN and its subsidiaries, all components of Other comprehensive income/(loss) have been attributed solely to FHN as the controlling interest holder.81Q21 FORM 10-Q REPORT
(b)Represents shares canceled in connection with the resolution of remaining Capital Bank Financial Corporation ("CBF") dissenters' appraisal process.


Three months ended March 31, 2019
(Dollars and shares in thousands, except per share data) (unaudited) Common
Shares		      Total Preferred
Stock		 Common
Stock		 Capital
Surplus		 Undivided
Profits		 Accumulated
Other
Comprehensive
Income/(Loss) (a)		 Noncontrolling Interest
Balance, December 31, 2018 318,573
 $4,785,380
 $95,624
 $199,108
 $3,029,425
 $1,542,408
 $(376,616) $295,431
Adjustment to reflect adoption of ASU 2016-02 —
 (1,011) —
 —
 —
 (1,011) —
 —
Beginning balance, as adjusted 318,573
 4,784,369
 95,624
 199,108
 3,029,425
 1,541,397
 (376,616) 295,431
Net income/(loss) —
 103,405
 —
 —
 —
 100,585
 —
 2,820
Other comprehensive income/(loss) —
 55,465
 —
 —
 —
 —
 55,465
 —
Comprehensive income/(loss) —
 158,870
 —
 —
 —
 100,585
 55,465
 2,820
Cash dividends declared:                
Preferred stock ($1,550 per share) —
 (1,550) —
 —
 —
 (1,550) —
 —
Common stock ($.14 per share) —
 (44,864) —
 —
 —
 (44,864) —
 —
Common stock repurchased (b) (3,594) (53,436) —
 (2,246) (51,190) —
 —
 —
Common stock issued for:                
Stock options and restricted stock - equity awards 382
 520
 —
 239
 281
 —
 —
 —
Stock-based compensation expense —
 5,432
 —
 —
 5,432
 —
 —
 —
Dividends declared - noncontrolling interest of subsidiary preferred stock —
 (2,820) —
 —
 —
 —
 —
 (2,820)
Balance, March 31, 2019 315,361
 $4,846,521
 $95,624
 $197,101
 $2,983,948
 $1,595,568
 $(321,151) $295,431


See accompanying notes to consolidated condensed financial statements.
(a)Due to the nature of the preferred stock issued by FHN and its subsidiaries, all components of Other comprehensive income/(loss) have been attributed solely to FHN as the controlling interest holder.
(b)Includes $51.5 million repurchased under share repurchase programs.



FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 5



CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWSCHANGES IN EQUITY
  First Horizon National Corporation
  Three months ended March 31
(Dollars in thousands) (Unaudited) 2020 2019
Operating Activities    
Net income/(loss) $16,472
 $103,405
Adjustments to reconcile net income/(loss) to net cash provided/(used) by operating activities:    
Provision/(provision credit) for loan losses 145,000
 9,000
Provision/(benefit) for deferred income taxes (18,600) 7,238
Depreciation and amortization of premises and equipment 10,516
 11,400
Amortization of intangible assets 5,308
 6,216
Net other amortization and accretion 3,664
 1,257
Net (increase)/decrease in derivatives (323,845) (51,821)
Fair value adjustment on interest-only strips 1,295
 1,258
(Gains)/losses and write-downs on OREO, net (68) (290)
Stock-based compensation expense 7,281
 5,432
Equity securities (gains)/losses, net (25) (31)
Net (gains)/losses on sale/disposal of fixed assets 458
 (42)
(Gain)/loss on BOLI 366
 (1,032)
Loans held-for-sale:    
Purchases and originations (587,593) (513,788)
Gross proceeds from settlements and sales 180,810
 135,855
(Gain)/loss due to fair value adjustments and other (1,129) 19,291
Net (increase)/decrease in:    
Trading securities (133,755) 192,101
Fixed income receivables (140,455) (7,921)
Interest receivable (1,089) (5,970)
Other assets (477,645) 56,985
Net increase/(decrease) in:    
Trading liabilities (52,970) 94,289
Fixed income payables 41,739
 90,718
Interest payable (8,882) 16,570
Other liabilities (66,858) (47,631)
Total adjustments (1,416,477) 19,084
Net cash provided/(used) by operating activities (1,400,005) 122,489
Investing Activities    
Available-for-sale securities:    
Sales 8,703
 13,012
Maturities 224,406
 157,502
Purchases (213,950) (83,512)
Premises and equipment:    
Sales 2,185
 4,080
Purchases (7,603) (6,995)
Proceeds from sales of OREO 3,185
 3,791
Proceeds from BOLI 1,610
 3,208
Net (increase)/decrease in:    
Loans (2,312,423) (448,321)
Interests retained from securitizations classified as trading securities 64
 148
Interest-bearing cash (188,120) 264,357
Net cash provided/(used) by investing activities (2,481,943) (92,730)
Financing Activities    
Common stock:    
Stock options exercised 4,144
 520
Cash dividends paid (44,077) (38,759)
Repurchase of shares (a) (2,064) (53,436)
Cancellation of common shares (b) (1,892) —
Cash dividends paid - preferred stock - noncontrolling interest (2,883) (2,883)
Cash dividends paid - Series A preferred stock (1,550) (1,550)
Term borrowings:    
Payments/maturities —
 (1,179)
Increases in restricted and secured term borrowings (3,656) 3,120


FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 6



Net increase/(decrease) in:    
Deposits 1,990,115
 (220,104)
Short-term borrowings 1,806,967
 92,057
Net cash provided/(used) by financing activities 3,745,104
 (222,214)
Net increase/(decrease) in cash and cash equivalents (136,844) (192,455)
Cash and cash equivalents at beginning of period 1,266,893
 1,405,325
Cash and cash equivalents at end of period $1,130,049
 $1,212,870
Supplemental Disclosures    
Total interest paid $83,866
 $88,774
Total taxes paid 5,240
 1,008
Total taxes refunded 2
 27,522
Transfer from loans to OREO 1,116
 1,607
Transfer from loans HFS to trading securities 397,616
 425,808
See accompanying notes to consolidated condensed financial statements.
Three months ended March 31, 2021
Preferred StockCommon Stock
(Dollars in millions, except per share data; shares in thousands) (unaudited)SharesAmountSharesAmountCapital
Surplus		Retained EarningsAccumulated
Other
Comprehensive
Income (Loss) (a)		Noncontrolling InterestTotal
Balance, December 31, 202026,250 $470 555,031 $347 $5,074 $2,261 $(140)$295 $8,307 
Net income— — — — — 233 — 3 236 
Other comprehensive income (loss)— — — — — — (101)— (101)
Comprehensive income (loss)— — — — — 233 (101)3 135 
Cash dividends declared:
Preferred stock— — — — — (8)— — (8)
Common stock ($0.15 per share)— — — — — (84)— — (84)
Common stock repurchased (b)— — (3,864)(2)(60)— — — (62)
Common stock issued for:
Stock options and restricted stock - equity awards— — 1,208 0 12 — — — 12 
Stock-based compensation expense— — — — 10 — — — 10 
Dividends declared - noncontrolling interest of subsidiary preferred stock— — — — — — — (3)(3)
Balance, March 31, 202126,250 $470 552,375 $345 $5,036 $2,402 $(241)$295 $8,307 
(a) 2019 includes $51.5Due to the nature of the preferred stock issued by FHN and its subsidiaries, all components of Other comprehensive income (loss) have been attributed solely to FHN as the controlling interest holder.
(b) Includes $59 million repurchased under share repurchase programs.

Three months ended March 31, 2020
Preferred StockCommon Stock
(Dollars in millions, except per share data; shares in thousands) (unaudited)SharesAmountSharesAmountCapital
Surplus		Retained EarningsAccumulated
Other
Comprehensive
Income (Loss) (a)		Noncontrolling InterestTotal
Balance, December 31, 20191,000 $96 311,469 $195 $2,931 $1,798 $(239)$295 $5,076 
Adjustment to reflect adoption of ASU 2016-13— — — — — (96)— — (96)
Beginning balance, as adjusted1,000 96 311,469 195 2,931 1,702 (239)295 4,980 
Net income— — — — — 13 — 3 16 
Other comprehensive income (loss)— — — — — — 104 — 104 
Comprehensive income (loss)— — — — — 13 104 3 120 
Cash dividends declared:
Preferred stock ($1,550 per share)— — — — — (1)— — (1)
Common stock ($0.15 per share)— — — — — (48)— — (48)
Common stock repurchased— — (141)0 (2)— — — (2)
Common stock issued for:
Stock options and restricted stock - equity awards— — 652 0 4 — — — 4 
Stock-based compensation expense— — — — 7 — — — 7 
Dividends declared - noncontrolling interest of subsidiary preferred stock— — — — — — — (3)(3)
Other (b)— — (117)0 (1)— — — (1)
Balance, March 31, 20201,000 $96 311,863 $195 $2,939 $1,666 $(135)$295 $5,056 
(a)Due to the nature of the preferred stock issued by FHN and its subsidiaries, all components of Other comprehensive income (loss) have been attributed solely to FHN as the controlling interest holder.
(b)Represents shares canceled in connection with the resolution of remaining CBFCapital Bank Financial Corporation ("CBF") dissenters' appraisal process.




See accompanying notes to consolidated financial statements.

FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 7
FIRST HORIZON CORPORATION91Q21 FORM 10-Q REPORT

CONSOLIDATED STATEMENTS OF CASH FLOWS

 Three months ended March 31,
(Dollars in millions) (Unaudited)20212020
Operating Activities
Net income$236 $16 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Provision (provision credit) for credit losses(45)154 
Deferred income tax expense (benefit)(3)(19)
Depreciation and amortization of premises and equipment16 11 
Amortization of intangible assets14 5 
Net other amortization and accretion(14)4 
Net (increase) decrease in derivatives322 (324)
Stock-based compensation expense10 7 
Net (gains) losses on sale/disposal of fixed assets34 0 
Loans held for sale:
Purchases and originations(943)(588)
Gross proceeds from settlements and sales683 181 
(Gain) loss due to fair value adjustments and other(35)(1)
Other operating activities, net789 (846)
Total adjustments828 (1,416)
Net cash provided by (used in) operating activities1,064 (1,400)
Investing Activities
Proceeds from sales of securities available for sale26 9 
Proceeds from maturities of securities available for sale591 224 
Purchases of securities available for sale(1,065)(214)
Proceeds from sales of premises and equipment1 2 
Purchases of premises and equipment(10)(8)
Proceeds from BOLI1 2 
Net increase in loans and leases(338)(2,312)
Net increase in interest-bearing deposits with banks(3,284)(188)
Other investing activities, net6 3 
Net cash used in investing activities(4,072)(2,482)
Financing Activities
Common stock:
Stock options exercised12 4 
Cash dividends paid(84)(44)
Repurchase of shares(62)(2)
Cancellation of common shares0 (2)
Cash dividends paid - preferred stock - noncontrolling interest(3)(3)
Cash dividends paid - preferred stock(8)(2)
Net increase in deposits3,190 1,990 
Net increase in short-term borrowings4 1,807 
Increases (decreases) in restricted and secured term borrowings0 (3)
Net cash provided by financing activities3,049 3,745 
Net increase (decrease) in cash and cash equivalents41 (137)
Cash and cash equivalents at beginning of period1,648 1,267 
Cash and cash equivalents at end of period$1,689 $1,130 
Supplemental Disclosures
Total interest paid$39 $84 
Total taxes paid2 5 
Total taxes refunded4 0 
Transfer from loans to OREO0 1 
Transfer from loans HFS to trading securities498 398 
Transfer from loans to loans HFS(3)0 
Certain previously reported amounts have been reclassified to agree with current presentation.
See accompanying notes to consolidated financial statements.

FIRST HORIZON CORPORATION101Q21 FORM 10-Q REPORT

Notes to the Consolidated Condensed Financial Statements (Unaudited)

Note 1 – Financial InformationBasis of Presentation and Accounting Policies

Basis of Accounting.The accompanying unaudited interim consolidated condensed financial statements of First Horizon National Corporation (“FHN”), including its subsidiaries, have been prepared in conformityaccordance with accounting principles generally accepted inGAAP for interim financial information and with the United Statesinstructions to Form 10-Q and Article 10 of AmericaRegulation S-X. Accordingly, they do not include all information and follow general practices within the industries in which it operates. This preparation requires management to make estimates and assumptions that affect the amounts reported in thenotes necessary for complete financial statements and accompanying notes. These estimates and assumptions are based on information available as of the date of the financial statements and could differ from actual results.in accordance with GAAP. In the opinion of management, the accompanying unaudited consolidated financial statements contain all significant adjustments, consisting of normal and recurring items, considered necessary adjustments have been made for a fair presentation ofpresentation. These interim financial positionstatements should be read in conjunction with FHN's audited consolidated financial statements and results of operations for the periods presented. These adjustments are of a normal recurring nature unless otherwise disclosednotes in this QuarterlyFHN's Annual Report on Form 10-Q. The operating10-K for the year ended December 31, 2020. Operating results for the interim 2020 period are not necessarily indicative of the results that may be expected going forward. For further information, referfor the full year.

All significant intercompany balances and transactions have been eliminated in consolidation. Certain amounts reported in prior years have been reclassified to conform to the audited consolidated financial statements in Item 8 to FHN’s Annual Report on Form 10-K forcurrent period presentation. See the year ended December 31, 2019.

Revenues. Revenue is recognized when the performance obligations under the termsGlossary of a contract with a customer are satisfied in an amount that reflects the consideration FHN expects to be entitled. FHN derives a significant portion of its revenues from fee-based services. Noninterest income from transaction-based fees is generally recognized immediately upon completion of the transaction. Noninterest income from service-based fees is generally recognized over the period in which FHN provides the service. Any services performed over time generally require that FHN render services each periodAcronyms and therefore FHN measures progress in completing these services based upon the passage of time and recognizes revenue as invoiced.

See Note 1– Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements on Form 10-K for the year ended December 31, 2019, for a discussion of FHN's key revenues.

Contract Balances. As of March 31, 2020, accounts receivable related to products and services on non-interest income were $8.4 million. For the three months ended March 31, 2020, FHN had no material impairment losses on non-interest accounts receivable and there were no material contract assets, contract liabilities or deferred contract costs recorded on the Consolidated Condensed Statements of Condition as of March 31, 2020. Credit risk is assessed on these accounts receivable each reporting period and the amount of estimated uncollectible receivables is not significant.

Transaction Price Allocated to Remaining Performance Obligations. For the three months ended March 31, 2020, revenue recognized from performance obligations related to prior periods was not material.

Revenue expected to be recognized in any future year related to remaining performance obligations, excluding revenue pertaining to contracts that have an original expected duration of one year or less and contracts where revenue is recognized as invoiced, is not material.

Refer to Note 12– Business Segment Information for a reconciliation of disaggregated revenue by major product line and reportable segment.

Debt Investment Securities.Debt securities that may be sold prior to maturity are classified as available-for-sale (“AFS”) and are carried at fair value. The unrealized gains and losses on debt securities AFS, including securities for which no credit impairment exists, are excluded from earnings and are reported, net of tax, as a component of other comprehensive income within shareholders’ equity and the Consolidated Condensed Statements of Comprehensive Income. Debt securities which management has the intent and ability to hold to maturity (“HTM”) are reported at amortized cost. Interest-only strips that are classified as securities AFS are valued at elected fair value. See Note 16 - Fair Value of Assets and Liabilities for additional information. Realized gains and losses (i.e., from sales) for debt investment securities are determined by the specific identification method and reported in noninterest income.

In periods subsequent to 2019, the evaluation of credit risk for HTM debt securities mirrors the process described below for loans held-for-investment. AFS debt securities are reviewed for potential credit impairment at the individual security level. The evaluation of credit risk includes consideration of third-party and government guarantees (both explicit and implicit), senior or subordinated status, credit ratings of the issuer, the effects of interest rate changes since purchase and observable market information such as issuer-specific credit spreads. Credit losses for AFS debt securities are generally recognized through establishment of an allowance for credit losses that cannot exceed the amount by which amortized cost exceeds fair value. Charge offs are recorded as reductions of the security’s amortized cost and the credit allowance. Subsequent improvements in estimated credit losses result in reduction of the credit allowance, but not beyond zero. However, if FHN has the intent to sell or if it is more-likely-than-not that it will be compelled to sell a security with an unrecognized loss, the difference between the security's carrying value and fair value is recognized


FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 8



Note 1 – Financial Information (Continued)

through earnings and a new amortized cost basis is established for the security (i.e., no allowance for credit losses is recognized).
FHN has elected to exclude accrued interest receivable (“AIR”) from the fair value and amortized cost basis on AFS debt securities when assessing whether these securities have experienced credit impairment. Additionally, FHN has elected to not measure an allowance for credit losses on AIR for AFS debt securities based on its policy to write off uncollectible interest in a timely manner, which generally occurs when delinquency reaches no more than 90 days for all security types. Any such write offs are recognized as a reduction of interest income. AIR for AFS debt securities is included within Other assets in the Consolidated Condensed Statement of Condition.
In periods prior to 2020, both AFS and HTM securities were reviewed quarterly for possible other-than-temporary impairment (“OTTI”). The review included an analysis of the facts and circumstances of each individual investment such as the degree of loss, the length of time the fair value had been below cost, the expectation for that security’s performance, the creditworthiness of the issuer and FHN’s intent and ability to hold the security.
Declines in value judged to be other-than-temporary (“OTTI”) based on FHN’s analysis of the facts and circumstances related to an individual investment, including securities that FHN had the intent to sell, were determined by the specific identification method. For HTM debt securities, OTTI recognized was typically credit-related and was reported in noninterest income. For impaired AFS debt securities that FHN did not intend to sell and was not required to sell prior to recovery but for which credit losses existed, the OTTI recognized was allocated between the total impairment related to credit losses which was reported in noninterest income, and the impairment related to all other factors which was excluded from earnings and reported, net of tax, as a component of other comprehensive income within shareholders’ equity and the Consolidated Condensed Statements of Comprehensive Income.
Fed Funds Sold and Purchased. Fed funds sold and purchased represent unsecured overnight funding arrangements between participants in the Federal Reserve system primarily to assist banks in meeting their regulatory cash reserve requirements. Fed Funds sold are evaluated for credit risk each reporting period. Due to the short duration of each transaction and the history of no credit losses, no credit loss has been recognized.
Securities Purchased Under Agreements to Resell and Securities Sold Under Agreements to Repurchase.FHN purchases short-term securities under agreements to resell which are accounted for as collateralized financings except where FHN does not have an agreement to sell the same or substantially the same securities before maturity at a fixed
or determinable price. All of FHN’s securities purchased under agreements to resell are recognized as collateralized financings. Securities delivered under these transactions are delivered to either the dealer custody account at the FRB or to the applicable counterparty. Securities sold under agreements to repurchase are offered to cash management customers as an automated, collateralized investment account. Securities sold under agreements to repurchase are also used by the consumer/commercial bank to obtain favorable borrowing rates on its purchased funds. All of FHN's securities sold under agreements to repurchase are secured borrowings. Collateral is valued daily and FHN may require counterparties to deposit additional securities or cash as collateral, or FHN may return cash or securities previously pledged by counterparties, or FHN may be required to post additional securities or cash as collateral, based on the contractual requirements for these transactions.
FHN’s fixed income business utilizes securities borrowing arrangements as part of its trading operations. Securities borrowing transactions generally require FHN to deposit cash with the securities lender. The amount of cash advanced is recorded within Securities purchased under agreements to resell in the Consolidated Condensed Statements of Condition. These transactions are not considered purchases and the securities borrowed are not recognized by FHN. FHN does not conduct securities lending transactions.
Securities purchased under agreements to resell and securities borrowing arrangements are evaluated for credit risk each reporting period. As presented in Note 15 - Master Netting and Similar Agreements - Repurchase, Reverse Repurchase, and Securities Borrowing Transactions, these agreements are collateralized by the related securities and collateral maintenance provisions with counterparties, including replenishment and adjustment on a transaction specific basis. This collateral includes both the securities collateral for each transaction as well as offsetting securities sold under agreements to repurchase with the same counterparty. Given the history of no credit losses and collateralized nature of these transactions, no credit loss has been recognized.
Loans. Generally, loans are stated at principal amounts outstanding, net of unearned income. Interest on loans is recognized on an accrual basis at the applicable interest rate on the principal amount outstanding. Loan origination fees and direct costs as well as premiums and discounts are amortized as level yield adjustments over the respective loan terms. Unamortized net fees or costs, premiums and discounts are recognized in interest income upon early repayment of the loans. Cash collections from loans that were fully charged off prior to acquisition are recognized in noninterest income. Loan commitment fees are generally deferred and amortized on a straight-line basis over the commitment period.


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Note 1 – Financial Information (Continued)

FHN has elected to exclude accrued interest receivable (“AIR”) from the amortized cost basis on for its held-for-investment loan portfolio. FHN has also elected to not measure an allowance for credit losses on AIR for loans held-for-investment based on its policy to write off uncollectible interest in a timely manner, which occurs when a loan is placed on nonaccrual status. Such write offs are recognized as a reduction of interest income. AIR for held-for-investment loans is included within Other assets in the Consolidated Condensed Statements of Condition.

Purchased Credit-Deteriorated Loans. Subsequent to 2019, FHN evaluates all acquired loans to determine if they have experienced a more-than-insignificant deterioration in credit quality since origination (“PCD loans”). PCD loans can be identified on either an 1) individual or 2) pooled basis when the loans share similar risk characteristics. FHN evaluates various absolute factors to assist in the identification of PCD loans, including criteria such as, existing PCD status, risk rating of special mention or lower, nonaccrual or impaired status, identification of prior TDRs, and delinquency status. FHN also utilizes relative factors to identify PCD loans such as commercial loan grade migration, expansion of borrower credit spreads, declines in external risk ratings and changes in consumer loan characteristics (e.g., FICO decline or LTV increase). In addition, factors reflective of broad economic considerations are also considered in identifying PCD loans. These include industry, collateral type, and geographic location for the borrower’s operations. Internal factors for origination of new loans that are similar to the acquired loans are also evaluated to assess loans for PCD status, including increases in required yields, necessity of borrowers’ providing additional collateral and/or guarantees and changes in acceptable loan duration. Other indicators may also be used to evaluate loans for PCD status depending on borrower-specific communications and actions, such public statements, initiation of loan modification discussions and obtaining emergency funding from alternate sources.
Upon acquisition, the expected credit losses are allocated to the purchase price of individual PCD loans to determine each individual assets amortized cost basis, typically resulting in a reduction of the discount that is accreted prospectively to interest income. At the acquisition date and prospectively, only the unpaid principal balance is incorporated within the estimation of expected credit losses for PCD loans. Otherwise, the process for estimate of expected credit losses is consistent with that discussed below. As discussed below FHN applies undiscounted cash flow methodologies for the estimation of expected credit losses, which results in the calculated amount of credit losses at acquisition that is added to the amortized cost basis of the related PCD loans to exceed the discounted value of estimated credit lossesTerms included in the loan valuation.
Purchased Credit-Impaired Loans. Prior to 2020, ASC 310-30 “Accountingthis Report for Certain Loans or Debt Securities Acquired in a Transfer,” established guidance for acquired loans that exhibited deterioration of credit quality between origination and the time of acquisition and for which the timely collection of the interest and principal was not reasonably assured (“PCI loans”). PCI loans were initially recorded at fair value which was estimated by discounting expected cash flows at acquisition date. The expected cash flows included all contractually expected amounts (including interest) and incorporated an estimate for future expected credit losses, pre-payment assumptions, and yield requirement for a market participant, among other things. To the extent possible, certain PCI loans were aggregated into pools with composite interest rate and cash flows expected to be collected for the pool. Aggregation into loan pools was based upon common risk characteristics that include similar credit risk or risk ratings, and one or more predominant risk characteristics. Each PCI pool was accounted for as a single unit.
Accretable yield was initially established at acquisition and is the excess of cash flows expected at acquisition over the initial investment in the loan and was recognized in interest income over the remaining life of the loan, or pool of loans. Nonaccretable difference was initially established at acquisition and was the difference between the contractually required payments at acquisition and the cash flows expected to be collected at acquisition. FHN estimated expected cash flows for PCI loans on a quarterly basis. Increases in expected cash flows from the last measurement resulted in reversal of any nonaccretable difference (or allowance for loan losses to the extent any has previously been recorded) with a prospective positive impact on interest income. Decreases to the expected cash flows resulted in an increase in the allowance for loan losses through provision expense.
FHN did not report PCI loans as nonperforming loans due to the accretion of interest income. Additionally, PCI loans that have been pooled and subsequently modified were not reported as troubled debt restructurings since the pool was the unit of measurement.
Subsequent to 2019, PCI loans have transitioned to purchased-credit-deteriorated status and are accounted for as discussed above.terms used herein.
Allowance for Loan Losses.
The nature of the process by which FHN determines the appropriate ALLL requires the exercise of considerable judgment. See Note 5 - Allowance for Loan Losses for a discussion of FHN’s ALLL methodology and a description of the models utilized in the estimation process for the commercial and consumer loan portfolios. The discussion herein reflects periods before and after implementation of a change in credit loss estimation processes that was effective January 1, 2020.


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Note 1 – Financial Information (Continued)

Future adjustments to the ALLL may be necessary if economic or other conditions differ substantially from the assumptions used in making the estimates or, if required by regulators, based upon information at the time of their examinations or upon future regulatory guidance. Such adjustments to original estimates, as necessary, are made in the period in which these factors and other relevant considerations indicate that loss levels vary from previous estimates.
Subsequent to 2019
The ALLL is maintained at a level that management determines is sufficient to absorb current expected credit losses (“CECL”) in the loan portfolio. Management uses analytical models to estimate expected credit losses in the loan portfolio as of the balance sheet date. The models are carefully reviewed to identify trends that may not be captured in the modeled loss estimates. Management uses qualitative adjustments for those items not reflected in the modeled loss information such as recent changes from the macroeconomic forecasts utilized in model calculations, results of additional stressed modeling scenarios, observed and/or expected changes affecting borrowers in specific industries or geographic areas, exposure to large lending relationships and expected recoveries of prior charge offs.
The ALLL is increased by the provision for loan losses and is decreased by loan charge-offs. The ALLL is determined in accordance with ASC 326-20 "Financial Instruments - Credit Losses.” Credit loss estimation is based on the amortized cost of Loans, net, which includes the following:
1. Unpaid principal balance for originated assets or acquisition price for purchased assets
2. Accrued interest (see elections discussed previously)
3. Accretion or amortization of premium, discount, and net deferred fees or costs
4. Collection of cash
5. Charge-offs
6. Foreign exchange adjustments (none for FHN)
7. Fair value hedge accounting adjustments (none for FHN)

Premiums, discounts and net deferred origination costs/fees affect the calculated amount of expected credit losses but they are not considered when determining the amount of expected credit losses that are recorded.
Under CECL, loans must be pooled when they share similar risk characteristics with other loans. Loans that do not share similar risk characteristics are evaluated individually. Expected credit loss is estimated for the remaining life of loan(s), which is limited to the remaining contractual term(s), adjusted for prepayment estimates, which are included as separate inputs into modeled loss estimates. Renewals and extensions are not anticipated unless they are included in existing loan documentation
and are not unconditionally cancellable by the lender. However, losses are estimated over the estimated remaining life of reasonably expected TDRs which can extend beyond the current remaining contractual term.
Estimates of expected credit losses incorporate consideration of available information that is relevant to assessing the collectability of future cash flows. This includes internal and external information relating to past events, current conditions and reasonable and supportable forecasts of future conditions. FHN utilizes internal historical loss information as the initial point for estimating expected credit losses. Given the duration of historical information available, FHN considers its internal loss history to fully incorporate the effects of prior credit cycles. The historical loss information may be adjusted in situations where current loan characteristics (e.g., underwriting criteria) differ from those in existence at the time the historical losses occurred. Historical loss information is also adjusted for differences in economic conditions, macroeconomic forecasts and other factors management considers relevant over a period extending beyond the measurement date which is considered reasonable and supportable. This reasonable and supportable period is followed by a reversion period after which loss estimates are based on long-term historical loss averages.
FHN generally measures expected credit losses using undiscounted cash flow methodologies. Credit enhancements (e.g., guarantors) are considered in the estimation of uncollectible cash flows. Estimation of expected credit losses for loan agreements involving collateral maintenance provisions include consideration of the value of the collateral and replenishment requirements, with the maximum loss limited to the difference between the amortized cost of the loan and the fair value of the collateral. Expected credit losses for loans for which foreclosure is probable are measured at the fair value of collateral, less estimated costs to sell when disposition through sale is anticipated. Additionally, certain loans are valued at the fair value of collateral when repayment is expected to be provided substantially through the operation or sale of the collateral when the borrower is experiencing financial difficulty. Expected credit losses for TDRs are measured in accordance with ASC 310-40, which generally requires a discounted cash flow methodology, whereby the loans are measured based on the present value of expected future payments discounted at the loan’s original effective interest rate.
Expected recoveries of previously charged-off amounts are also included as a qualitative adjustment in the estimation of expected credit losses, which reduces the amount of the allowance recognized.Estimates of recoveries on previously charged-off assets included in the valuation account do not exceed the aggregate of amounts previously written off and expected to be written off.


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Note 1 – Financial Information (Continued)

Since CECL requires estimation of credit for the entire expected life of loans, loss estimates are highly sensitive to changes in macroeconomic forecasts, especially when those forecasts change dramatically in short time periods. Additionally, under CECL credit loss estimates are more likely to increase rapidly in periods of loan growth.
Expected credit losses for unfunded commitments are estimated for periods where the commitment is not unconditionally cancellable by FHN. The measurement of expected credit losses for unfunded commitments mirrors that of loans with the additional estimate of future draw rates (timing and amount).
Prior to 2020
The ALLL was maintained at a level that management determined was sufficient to absorb estimated probable incurred losses in the loan portfolio. The ALLL was increased by the provision for loan losses and loan recoveries and was decreased by loan charge-offs. The ALLL was determined in accordance with ASC 450-20-50 "Contingencies - Accruals for Loss Contingencies" and was composed of reserves for commercial loans evaluated based on pools of credit graded loans and reserves for pools of smaller-balance homogeneous consumer and commercial loans. The reserve factors applied to these pools were an estimate of probable incurred losses based on management’s evaluation of historical net losses from loans with similar characteristics. Additionally, the ALLL included specific reserves established in accordance with ASC 310-10-35 for loans determined by management to be individually impaired as well as reserves associated with PCI loans. Management used analytical models to estimate probable incurred losses in the loan portfolio as of the balance sheet date. The models, which were primarily driven by historical losses, were carefully reviewed to identify trends that may not have been captured in the historical loss factors used in the models. Management used qualitative adjustments for those items not yet captured in the models like then-current events, recent trends in the portfolio, current underwriting guidelines, and local and macroeconomic trends, among other things.
Key components of the estimation process were as follows: (1) commercial loans determined by management to be individually impaired loans were evaluated individually and specific reserves were determined based on the difference between the outstanding loan amount and the estimated net realizable value of the collateral (if collateral dependent), the present value of expected future cash flows or by observable market prices; (2) individual commercial loans not considered to be individually impaired were segmented based on similar credit risk characteristics and evaluated on a pool basis; (3) reserve rates for the commercial segment were calculated based on historical net charge-offs and were subject to adjustment by management to reflect current events, trends, and conditions (including economic considerations and trends);
(4) management’s estimate of probable incurred losses reflected the reserve rates applied against the balance of loans in the commercial segment of the loan portfolio; (5) consumer loans were generally segmented based on loan type; (6) reserve amounts for each consumer portfolio segment were calculated using analytical models based on delinquency trends and net loss experience and were subject to adjustment by management to reflect current events, trends, and conditions (including economic considerations and trends); and (7) the reserve amount for each consumer portfolio segment reflected management’s estimate of probable incurred losses in the consumer segment of the loan portfolio.
Impairment related to individually impaired loans was measured in accordance with ASC 310-10. All commercial portfolio segments, commercial TDRs and other individually impaired commercial loans were measured based on the present value of expected future payments discounted at the loan’s effective interest rate (“the DCF method”), observable market prices, or for loans that are solely dependent on the collateral for repayment, the net realizable value (collateral value less estimated costs to sell). Impaired loans also included consumer TDRs.

Summary of Accounting Changes. In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments,” which revises the measurement and recognition of credit losses for assets measured at amortized cost (e.g., HTM loans and debt securities) and AFS debt securities. Under ASU 2016-13, for assets measured at amortized cost, the current expected credit loss (“CECL”) is measured as the difference between amortized cost and the net amount expected to be collected. This represents a departure from prior GAAP as the “incurred loss” methodology for recognizing credit losses delayed recognition until it was probable a loss had been incurred. Under CECL the full amount of expected credit losses will be recognized at the time of loan origination. The measurement of current expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. Additionally, current disclosures of credit quality indicators in relation to the amortized cost of financing receivables are further disaggregated by year of origination. ASU 2016-13 leaves the methodology for measuring credit losses on AFS debt securities largely unchanged, with the maximum credit loss representing the difference between amortized cost and fair value. However, such credit losses are recognized through an allowance for credit losses, which permits recovery of previously recognized credit losses if circumstances change.

ASU 2016-13 also revises the recognition of credit losses for purchased financial assets with a more-than insignificant amount of credit deterioration since


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Note 1 – Financial Information (Continued)

origination (“PCD assets”). For PCD assets, the initial allowance for credit losses is added to the purchase price. Only subsequent changes in the allowance for credit losses are recorded as a credit loss expense for PCD assets. Interest income for PCD assets is recognized based on the effective interest rate, excluding the discount embedded in the purchase price that is attributable to the acquirer’s assessment of credit losses at acquisition. Previously, credit losses for purchased credit-impaired assets were included in the initial basis of the assets with subsequent declines in credit resulting in expense while subsequent improvements in credit were reflected as an increase in the future yield from the assets. For non-PCD assets, expected credit losses are recognized through earnings upon acquisition and the entire premium or discount accreted to interest income over the remaining life of the loan. Credit allowances for acquired non-PCD assets are established through immediate recognition of credit loss expense (similar to originated loans) and do not consider purchase discounts related to estimated credit losses.

The provisions of ASU 2016-13 were generally adopted through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in the year of adoption. Prospective implementation is required for debt securities for which an other-than-temporary-impairment (“OTTI”) had been previously recognized. Amounts previously recognized in accumulated other comprehensive income (“AOCI”) as of the date of adoption that relate to improvements in cash flows expected to be collected continue to be accreted into income over the remaining life of the asset. Recoveries of amounts previously written off relating to improvements in cash flows after the date of adoption are recorded in earnings when received. A prospective transition approach was used for existing PCD assets where, upon adoption, the amortized cost basis was increased to offset the initial recognition of the allowance for credit losses. Thus, an entity was not be required to reassess its purchased financial assets that existed as of the date of adoption to determine whether they would have met at acquisition the new criteria of more-than-insignificant credit deterioration since origination. An entity accretes the remaining noncredit discount (based on the revised amortized cost basis) into interest income at the effective interest rate at the adoption date.

ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. FHN’s most significant implementation activities included review of loan portfolio segments and classes, identification and evaluation of collateral dependent loans and loans secured by collateral replenishment arrangements, selection of measurement methodologies and related model development, data accumulation and verification, development of loan life estimates, identification of reasonable and supportable forecast periods, selection of time lines and methods for
reversion to unadjusted historical information, multiple preliminary analysis including parallel runs against existing loan loss estimation processes, and design and evaluation of internal controls over the new estimation processes. FHN utilizes undiscounted cash flow methods for loans except for troubled debt restructurings, which require use of discounted cash flow methodologies.

A significant portion of the adoption impact for ASU 2016-13 relates to increased reserves within the consumer portfolios, given the longer contractual maturities associated with many of these products as well as increased reserves for acquired loans that previously considered purchase discounts. Based on its implementation efforts, FHN recorded the following adoption adjustments effective January 1, 2020.

(Dollars in thousands) January 1, 2020
Loans, net of unearned income (a) $2,980
Allowance for loan losses (106,394)
Other assets (deferred taxes) 31,330
Total assets $(72,084)
     
Other liabilities (unfunded commitments) $23,973
Undivided profits (96,057)
Total liabilities and equity $(72,084)
(a) The effect on loans represents the increase in amortized cost for recognition of the allowance for credit losses on PCD loans.

FHN also assessed several asset classes other than loans that are within the scope of CECL and determined that the adoption effects for the change in measurement of credit risk were minimal for these classes. This includes Fed funds sold which have no history of credit losses due to their short (typically overnight) duration and counterparty risk assessment processes. This also includes securities borrowed and securities purchased under agreements to resell which have collateral maintenance agreements that incorporate master netting provisions resulting in minimal uncollateralized positions as of any date as evidenced by the disclosures provided in Note 15 - Master Netting and Similar Agreements-Repurchase, Reverse Repurchase, and Securities Borrowing Transactions. Additionally, FHN also evaluated the composition of its AFS securities and determined that the changes in ASU 2016-13 did not have an effect on the current portfolio.

In April 2019, the FASB issued ASU 2019-04, "Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments," which provides an election to either 1) not measure or 2) measure separately an allowance for credit losses for accrued interest receivable (“AIR"). Entities electing to not measure an allowance for AIR must write off uncollectible


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Note 1 – Financial Information (Continued)

interest in a timely manner. Additionally, an election is provided for the write off of uncollectible interest to be recorded either as a reversal of interest income or a charge against the allowance for credit losses or a combination of both. Disclosures are required depending upon which elections are made.

ASU 2019-04 also clarifies that when loans and securities are transferred between balance sheet categories (e.g., loans from held-for-investment to held-for-sale or securities from held-to-maturity to available-for-sale) the associated allowance for credit losses should be reversed to income and prospective accounting follows the requirements for the new classification. Further, ASU 2019-04 clarifies that recoveries should be incorporated within the estimation of the allowance for credit losses. Expected recoveries should not exceed the aggregate amount of prior write offs and expected future write offs. The inclusion of expected recoveries in the measurement of expected credit losses may result in a negative credit allowance in certain circumstances. Additionally, for collateral dependent financial assets, the allowance for credit losses that is added to the amortized cost basis should not exceed amounts previously written off.

ASU 2019-04 also makes several changes when a discounted cash flow approach is used to measure expected credit losses. ASU 2019-04 removes ASU 2016-03’s prohibition of using projections of future interest rate environments when using a discounted cash flow method to measure expected credit losses on variable-rate financial instruments. If an entity uses projections or expectations of future interest rate environments in estimating expected cash flows, the same assumptions should be used in determining the effective interest rate used to discount those expected cash flows. The effective interest rate should also be adjusted to consider the effects of expected prepayments on the timing of expected future cash flows. ASU 2019-04 provides an election to adjust the effective interest rate used in discounting expected cash flows to isolate credit risk in measuring the allowance for credit losses. Further, the discount rate should not be adjusted for subsequent changes in expected prepayments if a financial asset is restructured in a troubled debt restructuring.

Related to collateral-dependent financial assets, ASU 2019-04 requires inclusion of estimated costs to sell in the measurement of expected credit losses in situations where the entity intends to sell rather than operate the collateral. Additionally, the estimated costs to sell should be undiscounted when the entity intends to sell rather than operate the collateral.

Finally, ASU 2019-04 specifies that contractual renewal or extension options, except those treated as derivatives, should be included in the determination of the contractual term for a financial asset when included in the original or
modified contract as of the reporting date if they are not unconditionally cancellable by the entity.

The effective date and transition requirements for these components of ASU 2019-04 are consistent with the requirements for ASU 2016-13 and FHN incorporated these changes and revisions within its implementation efforts. Based on its previous existing practices for the timely write off uncollectible AIR, FHN elected to not measure an allowance for credit losses for AIR and to continue recognition of related write offs as a reversal of interest income.

In May 2019, the FASB issued ASU 2019-05, “Financial Instruments - Credit Losses, Targeted Transition Relief,” which provides an option to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost basis that are in the scope of ASU 2016-13, applied on an instrument-by-instrument basis. The fair value option election does not apply to HTM debt securities. The effective date and transition requirements for ASU 2019-05 are consistent with the requirements for ASU 2016-13. FHN did not elect to apply the fair value option to any asset classes that are in scope for CECL.

In November 2019, the FASB issued ASU 2019-11, “Codification Improvements to Topic 326, Financial Instruments-Credit Losses” which clarifies that expected recoveries should be included in the amortized cost basis previously written off or expected to be written off in the valuation allowance for PCD assets. ASU 2019-11 also clarifies that recoveries or expected recoveries of the unamortized noncredit discount or premium should not be included in the allowance for credit losses. ASU 2019-11 provides specific transition relief for existing troubled debt restructurings and extends the disclosure relief of ASU 2019-04 for accrued interest receivable balances to additional relevant disclosures involving amortized cost basis. Related to the assessment of credit risk for collateralized assets, ASU 2019-11 indicates that an entity should assess whether it reasonably expects the borrower will be able to continually replenish collateral securing the financial asset to apply the practical expedient of ASU 2016-13 while also requiring an estimation of expected credit losses for any difference between the amount of the amortized cost basis that is greater than the fair value of the collateral securing the financial asset.

The effective date and transition requirements for ASU 2019-11 are consistent with the requirements for ASU 2016-13 and FHN incorporated these changes and revisions within its implementation efforts and the effects are embedded within the adoption effects of ASU 2016-13. Consistent with non-PCD assets, the effect of including recoveries and expected recoveries within the measurement of expected credit losses for PCD assets may result in a negative credit allowance in certain circumstances.



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Note 1 – Financial Information (Continued)

On March 22, 2020, The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Office of the Comptroller of the Currency, and the Consumer Financial Protection Bureau issued guidance (the “Interagency Guidance”) that interprets, but does not suspend, ASC 310-40 related to the identification of troubled debt restructurings (“TDRs”). Also on that day, the FASB issued a statement indicating that the Interagency Guidance had been developed in consultation with the staff of the FASB who concurred in the approach.
The Interagency Guidance indicates that a lender can conclude that a borrower is not experiencing financial difficulty if either 1) short-term (e.g., six months) modifications are made in response to the economic effects of the Coronavirus disease 2019 (“COVID-19”) pandemic, such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant related to loans in which the borrower is less than 30 days past due on its contractual payments at the time a modification program is implemented, or 2) the modification or deferral program is mandated by the federal government or a state government. Accordingly, any loan modification made in response to COVID-19 pandemic that meets either of these practical expedients would not be considered a TDR because the borrower is not experiencing financial difficulty. Consistent with this perspective, financial institutions are generally not expected to designate loans with deferrals granted due to COVID-19 as past due or nonaccrual because of a deferral.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law. The CARES Act provides relief from certain requirements under U.S. GAAP. Section 4013 of the CARES Act provides entities optional temporary relief from the accounting and disclosure requirements for troubled debt restructurings (TDRs) under ASC 310-40 in certain situations. Section 4013 of the CARES Act permits the suspension of ASC 310-40 for loan modifications that are made by financial institutions in response to the COVID-19 pandemic if 1) the borrower was not more than 30 days past due as of December 31, 2019, and 2) the modifications are related to arrangements that defer or delay the payment of principal or interest, or change the interest rate on the loan. The CARES provisions apply to loan modifications relating to COVID-19 that are made between March 1, 2020 and the earlier of December 31, 2020 or 60 days after the national emergency related to COVID-19 ends.

On April 3, 2020, the Chief Accountant of the SEC issued a statement indicating that the staff would not object to the conclusion that elective application of the provisions of CARES Act are in accordance with GAAP for the periods that such elections are available.

On April 7, 2020, revised Interagency Guidance was issued to reflect the interaction of the CARES Act provisions and the Interagency Guidance, clarifying that the CARES Act guidance can be applied for regulatory purposes. Loan modifications outside the scope of the CARES Act and organizations that elect to not apply the CARES Act guidance should continue to apply ASC 310-40 as interpreted by the Interagency Guidance.

FHN has evaluated the provisions of the CARES Act and the Interagency Guidance related to loan modification programs instituted as a result of the COVID-19 pandemic. FHN’s programs involve the deferral of principal and interest payments, fee waivers and extensions for shorter terms (i.e., 6 months or less) or in response to government modification requirements which are consistent with the terms of the Interagency Guidance. Depending upon the duration and severity of the economic effects of the COVID-19 pandemic, additional loan modification programs may be implemented in the future which will be separately evaluated under the CARES Act and the Interagency Guidance.

Accounting Changes Issued but Not Currently EffectiveWith Extended Transition Periods

In March 2020, the FASB issued ASU 2020-04, “Facilitation of the Effects of Reference Rate Reform on Financial Reporting” which provides several optional expedients and exceptions to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The provisions of ASU 2020-04 primarily affect 1) contract modifications (e.g., loans, leases, debt, and derivatives) made in anticipation that a reference rate (e.g., LIBOR) will be discontinued and 2) the application of hedge accounting for existing relationships affected by those modifications. The provisions of ASU 2020-04 are effective upon release and apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by ASU 2020-04 do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. FHN has been identifying contracts affected by reference rate reform and developing modification
plans for those contracts. FHN anticipates that it willhas elected to utilize the optional expedients and exceptions provided by ASU 2020-04 for certain contract modifications. FHN anticipates that it will continue to utilize the expedients and exceptions in situations where they mitigate potential accounting outcomes that do not faithfully represent management’s intent or risk management activities, which is consistent with the purpose of the standard.

In January 2021, the FASB issued ASU 2021-01, "Scope" to expand the scope of ASU 2020-04 to apply to certain contract modifications that were implemented in October 2020 by derivative clearinghouses for the use of Secure Overnight Funding Rate (SOFR) in discounting, margining and price alignment for centrally cleared derivatives, including derivatives utilized in hedging relationships. ASU 2021-01 also applies to derivative contracts affected by the change in discounting convention regardless of whether they are centrally cleared (i.e., bi-lateral contracts can also be modified) and regardless of whether they reference LIBOR. ASU 2021-01 was effective immediately upon issuance with retroactive application permitted. FHN elected to retroactively apply the provisions of ASU 2021-01 because FHN's centrally cleared derivatives were affected by the change in discounting convention and because FHN has other bi-lateral derivative contracts that may be modified to conform to the use of SOFR for discounting. Adoption did not have a significant effect on FHN's reported financial condition or earnings.


FIRST HORIZON CORPORATION111Q21 FORM 10-Q REPORT
FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 15




Note 2 – Acquisitions and Divestitures

On November 4, 2019,July 1, 2020, FHN and IBERIABANK Corporation (“IBKC”) announced that they had entered into an agreementclosed their merger-of-equals transaction. FHN issued approximately 243 million shares of FHN common stock, plus 3 new series of preferred stock (Series B, Series C, and plan of merger under which IBKC will merge with FHNSeries D) in a merger-of-equals transaction.transaction valued at $2.5 billion. At the time of closing, IBKC headquartered in Lafayette, Louisiana, hasoperated 319 offices in 12 states, mostly in the southern U.S.

The merger-of-equals transaction has been accounted for as a business combination.
Accordingly, the assets acquired and southeastern U.S.,liabilities assumed are generally presented at their fair values as of the merger date. The determination of fair value requires management to make estimates about discount rates, future expected cash flows, market conditions and has reported $32.2other future events that are highly subjective in nature and subject to change.


The following schedule details a preliminary allocation of merger consideration to the valuations of the identifiable tangible and intangible assets acquired and liabilities assumed from IBKC as of July 1, 2020.
(Dollars in millions)IBERIABANK Corporation
Assets:
Cash and due from banks$395 
Interest-bearing deposits with banks1,683 
Securities available for sale at fair value3,544 
Loans held for sale320 
Loans and leases (a)25,921 
Allowance for loan and lease losses(284)
Other intangible assets240 
Premises and equipment311 
OREO9 
Other assets1,156 
Total assets acquired$33,295 
Liabilities:
Deposits$28,232 
Short-term borrowings209 
Term borrowings1,200 
Other liabilities618 
Total liabilities assumed$30,259 
Net assets acquired$3,036 
Consideration paid:
Consideration for outstanding common stock$2,243 
Consideration for equity awards28 
Consideration for preferred stock231 
Total consideration paid$2,502 
Preliminary purchase accounting gain$(534)
(a)     Includes $1.3 billion of totalinitial net investments in sales-type and direct financing leases.

In relation to the merger-of-equals transaction, FHN recorded a preliminary $533 million purchase accounting gain in 2020 and an additional $1 million purchase accounting gain during the first quarter of 2021, representing the shortfall of the purchase price under the acquisition accounting value of net assets $24.5 billion in
acquired, net of deferred taxes. The preliminary purchase accounting gain is not taxable. Due to the fact that certain back office functions (including loan processing) have not been integrated, the ongoing evaluation of post-merger activity, and the extended information gathering and management review
FIRST HORIZON CORPORATION121Q21 FORM 10-Q REPORT
Table of Contents

Note 2 – Acquisitions and Divestitures (Continued)
processes required to properly record acquired assets and liabilities, FHN considers its valuations of IBKC's loans and $25.5 billion in deposits, at March 31, 2020. IBKC‘s common stock is listed on The NASDAQ Stock Market, LLC underleases, other assets, tax receivables and payables, other liabilities and acquired contingencies to be provisional as management continues to identify and assess information regarding the symbol IBKC. Undernature of these assets and liabilities and reviews the merger agreement, each shareassociated valuation assumptions and methodologies. Accordingly, the amounts recorded for current and deferred tax assets and liabilities are also considered provisional as FHN continues to evaluate the nature and extent of IBKC common stock will be converted into 4.584 shares of FHN common
stock. After closing, FHN expects IBKC common shares will be converted into approximately 44 percentpermanent and temporary (timing) differences between the book and tax bases of the then-outstanding sharesacquired assets and liabilities assumed. Additionally, the accounting policies of both FHN common stock. The merger agreement requires FHN to expand its board of directors to 17 persons; after closing, 8 board positions will be held by current IBKC directors, and 9 will be held by current FHN directors. FHN expects the transaction to close in second quarter 2020, subject to regulatory approvals and other customary conditions. Merger and integration expenses related to the pending merger of equals with IBKC are recorded in FHN’s Corporate segment.
the process of being reviewed in detail. Upon completion of such review, conforming adjustments or financial statement reclassification may be determined.
Total merger expenses forAll measurement period adjustments made during the first three months of 2021 have been deemed insignificant individually and in the aggregate. FHN will finalize its valuation of the IBKC merger recognized formerger-of-equals transaction within the three months ended March 31, 2020 are presented in the table below:measurement period (i.e., no
  Three Months Ended
March 31
(Dollars in thousands) 2020
Professional fees (a) $662
Employee compensation, incentives and benefits (b) 689
Miscellaneous expense (c) 254
Total IBKC acquisition expense $1,605
(a) Primarily comprised of fees for legal, accounting, and merger consultants.
(b) Primarily comprised of fees for severance and retention.
(c) Primarily comprised of fees for travel and entertainment, contract employment, and other miscellaneous expenses.
On November 8, 2019, FHN announced an agreement for First Horizon Bank to purchase 30 branches from SunTrust Bank in conjunction with SunTrust Banks, Inc.'s merger with BB&T Corporation, which created Truist Financial Corp. As part of the agreement, FHN will assume approximately $2.4 billion of branch deposits for a 3.40 percent deposit premium and purchase approximately $410 million of branch loans. The branches are in communities in North Carolina (20 branches), Virginia (8 branches),


and Georgia (2 branches)later than July 1, 2021). FHN expects the purchase to close in third quarter 2020, subject to customary closing conditions.

See Note 2-2, Acquisitions and Divestitures, in the Notes to Consolidated Financial Statements2020 Annual Report on Form 10-K for the year ended December 31, 2019,2020, for a description of the methods used to determine the fair values of significant assets acquired and liabilities assumed presented above.
On July 17, 2020, First Horizon Bank completed its purchase of 30 branches from Truist Bank. As of December 31, 2020, the valuation of the acquired assets and liabilities assumed from the Truist branches acquisition was final. In relation to the acquisition, FHN recorded $78 million in goodwill, representing the excess of acquisition consideration over the estimated fair value of net assets acquired. All goodwill has been attributed to FHN's Regional Banking segment (refer to Note 7 - Intangible Assets for additional information about FHN'sinformation). This goodwill was the result of expected synergies, operational efficiencies and other acquisitions.
factors. Expenses related to FHN's merger and integration activities are recorded in FHN's Corporate segment.









FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 16

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Note 2 – Acquisitions and Divestitures (Continued)

Total other merger and integration expense recognized for the three months ended March 31, 20202021 and 20192020 are presented in the table below:
  Three Months Ended
March 31
(Dollars in thousands) 2020 2019
Professional fees (a) $799
 $1,867
Employee compensation, incentives and benefits (b) 396
 1,517
Contract employment and outsourcing (c) 306
 —
Occupancy (d) (25) 118
Miscellaneous expense (e) 822
 1,069
All other expense (f) 1,874
 1,089
Total $4,172
 $5,660
Three Months Ended
March 31,
(Dollars in millions)20212020
Personnel expense (a)$21 $1 
Legal and professional fees (b)3 2 
Net occupancy expense (c)3 0 
Other expense (d)43 3 
Total$70 $6 
Certain previously reported amounts have been reclassified to agree with current presentation.
(a)    Primarily comprised of fees for legal, accounting,severance and merger consultants.retention.
(b)    Primarily comprised of fees for severancelegal, accounting, and retention.merger consultants.    
(c) Primarily relates to fees for temporary assistance for merger and integration activities.
(d)    Primarily relates to expenses associated with lease exits.
(e)(d)    Consists of fees for operations services, communications and courier,delivery, equipment rentals, deprecationdepreciation and maintenance, supplies, travel and entertainment, computer software, and advertising and public relations.
(f) Primarily relates torelations, contract termination charges, internal technology development costs, costs of shareholder matters and asset impairments, as well as other miscellaneous expenses.impairments.


In addition to the transactions mentioned above, FHN acquires or divests assets from time to time in transactions that are considered business combinations or divestitures but are not material to FHN individually or in the aggregate. In April 2019, FHN sold a subsidiary acquired














as part of the CBF merger in 2017 that did not fit within FHN's risk profile. The sale resulted in the removal of approximately $25 million UPB of subprime consumer loans from Loans held-for-sale on FHN's Consolidated Condensed Statements of Condition.

FIRST HORIZON CORPORATION131Q21 FORM 10-Q REPORT

FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 17



Note 3 – Investment Securities
The following tables summarize FHN’s investment securities on March 31, 20202021 and December 31, 2019:
2020:
  March 31, 2020
(Dollars in thousands) 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
Securities available-for-sale:        
U.S. treasuries $100
 $—
 $—
 $100
Government agency issued mortgage-backed securities (“MBS”) 2,303,720
 98,797
 —
 2,402,517
Government agency issued collateralized mortgage obligations (“CMO”) 1,578,623
 48,320
 —
 1,626,943
Other U.S. government agencies 366,453
 7,268
 (1,224) 372,497
Corporates and other debt 40,000
 621
 —
 40,621
States and municipalities 74,578
 4,572
 (25) 79,125
  $4,363,474
 $159,578
 $(1,249) 4,521,803
AFS debt securities recorded at fair value through earnings:

        
SBA-interest only strips (a)       23,104
Total securities available-for-sale (b)       $4,544,907
Securities held-to-maturity:        
Corporates and other debt $10,000
 $—
 $(176) $9,824
Total securities held-to-maturity $10,000
 $—
 $(176) $9,824
 March 31, 2021
(Dollars in millions)Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Fair
Value
Securities available for sale:
U.S. treasuries$610 $0 $0 $610 
Government agency issued MBS4,009 68 (39)4,038 
Government agency issued CMO2,463 19 (41)2,441 
Other U.S. government agencies733 5 (13)725 
Corporate and other debt40 0 0 40 
States and municipalities467 9 (1)475 
$8,322 $101 $(94)8,329 
AFS securities recorded at fair value through earnings:
SBA-interest only strips (a)22 
Total securities available for sale (b)$8,351 
 
(a)SBA-interest only strips are recorded at elected fair value. See Note 17 - Fair Value of Assets and Liabilities for additional information.
(b)Includes $7.0 billion of securities pledged to secure public deposits, securities sold under agreements to repurchase, and for other purposes.
 December 31, 2020
(Dollars in millions)Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Fair
Value
Securities available for sale:
U.S. treasuries$613 $0 $0 $613 
Government agency issued MBS3,722 92 (2)3,812 
Government agency issued CMO2,380 29 (3)2,406 
Other U.S. government agencies672 12 0 684 
Corporate and other debt40 1 (1)40 
States and municipalities445 15 0 460 
$7,872 $149 $(6)8,015 
AFS securities recorded at fair value through earnings:
SBA-interest only strips (a)32 
Total securities available for sale (b)$8,047 
(a)SBA-interest only strips are recorded at elected fair value. See Note 17 - Fair Value of Assets and Liabilities for additional information.
(b)Includes $6.4 billion of securities pledged to secure public deposits, securities sold under agreements to repurchase, and for other purposes.

(a)FIRST HORIZON CORPORATIONSBA-interest only strips are recorded at elected fair value. See Note 16 - Fair Value for additional information.141Q21 FORM 10-Q REPORT
(b)Includes $4.0 billion of securities pledged to secure public deposits, securities sold under agreements to repurchase, and for other purposes.
  December 31, 2019
(Dollars in thousands) 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
Securities available-for-sale:        
U.S. treasuries $100
 $—
 $—
 $100
Government agency issued MBS 2,316,381
 34,692
 (2,556) 2,348,517
Government agency issued CMO 1,667,773
 9,916
 (7,197) 1,670,492
Other U.S. government agencies 303,463
 3,750
 (1,121) 306,092
Corporates and other debt 40,054
 486
 —
 40,540
States and municipalities 57,232
 3,324
 (30) 60,526
  $4,385,003
 $52,168
 $(10,904) 4,426,267
AFS debt securities recorded at fair value through earnings:
        
SBA-interest only strips (a)       19,136
Total securities available-for-sale (b)       $4,445,403
Securities held-to-maturity:        
Corporates and other debt $10,000
 $1
 $—
 $10,001
Total securities held-to-maturity $10,000
 $1
 $—
 $10,001
(a)SBA-interest only strips are recorded at elected fair value. See Note 16 - Fair Value of Assets and Liabilities for additional information.
(b)Includes $3.8 billion of securities pledged to secure public deposits, securities sold under agreements to repurchase, and for other purposes.




FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 18

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Note 3 – Investment Securities (Continued)

The amortized cost and fair value by contractual maturity for the available-for-sale and held-to-maturity debt securities portfoliosportfolio on March 31, 2020 are2021 is provided below:
Available for Sale
 Held-to-Maturity Available-for-Sale
(Dollars in thousands) 
Amortized
Cost
 
Fair
Value
 
Amortized
Cost
 
Fair
Value
(Dollars in millions)(Dollars in millions)Amortized
Cost		Fair
Value
Within 1 year $—
 $—
 $54,958
 $55,730
Within 1 year$758 $759 
After 1 year; within 5 years —
 —
 189,021
 195,624
After 5 years; within 10 years 10,000
 9,824
 3,581
 8,480
After 1 year through 5 yearsAfter 1 year through 5 years146 148 
After 5 years through 10 yearsAfter 5 years through 10 years345 348 
After 10 years —
 —
 233,571
 255,613
After 10 years601 617 
Subtotal 10,000
 9,824
 481,131
 515,447
Subtotal1,850 1,872 
Government agency issued MBS and CMO (a) —
 —
 3,882,343
 4,029,460
Government agency issued MBS and CMO (a)6,472 6,479 
Total $10,000
 $9,824
 $4,363,474
 $4,544,907
Total$8,322 $8,351 
 
(a)Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
The table below provides information on gross(a)Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
Gross gains and gross losses fromon sales of debt investment securities and cash proceeds from the sale of available-for-sale securities for the three months ended March 31, 2021 and 2020 and 2019.
 Three Months Ended
March 31
(Dollars in thousands)2020 2019
Gross gains on sales of securities$—
 $—
Gross (losses) on sales of securities—
 —
Net gain/(loss) on sales of securities (a)$—
 $—
(a)Cash proceeds for the three months ended March 31, 2020 and 2019 were not material.

were insignificant.
The following tables provide information on investments within the available-for-sale portfolio that had unrealized losses as of March 31, 20202021 and December 31, 2019:2020:

As of March 31, 2021
 As of March 31, 2020 Less than 12 months12 months or longerTotal
(Dollars in millions)(Dollars in millions)Fair
Value		Unrealized
Losses		Fair
Value		Unrealized
Losses		Fair
Value		Unrealized
Losses
 Less than 12 months 12 months or longer Total
(Dollars in thousands) 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
Government agency issued MBSGovernment agency issued MBS$1,772 $(39)$0 $0 $1,772 $(39)
Government agency issued CMOGovernment agency issued CMO1,508 (41)0 0 1,508 (41)
Other U.S. government agencies $88,334
 $(1,224) $—
 $—
 $88,334
 $(1,224)Other U.S. government agencies405 (13)0 0 405 (13)
States and municipalities 1,466
 (25) —
 —
 1,466
 (25)States and municipalities82 (1)0 0 82 (1)
Total temporarily impaired securities $89,800
 $(1,249) $—
 $—
 $89,800
 $(1,249)
TotalTotal$3,767 $(94)$0 $0 $3,767 $(94)
 
  As of December 31, 2019
  Less than 12 months 12 months or longer Total
(Dollars in thousands) 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
Government agency issued MBS $174,983
 $(495) $192,755
 $(2,061) $367,738
 $(2,556)
Government agency issued CMO 378,815
 (1,970) 361,124
 (5,227) 739,939
 (7,197)
Other U.S. government agencies 98,471
 (1,121) —
 —
 98,471
 (1,121)
States and municipalities 3,551
 (30) —
 —
 3,551
 (30)
Total temporarily impaired securities $655,820
 $(3,616) $553,979
 $(7,288) $1,209,799
 $(10,904)



FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 19

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Note 3 – Investment Securities (Continued)

 As of December 31, 2020
 Less than 12 months12 months or longerTotal
(Dollars in millions)Fair
Value		Unrealized
Losses		Fair
Value		Unrealized
Losses		Fair
Value		Unrealized
Losses
U.S. treasuries$307 $0 $0 $0 $307 $0 
Government agency issued MBS426 (2)0 0 426 (2)
Government agency issued CMO586 (3)0 0 586 (3)
Other U.S. government agencies80 (1)0 0 80 (1)
States and municipalities1 0 0 0 1 0 
Total$1,400 $(6)$0 $0 $1,400 $(6)
For periods subsequent to 2019, FHN has evaluated all AFS debt securities that were in unrealized loss positions in accordance with its accounting policy for recognition of credit losses. No AFS debt securities were determined to have credit losses because the primary cause of the decline in value was attributable to changes in interest rates. Total AIR not included in
the fair value or amortized cost basis of AFS debt securities was $12.3$24 million and $22 million as of March 31, 2020.2021 and December 31, 2020, respectively. Consistent with itsFHN's review of the related securities, there were no credit-related write downs of AIR for AFS debt securities during the reporting period. Additionally, for AFS debt securities with unrealized losses, FHN does not intend to sell
FIRST HORIZON CORPORATION151Q21 FORM 10-Q REPORT
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Note 3 – Investment Securities (Continued)
them and it is more-likely-than-not that FHN will not be required to sell them prior to recovery. Therefore, no write downs of these investments to fair value occurred during the reporting period.
For periods prior to 2020, FHN reviewed debt investment securities that were in unrealized loss positions in accordance with its accounting policy for OTTI and did not consider them other-than-temporarily impaired.


















For debt securities with unrealized losses, FHN did not intend to sell them and it is more-likely-than-not that FHN would not be required to sell them prior to recovery. The decline in value was primarily attributable to changes in interest rates and not credit losses.
The carrying amount of equity investments without a readily determinable fair value was $25.9$70 million and $25.6$57 million at March 31, 20202021 and December 31, 2019,2020, respectively. The year-to-date 20202021 and 20192020 gross amounts of upward and downward valuation adjustments were not significant.
Unrealized losses of $5.7 million and unrealized gains of $3.4$3 million were recognized in the three months ended March 31, 20202021 and 2019,2020, respectively, for equity investments with readily determinable fair values.



FIRST HORIZON CORPORATION161Q21 FORM 10-Q REPORT

FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 20



Note 4 – Loans
The following table provides the balance (amortized cost basis) of loans, net of unearned income, by portfolio segment as of March 31, 2020 and December 31, 2019:
  March 31 December 31
(Dollars in thousands) 2020 2019
Commercial:    
Commercial, financial, and industrial $22,124,430
 $20,051,091
Commercial real estate 4,639,692
 4,337,017
Consumer:    
Consumer real estate (a) 6,119,383
 6,177,139
Credit card & other 494,798
 495,864
Loans, net of unearned income $33,378,303
 $31,061,111
Allowance for loan losses 444,490
 200,307
Total net loans $32,933,813
 $30,860,804

(a)In first quarter 2020, the Permanent Mortgage portfolio was combined into Consumer Real Estate portfolio, all prior periods were revised for comparability.

Leases
COMPONENTS OF THE LOAN PORTFOLIO
The loanloans and lease portfolio is disaggregated into portfolio segments and then further disaggregated into classes for certain disclosures. GAAP defines a portfolio segment as the level at which an entity develops and documents a systematic method for determining its allowance for credit losses. A class is generally a disaggregation of a portfolio segment and is generally determined based on the initial measurement attribute (i.e., amortized cost or purchased credit-impaired), risk characteristics of the loan and FHN’s method for monitoring and assessing credit risk. Commercialrisk and performance. FHN's loan and lease portfolio segments include are commercial and consumer. The classes of loans and leases are: (1)
commercial, financial, and industrial, (“C&I”)which includes commercial and commercial real estate ("CRE"). Commercial classes within C&I include general C&I,industrial loans and leases and loans to mortgage companies, ("LMC"), the trust preferred loans (“TRUPS”) (i.e. long-term unsecured loans to bank and insurance-related businesses) portfolio and purchased credit-impaired (“PCI”) loans (for periods prior to 2020). Loans to mortgage companies include(2) commercial lines of credit to qualified mortgage companies primarily for the temporary warehousing of eligible mortgage loans prior to the borrower’s sale of those mortgage loans to third party investors. Commercial classes within CRE include income CRE, residential CRE and PCI loans (for periods prior to 2020). Consumer loan portfolio segments includereal estate, (3) consumer real estate, which includes both real estate installment and the credit card and other portfolio. Consumer classes include home equity lines of credit, (“HELOCs”), real estate (“R/E”) installment and PCI loans (for periods prior to 2020) within the consumer real estate segment and(4) credit card and other.
Credit Risk Characteristics InherentThe following table provides the amortized cost basis of loans and leases by portfolio segment and class as of March 31, 2021 and December 31, 2020, excluding accrued interest of $182 million and $180 million, respectively, which is included in Other assets in the Loan PortfolioConsolidated Balance Sheets.
Credit risk is the risk of loss due to adverse changes in a borrower’s or counterparty’s ability to meet its financial obligations under agreed upon terms. FHN is subject to credit risk in lending, trading, investing, liquidity/funding, and asset management activities although lending activities have the most exposure to credit risk. The nature and
(Dollars in millions)March 31, 2021December 31, 2020
Commercial:
Commercial and industrial (a) (b)$28,421 $27,700 
Loans to mortgage companies5,530 5,404 
   Total commercial, financial, and industrial33,951 33,104 
Commercial real estate12,470 12,275 
Consumer:
HELOC2,270 2,420 
Real estate installment loans8,783 9,305 
   Total consumer real estate11,053 11,725 
Credit card and other1,126 1,128 
Loans and leases$58,600 $58,232 
Allowance for loan and lease losses(914)(963)
Net loans and leases$57,686 $57,269 
(a)Includes equipment financing leases of $614 million and $587 million, respectively, as of March 31, 2021 and December 31, 2020.
(b)Includes PPP loans fully guaranteed by the SBA of $5.1 billion and $4.1 billion as of March 31, 2021 and December 31, 2020, respectively.

amount
Restrictions

Loans and leases with carrying values of credit risk depends on$38.1 million and $38.6 billion were pledged as collateral for borrowings at March 31, 2021 and December 31, 2020, respectively.

Concentrations of Credit Risk
Most of the types of transaction, the structure of those transactions, collateral received, the use of guarantors and the parties involved.
FHN assesses and manages credit risk through a series of policies, processes, measurement systems, and controls. FHN’s credit risk function ensures subject matter experts are providing oversight, support and credit approvals, particularlybusiness activity is with clients located in the specialtysouthern United States. FHN’s lending activity is concentrated in its market areas where industry-specific knowledge is required. Management emphasizes general portfolio servicing such that emerging risks are able to be identified early enough to correct potential deficiencies, prevent further credit deterioration, and mitigate credit losses.
Commercial Loans
The C&I portfolio is comprisedwithin those states. As of loans used for general business purposes. Typical products including working capital lines of credit, term loan financing of owner-occupied real estate and fixed assets, and trade credit enhancement through letters of credit. FHN utilizes deal teams comprised of relationship managers (RMs), portfolio managers (PMs), credit analysts and other specialists to identify, mitigate, document, and manage ongoing risk. Their function includes enhanced analytical support during loan origination and servicing, monitoring the financial condition of the borrower, and tracking compliance with loan agreements. FHN strives to identify problem assets early through comprehensive policies and guidelines, targeted portfolio reviews, more frequent servicing on lower rated borrowers, and an emphasis on frequent grading.
To the extent a guarantor/sponsor is used to support a commercial lending decision, FHN analyzes capability to pay, factoring in, among other things, liquidity and direct/indirect cash flows. A strong, legally enforceable guaranty can mitigate the risk of default or loss, justify a less severe rating, and consequently reduce the level of allowance or charge-off that might otherwise be deemed appropriate.


FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 21

Table of Contents
Note 4 – Loans (Continued)

Loans to mortgage companies include commercial lines of credit to qualified mortgage companies primarily for the temporary warehousing of eligible mortgage loans prior to the borrower’s sale of those mortgage loans to third party investors. Approximately 90 percent of the loans to mortgage companies are collateralized with government guaranteed loans. The loans are of short duration with maturities less than one year.
TRUPS loans are long-term unsecured loans to bank and insurance-related businesses. TRUPS lending was originally extended as a form of “bridge” financing to participants in the pooled trust preferred securitization program offered primarily to smaller banking (generally less than $15 billion in total assets) and insurance institutions through FHN’s fixed income business. Origination of TRUPS lending ceased in early 2008. Individual TRUPS are regraded at least quarterly as part of FHN’s commercial loan review process.
Commercial Real Estate loans include financings for commercial construction and nonconstruction loans. The income-producing CRE class contains loans and draws on lines and letters of credit to commercial real estate developers for the construction and mini-permanent financing of income-producing real estate. The residential CRE class includes loans to residential builders and developers for the purpose of constructing single-family homes, condominiums, and town homes and on a limited basis, for developing residential subdivisions. Active residential CRE lending is primarily focused in certain core markets with nearly all new originations made to “strategic” clients. FHN considers a “strategic” residential CRE borrower as a homebuilder who demonstrates the ability to withstand cyclical downturns, maintains active development and investment activities providing for regular financing opportunities, and is fundamentally sound as evidenced by a prudent loan structure, appropriate covenants and recourse, and capable and willing sponsors in markets with positive homebuilding and economic dynamics. The credit administration and ongoing monitoring of these portfolios consists of multiple internal control processes including stressing a borrower’s or project’s financial capacity utilizing numerous attributes such as interest rates, vacancy, and discount rates. Key information captured from the various portfolios is aggregated and utilized to assist with the assessment and adequacy of the ALLL and to steer portfolio management strategies.
Consumer Loans
The consumer real estate portfolio is primarily comprised of home equity lines and installment loans within FHN’s regional banking segment and jumbo mortgages and one-time-close (“OTC”) completed construction loans in FHN’s non-strategic segment that were originated through pre-2009 mortgage businesses. The corporate segment also includes loans that were previously included in off-balance sheet proprietary securitization trusts that were brought back into the loan portfolios at fair value through the
execution of cleanup calls due to the relatively small balances left in the securitization and should continue to run-off. Generally performance of this portfolio is affected by life events that affect borrowers’ finances, the level of unemployment, and home prices. FHN obtains first lien performance information from third parties and through loss mitigation activities, and places a stand-alone second lien loan on nonaccrual if performance issues with the first lien are discovered.
FHN performs continuous HELOC account review processes in order to identify higher-risk home equity lines and initiate preventative and corrective actions. The reviews consider a number of account activity patterns and characteristics such as the number of times delinquent within recent periods, changes in credit bureaus score since origination, scored degradation, performance of the first lien, and account utilization. In accordance with FHN’s interpretation of regulatory guidance, FHN may block future draws on accounts in order to mitigate risk of loss to FHN.
The credit card and other portfolio is primarily comprised of automobile loans, credit card receivables, and other consumer-related credits.
As discussed in Note 1 - Summary of Significant Accounting Policies, the ALLL estimation process was revised on January 1, 2020 to reflect the adoption of ASU 2016-13.  All information contained in the following disclosures reflects the application of requirements from the adoption of ASU 2016-13 for periods after 2019.  Information for periods prior to 2020 has been retained with the content consistent with prior disclosures.
Concentrations
FHN has a concentration of residential real estate loans (19 percent of total loans). Loans to finance and insurance companies total $2.8 billion (13 percent of the C&I portfolio, or 8 percent of the total loans).March 31, 2021, FHN had loans to mortgage companies totaling $5.7of $5.5 billion (26 percentand loans to finance and insurance companies of $3.1 billion. As a result, 25% of the C&I segment, or 17 percent of total loans) as of March 31, 2020. As a result, 39 percent of the C&I segmentportfolio is sensitive to impacts on the financial services industry.
Asset
Credit Quality Indicators

FHN employs a dual grade commercial risk grading methodology to assign an estimate for the probability of default (“PD”) and the loss given default (“LGD”) for each commercial loan using factors specific to various industry, portfolio, or product segments that result in a rank ordering of risk and the assignment of grades PD 1 to PD 16. This credit grading system is intended to identify and measure the credit quality of the loan and lease portfolio by analyzing the migration of loans between grading categories. PD grades assigned through FHN’s risk rating process are used as a loan level inputIt is also integral to inform probabilitythe estimation methodology utilized in determining the ALLL since an allowance is established for pools of default forecasts under certain macroeconomic scenarios.commercial loans based on the credit grade assigned. Each PD grade corresponds to an estimated one-year default probability percentage;percentage. PD grades are continually evaluated, but require a PD 1 hasformal scorecard annually. As a response to the lowest expected defaultCOVID-19 pandemic, FHN identified a segment of its commercial portfolio that requires a quarterly re-


FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 22

FIRST HORIZON CORPORATION171Q21 FORM 10-Q REPORT
Table of Contents

Note 4 – Loans and Leases (Continued)

grading process. As borrowers recover, they can be removed from the quarterly re-grading process with credit officer concurrence.
probability, and probabilities increase as grades progress down the scale. PD 1 through PD 12 are “pass” grades. PD grades 13-16 correspond to the regulatory-defined categories of special mention (13), substandard (14), doubtful (15), and loss (16). Special mention loans and leases have potential weaknesses that, if left uncorrected, may result in deterioration of FHN's credit position at some future date. Substandard commercial loans and
Pass loan grades
leases have well-defined weaknesses and are required to be reassessed annually or earlier whenever there has been a material change incharacterized by the financial conditiondistinct possibility that FHN will sustain some loss if the deficiencies are not corrected. Doubtful commercial loans and leases have the same weaknesses as substandard loans and leases with the added characteristics that the probability of loss is high and collection of the borrower or risk characteristics of the relationship. All commercial loans over $1 million and certain commercial loans over $500,000 that are graded 13 or worse are reassessed on a quarterly basis. Loan grading disciplinefull amount is regularly reviewed internally by Credit
improbable.
Assurance Services to determine if the process continues to result in accurate loan grading across the portfolio. FHN may utilize availability of guarantors/sponsors to support lending decisions during the credit underwriting process and when determining the assignment of internal loan grades. LGD grades are assigned based on a scale of 1-12 and represent FHN’s expected recovery based on collateral type in the event a loan defaults. See Note 5 – Allowance for Loan Losses for further discussion on the credit grading system.

The following tables provide the amortized cost basis of the commercial loan portfolio by year of origination and credit quality indicator as of March 31, 2021 and December 31, 2020:
March 31, 2021
 C&I
(Dollars in millions)20212020201920182017Prior to 2017LMC (a)Revolving
 Loans		Revolving
Loans converted
to term loans (b)		Total
Credit Quality Indicator:
Pass (PD grades 1 through 12) (c)$2,368 $7,915 $4,572 $2,174 $1,600 $3,038 $5,530 $5,535 $14 $32,746 
Special Mention (PD grade 13)5 68 65 51 28 81 0 189 7 494 
Substandard, Doubtful, or Loss (PD grades 14,15, and 16)35 148 80 124 35 94 0 148 47 711 
Total C&I loans$2,408 $8,131 $4,717 $2,349 $1,663 $3,213 $5,530 $5,872 $68 $33,951 
(a)     LMC includes non-revolving commercial lines of credit to qualified mortgage companies primarily for the temporary warehousing of eligible mortgage loans prior to the borrower's sale of those mortgage loans to third party investors. The loans are of short duration with maturities less than one year.
(b)    C&I loans converted from revolving to term in 2021 were not material.
(c)    2021 and 2020 balances include PPP loans.


  C&I  
(Dollars in thousands) 2020 2019 2018 2017 2016 prior to 2016 (a) LMC (b) Revolving
Loans		 Revolving
Loans converted
to term loans (c)		 Total
PD Grade:                    
1 $27,293
 $100,359
 $125,095
 $81,397
 $112,175
 $117,965
 $—
 $156,041
 $223
 $720,548
2 33,244
 239,750
 95,269
 81,542
 176,068
 112,586
 —
 108,408
 51
 846,918
3 15,083
 165,433
 52,645
 96,725
 65,932
 119,415
 1,028,798
 219,037
 14,042
 1,777,110
4 144,129
 318,374
 155,173
 140,516
 158,705
 149,248
 958,145
 372,890
 277
 2,397,457
5 149,048
 604,067
 306,849
 161,921
 127,011
 228,347
 927,946
 507,991
 14,230
 3,027,410
6 187,540
 713,579
 244,128
 241,828
 107,498
 201,660
 1,740,304
 801,860
 16,485
 4,254,882
7 270,190
 903,326
 395,680
 167,749
 91,881
 156,238
 806,853
 794,174
 447
 3,586,538
8 224,670
 626,348
 217,091
 178,183
 33,476
 115,727
 140,372
 495,002
 7,096
 2,037,965
9 128,773
 332,262
 92,720
 91,648
 60,522
 93,750
 68,707
 419,388
 2,055
 1,289,825
10 65,206
 128,169
 113,744
 56,088
 60,659
 53,920
 25,023
 191,883
 996
 695,688
11 29,742
 95,269
 65,404
 64,494
 75,508
 52,240
 —
 109,709
 3,618
 495,984
12 25,376
 36,918
 46,792
 41,370
 19,248
 28,881
 17,766
 114,052
 1,112
 331,515
13 18,233
 32,564
 12,153
 11,247
 84,321
 39,710
 —
 63,993
 383
 262,604
14,15,16 35,268
 22,351
 51,983
 26,586
 17,414
 14,493
 —
 124,557
 7,242
 299,894
Collectively evaluated for impairment 1,353,795
 4,318,769
 1,974,726
 1,441,294
 1,190,418
 1,484,180
 5,713,914
 4,478,985
 68,257
 22,024,338
Individually evaluated for impairment —
 12,771
 12,642
 14,552
 1,827
 24,145
 —
 33,988
 167
 100,092
Total C&I loans $1,353,795
 $4,331,540
 $1,987,368
 $1,455,846
 $1,192,245
 $1,508,325
 $5,713,914
 $4,512,973
 $68,424
 $22,124,430
(a)FIRST HORIZON CORPORATIONTRUPS loans were originated prior to 2016. Total balance of TRUPS as of March 31, 2020 is $215.4 million, with $3.3 million in PD 3, $42.4 million in PD 4, $84.5 million in PD 5, $27.3 million in PD 6, $7.4 million in PD 7, $31.9 million in PD 9, and $18.6 million in PD 10.181Q21 FORM 10-Q REPORT
(b)LMC includes non-revolving commercial lines of credit to qualified mortgage companies primarily for the temporary warehousing of eligible mortgage loans prior to the borrower's sale of those mortgage loans to third party investors. The loans are of short duration with maturities less than one year.
(c)$14.1 million of C&I loans were converted from revolving to term in first quarter 2020.


FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 23

Table of Contents

Note 4 – Loans and Leases (Continued)
December 31, 2020
C&I
(Dollars in millions)20202019201820172016Prior to 2016LMC (a)Revolving
 Loans		Revolving
Loans converted
to term loans (b)		Total
Credit Quality Indicator:
Pass (PD grades 1 through 12) (c)$9,060 $5,138 $2,628 $1,748 $1,161 $2,145 $5,404 $4,571 $60 $31,915 
Special Mention (PD grade 13)89 93 70 31 37 64 0 127 1 512 
Substandard, Doubtful, or Loss (PD grades 14,15, and 16)182 77 114 50 42 58 0 95 59 677 
Total C&I loans$9,331 $5,308 $2,812 $1,829 $1,240 $2,267 $5,404 $4,793 $120 $33,104 
(a)    LMC includes non-revolving commercial lines of credit to qualified mortgage companies primarily for the temporary warehousing of eligible mortgage loans prior to the borrower's sale of those mortgage loans to third party investors. The loans are of short duration with maturities less than one year.
(b)    $50 million of C&I loans were converted from revolving to term in 2020.
(c)    2020 balances include PPP loans.

March 31, 2021
CRE
(Dollars in millions)20212020201920182017Prior to 2017Revolving
 Loans		Revolving
Loans converted
to term loans		Total
Credit Quality Indicator:
Pass (PD grades 1 through 12)$514 $2,346 $3,350 $1,612 $1,024 $2,652 $320 $0 $11,818 
Special Mention (PD grade 13)0 74 38 178 77 109 0 0 476 
Substandard, Doubtful, or Loss (PD grades 14,15, and 16)0 18 12 21 43 57 25 0 176 
Total CRE loans$514 $2,438 $3,400 $1,811 $1,144 $2,818 $345 $0 $12,470 

December 31, 2020
CRE
(Dollars in millions)20202019201820172016Prior to 2016Revolving
 Loans		Revolving
Loans converted
to term loans		Total
Credit Quality Indicator:
Pass (PD grades 1 through 12)$2,477 $3,311 $1,750 $1,140 $946 $1,800 $259 $19 $11,702 
Special Mention (PD grade 13)48 24 117 75 71 54 0 0 389 
Substandard, Doubtful, or Loss (PD grades 14,15, and 16)30 13 21 42 27 33 18 0 184 
Total CRE loans$2,555 $3,348 $1,888 $1,257 $1,044 $1,887 $277 $19 $12,275 



  Income CRE  
(Dollars in thousands) 2020 2019 2018 2017 2016 prior to 2016 Revolving
Loans		 Revolving
Loans converted
to term loans		 Total
PD Grade:                  
1 $22,307
 $—
 $398
 $—
 $130
 $1,102
 $—
 $—
 $23,937
2 445
 30,859
 651
 333
 1,211
 2,410
 —
 —
 35,909
3 62,707
 207,828
 78,203
 75,629
 65,898
 29,466
 68,770
 188
 588,689
4 65,474
 287,116
 98,370
 122,518
 75,032
 63,680
 934
 3,234
 716,358
5 192,596
 296,099
 160,253
 233,104
 114,572
 35,705
 36,944
 10,729
 1,080,002
6 81,162
 215,741
 143,419
 143,142
 34,758
 133,573
 33,021
 195
 785,011
7 122,282
 224,637
 140,601
 85,853
 19,369
 35,968
 36,633
 2,432
 667,775
8 15,635
 76,102
 54,998
 15,421
 29,382
 50,736
 6,239
 132
 248,645
9 25,288
 29,485
 23,192
 27,916
 4,169
 39,457
 38
 —
 149,545
10 15,437
 15,563
 7,260
 3,805
 8,973
 17,006
 —
 150
 68,194
11 1,696
 19,007
 11,372
 22,561
 3,931
 16,481
 128
 —
 75,176
12 —
 15,050
 2,445
 697
 554
 10,877
 71
 232
 29,926
13 418
 9,672
 913
 2,185
 223
 1,325
 138
 —
 14,874
14,15,16 7,021
 19,536
 45
 30,449
 129
 3,635
 20,384
 —
 81,199
Collectively evaluated for impairment 612,468
 1,446,695
 722,120
 763,613
 358,331
 441,421
 203,300
 17,292
 4,565,240
Individually evaluated for impairment —
 —
 —
 —
 —
 163
 —
 —
 163
Total CRE-IP $612,468
 $1,446,695
 $722,120
 $763,613
 $358,331
 $441,584
 $203,300
 $17,292
 $4,565,403

  Residential CRE  
(Dollars in thousands) 2020 2019 2018 2017 2016 prior to 2016 Revolving
Loans		 Revolving
Loans converted
to term loans		 Total
PD Grade:                  
1 $—
 $—
 $—
 $—
 $—
 $23
 $—
 $—
 $23
2 —
 —
 —
 —
 —
 —
 —
 —
 —
3 —
 —
 272
 175
 —
 106
 —
 —
 553
4 95
 886
 —
 313
 —
 124
 —
 —
 1,418
5 —
 —
 —
 —
 79
 —
 —
 —
 79
6 5,568
 6,252
 42
 338
 44
 349
 —
 —
 12,593
7 —
 527
 2,904
 1,795
 —
 190
 21,382
 —
 26,798
8 150
 312
 463
 —
 —
 153
 100
 —
 1,178
9 —
 —
 263
 —
 498
 79
 —
 —
 840
10 —
 735
 266
 —
 —
 77
 —
 —
 1,078
11 3,517
 20,693
 3,471
 161
 —
 477
 —
 —
 28,319
12 —
 —
 —
 —
 —
 161
 —
 —
 161
13 1,006
 —
 45
 —
 —
 9
 —
 —
 1,060
14,15,16 15
 28
 —
 —
 —
 146
 —
 —
 189
Collectively evaluated for impairment 10,351
 29,433
 7,726
 2,782
 621
 1,894
 21,482
 —
 74,289
Individually evaluated for impairment —
 —
 —
 —
 —
 —
 —
 —
 —
Total CRE-RES $10,351
 $29,433
 $7,726
 $2,782
 $621
 $1,894
 $21,482
 $—
 $74,289



FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 24

FIRST HORIZON CORPORATION191Q21 FORM 10-Q REPORT

Note 4 – Loans and Leases (Continued)

The following table provides the balances of commercial loan portfolio classes with associated allowance, disaggregated by PD grade as of December 31, 2019.

  December 31, 2019
(Dollars in thousands) 
General
C&I
 
Loans to
Mortgage
Companies
 TRUPS (a) 
Income
CRE
 
Residential
CRE
 Total 
Percentage
of Total
 
Allowance
for Loan
Losses
PD Grade:                
1 $696,040
 $—
 $—
 $1,848
 $—
 $697,888
 3% $69
2 767,048
 —
 —
 48,906
 38
 815,992
 4
 165
3 743,123
 877,210
 3,314
 474,067
 806
 2,098,520
 9
 274
4 1,237,772
 692,971
 46,375
 680,223
 477
 2,657,818
 11
 738
5 1,986,761
 670,402
 72,512
 993,628
 1,700
 3,725,003
 15
 8,265
6 2,511,290
 1,410,387
 27,263
 717,062
 17,027
 4,683,029
 19
 12,054
7 2,708,707
 509,616
 18,378
 641,345
 30,925
 3,908,971
 16
 20,409
8 1,743,364
 136,771
 —
 269,407
 16,699
 2,166,241
 9
 22,514
9 1,101,873
 77,139
 31,909
 169,586
 13,007
 1,393,514
 6
 17,484
10 563,635
 21,229
 18,536
 59,592
 2,153
 665,145
 3
 10,197
11 495,140
 —
 —
 81,682
 2,302
 579,124
 2
 13,454
12 262,906
 15,158
 —
 28,807
 1,074
 307,945
 1
 8,471
13 232,823
 —
 —
 32,966
 1,126
 266,915
 1
 8,142
14,15,16 263,076
 —
 —
 43,400
 626
 307,102
 1
 29,318
Collectively evaluated for impairment 15,313,558
 4,410,883
 218,287
 4,242,519
 87,960
 24,273,207
 100
 151,554
Individually evaluated for impairment 82,438
 —
 —
 1,563
 —
 84,001
 —
 6,196
Purchased credit-impaired loans 25,925
 —
 —
 4,155
 820
 30,900
 —
 848
Total commercial loans $15,421,921
 $4,410,883
 $218,287
 $4,248,237
 $88,780
 $24,388,108
 100% $158,598

(a) Balances presented net of a $19.1 million valuation allowance.


The consumer portfolio is comprised primarily of smaller-balance loans which are very similar in nature in that most are standard products and are backed by residential real estate. Because of the similarities of consumer loan-types, FHN is able to utilize the Fair Isaac Corporation (“FICO”)FICO score, among other attributes, to assess the credit quality of consumer borrowers. FICO scores are refreshed on a quarterly basis in an attempt to reflect the recent risk profile of the borrowers. Accruing delinquency amounts are indicators of asset quality within the credit card and other consumer portfolio.



The following table reflects the amortized cost basis by year of origination and refreshed FICO scores for
consumer real estate loans as of March 31, 2021 and December 31, 2020. Within consumer real estate, classes include home equity line of credit ("HELOC")HELOC and real estate installment. HELOCs are loans which during their draw period are classified as revolving loans. Once the draw period ends and the loan enters its repayment period, the loan converts to a term loan and is classified as revolving loans converted to term loans. All loans classified in the following tabletables as revolving loans or revolving loans converted to term loans are HELOCs. Real estate installment loans are originated as a fixed term loan and are classified below in their vintage year from prior to 2016 to 2020.year. All loans in the following tabletables classified in a vintage year are real estate installment loans.



FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 25

Table of Contents
Note 4 – Loans (Continued)

March 31, 2021
 Consumer Real Estate Consumer Real Estate
(Dollars in thousands) 2020 2019 2018 2017 2016 Prior to 2016 Revolving
Loans		 Revolving
Loans converted
to term loans (a)		 Total
(Dollars in millions)(Dollars in millions)20212020201920182017Prior to 2017Revolving
 Loans		Revolving
Loans converted
to term loans (a)		Total
FICO score 740 or greater $134,032
 $586,720
 $451,497
 $438,007
 $541,683
 $1,346,587
 $646,462
 $142,848
 $4,287,836
FICO score 740 or greater$131 $1,195 $1,060 $613 $529 $2,230 $1,200 $150 $7,108 
FICO score 720-739 25,129
 80,851
 50,344
 42,134
 78,632
 135,173
 75,392
 31,629
 519,284
FICO score 720-7398 163 142 91 69 249 179 27 928 
FICO score 700-719 10,325
 63,306
 32,469
 36,606
 35,111
 130,881
 58,913
 29,201
 396,812
FICO score 700-71915 129 103 75 72 267 173 31 865 
FICO score 660-699 27,489
 54,870
 38,198
 33,127
 45,329
 175,873
 80,018
 54,440
 509,344
FICO score 660-69913 121 120 115 69 329 238 53 1,058 
FICO score 620-659 1,026
 21,260
 9,708
 11,482
 16,651
 72,843
 28,433
 31,527
 192,930
FICO score 620-6591 40 57 31 21 134 83 35 402 
FICO score less than 620 339
 12,792
 9,706
 11,477
 12,671
 91,003
 26,318
 48,871
 213,177
FICO score less than 620108 58 32 41 50 302 56 45 692 
Total $198,340
 $819,799
 $591,922
 $572,833
 $730,077
 $1,952,360
 $915,536
 $338,516
 $6,119,383
Total$276 $1,706 $1,514 $966 $810 $3,511 $1,929 $341 $11,053 
(a) $9.0$11 million of HELOC loans were converted from revolving to term in first quarter 2020.2021.

December 31, 2020
 Consumer Real Estate
(Dollars in millions)20202019201820172016Prior to 2016Revolving
 Loans		Revolving Loans converted to term loansTotal
FICO score 740 or greater$1,186 $1,167 $703 $610 $674 $1,719 $1,275 $159 $7,493 
FICO score 720-739157 158 100 77 92 197 186 29 996 
FICO score 700-719122 107 78 76 73 221 177 34 888 
FICO score 660-699130 141 123 75 85 296 264 59 1,173 
FICO score 620-65945 61 37 28 35 127 92 36 461 
FICO score less than 620107 36 52 54 95 261 61 48 714 
Total$1,747 $1,670 $1,093 $920 $1,054 $2,821 $2,055 $365 $11,725 


FIRST HORIZON CORPORATION201Q21 FORM 10-Q REPORT
Table of Contents

Note 4 – Loans and Leases (Continued)
The following table reflectstables reflect the amortized cost basis by year of origination and refreshed FICO scores for credit card and other consumer loans as of March 31, 2021 and December 31, 2020.
March 31, 2021
 Other Consumer Credit Card and Other
(Dollars in thousands) 2020 2019 2018 2017 2016 Prior to 2016 Revolving
Loans		 Revolving
Loans converted
to term loans (a)		 Total
(Dollars in millions)(Dollars in millions)20212020201920182017Prior to 2017Revolving
 Loans		Revolving
Loans converted
to term loans (a)		Total
FICO score 740 or greater $9,410
 $41,336
 $24,423
 $12,035
 $5,338
 $21,272
 $176,917
 $3,293
 $294,024
FICO score 740 or greater$13 $51 $43 $53 $32 $119 $279 $6 $596 
FICO score 720-739 1,509
 6,235
 3,799
 1,911
 1,054
 2,954
 36,173
 709
 54,344
FICO score 720-7392 8 7 6 7 30 36 2 98 
FICO score 700-719 2,236
 5,986
 2,551
 2,103
 924
 2,674
 23,185
 934
 40,593
FICO score 700-7193 8 7 8 6 38 35 2 107 
FICO score 660-699 3,219
 8,803
 4,355
 3,221
 1,524
 4,041
 32,282
 1,700
 59,145
FICO score 660-6992 29 10 14 8 52 41 3 159 
FICO score 620-659 449
 2,760
 1,945
 912
 1,196
 2,213
 13,020
 632
 23,127
FICO score 620-6591 4 4 6 4 31 19 1 70 
FICO score less than 620 279
 1,458
 1,190
 752
 3,034
 4,573
 10,781
 1,498
 23,565
FICO score less than 62011 9 6 7 10 30 21 2 96 
Total $17,102
 $66,578
 $38,263
 $20,934
 $13,070
 $37,727
 $292,358
 $8,766
 $494,798
Total$32 $109 $77 $94 $67 $300 $431 $16 $1,126 
(a) $1.5$2 million of other consumer loans were converted from revolving to term in first quarter 2020.


2021.
The following table reflects the percentage of balances outstanding by average, refreshed FICO scores for the HELOC and real estate installment classes of loans as of December 31, 2019.
  December 31, 2019
(Dollars in thousands) HELOC R/E Installment Loans (b)
FICO score 740 or greater 62.0% 71.9%
FICO score 720-739 8.6
 8.3
FICO score 700-719 7.6
 6.3
FICO score 660-699 10.8
 8.1
FICO score 620-659 4.7
 2.8
FICO score less than 620 (a) 6.3
 2.6
Total 100.0% 100.0%
(a)For this group, a majority of the loan balances had FICO scores at the time of the origination that exceeded 620 but have since deteriorated as the loan have seasoned.
(b)In first quarter 2020, the Permanent Mortgage portfolio was combined into Consumer Real Estate portfolio, all prior periods were revised for comparability.

December 31, 2020
 Credit Card and Other
(Dollars in millions)20202019201820172016Prior to 2016Revolving
 Loans		Revolving Loans converted to term loansTotal
FICO score 740 or greater$57 $52 $59 $37 $23 $116 $159 $5 $508 
FICO score 720-7397 7 9 8 8 27 91 2 159 
FICO score 700-7199 8 9 8 4 38 37 3 116 
FICO score 660-69930 12 15 9 9 48 46 3 172 
FICO score 620-6595 5 7 5 10 24 20 1 77 
FICO score less than 62014 7 8 11 9 26 20 1 96 
Total$122 $91 $107 $78 $63 $279 $373 $15 $1,128 





FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 26

Table of Contents
Note 4 – Loans (Continued)

Nonaccrual and Past Due Loans
and Leases
Nonperforming loans
Loans and leases are loans placed on nonaccrual if it becomes evident that full collection of principal and interest is at risk, impairment has been recognized as a partial charge-off of principal balance due to insufficient collateral value and past due status, or on a case-by-case basis if FHN continues to receive payments but there are other borrower-specific issues. Included in nonaccrualsnonaccrual are loans thatfor which FHN continues to receive payments including residential real estate loans where the borrower has been discharged of personal obligation through bankruptcy, and second liens, regardless of delinquency status, behind first liens that are 90 or more days past due, are bankruptcies, or are TDRs. bankruptcy.
Past due loans are loans contractually past due as to interest or principal payments, but which have not yet been put on nonaccrual status. In accordance with revised Interagency Guidance issued in 2020, FHN is not required to designate loans with deferrals granted in response to COVID-19 as past due because of such deferrals. If a borrower defers payment, this may result in no contractual payments being past due, and as such, loans would not be considered past due during the period of deferral, and as a result, are excluded from loans past due 30-89 days and loans 90+ days past due in the tables below.

FIRST HORIZON CORPORATION211Q21 FORM 10-Q REPORT
Table of Contents

Note 4 – Loans and Leases (Continued)
The following table reflects accruing and non-accruing loans and leases by class on March 31, 2021 and December 31, 2020:
March 31, 2021
 AccruingNon-Accruing 
(Dollars in millions)Current30-89
Days
Past Due		90+
Days
Past Due		Total
Accruing		Current30-89
Days
Past Due		90+
Days
Past Due		Total
Non-
Accruing		Total
Loans
Commercial, financial, and industrial:
C&I (a) (b)$28,251 $26 $0 $28,277 $102 $7 $35 $144 $28,421 
Loans to mortgage companies5,530 0 0 5,530 0 0 0 0 5,530 
Total commercial, financial, and industrial33,781 26 0 33,807 102 7 35 144 33,951 
Commercial real estate:
CRE12,392 11 0 12,403 20 3 44 67 12,470 
Consumer real estate:
HELOC2,198 6 9 2,213 43 2 12 57 2,270 
Real estate installment loans8,623 33 4 8,660 72 8 43 123 8,783 
Total consumer real estate10,821 39 13 10,873 115 10 55 180 11,053 
Credit card and other:
Credit card273 2 0 275 0 0 0 0 275 
Other845 3 0 848 1 1 1 3 851 
Total credit card and other1,118 5 0 1,123 1 1 1 3 1,126 
Total loans and leases$58,112 $81 $13 $58,206 $238 $21 $135 $394 $58,600 
  Accruing Non-Accruing  
(Dollars in thousands) Current 
30-89
Days
Past Due
 
90+
Days
Past Due
 
Total
Accruing
 Current 
30-89
Days
Past Due
 
90+
Days
Past Due
 
Total
Non-
Accruing
 
Total
Loans
Commercial (C&I):                  
General C&I (a) $16,081,865
 $17,049
 $166
 $16,099,080
 $60,387
 $2,505
 $33,189
 $96,081
 $16,195,161
Loans to mortgage companies 5,713,914
 —
 —
 5,713,914
 —
 —
 —
 —
 5,713,914
TRUPS (b) 215,355
 —
 —
 215,355
 —
 —
 —
 —
 215,355
Total commercial (C&I) 22,011,134
 17,049
 166
 22,028,349
 60,387
 2,505
 33,189
 96,081
 22,124,430
Commercial real estate:                  
Income CRE 4,562,822
 419
 —
 4,563,241
 29
 816
 1,317
 2,162
 4,565,403
Residential CRE 74,222
 39
 —
 74,261
 —
 28
 —
 28
 74,289
Total commercial real estate 4,637,044
 458
 —
 4,637,502
 29
 844
 1,317
 2,190
 4,639,692
Consumer real estate:                  
HELOC 1,186,834
 10,213
 5,828
 1,202,875
 41,506
 3,547
 6,124
 51,177
 1,254,052
R/E installment loans 4,801,281
 17,741
 6,304
 4,825,326
 24,162
 2,420
 13,423
 40,005
 4,865,331
Total consumer real estate 5,988,115
 27,954
 12,132
 6,028,201
 65,668
 5,967
 19,547
 91,182
 6,119,383
Credit card & other:                  
Credit card 189,247
 1,893
 1,715
 192,855
 —
 —
 —
 —
 192,855
Other 300,308
 1,144
 131
 301,583
 153
 38
 169
 360
 301,943
Total credit card & other 489,555
 3,037
 1,846
 494,438
 153
 38
 169
 360
 494,798
Total loans, net of unearned income $33,125,848
 $48,498
 $14,144
 $33,188,490
 $126,237
 $9,354
 $54,222
 $189,813
 $33,378,303

(a) $36.1$100 million of general C&I loans are nonaccrual loans that have been specifically reviewed for impairment with no related allowance.
(b) C&I loans include TRUPS loans of $210 million, which is presented net of the valuation allowancean amortizing discount of $18.9$18 million.

December 31, 2020
 AccruingNon-Accruing 
(Dollars in millions)Current30-89
Days
Past Due		90+
Days
Past Due		Total
Accruing		Current30-89
Days
Past Due		90+
Days
Past Due		Total
Non-
Accruing		Total
Loans
Commercial, financial, and industrial:
C&I (a) (b)$27,541 $15 $0 $27,556 $88 $12 $44 $144 $27,700 
Loans to mortgage companies5,404 0 0 5,404 0 0 0 0 5,404 
Total commercial, financial, and industrial32,945 15 0 32,960 88 12 44 144 33,104 
Commercial real estate:
CRE12,194 23 0 12,217 10 42 6 58 12,275 
Consumer real estate:
HELOC2,336 13 11 2,360 43 3 14 60 2,420 
Real estate installment loans9,138 40 5 9,183 63 9 50 122 9,305 
Total consumer real estate11,474 53 16 11,543 106 12 64 182 11,725 
Credit card and other:
Credit card279 3 1 283 0 0 0 0 283 
Other838 6 0 844 1 0 1 2 845 
Total credit card and other1,117 9 1 1,127 1 0 1 2 1,128 
Total loans and leases, net of unearned income$57,730 $100 $17 $57,847 $205 $66 $115 $386 $58,232 

(a) $101 million of C&I loans are nonaccrual loans that have been specifically reviewed for impairment with no related allowance.
(b) C&I loans include TRUPs loans of $210 million, which is net of an amortizing discount of $18 million.


FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 27

FIRST HORIZON CORPORATION221Q21 FORM 10-Q REPORT
Table of Contents

Note 4 – Loans and Leases (Continued)

Collateral-Dependent Loans
The following table reflects accruing
Collateral-dependent loans are defined as loans for which repayment is expected to be derived substantially through the operation or sale of the collateral and non-accruing loans by class onwhere the borrower is experiencing financial difficulty. At a minimum, the estimated value of the collateral for each loan equals the current book value.

As of March 31, 2021 and December 31, 2019:2020
, FHN had commercial loans with amortized cost of approximately $247 million and $167 million that was based on the value of underlying collateral. Collateral-dependent C&I and CRE loans totaled $180 million and $67 million, respectively, at March 31, 2021. The collateral for these loans generally consists of business assets including land, buildings, equipment and financial assets. During the three months ended March 31, 2021, FHN recognized charge-offs of approximately $13 million on these loans related to reductions in estimated collateral values.
  Accruing Non-Accruing  
(Dollars in thousands) Current 
30-89
Days
Past Due
 
90+
Days
Past Due
 
Total
Accruing
 Current 
30-89
Days
Past Due
 
90+
Days
Past Due
 
Total
Non-
Accruing
 
Total
Loans
Commercial (C&I):                  
General C&I $15,314,292
 $7,155
 $237
 $15,321,684
 $36,564
 $14,385
 $23,363
 $74,312
 $15,395,996
Loans to mortgage companies 4,410,883
 —
 —
 4,410,883
 —
 —
 —
 —
 4,410,883
TRUPS (a) 218,287
 —
 —
 218,287
 —
 —
 —
 —
 218,287
Purchased credit-impaired loans 23,840
 287
 1,798
 25,925
 —
 —
 —
 —
 25,925
Total commercial (C&I) 19,967,302
 7,442
 2,035
 19,976,779
 36,564
 14,385
 23,363
 74,312
 20,051,091
Commercial real estate:                  
Income CRE 4,242,044
 679
 —
 4,242,723
 —
 19
 1,340
 1,359
 4,244,082
Residential CRE 87,487
 7
 —
 87,494
 —
 466
 —
 466
 87,960
Purchased credit-impaired loans 4,752
 128
 95
 4,975
 —
 —
 —
 —
 4,975
Total commercial real estate 4,334,283
 814
 95
 4,335,192
 —
 485
 1,340
 1,825
 4,337,017
Consumer real estate:                  
HELOC 1,217,344
 9,156
 5,669
 1,232,169
 43,007
 4,227
 7,472
 54,706
 1,286,875
R/E installment loans (b) 4,812,446
 12,894
 9,170
 4,834,510
 20,710
 1,076
 9,202
 30,988
 4,865,498
Purchased credit-impaired loans 18,720
 2,770
 3,276
 24,766
 —
 —
 —
 —
 24,766
Total consumer real estate 6,048,510
 24,820
 18,115
 6,091,445
 63,717
 5,303
 16,674
 85,694
 6,177,139
Credit card & other:                  
Credit card 198,917
 1,076
 1,178
 201,171
 —
 —
 —
 —
 201,171
Other 291,700
 1,802
 337
 293,839
 101
 44
 189
 334
 294,173
Purchased credit-impaired loans 323
 98
 99
 520
 —
 —
 —
 —
 520
Total credit card & other 490,940
 2,976
 1,614
 495,530
 101
 44
 189
 334
 495,864
Total loans, net of unearned income $30,841,035
 $36,052
 $21,859
 $30,898,946
 $100,382
 $20,217
 $41,566
 $162,165
 $31,061,111

Certain previously reported amounts have been reclassified to agreeConsumer HELOC and real estate installment loans with current presentation.
(a)TRUPS is presented net of the valuation allowance of $19.1 million.
(b)In first quarter 2020, the Permanent Mortgage portfolio was combined into Consumer Real Estate portfolio, all prior periods were revised for comparability.

amortized cost based on the value of underlying real estate collateral were approximately $9 million and $24 million, respectively, as of March 31, 2021, and $9 million and $26 million, respectively, as of December 31, 2020. Charge-offs during the three months ended March 31, 2021 were not significant for collateral-dependent consumer loans.
Troubled Debt Restructurings
As part of FHN’s ongoing risk management practices, FHN attempts to work with borrowers when necessary to extend or modify loan terms to better align with their current ability to repay. Extensions and modifications to loans are made in accordance with internal policies and guidelines which conform to regulatory guidance. Each occurrence is unique to the borrower and is evaluated separately.
A modification is classified as a TDR if the borrower is experiencing financial difficulty and it is determined
that FHN has granted a concession to the borrower. FHN may determine that a borrower is experiencing financial difficulty if the borrower is currently in default on any of its debt, or if it is probable that a borrower may default in the foreseeable future. Many aspects of a borrower’s financial situation are assessed when determining whether they are experiencing financial difficulty. Concessions could include extension of the maturity date, reductions of the interest rate (which may make the rate lower than current market
for a new loan with similar risk), reduction or forgiveness of accrued interest, or principal forgiveness. The assessments of whether a borrower is experiencing (or is likely to experience) financial difficulty, and whether a concession has been granted, are subjective in nature and management’s judgment is required when determining whether a modification is classified as a TDR.
In accordance with regulatory guidance, certain loan modifications that might ordinarily have qualified as TDRs were not accounted for as TDRs and have been excluded from the disclosures below. For all classes withinloan modifications that were made during the commercial portfolio segment,three months ended March 31, 2021 or the year ended December 31, 2020 that met the TDR relief provisions outlined in either the CARES Act, as extended by the CAA, or revised Interagency Guidance, FHN has excluded these modifications from consideration as TDRs, are typically modified through forbearance agreements (generally 6 to 12 months). Forbearance agreements could include reduced interest rates, reduced payments, release of guarantor, or entering into short sale agreements. FHN’s proprietary modification programs for consumerand has excluded loans are generally structured using parameters of U.S. government-sponsored programs suchwith these qualifying modifications from designation as TDRs in the former Home Affordable Modification Program (“HAMP”). Within the HELOCinformation and R/E installment loans classes of the consumer portfolio segment, TDRs are typically modified by reducing the interest rate (in increments of 25 basis


FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 28

Table of Contents
Note 4 – Loans (Continued)

points to a minimum of 1 percent for up to 5 years) and a possible maturity date extension to reach an affordable housing debt-to-income ratio. After 5 years, the interest rate generally returns to the original interest rate prior to modification; for certain modifications, the modified interest rate increases 2 percent per year until the original interest rate prior to modification is achieved. Prior to 2020, Consumer real estate mortgage TDRs (previously classified as permanent mortgage) were typically modified by reducing the interest rate (in increments of 25 basis points to a minimum of 2 percent for up to 5 years) and a possible maturity date extension to reach an affordable housing debt-to-income ratio. After 5 years, the interest rate stepped up 1 percent every year until it reached the Federal Home Loan Mortgage Corporation Weekly Survey Rate cap. Contractual maturities may be extended to 40 years for consumer real estate loans. Within the credit card class of the consumer portfolio segment, TDRs are typically modified through either a short-term credit card hardship program or a longer-term credit card workout program. In the credit card hardship program, borrowers may be granted
rate and payment reductions for 6 months to 1 year. In the credit card workout program, customers are granted a rate reduction to 0 percent and term extensions for up to 5 years to pay off the remaining balance.
Despite the absence of a loan modification, the discharge of personal liability through bankruptcy proceedings is considered a concession. As a result, FHN classifies all non-reaffirmed residential real estate loans discharged in Chapter 7 bankruptcy as nonaccruing TDRs.discussion that follows.
On March 31, 20202021 and December 31, 2019,2020, FHN had $194.7$288 million and $206.3$307 million of portfolio loans classified as TDRs, respectively. For TDRs in the loan portfolio, FHN had loan loss reserves of $13.9$11 million, or 7 percent4% as of March 31, 2020,2021, and $19.7$12 million, or 10 percent4% as of December 31, 2019.2020. Additionally, $50.5$41 million and $51.1$42 million of loans held-for-saleheld for sale as of March 31, 20202021 and December 31, 2019,2020, respectively, were classified as TDRs.
The following tables reflect portfolio loans that were classified as TDRs during the three months ended March 31, 2020 and 2019:
  March 31, 2020 March 31, 2019
(Dollars in thousands) Number 
Pre-Modification
Outstanding
Recorded Investment
 
Post-Modification
Outstanding
Recorded Investment
 Number 
Pre-Modification
Outstanding
Recorded Investment
 
Post-Modification
Outstanding
Recorded Investment
Commercial (C&I):            
General C&I 3
 $5,927
 $4,433
 2
 $13,895
 $13,820
   Total commercial (C&I) 3
 5,927
 4,433
 2
 13,895
 13,820
Consumer real estate:            
HELOC 8
 912
 891
 19
 2,104
 2,084
R/E installment loans 10
 1,511
 1,497
 47
 7,425
 7,413
   Total consumer real estate 18
 2,423
 2,388
 66
 9,529
 9,497
Credit card & other 24
 158
 146
 15
 74
 71
Total troubled debt restructurings 45
 $8,508
 $6,967
 83
 $23,498
 $23,388












FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 29

FIRST HORIZON CORPORATION231Q21 FORM 10-Q REPORT

Note 4 – Loans and Leases (Continued)

The following tables present the end of period balance for loans modified in a TDR during the periods indicated:
 Three Months Ended March 31, 2021Three Months Ended March 31, 2020
(Dollars in millions)NumberPre-Modification Outstanding Recorded  InvestmentPost-Modification Outstanding Recorded  InvestmentNumberPre-Modification Outstanding Recorded  InvestmentPost-Modification Outstanding Recorded  Investment
Commercial, financial, and industrial:
C&I17 $8 $8 3 $6 $4 
Commercial real estate:
 CRE1 12 10 0 0 0 
Consumer real estate:
HELOC12 2 2 8 1 1 
Real estate installment loans9 2 2 10 2 2 
Total consumer real estate21 4 4 18 3 3 
Credit card and other13 0 0 24 0 0 
Total TDRs52 $24 $22 45 $9 $7 
The following tables present TDRs which re-defaulted during the three months ended March 31, 2021 and 2020, and 2019, andand as to which the modification occurred 12 months or less prior to the re-default. For purposes of this disclosure, FHN generally defines payment default as 30 or more days past due.
 Three Months Ended March 31, 2021Three Months Ended March 31, 2020
(Dollars in millions)NumberRecorded
Investment		NumberRecorded
Investment
Commercial, financial, and industrial:
C&I7 $1 0 $0 
Commercial real estate:
 CRE0 0 0 0 
Consumer real estate:
HELOC1 0 4 1 
Real estate installment loans3 2 5 0 
Total consumer real estate4 2 9 1 
Credit card and other0 0 7 0 
Total TDRs11 $3 16 $1 
  March 31, 2020 March 31, 2019
(Dollars in thousands) Number 
Recorded
Investment
 Number 
Recorded
Investment
Commercial (C&I):        
General C&I —
 $—
 —
 $—
Total commercial (C&I) —
 —
 —
 —
Consumer real estate:        
HELOC 4
 960
 1
 33
R/E installment loans 5
 344
 —
 —
Total consumer real estate 9
 1,304
 1
 33
Credit card & other 7
 31
 8
 18
Total troubled debt restructurings 16
 $1,335
 9
 $51


Accrued Interest
FIRST HORIZON CORPORATION241Q21 FORM 10-Q REPORT

Note 5 – Allowance for Credit Losses
Management's estimate of expected credit losses in the loan and lease portfolios is recorded in the ALLL and the RULC, collectively the ACL. The ALLL and the RULC are reported on the Consolidated Balance Sheets in the Allowance for loan and lease losses and in Other liabilities, respectively. Provision for credit losses related to the loans and leases portfolio and the unfunded lending commitments are reported in the Consolidated Statements of Income as Provision for credit losses.
The ACL is maintained at a level management believes to be appropriate to absorb expected lifetime credit losses over the contractual life of the loan and lease portfolio and unfunded lending commitments. The determination of the ACL is based on periodic evaluation of the loan and lease portfolios and unfunded lending commitments considering a number of relevant underling factors, including key assumptions and evaluation of quantitative and qualitative information.
In accordance with its accounting policy elections, FHN has excludeddoes not recognize a separate allowance for expected credit losses for AIR fromand records reversals
of AIR as reductions of interest income. FHN reverses previously accrued but uncollected interest when an asset is placed on nonaccrual status. As of March 31, 2021 and December 31, 2020, FHN recognized approximately $1 million in allowance for expected credit losses on COVID-19 deferrals that do not qualify for the amortized cost basis of Loans, net of unearned income.election which is not reflected in the table below. AIR and the related allowance for expected credit losses is included withinas a component of Other assets in the Consolidated Condensed Statementsassets.
The total amount of Conditioninterest reversals from loans placed on nonaccrual status and the amounts by portfolio segmentamount of income recognized on nonaccrual loans during the three months ended ended March 31, 2021 and 2020 were not material.
Expected credit losses for unfunded commitments are presented inestimated for periods where the following table.commitment is not unconditionally cancellable. The measurement of expected credit losses for unfunded commitments mirrors that of loans and leases with the additional estimate of future draw rates (timing and amount).
  March 31
(Dollars in thousands) 2020
Commercial:  
Commercial, financial, and industrial $55,215
Commercial real estate 11,233
Consumer:  
Consumer real estate 16,154
Credit card & other 1,672
Total accrued interest $84,274


Purchased Credit-Impaired Loans

The following table presentsprovides a rollforward of the accretable yieldALLL and RULC by portfolio type for the yearthree months ended DecemberMarch 31, 2019:
2021 and 2020:
  Year Ended
(Dollars in thousands) 2019
Balance, beginning of period $13,375
Accretion (5,792)
Adjustment for payoffs (2,438)
Adjustment for charge-offs (479)
Adjustment for pool excess recovery (a) —
Increase in accretable yield (b) 5,513
Disposals (4)
Other (367)
Balance, end of period $9,808
(a)Represents the removal of accretable difference for the remaining loans in a pool which is now in a recovery state.
(b)Includes changes in the accretable yield due to both transfers from the nonaccretable difference and the impact of changes in the expected timing of the cash flows.

(Dollars in millions)Commercial, Financial, and Industrial (a)Commercial Real EstateConsumer Real EstateCredit Card and OtherTotal
Allowance for loan and lease losses:
Balance as of January 1, 2021$453 $242 $242 $26 $963 
Charge-offs(16)(3)(1)(3)(23)
Recoveries6 2 6 1 15 
Provision (provision credit) for loan and lease losses(1)(8)(25)(6)(41)
Balance as of March 31, 2021$442 $232 $222 $18 $914 
Reserve for remaining unfunded commitments:
Balance as of January 1, 2021$65 $10 $10 $0 $85 
Provision (provision credit) for remaining unfunded commitments(3)1 (2)0 (4)
Balance as of March 31, 2021$62 $11 $8 $0 $81 
Allowance for loan losses:
Balance as of January 1, 2020, as adjusted (b)$142 $29 $121 $15 $307 
Charge-offs(7)(1)(2)(4)(14)
Recoveries 1 1 3 1 6 
Provision for loan losses 119 19 0 7 145 
Balance as of March 31, 2020$255 $48 $122 $19 $444 
Reserve for remaining unfunded commitments:
Balance as of January 1, 2020, as adjusted (b)$21 $3 $6 $0 $30 
Provision for remaining unfunded commitments6 3 0 0 9 
Balance as of March 31, 2020$27 $6 $6 $0 $39 
At December 31, 2019, the ALLL related to PCI loans was $2.0 million. Net charge-offs related to PCI loans during 2019 were $5.8 million. The loan loss provision expense related to PCI loans during 2019 was $1.3 million.




FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 30

Table of Contents
Note 4 – Loans (Continued)


The following table reflects the outstanding principal balance and carrying amounts of the acquired PCI(a) C&I loans as of DecemberMarch 31, 2019:2021 include $5.1 billion in PPP loans which due to the government guarantee and forgiveness provisions are considered to have no credit risk and therefore have no allowance for loan and lease losses.
  December 31, 2019
(Dollars in thousands) Carrying value Unpaid balance
Commercial, financial and industrial $24,973
 $25,938
Commercial real estate 5,078
 5,466
Consumer real estate 23,681
 26,245
Credit card and other 489
 567
Total $54,221
 $58,216

Impaired Loans
The following tables provide information at December 31, 2019 by class related to individually impaired loans and consumer TDRs, regardless of accrual status. Recorded investment is defined(b) Balance, as the amount of the investment in a loan, excluding any valuation allowance but including any direct write-down of the investment. For purposes of this disclosure, TRUPS valuation allowance has been excluded.
  December 31, 2019
(Dollars in thousands) Recorded
Investment		 Unpaid
Principal
Balance		 Related
Allowance
Impaired loans with no related allowance recorded:      
Commercial:      
General C&I $52,672
 $63,602
 $—
Income CRE 1,563
 1,563
 —
Total $54,235
 $65,165
 $—
Consumer:      
HELOC (a) $4,940
 $10,438
 $—
R/E installment loans (a) 7,593
 10,054
 —
Total $12,533
 $20,492
 $—
Impaired loans with related allowance recorded:      
Commercial:      
General C&I $29,766
 $31,536
 $6,196
TRUPS —
 —
 —
Income CRE —
 —
 —
Total $29,766
 $31,536
 $6,196
Consumer:      
HELOC $55,522
 $59,122
 $7,016
R/E installment loans 94,191
 104,121
 12,282
Credit card & other 653
 653
 422
Total $150,366
 $163,896
 $19,720
Total commercial $84,001
 $96,701
 $6,196
Total consumer $162,899
 $184,388
 $19,720
Total impaired loans $246,900
 $281,089
 $25,916
(a)All discharged bankruptcy loans are charged down to an estimate of net realizable value and do not carry any allowance.



FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 31

Table of Contents
Note 4 – Loans (Continued)

 Three Months Ended March 31
  2019
(Dollars in thousands) Average
Recorded
Investment		 Interest
Income
Recognized
Impaired loans with no related allowance recorded:    
Commercial:    
   General C&I $55,765
 $180
Loans to mortgage companies —
 —
   Income CRE 1,556
 13
   Residential CRE —
 —
   Total $57,321
 $193
Consumer:    
   HELOC (a) $7,597
 $—
   R/E installment loans (a) 8,637
 —
   Total $16,234
 $—
Impaired loans with related allowance recorded:    
Commercial:    
   General C&I $7,294
 $—
   TRUPS 2,863
 —
   Income CRE 367
 4
   Residential CRE —
 —
   Total $10,524
 $4
Consumer:    
   HELOC $65,013
 $522
   R/E installment loans 108,059
 822
   Credit card & other 690
 5
   Total $173,762
 $1,349
Total commercial $67,845
 $197
Total consumer $189,996
 $1,349
Total impaired loans $257,841
 $1,546
(a)All discharged bankruptcy loans are charged down to an estimate of net realizable value and do not carry any allowance.



FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 32



Note 5 – Allowance for Loan Losses
As discussed in Note 1 - Summary of Significant Accounting Policies, the ALLL estimation process was revised on January 1, 2020 to reflect the adoption of ASU 2016-13. All information contained in the following disclosuresadjusted, reflects the application of requirements from the adoption of ASU 2016-13 (CECL) effective January 1, 2020.
FIRST HORIZON CORPORATION251Q21 FORM 10-Q REPORT

Note 5- Allowance for periods after 2019. Information for periods prior to 2020 has been retained with the content consistent with prior disclosures.Credit Losses (Continued)
Periods after 2019
The ALLL has been determineddifference in accordance with ASC 326-20, which requires a recognitionthe ACL as of current expected credit losses onMarch 31, 2021 as compared to December 31, 2020 reflects improvement in the amortized cost basis of loans. During the first quarter of 2020, expected credit loss estimates were adversely affected across all portfolio segments due to the sudden, steep decline in macroeconomic forecasts due to the actual and projected effects of the COVID-19 pandemic. To a lesser extent, loan growth also resulted in a higher ALLL as those increased balances received a full life-of-loan allowance based on current macroeconomic projections.outlook.
For all portfolio segments, FHN has selected a 4-year reasonable and supportable forecast period which reflects a 3-year period during which macroeconomic variables are used to estimate expected credit losses. This is followed by a 1-year, time-weighted reversion to historical loss factors with weights assigned to macroeconomic variables diminishing, and weights assigned to historical loss averages increasing, pro rata as months lapse during the 1-year period. Thereafter, FHN immediately reverts to historical loss averages over the remaining estimated life of loans.
In developing credit loss estimates for its loan portfolio, FHN evaluated multiple macroeconomic forecasts provided by Moody’s.and lease portfolios, FHN selected Moody’s baseline forecast as the primary source for its macroeconomic inputs, which are inclusive ofincluded assumptions that were generally in line with Blue Chip Economic Indicators, including unemployment rates for 2021 and 2022 and GDP growth rates for the followingsame periods, as well as assumptions around further business disruption related to COVID-19 and an unchanged target Fed funds range until mid 2023.

As there can be no certainty that actual economic performance will precisely follow any specific macroeconomic forecast, FHN also evaluated other macroeconomic forecasts provided by Moody’s and adjusted the economic effects of the COVID-19 pandemic:
Passage and implementation of the CARES Act
Federal Reserve stimulus including open-ended quantitative easing and announced programs
Assumes passage ofmodeled outputs through a fourth stimulus package in in fourth quarter 2020
Recession startsqualitative adjustment to account for uncertainties inherent in the first 6macroeconomic forecast process. Additionally, where macroeconomic forecast variables used in the models did not take into effect the impact of federal stimulus and bank-supported payment deferral and forbearance programs on the timing of grade migration and recognition of loss content, management adjusted model outputs qualitatively to account for this assistance.
During the year ended December 31, 2020 and the three months of 2020
Unemployment peaks at 9 percent in second quarter 2020
The economy experiences a partial bounce back in third quarter 2020, which is followed by slow growth
GDP growth accelerates later inended March 31, 2021,
Return to full employment by 2023
FHN also utilized moreconsidered stressed economic scenarios in evaluating certain components of its loan portfolio (industries)portfolios or industries that are most exposed to the effects of the COVID-19 pandemic including Franchise Finance, Energy and Hospitality within the C&I segment and CRE-Hospitality within the Commercial Real Estate segment. This analysis was utilized in developingadded qualitative adjustments, where needed, to increaseaccount for the recorded ALLL attributable to these components beyond therisks not captured in modeled results. Management also made qualitative adjustments to reflect estimated recoveries based on a review of prior charge off and recovery levels, for default risk associated with large balances with individual borrowers, for estimated loss amounts not reflected in historical factors due to specific portfolio risk, and for instances where limited data for acquired loans is considered to affect modeled results.
Typically commercial
FIRST HORIZON CORPORATION261Q21 FORM 10-Q REPORT


Note 6 – Mortgage Banking Activity
On July 1, 2020, as part of the IBKC merger, FHN obtained IBKC's mortgage banking operations which includes origination and servicing of residential first lien mortgages that conform to standards established by GSEs that are major investors in U.S. home mortgages, but can also consist of junior lien loans secured by residential property. These loans are primarily sold to private companies that are unaffiliated with the GSEs on a servicing-released basis. Gains and losses on these mortgage loans are included in C&IMortgage banking and CRE have shorter expected lives, basedtitle income on the contractual term
Consolidated Statements of Income. Prior to the merger, FHN’s mortgage banking operations were not significant; however, at March 31, 2021, FHN had approximately $53 million of loans that remained from pre-2009 Mortgage Business operations. Activity related to the pre-2009 mortgage loans was primarily limited to payments and write-offs in 2020 and 2021, with no new originations or loan agreements, prepayment estimatessales, and a limitedonly an insignificant amount of renewal or extension options that are not unconditionally cancellable by FHN. Estimated weighted average lives are normally under 3 years. TRUPsrepurchases. These loans are an exception dueexcluded from the disclosure below.
The following table summarizes activity relating to longer contractual lives, beneficial borrower terms and balloon payoff structure. Consumer HELOC and installmentresidential mortgage loans tend to have significantly longer lives based on their contractual terms which is reduced somewhat by estimated prepayments with estimated weighted average lives normally 5 years or less. Credit card loans have shorter estimated lives approximating 1 year based on customer payment trends and because the revolving lines are unconditionally cancellable by FHN.
Asheld for sale as of March 31, 2020, FHN had General C&I loans with amortized cost of approximately $32 million that was based on the value of underlying collateral. At a minimum, the estimated value of the collateral for each loan equals the current book value. The collateral for these loans generally consists of business assets including land, buildings, equipment and financial assets. During the three months ended March 31, 2020,2021 and the year ended December 31, 2020.

(Dollars in millions)March 31, 2021December 31, 2020
Balance at beginning of period$409 $4 
Acquired0 320 
Originations and purchases446 2,499 
Sales, net of gains(421)(2,405)
Mortgage loans transferred from (to) held for investment3 (9)
Balance at end of period$437 $409 

Mortgage Servicing Rights
Effective with the IBKC merger, FHN recognized charge-offsmade an election to record mortgage servicing rights at the lower of approximately $6 million on these loans related to reductions in estimated collateral values.
Consumer HELOCcost or market value and installmentamortize over the remaining servicing life of the loans, with amortized cost basedconsideration given to prepayment assumptions. Mortgage servicing rights are included in Other assets on the valueConsolidated Balance Sheets. Mortgage servicing rights had the following carrying values as of underlying real estate collateral were approximately $10 millionthe periods indicated.
March 31, 2021
(Dollars in millions)Gross Carrying AmountAccumulated AmortizationNet Carrying Amount
Mortgage servicing rights$31 $(4)$27 
December 31, 2020
(Dollars in millions)Gross Carrying AmountAccumulated AmortizationNet Carrying Amount
Mortgage servicing rights$28 $(3)$25 
In addition, there was an insignificant amount of non-mortgage and $23 million, respectively,commercial servicing rights as of March 31, 2021 and December 31, 2020. At a minimum, the estimated value of the collateral for each loan equals the current book value. Charge offs during the three months


FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 33

Table of Contents

Note 5 – Allowance for Loan Losses (Continued)

ended March 31, 2020Total mortgage servicing fees included in Mortgage banking and title income were not significant for either portfolio segment.
Unfunded Commitments
The measurement of expected credit losses for unfunded commitments mirrors that of loans with the additional estimate of future draw rates (timing and amount). Consistent with the ALLL, the decline in macroeconomic forecasts during March resulted in higher credit expense for unfunded commitments. However, this effect of higher loss forecasts was offset somewhat because many borrowers drew on available lines prior to the end of the quarter which resulted in higher loan balances (and ALLL). Total credit loss expense for unfunded commitments was $9.2$1 million for the three months ended March 31, 2020.
Periods prior to 2020
The ALLL included the following components: reserves for commercial loans evaluated based on pools of credit graded loans and reserves for pools of smaller-balance homogeneous consumer loans, both determined in accordance with ASC 450-20-50, and to a lesser extent, reserves determined in accordance with ASC 310-10-35 for loans determined by management to be individually impaired and an allowance associated with PCI loans.
For commercial loans, ASC 450-20-50 reserves were established using historical net loss factors by grade level, loan product, and business segment. The ALLL for smaller-balance homogeneous consumer loans was determined based on pools of similar loan types that have similar credit risk characteristics. ASC 450-20-50 reserves for the consumer portfolio were determined using segmented roll-rate models that incorporated various factors including historical delinquency trends, experienced loss frequencies, and experienced loss severities. Generally, reserves for consumer loans reflected inherent losses in the portfolio that were expected to be recognized over the following twelve months. The historical net loss factors for both commercial and consumer ASC 450-20-50 reserve models were subject to qualitative adjustments by management to reflect current events, trends, and conditions (including economic considerations and trends), which were not fully captured in the historical net loss factors. The pace of the economic recovery, performance of the housing market,
unemployment levels, labor participation rate, the regulatory environment, regulatory guidance, and portfolio segment-specific trends, were examples of additional factors considered by management in determining the ALLL. Additionally, management considered the inherent uncertainty of quantitative models that were driven by historical loss data. Management evaluated the periods of historical losses that were the basis for the loss rates used in the quantitative models and selected historical loss periods that were believed to be the most reflective of losses inherent in the loan portfolio as of the balance sheet date. Management also periodically reviewed an analysis of the loss emergence period which was the amount of time required for a loss to be confirmed (initial charge-off) after a loss event had occurred. FHN performed extensive studies related to the historical loss periods used in the model and the loss emergence period and model assumptions were adjusted accordingly.
Impairment related to individually impaired loans was measured in accordance with ASC 310-10. For all commercial portfolio segments, commercial TDRs and other individually impaired commercial loans were measured based on the present value of expected future payments discounted at the loan’s effective interest rate (“the DCF method”), observable market prices, or for loans that are solely dependent on the collateral for repayment, the net realizable value (collateral value less estimated costs to sell). Impaired loans also included consumer TDRs. Generally, the allowance for TDRs in all consumer portfolio segments was determined by estimating the expected future cash flows using the modified interest rate (if an interest rate concession), incorporating payoff and net charge-off rates specific to the TDRs within the portfolio segment being assessed, and discounted using the pre-modification interest rate. The discount rates of variable rate TDRs were adjusted to reflect changes in the interest rate index to which the rates are tied. The discounted cash flows were then compared to the outstanding principal balance in order to determine required reserves. Residential real estate loans discharged through bankruptcy were considered collateral-dependent2021, and were charged down to net realizable value (collateral value less estimated costs to sell).








FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 34

Table of Contents

Note 5 – Allowance for Loan Losses (Continued)

The following table provides a rollforward of the allowance for loan losses by portfolio segmentinsignificant for the three months ended March 31, 2020 and 2019:
(Dollars in thousands) C&I 
Commercial
Real Estate
 
Consumer
Real Estate (a)
 
Credit Card
and Other
 Total
Balance as of January 1, 2020 $122,486
 $36,112
 $28,443
 $13,266
 $200,307
Adoption of ASU 2016-13 18,782
 (7,348) 92,992
 1,968
 106,394
Charge-offs (6,751) (581) (2,310) (3,811) (13,453)
Recoveries 935
 573
 3,555
 1,179
 6,242
Provision for loan losses 119,064
 18,869
 342
 6,725
 145,000
Balance as of March 31, 2020 254,516
 47,625
 123,022
 19,327
 444,490
Allowance - individually evaluated for impairment 11,401
 —
 13,394
 468
 25,263
Allowance - collectively evaluated for impairment 243,115
 47,625
 109,628
 18,859
 419,227
Loans, net of unearned as of March 31, 2020:          
  Individually evaluated for impairment 100,092
 163
 152,393
 699
 253,347
  Collectively evaluated for impairment 22,024,338
 4,639,529
 5,966,990
 494,099
 33,124,956
Total loans, net of unearned income $22,124,430
 $4,639,692
 $6,119,383
 $494,798
 $33,378,303
Balance as of January 1, 2019 $98,947
 $31,311
 $37,439
 $12,727
 $180,424
Charge-offs (3,101) (434) (2,804) (4,188) (10,527)
Recoveries  829
 57
 4,041
 1,087
 6,014
Provision/(provision credit) for loan losses  7,038
 3,448
 (4,522) 3,036
 9,000
Balance as of March 31, 2019 103,713
 34,382
 34,154
 12,662
 184,911
Allowance - individually evaluated for impairment 
 3,437
 —
 23,923
 446
 27,806
Allowance - collectively evaluated for impairment 
 98,135
 34,382
 9,108
 12,067
 153,692
Allowance - purchased credit-impaired loans 2,141
 —
 1,123
 149
 3,413
Loans, net of unearned as of March 31, 2019:          
  Individually evaluated for impairment  83,253
 1,879
 189,332
 684
 275,148
  Collectively evaluated for impairment 17,056,034
 3,936,727
 6,141,585
 504,271
 27,638,617
  Purchased credit-impaired loans 36,825
 8,337
 29,846
 1,275
 76,283
Total loans, net of unearned income $17,176,112
 $3,946,943
 $6,360,763
 $506,230
 $27,990,048

Certain previously reported amounts have been reclassified to agree with current presentation.
a) In first quarter 2020, the Permanent Mortgage portfolio was combined into Consumer Real Estate portfolio, all prior periods were revised for comparability.

2020.
In accordance with its accounting policy elections, FHN does not recognize a separate allowance for expected credit losses for AIR and records reversals of AIR as reductions of interest income. FHN reverses previously accrued but uncollected interest when an asset is placed on nonaccrual status.











The total amount of interest reversals from loans placed on nonaccrual status during the three months ended March 31, 2020 was not material. In addition, the amount of income recognized on nonaccrual loans for the three months ended in March 31, 2020 was not material.


FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 35



Note 6 – Intangible Assets
The following is a summary of other intangible assets included in the Consolidated Condensed Statements of Condition:
  March 31, 2020 December 31, 2019
(Dollars in thousands) 
Gross Carrying
Amount
 
Accumulated
Amortization
 
Net Carrying
Value
 
Gross Carrying
Amount
 
Accumulated
Amortization
 
Net Carrying
Value
Core deposit intangibles $157,150
 $(51,966) $105,184
 $157,150
 $(47,372) $109,778
Customer relationships (a) 23,000
 (5,734) 17,266
 77,865
 (60,150) 17,715
Other (b) 5,622
 (3,180) 2,442
 5,622
 (2,915) 2,707
Total $185,772
 $(60,880) $124,892
 $240,637
 $(110,437) $130,200

(a)FIRST HORIZON CORPORATION2020 decrease in gross carrying amounts and accumulated amortization associated with $54.9 million of customer relationships fully amortized at December 31, 2019.271Q21 FORM 10-Q REPORT
(b)Balance primarily includes noncompete covenants, as well as $.3 million related to state banking licenses not subject to amortization.
Amortization expense

Note 7 – Goodwill and Other Intangible Assets

Goodwill

On July 1, 2020, FHN completed its merger-of-equals transaction with IBKC. In connection with the merger, FHN recorded a $534 million purchase accounting gain, based on preliminary fair value estimates.

On July 17, 2020, FHN completed its purchase of 30 branches from Truist Bank. In relation to the acquisition, FHN recorded $78 million in goodwill, based on fair value estimates. See Note 2 - Acquisitions and Divestituresfor additional information regarding these transactions.

FHN performed the required annual goodwill impairment test as of October 1, 2020. The annual impairment test did not indicate impairment in any of FHN’s reporting units as of the testing date. Following the testing date, management evaluated the events and circumstances that could indicate that goodwill might be impaired and concluded that a subsequent interim test was $5.3 million and $6.2 million fornot necessary.
As further discussed in Note 13 - Business Segment Information, FHN reorganized its management reporting structure during the three months ended March 31,fourth quarter of 2020 and, 2019, respectively. As of March 31, 2020accordingly, its segment reporting structure and goodwill reporting units. In connection with the estimated aggregated amortization expense is expectedreorganization, management reallocated goodwill to be:the new reporting units using a relative fair value approach.
(Dollars in thousands)  
Year Amortization
Remainder of 2020 $15,852
2021 19,547
2022 17,412
2023 16,117
2024 14,679
2025 12,580

GrossAccounting estimates and assumptions were made about FHN’s future performance and cash flows, as well as other prevailing market factors (e.g., interest rates, economic trends, etc.) when determining fair value as part of the goodwill accumulated impairments, and accumulated divestiture related write-offs were determined beginning January 1, 2002, when a changeimpairment test. While management used the best information available to estimate future performance for each reporting unit, future adjustments to management’s projections may be necessary if conditions differ substantially from the assumptions used in accounting requirements resulted in goodwill being assessed for impairment rather than being amortized. Gross goodwill of $200.0 million with accumulated impairments and accumulated divestiture-related write-offs of $114.1 million and $85.9 million, respectively, were previously allocated tomaking the non-strategic segment, resulting in $0 net goodwill allocated to the non-strategic segment as of March 31, 2020 and December 31, 2019. The regional banking and fixed income segments do not have any accumulated impairments or divestiture related write-offs. estimates.


The following is a summary of goodwill by reportable segment included in the Consolidated Condensed Statements of ConditionBalance Sheets as of March 31, 20202021 and December 31, 2019.2020.
(Dollars in millions)Regional
Banking		Specialty BankingTotal
December 31, 2019$802 $631 $1,433 
Additions78 0 78 
December 31, 2020$880 $631 $1,511 
December 31, 2020$880 $631 $1,511 
Additions and adjustments0 0 0 
March 31, 2021$880 $631 $1,511 
(Dollars in thousands) 
Regional
Banking
 
Fixed
Income
 Total
December 31, 2018 $1,289,819
 $142,968
 $1,432,787
Additions —
 —
 —
March 31, 2019 $1,289,819
 $142,968
 $1,432,787
       
December 31, 2019 $1,289,819
 $142,968
 $1,432,787
Additions —
 —
 —
March 31, 2020 $1,289,819
 $142,968
 $1,432,787


Other intangible assets


FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 36



Note 7 – Other Income and Other Expense
Following is detail of AllThe following table, which excludes fully amortized intangibles, presents other income and commissions and All other expense as presentedintangible assets included in the Consolidated Condensed Statements of Income:Balance Sheets:
 March 31, 2021December 31, 2020
(Dollars in millions)Gross Carrying
Amount		Accumulated
Amortization		Net Carrying
Value		Gross Carrying
Amount		Accumulated
Amortization		Net Carrying
Value
Core deposit intangibles$371 $(93)$278 $371 $(81)$290 
Customer relationships37 (9)28 37 (8)29 
Other (a)41 (8)33 41 (6)35 
Total$449 $(110)$339 $449 $(95)$354 
(a)Includes noncompete covenants and purchased credit card intangible assets. Also includes title plant intangible assets and state banking licenses which are not subject to amortization.
 Three Months Ended
March 31
(Dollars in thousands)2020 2019
All other income and commissions:   
Other service charges$5,219
 $3,869
ATM and interchange fees4,212
 3,241
Mortgage banking2,431
 1,886
Letter of credit fees1,462
 1,368
Dividend income1,130
 2,313
Electronic banking fees1,030
 1,271
Insurance commissions789
 624
Gain/(loss) on extinguishment of debt—
 (1)
Deferred compensation (a)(9,507) 5,474
Other7,598
 4,586
Total$14,364
 $24,631
All other expense:   
Credit expense on unfunded commitments (b)$9,230
 $396
Travel and entertainment2,709
 2,712
Other insurance and taxes2,679
 2,694
Non-service components of net periodic pension and post-retirement cost2,508
 432
Supplies2,411
 1,804
Customer relations2,004
 1,599
Employee training and dues1,341
 1,457
Miscellaneous loan costs1,094
 1,027
Tax credit investments346
 675
Litigation and regulatory matters13
 13
OREO(184) (366)
Other9,075
 6,888
Total$33,226
 $19,331

Certain previously reported amounts have been reclassified to agree with current presentation.
(a)FIRST HORIZON CORPORATIONAmounts are driven by market conditions and are mirrored by changes in deferred compensation expense which is included in employee compensation expense. First quarter 2020 decrease was driven by negative equity market valuations.281Q21 FORM 10-Q REPORT

Note 8 - Preferred Stock

The following table presents a summary of FHN's non-cumulative perpetual preferred stock:

(Dollars in millions)March 31, 2021December 31, 2020
Issuance DateEarliest Redemption Date (a)Annual Dividend RateDividend PaymentsShares OutstandingLiquidation AmountCarrying AmountCarrying Amount
Series A1/31/20134/10/20186.200 %Quarterly1,000 $100 $96 $96 
Series B7/2/20208/1/20256.625 %(b)Semi-annually8,000 80 77 77 
Series C7/2/20205/1/20266.600 %(c)Quarterly5,750 58 59 59 
Series D7/2/20205/1/20246.100 %(d)Semi-annually10,000 100 93 93 
Series E5/28/202010/10/20256.500 %Quarterly1,500 150 145 145 
26,250 $488 $470 $470 
(a) Denotes earliest optional redemption date. Earlier redemption is possible, at FHN's election, if certain regulatory capital events occur.
(b) Fixed dividend rate will reset on August 1, 2025 to three-month LIBOR plus 4.262%.
(c) Fixed dividend rate will reset on May 1, 2026 to three-month LIBOR plus 4.920%.
(d) Fixed dividend rate will reset on May 1, 2024 to three-month LIBOR plus 3.859%.

Subsidiary Preferred Stock
First Horizon Bank has issued 300,000 shares of Class A Non-Cumulative Perpetual Preferred Stock (Class A Preferred Stock) with a liquidation preference of $1,000 per share. Dividends on the Class A Preferred Stock, if declared, accrue and are payable each quarter, in arrears, at a floating rate equal to the greater of the three month LIBOR plus 0.85% or 3.75% per annum. These securities qualify fully as Tier 1 capital for First Horizon Bank, while for FHN they qualify partially as Tier 1 capital and partially as Tier 2 capital. On March 31, 2021 and December 31, 2020, $295 million of Class A Preferred Stock was recognized as Noncontrolling interest on the Consolidated Balance Sheets.
(b)FIRST HORIZON CORPORATIONFirst quarter 2020 increase largely associated with a sudden, steep decline in economic forecast attributable to the COVID-19 pandemic.291Q21 FORM 10-Q REPORT



FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 37




Note 89 – Components of Other Comprehensive Income/(loss)Income (Loss)
The following table provides the changes in accumulated other comprehensive income/income (loss) by component, net of tax, for the three months ended March 31, 20202021 and 2019:2020:
(Dollars in millions)Securities AFSCash Flow
Hedges		Pension and
Post-retirement
Plans		Total
Balance as of January 1, 2021$108 $12 $(260)$(140)
Net unrealized gains (losses)(103)(3)2 (104)
Amounts reclassified from AOCI0 1 2 3 
Other comprehensive income (loss)(103)(2)4 (101)
Balance as of March 31, 2021$5 $10 $(256)$(241)
(Dollars in thousands) Securities AFS Cash Flow
Hedges		 Pension and
Post-retirement
Plans		 Total
Balance as of January 1, 2020 $31,079
 $3,227
 $(273,914) $(239,608)
Net unrealized gains/(losses) 88,278
 13,155
 —
 101,433
Amounts reclassified from AOCI —
 (94) 2,105
 2,011
Other comprehensive income/(loss) 88,278
 13,061
 2,105
 103,444
Balance as of March 31, 2020 $119,357
 $16,288
 $(271,809) $(136,164)
         
Balance as of January 1, 2019 $(75,736) $(12,112) $(288,768) $(376,616)
Net unrealized gains/(losses) 48,615
 3,936
 —
 52,551
Amounts reclassified from AOCI —
 1,451
 1,463
 2,914
Other comprehensive income/(loss) 48,615
 5,387
 1,463
 55,465
Balance as of March 31, 2019 $(27,121) $(6,725) $(287,305) $(321,151)


(Dollars in millions)Securities AFSCash Flow
Hedges		Pension and
Post-retirement
Plans		Total
Balance as of January 1, 2020$31 $3 $(273)$(239)
Net unrealized gains (losses)89 13 0 102 
Amounts reclassified from AOCI0 0 2 2 
Other comprehensive income (loss)89 13 2 104 
Balance as of March 31, 2020$120 $16 $(271)$(135)
Reclassifications from AOCI, and related tax effects, were as follows:
(Dollars in millions)Three Months Ended
March 31,		 
Details about AOCI20212020Affected line item in the statement where net income is presented
Cash flow hedges:
Realized (gains) losses on cash flow hedges$2 $0 Interest and fees on loans and leases
Tax expense (benefit)(1)0 Income tax expense
1 0 
Pension and Postretirement Plans:
Amortization of prior service cost and net actuarial (gain) loss4 3 All other expense
Tax expense (benefit)(2)(1)Income tax expense
2 2 
Total reclassification from AOCI$3 $2 
(Dollars in thousands) Three Months Ended
March 31		  
Details about AOCI 2020 2019 Affected line item in the statement where net income is presented
Cash flow hedges:      
Realized (gains)/losses on cash flow hedges (124) 1,927
 Interest and fees on loans
Tax expense/(benefit) 30
 (476) Provision/(benefit) for income taxes
  (94) 1,451
  
Pension and Postretirement Plans:      
Amortization of prior service cost and net actuarial gain/(loss) 2,791
 1,943
 All other expense
Tax expense/(benefit) (686) (480) Provision/(benefit) for income taxes
  2,105
 1,463
  
Total reclassification from AOCI $2,011
 $2,914
  



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FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 38




Note 910 – Earnings Per Share
The following table provides reconciliationscomputations of net income to net income available tobasic and diluted earnings per common shareholders and the difference between average basic common shares outstanding and average diluted common shares outstanding:share were as follows:
 Three Months Ended
March 31
(Dollars and shares in thousands, except per share data)2020 2019
Net income/(loss)$16,472
 $103,405
Net income attributable to noncontrolling interest2,852
 2,820
Net income/(loss) attributable to controlling interest13,620
 100,585
Preferred stock dividends1,550
 1,550
Net income/(loss) available to common shareholders$12,070
 $99,035
    
Weighted average common shares outstanding—basic311,597
 317,435
Effect of dilutive securities1,573
 2,146
Weighted average common shares outstanding—diluted313,170
 319,581
    
Net income/(loss) per share available to common shareholders$0.04
 $0.31
Diluted income/(loss) per share available to common shareholders$0.04
 $0.31

 Three Months Ended
March 31,
(Dollars in millions, except per share data; shares in thousands)20212020
Net income$236 $16 
Net income attributable to noncontrolling interest3 3 
Net income attributable to controlling interest23313
Preferred stock dividends8 1
Net income available to common shareholders22512 
Weighted average common shares outstanding—basic552,249 311,597 
Effect of dilutive securities5,283 1,573 
Weighted average common shares outstanding—diluted557,532 313,170 
Basic earnings per common share$0.41 $0.04 
Diluted earnings per common share$0.40 $0.04 
The following table presents outstanding options and other equity awards that were excluded from the calculation of diluted earnings per share because they were either anti-dilutive (the exercise price was higher than the weighted-average market price for the period) or the performance conditions have not been met:
 
 Three Months Ended
March 31,
(Shares in thousands)20212020
Stock options excluded from the calculation of diluted EPS3,827 3,031 
Weighted average exercise price of stock options excluded from the calculation of diluted EPS$18.11 $18.73 
Other equity awards excluded from the calculation of diluted EPS2,784 4,264 
  Three Months Ended
March 31
(Shares in thousands) 2020 2019
Stock options excluded from the calculation of diluted EPS 3,031
 2,613
Weighted average exercise price of stock options excluded from the calculation of diluted EPS $18.73
 $21.77
Other equity awards excluded from the calculation of diluted EPS 4,264
 1,922



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FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 39




Note 1011 – Contingencies and Other Disclosures
CONTINGENCIES


Contingent Liabilities Overview
Contingent liabilities arise in the ordinary course of business. Often they are related to lawsuits, arbitration, mediation, and other forms of litigation. Various litigation matters currently are threatened or pending against FHN and its subsidiaries. Also, FHN at times receives requests for information, subpoenas, or other inquiries from federal, state, and local regulators, from other government authorities, and from other parties concerning various matters relating to FHN’s current or former businesses. Certain matters of that sort are pending at this time,most times, and FHN is cooperating ingenerally cooperates when those matters.matters arise. Pending and threatened litigation matters sometimes are settled by the parties, and sometimes pending matters are resolved in court or before an arbitrator.arbitrator, or are withdrawn. Regardless of the manner of resolution, frequently the most significant changes in status of a matter occur over a short time period, often following a lengthy period of little substantive activity. In view of the inherent difficulty of predicting the outcome of these matters, particularly where the claimants seek very large or indeterminate damages, or where the cases present novel legal theories or involve a large number of parties, or where claims or other actions may be possible but have not been brought, FHN cannot reasonably determine what the eventual outcome of the matters will be, what the timing of the ultimate resolution of these matters may be, or what the eventual loss or impact related to each matter may be. FHN establishes a loss contingency liability for a litigation matter when loss is both probable and reasonably estimable as prescribed by applicable financial accounting guidance. If loss for a matter is probable and a range of possible loss outcomes is the best estimate available, accounting guidance requires a liability to be established at the low end of the range.
Based on current knowledge, and after consultation with counsel, management is of the opinion that loss contingencies related to threatened or pending litigation matters should not have a material adverse effect on the consolidated financial condition of FHN, but may be material to FHN’s operating results for any particular reporting period depending, in part, on the results from that period.
Material Loss Contingency Matters
Summary
As used in this Note, except for matters that are reported as having been substantially settled or otherwise substantially resolved, FHN's “material loss
contingency matters” generally fall into at least one of the following categories: (i) FHN has determined material loss to be probable and has established a material loss liability in accordance with
applicable financial accounting guidance; (ii) FHN has determined material loss to be probable but is not reasonably able to estimate an amount or range of material loss liability; or (iii) FHN has determined that material loss is not probable but is reasonably possible, and that the amount or range of that reasonably possible material loss is estimable. As defined in applicable accounting guidance, loss is reasonably possible if there is more than a remote chance of a material loss outcome for FHN. Set forth below areFHN provides contingencies note disclosures for certain pending or threatened litigation matters each quarter, including all matters mentioned in categories (i) or (ii) and, occasionally, certain matters mentioned in category (iii). In addition, in this Note, certain other matters, or groups of matters, are discussed relating to FHN’s pre-2009 mortgage origination and servicing businesses. In all litigation matters discussed in this Note, unless settled or otherwise resolved, FHN believes it has meritorious defenses and intends to pursue those defenses vigorously.
FHN reassesses the liability for litigation matters each quarter as the matters progress. At March 31, 2020,2021, the aggregate amount of liabilities established for all such loss contingency matters was $.6$1 million. These liabilities are separate from those discussed under the heading “Loan“Mortgage Loan Repurchase and Foreclosure Liability” below.
In each material loss contingency matter, except as otherwise noted, there is more than a remote chance that any of the following outcomes will occur: the plaintiff will substantially prevail; the defense will substantially prevail; the plaintiff will prevail in part; or the matter will be settled by the parties. At March 31, 2020,2021, FHN is unable to estimate anyestimates that for all material loss contingency matters, estimable reasonably possible loss ("RPLs") for contingency matterslosses in future periods in excess of currently established liabilities.liabilities could aggregate in a range from 0 to less than $1 million.
As a result of the general uncertainties discussed above and the specific uncertainties discussed for each matter mentioned below, it is possible that the ultimate future loss experienced by FHN for any particular matter may materially exceed the amount, if any, of currently established liability for that matter.
Material Matters
FHN was one of multiple defendants in a consolidated putative class action suit: In re GSE Bonds Antitrust Litigation, No. 1:19-cv-01704-JSR (U.S. District Court S.D.N.Y.). The plaintiffs claim that defendants conspired to fix secondary market prices of government-sponsored enterprise (“GSE”) bonds from 2009 through 2015. During the third quarter of 2019, FHN reached a class settlement with the plaintiffs, subject to court approval, without


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Table of Contents

Note 1011 – Contingencies and Other Disclosures (Continued)

Material Matters
admitting liability. Though still subject to court approval, the settlement has been paid and therefore is not reflected in established liabilities.
In the first quarter of 2020, aA former shareholder of Capital Bank Financial Corp. ("CBF")CBF has filed a putative class action suit, Searles v. DeMartini et al, No. 2020-0136 (Del. Chancery), against certain former directors, officers, and shareholders of CBF, alleging, among other things, that defendants breached certain fiduciary duties in connection with CBF's merger with FHN in 2017. Plaintiff claims unspecified damages related to the merger consideration and opportunity loss. FHN is unable to estimate an RPL range for this matter due to significant uncertainties regarding: whether a class will be certified and, if so, the composition of the class; the amount of potential damages that might be awarded, if any; of any such damages amount, the amount that FHN would be obliged to indemnify; the availability ofwhether applicable insurance;insurance will be sufficient to cover FHN's exposure; and the outcome of discovery, which has not yet begun.discovery.
Exposures from pre-2009 Mortgage Business
FHN is contending with indemnification claims related to "other whole loans sold," which were mortgage loans originated by FHN before 2009 and sold outside of an FHN securitization. These claims generally assert that FHN-originated loans contributed to losses in connection with mortgage loans securitized by the buyer of the loans. The claims generally do not include specific deficiencies for specific loans sold by FHN. Instead, the claims generally assert that FHN is liable for a share of the claimant's loss estimated by assessing the totality of the other whole loans sold by FHN to claimant in relation to the totality of the larger number of loans securitized by claimant. FHN is unable to estimate an RPL range for these matters due to significant uncertainties regarding: the number of, and the facts underlying, the loan originations which claimants assert are indemnifiable; the applicability of FHN’s contractual indemnity covenants to those facts and originations; and, in those cases where an indemnity claim may be supported, whether any legal defenses, counterclaims, other counter-positions, or third-party claims might eliminate or reduce claims against FHN or their impact on FHN.
FHN also is contending withhas indemnification claims related to servicing obligations. The most significant is from Nationstar Mortgage LLC, currently doing business as “Mr. Cooper.” Nationstar was the purchaser of FHN’s mortgage servicing obligations and assets in 2013 and 2014 and, starting in 2011, was FHN’s subservicer. Nationstar asserts several categories of indemnity obligations in connection with mortgage loans under the subservicing arrangement and under the purchase transaction. This matter currently is not in litigation, but litigation in the future is possible. FHN is unable to
estimate an RPL range for this matter due to significant uncertainties regarding: the exact nature of each of Nationstar’s claims and its position in respect of each; the number of, and the facts underlying, the claimed instances of indemnifiable events; the applicability of FHN’s contractual indemnity covenants to those facts and events; and, in those cases where the facts and events might support an indemnity claim, whether any legal defenses, counterclaims, other counter-positions, or third-party claims might eliminate or reduce claims against FHN or their impact on FHN.
FHN has additional potential exposures related to its pre-2009 mortgage businesses. A few of those matters have become litigation which FHN currently estimates are immaterial, some are non-litigation claims or threats, some are mere subpoenas or other requests for information, and in some areas FHN has no indication of any active or threatened dispute. Some of those matters might eventually result in settlements, and some might eventually result in adverse litigation outcomes, but none are included in the material loss contingency liabilities mentioned above or in the RPL range mentioned above.above..
Mortgage Loan Repurchase and Foreclosure Liability
FHN’s repurchase and foreclosure liability, primarily related to its pre-2009 mortgage businesses, is comprised of accruals to cover estimated loss content in the active pipeline (consisting of mortgage loan repurchase, make-whole, foreclosure/servicing demands and certain related exposures), estimated future inflows, and estimated loss content related to certain known claims not currently included in the active pipeline. FHN compares the estimated probable incurred losses determined under the applicable loss estimation approaches for the respective periods with current reserve levels. Changes in the estimated required liability levels are recorded as necessary through the repurchase and foreclosure provision.
Based on currently available information and experience to date, FHN has evaluated its loan repurchase, make-whole, foreclosure, and certain related exposures and has accrued for losses of $13.5 million and $14.5$16 million as of March 31, 20202021 and December 31, 2019, respectively.2020. Accrued liabilities for FHN’s estimate of these obligations are reflected in Other liabilities on the Consolidated Condensed Statements of Condition.Balance Sheets. Charges/expense reversals to increase/decrease the liability are included within Repurchase and foreclosure provision/(provision credit)Other income on the Consolidated Condensed Statements of Income. The estimates are based upon currently available information and fact patterns that exist as of each balance sheet date and could be subject to future changes. Changes to any one of
FIRST HORIZON CORPORATION331Q21 FORM 10-Q REPORT

Note 11 – Contingencies and Other Disclosures (Continued)
these factors could significantly impact the estimate of FHN’s liability.


FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 41

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Note 10 – Contingencies and Other Disclosures (Continued)

OTHER DISCLOSURES
Indemnification Agreements and Guarantees
In the ordinary course of business, FHN enters into indemnification agreements for legal proceedings against its directors and officers and standard representations and warranties for underwriting agreements, merger and acquisition agreements, loan sales, contractual commitments, and various other business transactions or arrangements.































The extent of FHN’s obligations under these agreements depends upon the occurrence of future events; therefore, it is not possible to estimate a maximum potential amount of payouts that could be required by such agreements.



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Note 1112 – Pension, Savings, and Other Employee BenefitsRetirement Plans
Pension plan.
FHN sponsors a noncontributory, qualified defined benefit pension plan to employees hired or re-hired on or before September 1, 2007. Pension benefits are based on years of service, average compensation near retirement or other termination, and estimated social security benefits at age 65. Benefits under the plan are “frozen” so that years of service and compensation changes after 2012 do not affect the benefit owed. Minimum contributions are based upon actuarially determined amounts necessary to fund the total benefit obligation. Decisions to contribute to the plan are based upon pension funding requirements under the Pension Protection Act, the maximum amount deductible under the Internal Revenue Code, the actual performance of plan assets, and trends in the regulatory environment. FHN made no contributions to the qualified pension plan
in 2019.2020. Management does not currently anticipate that FHN will make a contribution to the qualified pension plan for the remainder of 2020.2021.
FHN also maintains non-qualified plans including a supplemental retirement plan that covers certain employees whose benefits under the qualified pension plan have been limited by tax rules. These other non-qualified plans are unfunded, and contributions to these plans cover all benefits paid under the non-qualified plans.
Payments made under the non-qualified plans were $5.2$5 million for 2019.2020. FHN anticipates making benefit payments under the non-qualified plans of $5.2$5 million in 2020.
Savings plan. FHN provides all qualifying full-time employees with the opportunity to participate in FHN's tax qualified 401(k) savings plan. The qualified plan allows employees to defer receipt of earned salary, up to tax law limits, on a tax-advantaged basis. Accounts, which are held in trust, may be invested in a wide range of mutual funds and in FHN common stock. Up to tax law limits, FHN provides a 100 percent match for the first 6 percent of salary deferred, with company matching contributions invested according to a participant’s current investment election. Through a non-qualified savings restoration plan, FHN provides a restorative benefit to certain highly-compensated employees who participate in the savings plan and whose contribution elections are capped by tax limitations.
Other employee benefits. FHN provides postretirement life insurance benefits to certain employees and also provides postretirement medical insurance benefits to retirement-eligible employees. The postretirement medical plan is contributory with FHN contributing a fixed amount for certain participants. FHN’s postretirement benefits include certain prescription drug benefits.2021.
Service cost is included in Employee compensation, incentives, and benefitsPersonnel expense in the Consolidated Condensed Statements of Income. All other components of net periodic benefit cost are included in AllOther expense.
For more information on FHN's pension plan and other expense.postretirement benefit plans, see Note 18 - Pension, Savings and Other Employee Benefits in FHN's 2020 Annual Report on Form 10-K.
The components of net periodic benefit cost for the three months ended March 31 arewere as follows:

 Pension Benefits
(Dollars in millions)20212020
Components of net periodic benefit cost
Interest cost$4 $6 
Expected return on plan assets(4)(6)
Amortization of unrecognized:
Actuarial (gain) loss2 3 
Other2 0 
Net periodic benefit cost$4 $3 
  Pension Benefits Other Benefits
(Dollars in thousands) 2020 2019 2020 2019
Components of net periodic benefit cost        
Service cost $8
 $8
 $25
 $24
Interest cost 5,909
 7,575
 304
 351
Expected return on plan assets (6,168) (9,173) (311) (269)
Amortization of unrecognized:        
Prior service cost/(credit) —
 —
 8
 —
Actuarial (gain)/loss 3,224
 2,435
 (75) (117)
Net periodic benefit cost/(credit) $2,973
 $845
 $(49) $(11)



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Note 1213 – Business Segment Information
During the fourth quarter of 2020, FHN reorganized its internal management structure and, accordingly, its segment reporting structure. Historically, FHN's reportable business segments were Regional Banking, Fixed Income, Corporate, and Non-strategic. On July 1, 2020, FHN and IBKC closed their merger of equals transaction. This transaction prompted organizational changes to better integrate and execute the combined Company's strategic priorities across all lines of businesses. As a result, FHN revised its reportable segments as described below. Prior period segment information has 4 businessbeen reclassified to conform to the current period presentation.

FHN is composed of the following operating segments: regional banking, fixed income, corporate, and non-strategic. The regional banking

•Regional Banking segment offers financial products and services, including traditional lending and deposit taking, to consumer and commercial customersclients primarily in the southeastsouthern U.S. and other selected markets. Regional bankingBanking also provides investments,investment, wealth management, financial planning, trust services and asset management services for consumer clients.

•Specialty Banking segment consists of lines of business that deliver product offerings and services with specialized industry knowledge.Specialty Banking’s lines of business include asset-based lending, mortgage banking, credit card, and cash management. Additionally, the regional banking segment includeswarehouse lending, commercial real estate, franchise finance, correspondent banking, which provides credit, depository,equipment finance, mortgage, and othertitle insurance.In addition to traditional lending and deposit taking, Specialty Banking also delivers treasury management solutions, loan syndications, international banking related services to other financial institutions nationally. The fixed income segment consistsand SBA lending. Additionally, Specialty Banking has
a line of business focused on fixed income securities sales, trading, underwriting, and strategies for institutional clients in the U.S. and abroad, as well as loan sales, portfolio advisory services, and derivative sales. The corporate

•Corporate segment consists primarily of unallocated corporate expenses, expense on subordinated debt issuances, bank-owned life insurance, unallocated interest income associated with excess equity, net impactsupport functions including risk management, audit, accounting, finance, executive office, and corporate communications. Shared support services such as human resources, properties, technology, credit risk and bank operations are allocated to the activities of raising incrementalRegional Banking, Specialty Banking and Corporate. Additionally, the Corporate segment includes centralized management of capital and funding to support the business activities of the company including management of wholesale funding, liquidity, and capital management and allocation. The Corporate segment also includes the revenue and expense associated with deferred compensation plans, funds management, tax credit investment activities, derivative valuation adjustments
related to prior sales of Visa Class B shares, gain/(loss) on extinguishment of debt, acquisition- and integration-related costs, expenses associated with rebranding initiatives, and various charges related to restructuring, repositioning, and efficiency efforts. The non-strategic segment consists of run-off consumer lending activities,businesses such as pre-2009 mortgage banking elements, run-off consumer and the associated ancillary revenues and expenses related to these businesses. Non-strategic also includes the wind-down trust preferred loan portfolioportfolios, and other exited businesses.
Periodically, FHN adapts its segments to reflect managerial or strategic changes. FHN may also modify its methodology of allocating expenses and equity among segments which could change historical segment results. Business segment revenue, expense, asset, and equity levels reflect those which are specifically identifiable or which are allocated based on an internal allocation method. Because the allocations are based on internally developed assignments and allocations, to an extent they are subjective. Generally, all assignments and allocations have been consistently applied for all periods presented.

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Note 13 – Business Segment Information (Continued)
The following table reflects the amounts of consolidated revenue, expense, tax, and average assetstables reflect financial information for each reportable business segment for the three months ended March 31:31 2021 and 2020:
Three Months Ended March 31, 2021
(Dollars in millions)Regional BankingSpecialty BankingCorporateConsolidated
Net interest income (expense)$426 $159 $(77)$508 
Provision for credit losses(32)(7)(6)(45)
Noninterest income100 185 13 298 
Noninterest expense (a)272 154 118 544 
Income (loss) before income taxes286 197 (176)307 
Income tax expense (benefit)66 47 (42)71 
Net income (loss)$220 $150 $(134)$236 
Average assets$42,371 $21,503 $21,527 $85,401 
(a) Includes $33 million in asset impairments related to IBKC merger integration efforts in the Corporate segment.
Three Months Ended March 31, 2020
(Dollars in millions)Regional BankingSpecialty BankingCorporateConsolidated
Net interest income (expense)$194 $109 $0 $303 
Provision for credit losses98 54 2 154 
Noninterest income73 104 (3)174 
Noninterest expense173 111 18 302 
Income (loss) before income taxes(4)48 (23)21 
Income tax expense (benefit)(2)11 (4)5 
Net income (loss)$(2)$37 $(19)$16 
Average assets$19,044 $16,890 $7,618 $43,552 
  Three Months Ended
March 31
(Dollars in thousands) 2020 2019
Consolidated    
Net interest income $302,802
 $294,508
Provision/(provision credit) for loan losses (a) 145,000
 9,000
Noninterest income 174,756
 141,045
Noninterest expense 311,319
 296,090
Income/(loss) before income taxes 21,239
 130,463
Provision/(benefit) for income taxes 4,767
 27,058
Net income/(loss) $16,472
 $103,405
Average assets $43,551,912
 $40,883,192
(a)First quarter 2020 increase in provision expense primarily associated with a sudden, steep decline in the economic forecast attributable to the COVID-19 pandemic.



















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Table of Contents

Note 12 – Business Segment Information (Continued)

  Three Months Ended
March 31
(Dollars in thousands) 2020 2019
Regional Banking    
Net interest income $300,128
 $286,023
Provision/(provision credit) for loan losses (a) 145,435
 13,442
Noninterest income 81,871
 73,029
Noninterest expense 211,013
 198,569
Income/(loss) before income taxes 25,551
 147,041
Provision/(benefit) for income taxes 4,388
 34,109
Net income/(loss) $21,163
 $112,932
Average assets $32,164,347
 $28,801,849
Fixed Income    
Net interest income $10,914
 $7,332
Noninterest income 95,723
 53,807
Noninterest expense 81,063
 50,533
Income/(loss) before income taxes 25,574
 10,606
Provision/(benefit) for income taxes 6,099
 2,457
Net income/(loss) $19,475
 $8,149
Average assets $3,764,192
 $2,848,249
Corporate    
Net interest income/(expense) $(13,359) $(7,914)
Noninterest income (b) (3,718) 13,353
Noninterest expense (b) (c) 15,449
 41,779
Income/(loss) before income taxes (32,526) (36,340)
Provision/(benefit) for income taxes (6,372) (11,771)
Net income/(loss) $(26,154) $(24,569)
Average assets $6,784,190
 $8,058,041
Non-Strategic    
Net interest income $5,119
 $9,067
Provision/(provision credit) for loan losses (a) (435) (4,442)
Noninterest income 880
 856
Noninterest expense 3,794
 5,209
Income/(loss) before income taxes 2,640
 9,156
Provision/(benefit) for income taxes 652
 2,263
Net income/(loss) $1,988
 $6,893
Average assets $839,183
 $1,175,053
Certain previously reported amounts have been reclassified to agree with current presentation.
(a)First quarter 2020 increase in provision expense primarily associated with a sudden, steep decline in the economic forecast attributable to the COVID-19 pandemic.
(b)First quarter 2020 decrease due to fluctuations in deferred compensation income driven by equity market valuations and mirrored by changes in deferred compensation expense, which is included in employee compensation expense.
(c)2020 and 2019 include restructuring-related costs associated with efficiency initiatives; refer to Note 17 - Restructuring, Repositioning, and Efficiency for additional information. 2020 and 2019 include acquisition-related expenses; refer to Note 2 - Acquisitions and Divestitures for additional information.










FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 45

Table of Contents

Note 12 – Business Segment Information (Continued)


The following tables reflect a disaggregation of FHN’s noninterest income by major product line and reportable segment for the three months ended March 31, 20202021 and 2019:2020:
Three months ended March 31, 2021
(Dollars in millions)Regional BankingSpecialty BankingCorporateConsolidated
Noninterest income:
Fixed income (a)$1 $125 $0 $126 
Mortgage banking and title income0 52 1 53 
Deposit transactions and cash management38 3 1 42 
Brokerage, management fees and commissions20 0 0 20 
Trust services and investment management12 0 0 12 
Bankcard income11 0 0 11 
Other income (b)18 5 11 34 
Total noninterest income$100 $185 $13 $298 
(a)Includes $10 million of underwriting, portfolio advisory, and other noninterest income in scope of ASC 606, "Revenue From Contracts With Customers."
(b)Includes other service charges, ATM and interchange fees, electronic banking fees, and insurance commissions in scope of ASC 606.

 Three months ended March 31, 2020
(Dollars in thousands)Regional Banking Fixed Income Corporate Non-Strategic Consolidated
Noninterest income:         
Fixed income (a)$121
 $95,514
 $—
 $—
 $95,635
Deposit transactions and cash management28,812
 —
 1,435
 43
 30,290
Brokerage, management fees and commissions15,405
 —
 —
 —
 15,405
Bankcard income7,150
 —
 70
 33
 7,253
Trust services and investment management7,213
 —
 (18) —
 7,195
BOLI (b)—
 —
 4,589
 —
 4,589
Equity securities gains/(losses), net (b)—
 —
 25
 —
 25
All other income and commissions (c) (d)23,170
 209
 (9,819) 804
 14,364
     Total noninterest income$81,871
 $95,723
 $(3,718) $880
 $174,756
(a)FIRST HORIZON CORPORATIONIncludes $9.3 million of underwriting, portfolio advisory, and other noninterest income in scope of Accounting Standards Codification ("ASC") 606, "Revenue From Contracts With Customers."371Q21 FORM 10-Q REPORT
(b)Represents noninterest income excluded from the scope of ASC 606. Amount is presented for informational purposes to reconcile total non-interest income.
(c)Includes other service charges, ATM and interchange fees, electronic banking fees, and insurance commission in scope of ASC 606.
(d)First quarter 2020 Corporate balance includes negative deferred compensation income driven by equity market valuations.


Note 13 – Business Segment Information (Continued)
Three months ended March 31, 2020
Three months ended March 31, 2019
(Dollars in thousands)Regional Banking Fixed Income Corporate Non- Strategic Consolidated
(Dollars in millions)(Dollars in millions)Regional BankingSpecialty BankingCorporateConsolidated
Noninterest income:         Noninterest income:
Fixed income (a)$17
 $53,732
 $—
 $—
 $53,749
Fixed income (a)$0 $96 $0 $96 
Mortgage banking and title incomeMortgage banking and title income0 2 0 2 
Deposit transactions and cash management30,003
 3
 1,563
 52
 31,621
Deposit transactions and cash management26 3 1 30 
Brokerage, management fees and commissions12,630
 —
 —
 3
 12,633
Brokerage, management fees and commissions16 0 0 16 
Trust services and investment managementTrust services and investment management7 0 0 7 
Bankcard income7,039
 —
 62
 (149) 6,952
Bankcard income6 1 0 7 
Trust services and investment management7,056
 —
 (30) —
 7,026
BOLI (b)—
 —
 4,402
 —
 4,402
Equity securities gains/(losses), net (b)—
 —
 31
 —
 31
All other income and commissions (c)16,284
 72
 7,325
 950
 24,631
Other income (b)Other income (b)18 2 (4)16 
Total noninterest income$73,029
 $53,807
 $13,353
 $856
 $141,045
Total noninterest income$73 $104 $(3)$174 
Certain previously reported amounts have been reclassified to agree with current presentation.
(a)Includes $7.3 million of underwriting, portfolio advisory, and other noninterest income in scope of Accounting Standards
Codification ("ASC")
(a)Includes $9 million of underwriting, portfolio advisory, and other noninterest income in scope of ASC 606, "Revenue From Contracts With Customers."
(b)Includes other service charges, ATM and interchange fees, electronic banking fees, and insurance commissions in scope of ASC 606.

(b)FIRST HORIZON CORPORATIONRepresents noninterest income excluded from the scope of ASC 606. Amount is presented for informational purposes to reconcile381Q21 FORM 10-Q REPORT
total non-interest income.
(c)Includes other service charges, ATM and interchange fees, electronic banking fees, and insurance commission in scope of ASC
606.




FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 46




Note 1314 – Variable Interest Entities
ASC 810 defines aFHN makes equity investments in various entities that are considered VIEs, as defined by GAAP. A VIE as a legal entity where (a) the equity investors, as a group, lacktypically does not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support (b) the equity investors, as a group, lack either, (1) the power through voting rights, or similar rights, to direct the activities of an entity that most significantly impact the entity’s economic performance, (2) the obligation to absorb the expected losses of the entity, or (3) the right to receive the expected residual returns of the entity, or (c) the entity is structured with non-substantive voting rights. Afrom other parties. The Company’s variable interest is aarises from contractual, ownership or other interest that fluctuatesmonetary interests in the entity, which change with changesfluctuations in the fair value of the VIE’sentity's net assets exclusive of variable interests. Under ASC 810, as amended,assets. FHN consolidates a VIE if FHN is the primary beneficiary of the entity. FHN is required to consolidatethe primary beneficiary of a VIE when it has aif FHN's variable interest in a VIE that provides it with a controlling financial interest. For such purposes, the determination of whether a controlling financial interest exists is based on whether a single party has both the power to direct the activities of the VIE that most significantly impact the VIE’s economic performanceVIE and the obligation to absorb losses of the VIE or the right to receive benefits from(or the VIEobligation to absorb losses) that could potentially be significant.significant to the VIE. To determine whether or not a variable interest held could potentially be significant to the VIE, FHN considers both qualitative and quantitative factors regarding the nature, size and form of its involvement with the VIE. FHN assesses whether or not it is the primary beneficiary of a VIE on an ongoing basis.

Consolidated Variable Interest Entities
FHN has established certain rabbi trusts related to deferred compensation plans offered to its employees. FHN contributes employee cash compensation deferrals to the trusts and directs the underlying investments made by the trusts. The assets of these trusts are available to FHN’s creditors only in the event that FHN becomes insolvent. These trusts are considered VIEs as there is no equity at risk in the trusts since FHN provided the equity interest to its employees in exchange for services rendered. FHN is considered the primary beneficiary of the rabbi trusts as it has the power to direct the activities that most significantly impact the economic performance of the rabbi trusts through its ability to direct the underlying investments made by the trusts. Additionally, FHN could potentially receive benefits or absorb losses that are significant to the trusts due to its right to receive any asset values in excess of liability payoffs and its obligation to fund any liabilities to employees that are in excess of a rabbi trust’s assets.
The following table summarizes the carrying value of assets and liabilities associated with rabbi trusts used for deferred compensation plans which are consolidated by FHN as of March 31, 20202021 and December 31, 2019:2020:
       
(Dollars in thousands)
  March 31, 2020  December 31, 2019
Assets:      
Other assets  $82,904
  $91,873
Total assets  $82,904
  $91,873
Liabilities:      
Other liabilities  $61,517
  $70,830
Total liabilities  $61,517
  $70,830

(Dollars in millions)March 31, 2021December 31, 2020
Assets:
Other assets$200 $195 
Total assets$200 $195 
Liabilities:
Other liabilities$173 $165 
Total liabilities$173 $165 
Nonconsolidated Variable Interest Entities
Low Income Housing Tax Credit Partnerships. First Horizon Community Investment Group, Inc. ("FHCIG"), aThrough designated wholly-owned subsidiary ofsubsidiaries, First Horizon Bank, makes equity investments as a limited partner in various partnerships that sponsor affordable housing projects utilizing the Low Income Housing Tax Credit (“LIHTC”) pursuant to Section 42 of the Internal Revenue Code.LIHTC. The purpose of these investments is to achieve a satisfactory return on capital and to support FHN’s community reinvestment initiatives. The activities of the limited partnerships include the identification, development, and operation of multi-family housing units that are leased to qualifying residential tenants generally within FHN’s primary geographic region. LIHTC partnerships are considered VIEs as FHCIG, the holder of the equity investment at risk, does notmanaged by unrelated general partners that have the abilitypower to direct the activities thatwhich most significantly affect the performance of the entity throughpartnerships. FHN is therefore not the primary beneficiary of any LIHTC partnerships. Accordingly, FHN does not consolidate these VIEs and accounts for these investments in other assets on the Consolidated Balance Sheets.
voting rights or similar rights. FHCIG could absorb losses that are significant to the LIHTC partnerships as it has a risk of loss for its capital contributions and funding commitments to each partnership. The general partners are considered the primary beneficiaries as managerial functions give them the power to direct the activities that most significantly impact the entities’ economic performance and the managing members are exposed to all losses beyond FHCIG’s initial capital contributions and funding commitments.
FHN accounts for all qualifying LIHTC investments under the proportional amortization method. Under this method an entity amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received and recognizes the net investment performance in the income statement as a component of income tax expense/


FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 47

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Note 13 – Variable Interest Entities (Continued)

(benefit).expense. LIHTC investments that do not qualify for the proportional amortization method are accounted for using the equity method. Expenses associated with these
investments were $.2 million and $.5 millionnot material for the three months ended March 31, 20202021 and 2019, respectively.2020.
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Note 14 – Variable Interest Entities (Continued)
The following table summarizes the impact to the Provision/(benefit) for income taxesIncome tax expense on the Consolidated Condensed Statements of Income for the three months ended March 31, 2020,2021 and 20192020 for LIHTC investments accounted for under the proportional amortization method.
Three Months Ended
March 31,
(Dollars in millions)20212020
Income tax expense (benefit):
Amortization of qualifying LIHTC investments$9 $6 
Low income housing tax credits(9)(5)
Other tax benefits related to qualifying LIHTC investments(3)(3)
  Three Months Ended
March 31
(Dollars in thousands)

 2020 2019
Provision/(benefit) for income taxes:    
Amortization of qualifying LIHTC investments $5,561
 $3,998
Low income housing tax credits (4,598) (3,629)
Other tax benefits related to qualifying LIHTC investments (2,555) (1,610)


Other Tax Credit Investments. First Tennessee New Markets Corporation (“FTNMC”), a wholly-owned subsidiary ofThrough designated subsidiaries, First Horizon Bank periodically makes equity investments through wholly-owned subsidiaries as a non-managing member in various limited liability companies (“LLCs”)LLCs that sponsor community development projects utilizing the New Market Tax Credit (“NMTC”) pursuant to Section 45 of the Internal Revenue Code.NMTC. First Horizon Bank also makes equity investments as a limited partner or non-managing member in entities that receive tax credits from solar and historic tax credits. The purpose of these investments is to achieve a satisfactory return on capital and to support FHN’s community reinvestment initiatives. The activities of the LLCs include providing investment capital for low-income communities within FHN’s primary geographic region. A portion of the funding of FTNMC’s investment in a NMTC LLC is obtained via a loan from an unrelated third-party that is typically a community development enterprise. The NMTC LLCsThese entities are considered VIEs as FTNMC,First Horizon Bank's subsidiaries represent the holderholders of the equity investment at risk, doesbut do not have the ability to direct the activities that most significantly affect the performance of the entity through voting rights or similar rights. While FTNMC could absorb losses that are significant to the NMTC LLCs as it has a risk of loss for its initial capital contributions, the managing members are considered the primary beneficiaries as managerial functions give them the power to direct the activities that most significantly impact the NMTC LLCs’ economic performance and the managing members are exposed to all losses beyond FTNMC’s initial capital contributions.entities.
FHCIG also makes equity investments as a limited partner or non-managing member in entities that receive Historic Tax Credits pursuant to Section 47 of the Internal Revenue Code. As of March 31, 2020 and December 31, 2019, there were no investments funded through loans from community development enterprises. The purpose of these entities is the rehabilitation of historic buildings with the tax credits provided to incent private investment in the historic cores of cities and towns. These entities are considered VIEs as FHCIG, the holder of the equity investment at risk, does
not have the ability to direct the activities that most significantly affect the performance of the entity through voting rights or similar rights. FHCIG could absorb losses that are significant to the entities as it has a risk of loss for its capital contributions and funding commitments to each partnership. The managing members are considered the primary beneficiaries as managerial functions give them the power to direct the activities that most significantly impact the entities’ economic performance and the managing members are exposed to all losses beyond FHCIG’s initial capital contributions and funding commitments.
Small Issuer Trust Preferred Holdings. First Horizon Bank holds variable interests in trusts which have issued mandatorily redeemable preferred capital securities (“trust preferreds”) for smaller banking and insurance enterprises. First Horizon Bank has no voting rights for the trusts’ activities. The trusts’ only assets are junior subordinated debentures of the issuing enterprises. The creditors of the trusts hold no recourse to the assets of First Horizon Bank. These trusts meet the definition of a VIE as the holders of the equity investment at risk do not have the power through voting rights, or similar rights, to direct the activities that most significantly impact the trusts’ economic performance. Based on the nature of the trusts’ activities and the size of First Horizon Bank’s holdings, First Horizon Bank could potentially receive benefits or absorb losses that are significant to the trusts regardless of whether a majority of a trust’s securities are held by First Horizon Bank. However, sinceSince First Horizon Bank is solely a holder of the trusts’ securities, it has no rights which would give it the power to direct the activities that most significantly impact the trusts’ economic performance and thus it is not considered the primary beneficiary of the trusts. First Horizon Bank has no contractual requirements to provide financial support to the trusts.
On-Balance Sheet Trust Preferred Securitization. In 2007, First Horizon Bank executed a securitization of certain small issuer trust preferreds for which the


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Note 13 – Variable Interest Entities (Continued)

underlying trust meets the definition of a VIE as the holders of the equity investment at risk do not have the power through voting rights, or similar rights, to direct the activities that most significantly impact the entity’s economic performance. First Horizon Bank could potentially receive benefits or absorb losses that are significant to the trust based on the size and priority of the interests it retained in the securities issued by the trust. However, sinceSince First Horizon Bank did not retain servicing or other decision making rights, First Horizon Bank is not the primary beneficiary as it does not have the power to direct the activities that most significantly impact the trust’s
economic performance. Accordingly, First Horizon Bank has accounted for the funds received through the securitization as a term borrowing in its Consolidated Condensed Statements of Condition.Balance Sheets. First Horizon Bank has no contractual requirements to provide financial support to the trust.
Proprietary Residential Mortgage Securitizations. FHN holds variable interests (primarily principal-only strips) in proprietary residential mortgage securitization trusts it established prior to 2008 as a source of liquidity for its mortgage banking operations. Except for recourse due to breaches of representations and warranties made by FHN in connection with the sale of the loans to the trusts, the creditors of the trusts hold no recourse to the assets of FHN. Additionally, FHN has no contractual requirements to provide financial support to the trusts. Based on their restrictive nature, the trusts are considered VIEs as the holders of equity at risk do not have the power through voting rights, or similar rights, to direct the activities that most significantly impact the trusts’ economic performance. However, FHN did not have the ability to participate in significant portions of a securitization trust’s cash flows and FHN was not considered the primary beneficiary of the trust. Therefore, these trusts were not consolidated by FHN.

Holdings in Agency Mortgage-Backed Securities. FHN holds securities issued by various Agency securitization trusts. Based on their restrictive nature, the trusts meet the definition of a VIE since the holders of the equity investments at risk do not have the power through voting rights, or similar rights, to direct the activities that most significantly impact the entities’ economic performance. FHN could potentially receive benefits or absorb losses that are significant to the trusts based on the nature of the trusts’ activities and the size of FHN’s holdings. However, FHN is solely a holder of the trusts’ securities and does not have the power to direct the activities that most significantly impact the trusts’ economic performance, and is not considered the primary beneficiary of the trusts. FHN has no contractual requirements to provide financial support to the trusts.

Commercial Loan Troubled Debt Restructurings. For certain troubled commercial loans, First Horizon Bank
restructures the terms of the borrower’s debt in an effort to increase the probability of receipt of amounts contractually due. Following a troubled debt restructuring, the borrower entity typically meets the definition of a VIE as the initial determination of whether an entity is a VIE must be reconsidered as events have proven that the entity’s equity is not sufficient to permit it to finance its activities without additional subordinated financial support or a restructuring of the terms of its financing.

As First Horizon Bank does not have the power to direct the activities that most significantly impact such troubled commercial borrowers’ operations, it is not considered the primary beneficiary even in situations where, based on the size of the financing provided, First Horizon Bank is exposed to potentially significant benefits and losses of the borrowing entity. First Horizon Bank has no contractual requirements to
FIRST HORIZON CORPORATION401Q21 FORM 10-Q REPORT

Note 14 – Variable Interest Entities (Continued)
provide financial support to the borrowing entities beyond certain funding commitments established upon restructuring of the terms of the debt that allows for preparation of the underlying collateral for sale.

Sale Leaseback Transaction. First Horizon Bank has entered into an agreement with a single asset leasing entity for the sale and leaseback of an office building. In conjunction with this transaction, First Horizon Bank loaned funds to a related party of the buyer that were used for the purchase price of the building. First Horizon Bank also entered into a construction loan agreement with the single asset entity for renovation of the building. Since this transaction did not qualify as a sale prior to 2019, it was accounted for using the deposit method which created a net asset or liability for all cash flows between First Horizon Bank and the buyer. Upon adoption of ASU 2016-02 the transaction qualified as a seller-financed sale-leaseback. The buyer-lessor in this transaction meets the definition of a VIE as it does not have sufficient equity at risk since First Horizon Bank is providing the funding for the purchase and renovation. A related party of the buyer-lessor has the power to direct the activities that most significantly impact the operations and could potentially receive benefits or absorb losses that are significant to the transactions, making it the primary beneficiary. Therefore, First Horizon Bank does not consolidate the leasing entity.

Proprietary Trust Preferred Issuances. In conjunction with the acquisition of CBF,its acquisitions, FHN acquired junior subordinated debt underlying multiple issuances of trust preferred debt by institutions previously acquired by CBF.debt. All of the remaining trusts are considered VIEs because the ownership interests from the capital
contributions to these trusts are not considered “at risk” in evaluating whether the holders of the equity investments at risk in the trusts have the power through voting rights, or similar rights,ability to direct the activities that most significantly impact the entities’ economic performance. Thus, FHN cannot be the trusts’ primary beneficiary because its ownership interests in the trusts are not considered variable interests as they are not


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Note 13 – Variable Interest Entities (Continued)


considered “at risk”. Consequently, none of the trusts are consolidated by FHN.


The following table summarizes FHN’s nonconsolidated VIEs as of March 31, 2020:2021:
(Dollars in millions) 
Maximum
Loss Exposure		Liability
Recognized		Classification
Type 
Low income housing partnerships$345 $126 (a)
Other tax credit investments (b)68 42 Other assets
Small issuer trust preferred holdings (c)210 0 Loans and leases
On-balance sheet trust preferred securitization32 83 (d)
Holdings of agency mortgage-backed securities (c)7,053 0 (e)
Commercial loan troubled debt restructurings (f)169 0 Loans and leases
Proprietary trust preferred issuances (g)0 287 Term borrowings
(Dollars in thousands) 
 
Maximum
Loss Exposure
 
Liability
Recognized
 Classification
Type 
      
Low income housing partnerships $241,435
 $123,720
 (a)
Other tax credit investments (b) 6,161
 —
 Other assets
Small issuer trust preferred holdings (c) 234,214
 —
 Loans, net of unearned income
On-balance sheet trust preferred securitization 32,261
 81,912
 (d)
Proprietary residential mortgage securitizations 785
 —
 Trading securities
Holdings of agency mortgage-backed securities (c) 5,126,372
 —
 (e)
Commercial loan troubled debt restructurings (f) 42,109
 —
 Loans, net of unearned income
Sale-leaseback transaction 18,052
 —
 (g)
Proprietary trust preferred issuances (h)

 —
 167,014
 Term borrowings
(a)Maximum loss exposure represents $219 million of current investments and $126 million of accrued contractual funding commitments. Accrued funding commitments represent unconditional contractual obligations for future funding events and are also recognized in Other liabilities. FHN currently expects to be required to fund these accrued commitments by the end of 2024.
(a)Maximum loss exposure represents $117.7 million of current investments and $123.7 million of accrued contractual funding commitments. Accrued funding commitments represent unconditional contractual obligations for future funding events, and are also recognized in Other liabilities. FHN currently expects to be required to fund these accrued commitments by the end of 2023.
(b)A liability is not recognized as investments are written down over the life of the related tax credit. Maximum loss exposure represents the value of current investments.
(c)Maximum loss exposure represents the value of current investments. A liability is not recognized as FHN is solely a holder of the trusts’ securities.
(d)Includes $112.5 million classified as Loans, net of unearned income, and $1.7 million classified as Trading securities which are offset by $81.9 million classified as Term borrowings.
(e)Includes $1.1 billion classified as Trading securities and $4.0 billion classified as Securities available-for-sale.
(f)Maximum loss exposure represents $41.6 million of current receivables and $.5 million of contractual funding commitments on loans related to commercial borrowers involved in a troubled debt restructuring.
(g)Maximum loss exposure represents the current loan balance plus additional funding commitments.
(h)No exposure to loss due to nature of FHN's involvement.
(b)Maximum loss exposure represents the value of current investments.
(c)Maximum loss exposure represents the value of current investments. A liability is not recognized as FHN is solely a holder of the trusts’ securities.
(d)Includes $112 million classified as Loans and leases and $2 million classified as Trading securities which are offset by $83 million classified as Term borrowings.
(e)Includes $0.6 billion classified as Trading securities and $6.5 billion classified as Securities available for sale.
(f)Maximum loss exposure represents $166 million of current receivables and $3 million of contractual funding commitments on loans related to commercial borrowers involved in a troubled debt restructuring.
(g)No exposure to loss due to nature of FHN's involvement.
The following table summarizes FHN’s nonconsolidated VIEs as of December 31, 2019:2020:
(Dollars in millions)Maximum
Loss Exposure		Liability
Recognized		Classification
Type 
Low income housing partnerships$338 $132 (a)
Other tax credit investments (b)64 42 Other assets
Small issuer trust preferred holdings (c)210 0 Loans and leases
On-balance sheet trust preferred securitization32 82 (d)
Holdings of agency mortgage-backed securities (c)7,063 0 (e)
Commercial loan troubled debt restructurings (f)186 0 Loans and leases
Proprietary trust preferred issuances (g)0 287 Term borrowings
(a)Maximum loss exposure represents $206 million of current investments and $132 million of accrued contractual funding commitments. Accrued funding commitments represent unconditional contractual obligations for future funding events and are also recognized in Other liabilities. FHN currently expects to be required to fund these accrued commitments by the end of 2024.
(b)Maximum loss exposure represents current investments.
(c)Maximum loss exposure represents the value of current investments. A liability is not recognized as FHN is solely a holder of the trusts’ securities.
(d)Includes $112 million classified as Loans and leases and $2 million classified as Trading securities which are offset by $82 million classified as Term borrowings.
(e)Includes $0.8 billion classified as Trading securities and $6.2 billion classified as Securities available for sale.
(f)Maximum loss exposure represents $176 million of current receivables and $10 million of contractual funding commitments on loans related to commercial borrowers involved in a troubled debt restructuring.
(g)No exposure to loss due to nature of FHN's involvement.
(Dollars in thousands) 
Maximum
Loss Exposure
 
Liability
Recognized
 Classification
Type 
      
Low income housing partnerships $237,668
 $136,404
 (a)
Other tax credit investments (b) (c) 6,282
 —
 Other assets
Small issuer trust preferred holdings (d) 238,397
 —
 Loans, net of unearned income
On-balance sheet trust preferred securitization 33,265
 80,908
 (e)
Proprietary residential mortgage securitizations 941
 —
 Trading securities
Holdings of agency mortgage-backed securities (d) 4,537,685
 —
 (f)
Commercial loan troubled debt restructurings (g) 45,169
 —
 Loans, net of unearned income
Sale-leaseback transaction 18,111
 —
 (h)
Proprietary trust preferred issuances (i) —
 167,014
 Term borrowings
(a)FIRST HORIZON CORPORATIONMaximum loss exposure represents $101.3 million of current investments and $136.4 million of accrued contractual funding commitments. Accrued funding commitments represent unconditional contractual obligations for future funding events, and are also recognized in Other liabilities. FHN currently expects to be required to fund these accrued commitments by the end of 2023.411Q21 FORM 10-Q REPORT
(b)A liability is not recognized as investments are written down over the life of the related tax credit.
(c)Maximum loss exposure represents current investment balance. As of December 31, 2019, there were no investments funded through loans from community development enterprises.
(d)Maximum loss exposure represents the value of current investments. A liability is not recognized as FHN is solely a holder of the trusts’ securities.
(e)Includes $112.5 million classified as Loans, net of unearned income, and $1.7 million classified as Trading securities which are offset by $80.9 million classified as Term borrowings.
(f)Includes $.5 billion classified as Trading securities and $4.0 billion classified as Securities available-for-sale.
(g)Maximum loss exposure represents $43.4 million of current receivables and $1.8 million of contractual funding commitments on loans related to commercial borrowers involved in a troubled debt restructuring.
(h)Maximum loss exposure represents the current loan balance plus additional funding commitments less amounts received from the buyer-lessor.
(i)No exposure to loss due to nature of FHN's involvement.


FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 50




Note 1415 – Derivatives

In the normal course of business, FHN utilizes various financial instruments (including derivative contracts and credit-related agreements) through its fixed income and risk management operations, as part of its risk management strategy and as a means to meet customers’clients’ needs. Derivative instruments are subject to credit and market risks in excess of the amount recorded on the balance sheet as required by GAAP. The contractual or notional amounts of these financial instruments do not necessarily represent the amount of credit or market risk. However, they can be used to measure the extent of involvement in various types of financial instruments. Controls and monitoring procedures for these instruments have been established and are routinely reevaluated. The Asset/Liability Committee (“ALCO”)ALCO controls, coordinates, and monitors the usage and effectiveness of these financial instruments.
Credit risk represents the potential loss that may occur if a party to a transaction fails to perform according to the terms of the contract. The measure of credit exposure is the replacement cost of contracts with a positive fair value. FHN manages credit risk by entering into financial instrument transactions through national exchanges, primary dealers or approved counterparties, and by using mutual margining and master netting agreements whenever possible to limit potential exposure. FHN also maintains collateral posting requirements with certain counterparties to limit credit risk. Daily margin posted or received with central clearinghouses is considered a legal settlement of the related derivative contracts which results in a net presentation for each contract in the Consolidated Condensed Statements of Condition.Balance Sheets. Treatment of daily margin as a settlement has no effect on hedge accounting or gains/losses for the applicable derivative contracts. On March 31, 20202021 and December 31, 2019,2020, respectively, FHN had $214.4$234 million and $136.6$280 million of cash receivables and $160.7$122 million and $53.0$166 million of cash payables related to collateral posting under master netting arrangements, inclusive of collateral posted related to contracts with adjustable collateral posting thresholds and over-collateralized positions, with derivative counterparties. With exchange-traded contracts, the credit risk is limited to the clearinghouse used. For non-exchange traded instruments, credit risk may occur when there is a gain in the fair value of the financial instrument and the counterparty fails to perform according to the terms of the contract and/or when the collateral proves to be of insufficient value. See additional discussion regarding master netting agreements and collateral posting requirements later in this note under the heading “Master Netting and Similar Agreements.” Market risk represents the potential loss due to the decrease in the value of a financial instrument caused
primarily by changes in interest rates or the prices of debt instruments. FHN manages market risk by establishing and monitoring limits on the types and degree of risk that may be undertaken.
FHN continually measures this risk through the use of models that measure value-at-risk and earnings-at-risk.
Derivative Instruments. FHN enters into various derivative contracts both to facilitate customerclient transactions and as a risk management tool. Where contracts have been created for customers,clients, FHN enters into upstream transactions with dealers to offset its risk exposure. Contracts with dealers that require central clearing are novated to a clearing agent who becomes FHN’s counterparty. Derivatives are also used as a risk management tool to hedge FHN’s exposure to changes in interest rates or other defined market risks.
Forward contracts are over-the-counter contracts where two parties agree to purchase and sell a specific quantity of a financial instrument at a specified price, with delivery or settlement at a specified date. Futures contracts are exchange-traded contracts where two parties agree to purchase and sell a specific quantity of a financial instrument at a specified price, with delivery or settlement at a specified date. Interest rate option contracts give the purchaser the right, but not the obligation, to buy or sell a specified quantity of a financial instrument, at a specified price, during a specified period of time. Caps and floors are options that are linked to a notional principal amount and an underlying indexed interest rate. Interest rate swaps involve the exchange of interest payments at specified intervals between two parties without the exchange of any underlying principal. Swaptions are options on interest rate swaps that give the purchaser the right, but not the obligation, to enter into an interest rate swap agreement during a specified period of time.
Trading Activities
FHN’s fixed income segmentFHNF trades U.S. Treasury, U.S. Agency, government-guaranteed loan, mortgage-backed, corporate and municipal fixed income securities, and other securities for distribution to customers.clients. When these securities settle on a delayed basis, they are considered forward contracts. Fixed incomeFHNF also enters into interest rate contracts, including caps, swaps, and floors, for its customers.clients. In addition, fixed incomeFHNF enters into futures and option contracts to economically hedge interest rate risk associated with a portion of its securities inventory. These transactions are measured at fair value, with changes in fair value
FIRST HORIZON CORPORATION421Q21 FORM 10-Q REPORT

Note 15 – Derivatives (Continued)
recognized currently in fixed income noninterest income. Related assets and liabilities are recorded on the Consolidated Condensed Statements of ConditionBalance Sheets as Derivativederivative assets and Derivativederivative liabilities within Other assets and Other liabilities. The FHN FinancialFHNF Risk Committee and the Credit Risk Management Committee collaborate to mitigate credit risk related to these transactions. Credit risk is controlled through credit approvals, risk control limits, and ongoing
monitoring procedures. Total trading revenues were $78.4$115 million and $44.5$78 million for the three months ended


FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 51

Table of Contents

Note 14 – Derivatives (Continued)

March 31, 20202021 and 2019,2020, respectively. Trading revenues are inclusive of both derivative and non-derivative financial instruments, and are included in Fixed income
noninterest income on the Consolidated Condensed Statements of Income.
The following tables summarize FHN’s derivatives associated with fixed incomeFHNF's trading activities as of March 31, 20202021 and December 31, 2019:2020:
 
March 31, 2021
 March 31, 2020
(Dollars in thousands) Notional Assets Liabilities
(Dollars in millions)(Dollars in millions)NotionalAssetsLiabilities
Customer interest rate contracts $3,395,932
 $232,886
 $1,509
Customer interest rate contracts$3,877 $111 $60 
Offsetting upstream interest rate contracts 3,395,932
 8,822
 16,735
Offsetting upstream interest rate contracts3,877 6 13 
Option contracts purchasedOption contracts purchased3 0 0 
Forwards and futures purchased 8,641,017
 156,687
 8,508
Forwards and futures purchased15,777 12 108 
Forwards and futures sold 9,435,099
 8,829
 163,096
Forwards and futures sold16,495 119 8 
 
 December 31, 2020
(Dollars in millions)NotionalAssetsLiabilities
Customer interest rate contracts$3,950 $207 $7 
Offsetting upstream interest rate contracts3,950 2 17 
Forwards and futures purchased10,795 62 0 
Forwards and futures sold11,633 1 65 
  December 31, 2019
(Dollars in thousands) Notional Assets Liabilities
Customer interest rate contracts $2,697,522
 $65,768
 $6,858
Offsetting upstream interest rate contracts 2,697,522
 2,583
 3,994
Option contracts purchased 40,000
 131
 —
Forwards and futures purchased 9,217,350
 17,029
 3,187
Forwards and futures sold 9,403,112
 3,611
 16,620


Interest Rate Risk Management
FHN’s ALCO focuses on managing market risk by controlling and limiting earnings volatility attributable to changes in interest rates. Interest rate risk exists to the extent that interest-earning assets and interest-bearing liabilities have different maturity or repricing characteristics. FHN uses derivatives, primarily swaps, that are designed to moderate the impact on earnings as interest rates change. Interest paid or received for swaps utilized by FHN to hedge the fair value of long term debt is recognized as an adjustment of the interest expense of the liabilities whose risk is being managed. FHN’s interest rate risk management policy is to use derivatives to hedge interest rate risk or market value of assets or liabilities, not to speculate. In addition, FHN has entered into certain interest rate swaps and caps as a
part of a product offering to commercial customersclients that includes customer derivatives paired with upstream offsetting market instruments that, when completed, are designed to mitigate interest rate risk.
These contracts do not qualify for hedge accounting and are measured at fair value with gains or losses included in





current earnings in Noninterest expense on the Consolidated Condensed Statements of Income.
FHN had designated a derivative transaction in a hedging strategy to manage interest rate risk on $400.0$500 million of senior debt issued by First Horizon Bank prior to its maturity in December 2019.2020. This transaction qualified for hedge accounting under ASC 815-20 using the long-haul method. FHN entered into a pay floating, receive fixed interest rate swap to hedge the interest rate risk of the senior debt. First Horizon Bank early redeemed the $400.0$500 million senior debt onin November 1, 2019.
FHN has designated a derivative transaction in a hedging strategy to manage interest rate risk on $500.0 million of senior debt which matures in December 2020. This qualifies for hedge accounting under ASC 815-20 using the long-haul method. FHN entered into a pay floating, receive fixed interest rate swap to hedge the interest rate risk of the senior debt.



FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 52

FIRST HORIZON CORPORATION431Q21 FORM 10-Q REPORT

Note 1415 – Derivatives (Continued)

The following tables summarize FHN’s derivatives associated with interest rate risk management activities as of March 31, 20202021 and December 31, 2019:2020:
 
 March 31, 2021
(Dollars in millions)NotionalAssetsLiabilities
Customer Interest Rate Contracts Hedging 
Hedging Instruments and Hedged Items: 
Customer interest rate contracts$7,057 $255 $30 
Offsetting upstream interest rate contracts7,057 4 24 
  March 31, 2020
(Dollars in thousands) Notional Assets Liabilities
Customer Interest Rate Contracts Hedging 
      
Hedging Instruments and Hedged Items: 
      
Customer interest rate contracts $3,433,278
 $282,434
 $503
Offsetting upstream interest rate contracts 3,433,278
 5,750
 23,066
Debt Hedging      
Hedging Instruments:      
Interest rate swaps $500,000
 $61
 N/A
Hedged Items:      
Term borrowings:      
Par N/A
 N/A
 $500,000
Cumulative fair value hedging adjustments N/A
 N/A
 2,862
Unamortized premium/(discount) and issuance costs N/A
 N/A
 (519)
Total carrying value N/A
 N/A
 $502,343

  December 31, 2019
(Dollars in thousands) Notional Assets Liabilities
Customer Interest Rate Contracts Hedging      
Hedging Instruments and Hedged Items: 
      
Customer interest rate contracts $3,044,067
 $90,394
 $3,515
Offsetting upstream interest rate contracts 3,044,067
 3,537
 9,735
Debt Hedging      
Hedging Instruments:      
Interest rate swaps $500,000
 N/A
 $69
Hedged Items:      
Term borrowings:      
Par N/A
 N/A
 $500,000
Cumulative fair value hedging adjustments N/A
 N/A
 (1,604)
Unamortized premium/(discount) and issuance costs N/A
 N/A
 (740)
Total carrying value N/A
 N/A
 $497,656


 December 31, 2020
(Dollars in millions)NotionalAssetsLiabilities
Customer Interest Rate Contracts Hedging
Hedging Instruments and Hedged Items: 
Customer interest rate contracts$6,868 $436 $1 
Offsetting upstream interest rate contracts6,868 5 35 










FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 53

Table of Contents

Note 14 – Derivatives (Continued)

The following table summarizes gains/gains (losses) on FHN’s derivatives associated with interest rate risk management activities for the three months ended March 31, 20202021 and 2019:2020:
Three Months Ended
March 31,
20212020
(Dollars in millions)Gains (Losses)Gains (Losses)
Customer Interest Rate Contracts Hedging
Hedging Instruments and Hedged Items:
Customer interest rate contracts (a)$214 $196 
Offsetting upstream interest rate contracts (a)(214)(196)
Debt Hedging
Hedging Instruments:
Interest rate swaps (b)$0 $5 
Hedged Items:
Term borrowings (a) (c)0 (4)
(a)Gains (losses) included in Other expense within the Consolidated Statements of Income.
(b)Gains (losses) included in Interest expense.
(c)Represents gains and losses attributable to changes in fair value due to interest rate risk as designated in ASC 815-20 hedging relationships.

Cash Flow Hedges
  Three Months Ended
March 31
  2020 2019
(Dollars in thousands) Gains/(Losses) Gains/(Losses)
Customer Interest Rate Contracts Hedging  
Hedging Instruments and Hedged Items:    
Customer interest rate contracts (a) $195,552
 $29,112
Offsetting upstream interest rate contracts (a) (195,552) (29,112)
Debt Hedging    
Hedging Instruments:    
Interest rate swaps (b) $4,934
 $4,279
Hedged Items:    
Term borrowings (a) (c) (4,465) (4,266)
(a)Gains/losses included in All other expense within the Consolidated Condensed Statements of Income.
(b)Gains/losses included in the Interest expense.
(c)Represents gains and losses attributable to changes in fair value due to interest rate risk as designated in ASC 815-20 hedging relationships.
In first quarter 2016,Prior to 2021, FHN entered into ahad pay floating, receive fixed interest rate swap in a hedging strategyswaps designed to manage its exposure to the variability in cash flows related to the interest payments for the following five years on $250 million principal of debt instruments, which primarily consistconsisted of held-to-maturity trust preferred loans thatloans. In conjunction with the IBKC merger, FHN acquired interest rate contracts (floors and collars) which have variable interest payments based on 3-month LIBOR. In first quarter 2017, FHN initiatedbeen re-designated as cash flow hedges of $650 million notional amount that had initial durations between three years and seven years.hedges. The debt
instruments primarily
consist of held-to-maturity commercial loans that have variable interest payments based on 1-month LIBOR. $200 million of these swaps expired in first quarter 2020. These qualify for hedge accounting as
In a cash flow hedges under ASC 815-20. All changeshedge, the entire change in the fair value of these derivatives arethe interest rate swap included in the assessment of hedge effectiveness is initially recorded as a component of AOCI. Amounts arein OCI and is subsequently reclassified from AOCIOCI to current period earnings as(interest income or interest expense) in the same period that the hedged cash flows affectitem affects earnings. Interest paid or received for these swaps is recognized as an adjustment to interest income


FIRST HORIZON CORPORATION441Q21 FORM 10-Q REPORT

Note 15 – Derivatives (Continued)
The following tables summarize FHN’s derivative activities associated with cash flow hedges as of March 31, 20202021 and December 31, 2019:2020:
March 31, 2021
 March 31, 2020
(Dollars in thousands) Notional Assets Liabilities
(Dollars in millions)(Dollars in millions)NotionalAssetsLiabilities
Cash Flow Hedges
     
Cash Flow Hedges
Hedging Instruments:
     
Hedging Instruments:
Interest rate swaps $700,000
 $187
 N/A
Interest rate contractsInterest rate contracts$1,250 $27 $0 
Hedged Items:     Hedged Items:
Variability in cash flows related to debt instruments (primarily loans) N/A
 $700,000
 N/AVariability in cash flows related to debt instruments (primarily loans)N/A$1,250 N/A
 
  December 31, 2019
(Dollars in thousands) Notional Assets Liabilities
Cash Flow Hedges      
Hedging Instruments: 
      
Interest rate swaps $900,000
 N/A
 $241
Hedged Items:      
Variability in cash flows related to debt instruments (primarily loans) N/A
 $900,000
 N/A



FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 54

Table of Contents

Note 14 – Derivatives (Continued)

 December 31, 2020
(Dollars in millions)NotionalAssetsLiabilities
Cash Flow Hedges
Hedging Instruments: 
Interest rate contracts$1,250 $32 $0 
Hedged Items:
Variability in cash flows related to debt instruments (primarily loans)N/A$1,250 N/A
The following table summarizes gains/gains (losses) on FHN’s derivatives associated with cash flow hedges for the three months ended March 31, 20202021 and 2019:2020:
Three Months Ended
March 31,
20212020
(Dollars in millions)Gains (Losses)Gains (Losses)
Cash Flow Hedges
Hedging Instruments:
Interest rate contracts (a)$8 $17 
       Gain (loss) recognized in Other comprehensive income (loss)(3)13 
       Gain (loss) reclassified from AOCI into Interest income1 0 
(a)Approximately $25 million of pre-tax gains are expected to be reclassified into earnings in the next twelve months.


Other Derivatives

As part of the IBKC merger, FHN acquired mortgage banking operations that include the origination and sale of loans into the secondary market. As part of the origination of loans, FHN enters into interest rate lock commitments with borrowers. Additionally, FHN enters into forward sales contracts with buyers for delivery of loans at a future date.

Both of these contracts qualify as freestanding derivatives and are recognized at fair value through earnings. The notional and fair values of these contracts are presented in the table below. Balances and activity for periods prior to the IBKC merger were not significant.


March 31, 2021
(Dollars in millions)NotionalAssetsLiabilities
Mortgage Banking Hedges
Option contracts written$702 $9 $1 
Forward contracts purchased878 14 0 

  Three Months Ended
March 31
  2020 2019
(Dollars in thousands) Gains/(Losses) Gains/(Losses)
Cash Flow Hedges  
Hedging Instruments:    
Interest rate swaps (a) $17,374
 $7,218
       Gain/(loss) recognized in Other comprehensive income/(loss) 13,155
 3,936
       Gain/(loss) reclassified from AOCI into Interest income (94) 1,451
(a)FIRST HORIZON CORPORATIONApproximately $9.1 million of pre-tax gains are expected to be reclassified into earnings in the next twelve months.451Q21 FORM 10-Q REPORT
Other DerivativesTable of Contents

Note 15 – Derivatives (Continued)
December 31, 2020
(Dollars in millions)NotionalAssetsLiabilities
Mortgage Banking Hedges
Option contracts written$667 $20 $0 
Forward contracts purchased725 0 6 
The following table summarizes gains (losses) on FHN's derivatives associated with mortgage banking activities for the three month period ended March 31, 2021.
Three Months Ended
March 31,
2021
(Dollars in millions)Gains (Losses)
Mortgage Banking Hedges
Option contracts written$(11)
Forward contracts purchased23

In conjunction with the sales of a portionsale of its Visa Class B shares, in 2010 and 2011, FHN and the purchaser entered into derivative transactions whereby FHN will make or receive cash payments whenever the conversion ratio of the Visa Class B shares into Visa Class A shares is adjusted. FHN is also required to make periodic financing payments to the purchasers until all of Visa's covered litigation matters are resolved. In third quarter 2018, FHN sold the remainder of its Visa Class B shares, entering into a similar derivative arrangement with the counterparty. All of these derivatives extend until the end of Visa’s Covered Litigation matters. In September 2018, Visa reached a preliminary settlement for one class of plaintiffs in its Payment Card Interchange matter which later received final court approval in December 2019. In accordance with the agreement terms, several individual plaintiffs opted out of the settlement and have the opportunity to separately pursue resolution with Visa. Settlement has not been reached with the second class of plaintiffs in this matter and other covered litigation matters are also pending judicial resolution. Accordingly, the value and timing for completion of Visa’s Covered Litigation matters are uncertain.

The derivative transaction executed in third quarter 2018 includes a contingent accelerated termination clause based on the credit ratings of FHN and First Horizon Bank. FHN has not received or paid collateral related to this contract.

As of March 31, 20202021 and December 31, 2019,2020, the derivative liabilities associated with the sales of Visa Class B shares were $20.4$20 million and $22.8$13 million, respectively. See Note 17 - Fair Value of Assets & Liabilities for discussion of the valuation inputs and processes for these Visa-related derivatives.
FHN utilizes cross currency swaps and cross currency interest rate swaps to economically hedge its exposure to foreign currency risk and interest rate risk associated with
non-U.S. dollar denominated loans. As of March 31, 2020
2021 and December 31, 2019,2020, these loans were valued at $16.2$10 million and $18.4$12 million, respectively. The balance sheet amount and the gains/losses associated with these derivatives were not significant.
Related to its loan participation/syndication activities, FHN enters into risk participation agreements, under which it assumes exposure for, or receives indemnification for, borrowers’ performance on underlying interest rate derivative contracts. FHN’s counterparties in these contracts are other lending institutions involved in the loan participation/syndication arrangements for which the underlying interest rate derivative contract is intended to hedge interest rate risk for the borrower. FHN will make (other institution is the lead bank) or receive (FHN is the lead bank) payments for risk participations if the borrower defaults on its obligation to perform under the terms of its interest rate derivative agreement with the lead bank in the participation. As of March 31, 2021 and December 31, 2020, the notional values of FHN’s risk participations were $120.8$237 million and $233 million of derivative assets and $226.7$501 million and $464 million of derivative liabilities. The notional value for risk participation/syndication agreements is consistent with the percentage of participationliabilities, respectively. Assuming all underlying third party customers referenced in the lending arrangement. FHN’s maximumswap contracts defaulted at March 31, 2021 and December 31, 2020, the exposure or benefit in the risk participationfrom these agreements is contingentwould not be material based on the fair value of the underlying interest rate derivative contracts for which the borrower is in a liability position at the time of default. FHN monitors the credit risk associatedswaps.
In conjunction with the borrowers toIBKC merger, FHN obtained certain certificates of deposit with the rate of return based on an equity index which is considered an embedded derivative as a written option that must be separately recognized. The risks of the risk participations relate throughwritten option are offset by purchasing an option with terms that mirror the same credit risk assessment process utilized for establishing credit loss estimates for its loan portfolio. These credit risk estimates are included in the determination ofwritten option, which is also carried at fair value foron the risk participations.Company’s Consolidated Balance Sheets. As of March 31, 2021 and December 31, 2020, FHN had recognized $280 thousand$2 million and $1 million, respectively, of derivativeboth assets and $780 thousand of derivative liabilities associated with risk participation agreements.these contracts.



FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 55

Table of Contents

Note 14 – Derivatives (Continued)

Master Netting and Similar Agreements
As previously discussed, FHN uses master netting agreements, mutual margining agreements and collateral posting requirements to minimize credit risk on derivative contracts. Master netting and similar agreements are used when counterparties have multiple derivatives contracts that allow for a “right of setoff,” meaning that a counterparty may net offsetting positions and collateral with the same counterparty under the contract to determine a net receivable or payable. The following discussion provides an overview of these arrangements which may vary due to the derivative type and market in which a derivative transaction is executed.

Interest rate derivatives are subject to agreements consistent with standard agreement forms of the International Swap and Derivatives Association (“ISDA”).ISDA. Currently, all interest rate derivative contracts are entered into as over-the-counter transactions and collateral posting requirements are based on the net asset or liability position with each respective counterparty. For contracts that require central clearing, novation to a counterparty with access to a clearinghouse occurs and initial margin is posted.
FIRST HORIZON CORPORATION461Q21 FORM 10-Q REPORT

Note 15 – Derivatives (Continued)
Cash margin received (posted) that is considered settlements for the derivative contracts is included in the respective derivative asset (liability) value. Cash margin that is considered collateral received (posted) for interest rate derivatives is recognized as a liability (asset) on FHN’s Consolidated Condensed Statements of Condition.Balance Sheets.
Interest rate derivatives with customersclients that are smaller financial institutions typically require posting of collateral by the counterparty to FHN. This collateral is subject to a threshold with daily adjustments based upon changes in the level or fair value of the derivative position. Positions and related collateral can be netted in the event of default. Collateral pledged by a counterparty is typically cash or securities. The securities pledged as collateral are not recognized within FHN’s Consolidated Condensed Statements of Condition.Balance Sheets. Interest rate derivatives associated with lending arrangements share the collateral with the related loan(s). The derivative and loan positions may be netted in the event of default. For disclosure purposes, the entire collateral amount is allocated to the loan.
Interest rate derivatives with larger financial institutions entered into prior to required central clearing typically contain provisions whereby the collateral posting thresholds under the agreements adjust based on the credit ratings of both counterparties. If the credit rating of FHN and/or First Horizon Bank is lowered, FHN could be required to post additional collateral with the counterparties. Conversely, if the credit rating of FHN and/or First Horizon Bank is increased, FHN could have collateral released and be required to post less collateral in the future. Also, if a counterparty’s credit ratings were to
decrease, FHN and/or First Horizon Bank could require the posting of additional collateral; whereas if a counterparty’s credit ratings were to increase, the counterparty could require the release of excess collateral. Collateral for these arrangements is adjusted daily based on changes in the net fair value position with each counterparty.
The net fair value, determined by individual counterparty, of all derivative instruments with adjustable collateral posting thresholds was $232.5$85 million of assets and $4.4$33 million of liabilities on March 31, 2020,2021, and $63.1$200 million of assets and $6.4 $5
million of liabilities on December 31, 2019.2020. As of March 31, 20202021 and December 31, 2019,2020, FHN had received collateral of $291.3$248 million and $148.5$320 million and posted collateral of $41.4$5 million and $18.4$34 million, respectively, in the normal course of business related to these agreements.
Certain agreements entered into prior to required central clearing also contain accelerated termination provisions, inclusive of the right of offset, if a counterparty’s credit rating falls below a specified level. If a counterparty’s debt rating (including FHN’s and First Horizon Bank’s) were to fall below these minimums, these provisions would be triggered, and the counterparties could terminate the agreements and require immediate settlement of all derivative contracts under the agreements. The net fair value, determined by individual counterparty, of all interest rate derivative instruments with credit-risk-related contingent accelerated termination provisions was $232.3$102 million of assets and $24.2$40 million of liabilities on March 31, 2020,2021, and $63.1$216 million of assets and $10.3$17 million of liabilities on December 31, 2019.2020. As of March 31, 20202021 and December 31, 2019,2020, FHN had received collateral of $291.4$265 million and $148.5$343 million and posted collateral of $62.5$10 million and $22.7$53 million, respectively, in the normal course of business related to these contracts.
FHN’s fixed income segmentFHNF buys and sells various types of securities for its customers.clients. When these securities settle on a delayed basis, they are considered forward contracts, and are generally not subject to master netting agreements. For futures and options, FHN transacts through a third party, and the transactions are subject to margin and collateral maintenance requirements. In the event of default, open positions can be offset along with the associated collateral.
For this disclosure, FHN considers the impact of master netting and other similar agreements which allow FHN to settle all contracts with a single counterparty on a net basis and to offset the net derivative asset or liability position with the related securities and cash collateral. The application of the collateral cannot reduce the net derivative asset or liability position below zero, and therefore any excess collateral is not reflected in the following tables.


FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 56

FIRST HORIZON CORPORATION471Q21 FORM 10-Q REPORT

Note 1415 – Derivatives (Continued)

The following table provides details of derivative assets and collateral received as presented on the Consolidated Condensed Statements of ConditionBalance Sheets as of March 31, 20202021 and December 31, 2019:2020:
 
    Gross amounts not offset in the Balance Sheets 
(Dollars in millions)Gross amounts
of recognized
assets		Gross amounts
offset in the
Balance Sheets		Net amounts of
assets presented
in the Balance Sheets (a)		Derivative
liabilities
available for
offset		Collateral
received		Net amount
Derivative assets:
March 31, 2021
Interest rate derivative contracts$412 $0 $412 $(42)$(232)$138 
Forward contracts131 0 131 (33)(5)93 
$543 $0 $543 $(75)$(237)$231 
December 31, 2020
Interest rate derivative contracts$702 $0 $702 $(7)$(327)$368 
Forward contracts63 0 63 (14)(20)29 
$765 $0 $765 $(21)$(347)$397 
        
Gross amounts not offset in 
the Statements of Condition
  
(Dollars in thousands) 
Gross amounts
of recognized
assets
 
Gross amounts
offset in the
Statements of
Condition
 
Net amounts of
assets presented
in the Statements
of Condition (a)
 
Derivative
liabilities
available for
offset
 
Collateral
received
 Net amount
Derivative assets:            
March 31, 2020            
Interest rate derivative contracts $530,337
 $—
 $530,337
 $(1,974) $(303,798) $224,565
Forward contracts 165,516
 —
 165,516
 (89,790) (54,018) 21,708
  $695,853
 $—
 $695,853
 $(91,764) $(357,816) $246,273
             
December 31, 2019            
Interest rate derivative contracts $162,344
 $—
 $162,344
 $(5,604) $(143,334) $13,406
Forward contracts 20,640
 —
 20,640
 (13,292) (2,000) 5,348
  $182,984
 $—
 $182,984
 $(18,896) $(145,334) $18,754
(a)Included in Derivative assets on the Consolidated Condensed Statements of Condition. As of March 31, 2020 and December 31, 2019, $.4 million and $.1 million, respectively, of derivative assets have been excluded from these tables because they are generally not subject to master netting or similar agreements.

(a)Included in Other assets on the Consolidated Balance Sheets. As of March 31, 2021 and December 31, 2020, $16 million and $4 million, respectively, of derivative assets have been excluded from these tables because they are generally not subject to master netting or similar agreements.
The following table provides details of derivative liabilities and collateral pledged as presented on the Consolidated Condensed Statements of ConditionBalance Sheets as of March 31, 20202021 and December 31, 2019:2020:
 
    Gross amounts not offset
 in the Balance Sheets		 
(Dollars in millions)Gross amounts
of recognized
liabilities		Gross amounts
offset in the
Balance Sheets		Net amounts of
liabilities presented
in the Balance Sheets (a)		Derivative
assets 
available for
offset		Collateral
pledged		Net amount
Derivative liabilities:
March 31, 2021
Interest rate derivative contracts$128 $0 $128 $(42)$(12)$74 
Forward contracts115 0 115 (33)(34)48 
$243 $0 $243 $(75)$(46)$122 
December 31, 2020
Interest rate derivative contracts$60 $0 $60 $(7)$(31)$22 
Forward contracts65 0 65 (14)(51)0 
$125 $0 $125 $(21)$(82)$22 
        
Gross amounts not offset in the
Statements of Condition
  
(Dollars in thousands) 
Gross amounts
of recognized
liabilities
 
Gross amounts
offset in the
Statements of
Condition
 
Net amounts of
liabilities presented
in the Statements
of Condition (a)
 
Derivative
assets available
for offset
 
Collateral
pledged
 Net amount
Derivative liabilities:            
March 31, 2020            
Interest rate derivative contracts $41,980
 $—
 $41,980
 $(1,974) $(36,129) $3,877
Forward contracts 171,604
 —
 171,604
 (89,790) (81,814) —
  $213,584
 $—
 $213,584
 $(91,764) $(117,943) $3,877
December 31, 2019            
Interest rate derivative contracts $24,431
 $—
 $24,431
 $(5,604) $(18,689) $138
Forward contracts 19,807
 —
 19,807
 (13,292) (6,515) —
  $44,238
 $—
 $44,238
 $(18,896) $(25,204) $138
(a)Included in Other liabilities on the Consolidated Balance Sheets. As of March 31, 2021 and December 31, 2020, $21 million and $22 million, respectively, of derivative liabilities (primarily Visa-related derivatives) have been excluded from these tables because they are generally not subject to master netting or similar agreements.
(a)FIRST HORIZON CORPORATIONIncluded in Derivative liabilities on the Consolidated Condensed Statements of Condition. As of March 31, 2020 and December 31, 2019, $21.4 million and $23.2 million, respectively, of derivative liabilities (primarily Visa-related derivatives) have been excluded from these tables because they are generally not subject to master netting or similar agreements.481Q21 FORM 10-Q REPORT


FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 57




Note 1516 – Master Netting and Similar Agreements—Repurchase, Reverse Repurchase, and Securities Borrowing Transactions
For repurchase, reverse repurchase and securities borrowing transactions, FHN and each counterparty have the ability to offset all open positions and related collateral in the event of default. Due to the nature of these transactions, the value of the collateral for each transaction approximates the value of the corresponding receivable or payable. For repurchase agreements through FHN’s fixed income business (Securities(securities purchased under agreements to resell and Securitiessecurities sold under agreements to repurchase), transactions are collateralized by securities and/or government guaranteed loans which are delivered on the settlement date and are maintained throughout the term of the transaction. For FHN’s repurchase agreements through banking activities (Securities(securities sold under agreements to repurchase), securities are typically pledged at settlement
and not released until maturity. For asset positions, the collateral is not included on FHN’s Consolidated Condensed Statements of Condition.Balance Sheets. For
liability positions, securities collateral pledged by FHN is generally represented within FHN’s trading or available-for-sale securities portfolios.
For this disclosure, FHN considers the impact of master netting and other similar agreements that allow FHN to settle all contracts with a single counterparty on a net basis and to offset the net asset or liability position with the related securities collateral. The application of the collateral cannot reduce the net asset or liability position below zero, and therefore any excess collateral is not reflected in the tables below.
Securities purchased under agreements to resell is included in Federal funds sold and securities purchased under agreements to resell in the Consolidated Balance Sheets. Securities sold under agreements to repurchase is included in Short-term borrowings.
The following table provides details of Securitiessecurities purchased under agreements to resell as presented on the Consolidated Condensed Statements of Condition and collateral pledged by counterparties as of March 31, 20202021 and December 31, 2019:2020:
 
        
Gross amounts not offset in the
Statements of Condition
  
(Dollars in thousands) 
Gross amounts
of recognized
assets
 
Gross amounts
offset in the
Statements of
Condition
 
Net amounts of
assets presented
in the Statements
of Condition
 
Offsetting
securities sold
under agreements
to repurchase
 
Securities collateral
(not recognized on
FHN’s Statements
of Condition)
 Net amount
Securities purchased under agreements to resell:            
March 31, 2020 $562,435
 $—
 $562,435
 $(6,290) $(553,688) $2,457
December 31, 2019 586,629
 —
 586,629
 (21,004) (562,702) 2,923

    Gross amounts not offset in the
Balance Sheets		 
(Dollars in millions)Gross amounts
of recognized
assets		Gross amounts
offset in the
Balance Sheets		Net amounts of
assets presented
in the Balance Sheets		Offsetting
securities sold
under agreements
to repurchase		Securities collateral
(not recognized on
FHN’s Balance Sheets)		Net amount
Securities purchased under agreements to resell:
March 31, 2021$463 $0 $463 $0 $(461)$2 
December 31, 2020380 0 380 0 (379)1 
The following table provides details of Securitiessecurities sold under agreements to repurchase as presented on the Consolidated Condensed Statements of Condition and collateral pledged by FHN as of March 31, 20202021 and December 31, 2019:2020:
 
        
Gross amounts not offset in the
Statements of Condition
  
(Dollars in thousands) 
Gross amounts
of recognized
liabilities
 
Gross amounts
offset in the
Statements of
Condition
 
Net amounts of
liabilities presented
in the Statements
of Condition
 
Offsetting
securities
purchased under
agreements to resell
 
Securities/
government
guaranteed loans
collateral
 Net amount
Securities sold under agreements to repurchase:            
March 31, 2020 $788,595
 $—
 $788,595
 $(6,290) $(782,305) $—
December 31, 2019 716,925
 —
 716,925
 (21,004) (695,879) 42

    Gross amounts not offset in the
Balance Sheets		 
(Dollars in millions)Gross amounts
of recognized
liabilities		Gross amounts
offset in the
Balance Sheets		Net amounts of
liabilities presented
in the Balance Sheets		Offsetting
securities
purchased under
agreements to resell		Securities/
government
guaranteed loans
collateral		Net amount
Securities sold under agreements to repurchase:
March 31, 2021$1,098 $0 $1,098 $0 $(1,098)$0 
December 31, 20201,187 0 1,187 0 (1,187)0 
Due to the short duration of Securitiessecurities sold under agreements to repurchase and the nature of collateral involved, the risks associated with these transactions are considered minimal.





FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 58

FIRST HORIZON CORPORATION491Q21 FORM 10-Q REPORT

Note 1516 – Master Netting and Similar Agreements—Repurchase, Reverse Repurchase, and Securities Borrowing Transactions (Continued)

The following tables provide details, by collateral type, of the remaining contractual maturity of Securitiessecurities sold under agreements to repurchase as of March 31, 20202021 and December 31, 2019:2020:
 
 March 31, 2021
(Dollars in millions)Overnight and
Continuous		Up to 30 DaysTotal
Securities sold under agreements to repurchase:
U.S. treasuries$294 $0 $294 
Government agency issued MBS584 0 584 
Government agency issued CMO13 0 13 
Other U.S. government agencies82 0 82 
Government guaranteed loans (SBA and USDA)125 0 125 
Total securities sold under agreements to repurchase$1,098 $0 $1,098 
December 31, 2020
(Dollars in millions)Overnight and
Continuous		Up to 30 DaysTotal
Securities sold under agreements to repurchase:
U.S. treasuries$284 $0 $284 
Government agency issued MBS616 0 616 
Government agency issued CMO10 0 10 
Other U.S. government agencies151 0 151 
Government guaranteed loans (SBA and USDA)126 0 126 
Total securities sold under agreements to repurchase$1,187 $0 $1,187 
  March 31, 2020
(Dollars in thousands) 
Overnight and
Continuous
 Up to 30 Days Total
Securities sold under agreements to repurchase:      
U.S. treasuries $18,955
 $—
 $18,955
Government agency issued MBS 399,353
 10,397
 409,750
Government agency issued CMO —
 5,498
 5,498
Other U.S. government agencies 83,214
 —
 83,214
Government guaranteed loans (SBA and USDA) 271,178
 —
 271,178
Total Securities sold under agreements to repurchase $772,700
 $15,895
 $788,595
       
  December 31, 2019
(Dollars in thousands) 
Overnight and
Continuous
 Up to 30 Days Total
Securities sold under agreements to repurchase:      
U.S. treasuries $41,364
 $—
 $41,364
Government agency issued MBS 341,173
 4,545
 345,718
Other U.S. government agencies 54,924
 —
 54,924
Government guaranteed loans (SBA and USDA) 274,919
 —
 274,919
Total Securities sold under agreements to repurchase $712,380
 $4,545
 $716,925
FIRST HORIZON CORPORATION501Q21 FORM 10-Q REPORT



FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 59



Note 1617 – Fair Value of Assets &and Liabilities
FHN groups its assets and liabilities measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. This hierarchy requires FHN to maximize the use of observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. Each fair value measurement is placed into the proper level based on the lowest level of significant input. These levels are:
 
•Level 1—Valuation is based upon quoted prices for identical instruments traded in active markets.

•Level 2—Valuation is based upon quoted prices for similar instruments in active
markets, quoted
prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.

•Level 3—Valuation is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models, and similar techniques.


























FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 60

FIRST HORIZON CORPORATION511Q21 FORM 10-Q REPORT

Note 1617 – Fair Value of Assets &and Liabilities (Continued)

Recurring Fair Value Measurements
The following table presentstables present the balancebalances of assets and liabilities measured at fair value on a recurring basis as of March 31, 2021 and December 31, 2020:
 March 31, 2021
(Dollars in millions)Level 1Level 2Level 3Total
Trading securities:
U.S. treasuries$0 $51 $0 $51 
Government agency issued MBS0 384 0 384 
Government agency issued CMO0 190 0 190 
Other U.S. government agencies0 237 0 237 
States and municipalities0 10 0 10 
Corporate and other debt0 204 0 204 
Total trading securities0 1,076 0 1,076 
Loans held for sale (elected fair value)0 437 12 449 
Loans held for investment (elected fair value)0 0 17 17 
Securities available for sale:
U.S. treasuries0 610 0 610 
Government agency issued MBS0 4,038 0 4,038 
Government agency issued CMO0 2,441 0 2,441 
Other U.S. government agencies0 725 0 725 
States and municipalities0 475 0 475 
Corporate and other debt0 40 0 40 
Interest-only strips (elected fair value)0 0 22 22 
Total securities available for sale0 8,329 22 8,351 
Other assets:
Deferred compensation mutual funds122 0 0 122 
Equity, mutual funds, and other25 0 0 25 
Derivatives, forwards and futures145 0 0 145 
Derivatives, interest rate contracts0 414 0 414 
Derivatives, other0 2 0 2 
Total other assets292 416 0 708 
Total assets$292 $10,258 $51 $10,601 
Trading liabilities:
U.S. treasuries$0 $361 $0 $361 
Other U.S.government agencies0 20 0 20 
Government agency issued MBS0 8 0 8 
Corporate and other debt0 65 0 65 
Total trading liabilities0 454 0 454 
Other liabilities:
Derivatives, forwards and futures116 0 0 116 
Derivatives, interest rate contracts0 128 0 128 
Derivatives, other0 2 21 23 
Total other liabilities116 130 21 267 
Total liabilities$116 $584 $21 $721 

  March 31, 2020
(Dollars in thousands) Level 1 Level 2 Level 3 Total
Trading securities—fixed income:        
U.S. treasuries $—
 $243,315
 $—
 $243,315
Government agency issued MBS —
 661,174
 —
 661,174
Government agency issued CMO —
 435,738
 —
 435,738
Other U.S. government agencies —
 57,993
 —
 57,993
States and municipalities —
 75,288
 —
 75,288
Corporate and other debt —
 403,019
 —
 403,019
Equity, mutual funds, and other —
 202
 —
 202
Total trading securities—fixed income —
 1,876,729
 —
 1,876,729
Trading securities—mortgage banking —
 —
 785
 785
Loans held-for-sale (elected fair value) —
 —
 13,584
 13,584
Securities available-for-sale:        
U.S. treasuries —
 100
 —
 100
Government agency issued MBS —
 2,402,517
 —
 2,402,517
Government agency issued CMO —
 1,626,943
 —
 1,626,943
Other U.S. government agencies —
 372,497
 —
 372,497
States and municipalities —
 79,125
 —
 79,125
Corporate and other debt —
 40,621
 —
 40,621
Interest-Only Strip (elected fair value) —
 —
 23,104
 23,104
Total securities available-for-sale —
 4,521,803
 23,104
 4,544,907
Other assets:        
Deferred compensation mutual funds 41,666
 —
 —
 41,666
Equity, mutual funds, and other 22,833
 —
 —
 22,833
Derivatives, forwards and futures 165,516
 —
 —
 165,516
Derivatives, interest rate contracts —
 530,140
 —
 530,140
Derivatives, other —
 314
 280
 594
Total other assets 230,015
 530,454
 280
 760,749
Total assets $230,015
 $6,928,986
 $37,753
 $7,196,754
Trading liabilities—fixed income:        
U.S. treasuries $—
 $387,498
 $—
 $387,498
Government issued agency CMO —
 1,746
 —
 1,746
Corporate and other debt —
 63,367
 —
 63,367
Total trading liabilities—fixed income —
 452,611
 —
 452,611
Other liabilities:        
Derivatives, forwards and futures 171,604
 —
 —
 171,604
Derivatives, interest rate contracts —
 41,813
 —
 41,813
Derivatives, other —
 397
 21,170
 21,567
Total other liabilities 171,604
 42,210
 21,170
 234,984
Total liabilities $171,604
 $494,821
 $21,170
 $687,595



FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 61

FIRST HORIZON CORPORATION521Q21 FORM 10-Q REPORT

Note 1617 – Fair Value of Assets &and Liabilities (Continued)

 December 31, 2020
(Dollars in millions)Level 1Level 2Level 3Total
Trading securities:
U.S. treasuries$0 $81 $0 $81 
Government agency issued MBS0 633 0 633 
Government agency issued CMO0 212 0 212 
Other U.S. government agencies0 62 0 62 
States and municipalities0 7 0 7 
Corporate and other debt0 181 0 181 
Total trading securities0 1,176 0 1,176 
Loans held for sale (elected fair value)0 393 12 405 
Loans held for investment (elected fair value)0 0 16 16 
Securities available for sale:
U.S. treasuries0 613 0 613 
Government agency issued MBS0 3,812 0 3,812 
Government agency issued CMO0 2,406 0 2,406 
Other U.S. government agencies0 684 0 684 
States and municipalities0 460 0 460 
Corporate and other debt0 40 0 40 
Interest-only strips (elected fair value)0 0 32 32 
Total securities available for sale0 8,015 32 8,047 
Other assets:
Deferred compensation mutual funds118 0 0 118 
Equity, mutual funds, and other25 0 0 25 
Derivatives, forwards and futures63 0 0 63 
Derivatives, interest rate contracts0 702 0 702 
Derivatives, other0 4 0 4 
Total other assets206 706 0 912 
Total assets$206 $10,290 $60 $10,556 
Trading liabilities:
U.S. treasuries$0 $307 $0 $307 
Government agency issued MBS0 3 0 3 
Corporates and other debt0 43 0 43 
Total trading liabilities0 353 0 353 
Other liabilities:
Derivatives, forwards and futures71 0 0 71 
Derivatives, interest rate contracts0 60 0 60 
Derivatives, other0 4 14 18 
Total other liabilities71 64 14 149 
Total liabilities$71 $417 $14 $502 
The following table presents the balance of assets and liabilities measured at fair value on a recurring basis as of December 31, 2019:
  December 31, 2019
(Dollars in thousands) Level 1 Level 2 Level 3 Total
Trading securities—fixed income:        
U.S. treasuries $—
 $134,844
 $—
 $134,844
Government agency issued MBS —
 268,024
 —
 268,024
Government agency issued CMO —
 250,652
 —
 250,652
Other U.S. government agencies —
 124,972
 —
 124,972
States and municipalities —
 120,744
 —
 120,744
Corporate and other debt —
 445,253
 —
 445,253
Equity, mutual funds, and other —
 777
 —
 777
Total trading securities—fixed income —
 1,345,266
 —
 1,345,266
Trading securities—mortgage banking —
 —
 941
 941
Loans held-for-sale (elected fair value) —
 —
 14,033
 14,033
Securities available-for-sale:        
U.S. treasuries —
 100
 —
 100
Government agency issued MBS —
 2,348,517
 —
 2,348,517
Government agency issued CMO —
 1,670,492
 —
 1,670,492
Other U.S. government agencies —
 306,092
 —
 306,092
States and municipalities —
 60,526
 —
 60,526
Corporate and other debt —
 40,540
 —
 40,540
Interest-Only Strip (elected fair value) —
 —
 19,136
 19,136
Total securities available-for-sale —
 4,426,267
 19,136
 4,445,403
Other assets:        
Deferred compensation mutual funds 46,815
 —
 —
 46,815
Equity, mutual funds, and other 22,643
 —
 —
 22,643
Derivatives, forwards and futures 20,640
 —
 —
 20,640
Derivatives, interest rate contracts —
 162,413
 —
 162,413
Derivatives, other —
 62
 —
 62
Total other assets 90,098
 162,475
 —
 252,573
Total assets $90,098
 $5,934,008
 $34,110
 $6,058,216
Trading liabilities—fixed income:        
U.S. treasuries $—
 $406,380
 $—
 $406,380
Other U.S. government agencies —
 88
 —
 88
Government agency issued MBS —
 33
 —
 33
Corporate and other debt —
 99,080
 —
 99,080
Total trading liabilities—fixed income —
 505,581
 —
 505,581
Other liabilities:        
Derivatives, forwards and futures 19,807
 —
 —
 19,807
Derivatives, interest rate contracts —
 24,412
 —
 24,412
Derivatives, other —
 466
 22,795
 23,261
Total other liabilities 19,807
 24,878
 22,795
 67,480
Total liabilities $19,807
 $530,459
 $22,795
 $573,061





FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 62

FIRST HORIZON CORPORATION531Q21 FORM 10-Q REPORT

Note 1617 – Fair Value of Assets &and Liabilities (Continued)

Changes in Recurring Level 3 Fair Value Measurements
The changes in Level 3 assets and liabilities measured at fair value for the three months ended March 31, 20202021 and 2019,2020 on a recurring basis are summarized as follows:
  Three Months Ended March 31, 2020  
(Dollars in thousands) 
Trading
securities
   Interest- only strips- AFS   
Loans held-
for-sale
   Net  derivative
liabilities		  
Balance on January 1, 2020 $941
   $19,136
   $14,033
   $(22,795)  
Total net gains/(losses) included in:                
Net income (156)   (1,295)   329
   (511)  
Purchases —
   5,481
   —
   —
  
Sales —
   (8,703)   —
   —
  
Settlements —
   —
   (778)   2,416
  
Net transfers into/(out of) Level 3 —
   8,485
 (b) —
   —
  
Balance on March 31, 2020 $785
   $23,104
   $13,584
   $(20,890)  
Net unrealized gains/(losses) included in net income $—
 (a) $(865) (c) $329
 (a) $(511) (d) 
 Three Months Ended March 31, 2021 
(Dollars in millions)Interest- only strips- AFSLoans held
for sale		Loans held for investmentNet  derivative
liabilities
Balance on January 1, 2021$32 $12 $16 $(14)
Total net gains (losses) included in net income5 1 0 (9)
Purchases0 0 0 0 
Sales(27)0 0 0 
Settlements0 (1)(2)2 
Net transfers into (out of) Level 312 (b)0 3 0 
Balance on March 31, 2021$22 $12 $17 $(21)
Net unrealized gains (losses) included in net income$2 (c)$1 (a)$0 $(9)(d)
 
 Three Months Ended March 31, 2020 
(Dollars in millions)Trading
securities		Interest-only-strips-AFSLoans held for saleNet  derivative
liabilities
Balance on January 1, 2020$1 $19  $14 $(23)
Total net gains (losses) included in net income0 (1) 0 0 
Purchases0 5 0 0 
Sales0 (8)0 0 
Settlements0 0 (1)2 
Net transfers into (out of) Level 30 8 (b)0 0 
Balance on March 31, 2020$1 $23  $13 $(21)
Net unrealized gains (losses) included in net income$0 (a)$(1)(c)$0 (a)$0 (d)
  Three Months Ended March 31, 2019  
(Dollars in thousands) 
Trading
securities
   Interest-only-strips-AFS   Loans held-for-sale   Net  derivative
liabilities		  
Balance on January 1, 2019 $1,524
   $9,902
   $16,273
   $(31,540)  
Total net gains/(losses) included in:                
Net income 21
   (1,258)   495
   135
  
Purchases —
   86
   —
   —
 
Sales —
   (13,012)   —
   —
  
Settlements (148)   —
   (1,017)   2,435
  
Net transfers into/(out of) Level 3 —
   17,477
 (b)  —
   —
  
Balance on March 31, 2019 $1,397
   $13,195
   $15,751
   $(28,970)  
Net unrealized gains/(losses) included in net income $(30) (a)  $(894) (c)  $495
 (a) $135
 (d)
(a)Primarily included in mortgage banking income on the Consolidated Condensed Statements of Income.
(b)Transfers into interest-only strips - AFS level 3 measured on a recurring basis reflect movements from loans held-for-sale (Level 2 nonrecurring).
(c)Primarily included in fixed income on the Consolidated Condensed Statements of Income.
(d)Included in Other expense.

(a)Primarily included in mortgage banking and title income on the Consolidated Statements of Income.
(b)Transfers into interest-only strips - AFS level 3 measured on a recurring basis reflect movements from loans held for sale (Level 2 nonrecurring).
(c)Primarily included in Fixed income on the Consolidated Statements of Income.
(d)Included in Other expense.

There were no0 net unrealized gains/gains (losses) for Level 3 assets and liabilities included in other comprehensive income as of March 31, 20202021 and 2019.2020.








FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 63

FIRST HORIZON CORPORATION541Q21 FORM 10-Q REPORT

Note 1617 – Fair Value of Assets &and Liabilities (Continued)

Nonrecurring Fair Value Measurements
From time to time, FHN may be required to measure certain other financial assets at fair value on a nonrecurring basis in accordance with GAAP. These adjustments to fair value usually result from the application of lower of cost or market (“LOCOM”)(LOCOM) accounting or write-downs of individual assets. For assets measured at fair value on a

nonrecurring basis which were still held on the Consolidated Condensed Statements of ConditionBalance Sheets at March 31, 2020,2021, and December 31, 2019,2020, respectively, the following tables provide the level of valuation assumptions used to determine each adjustment and the related carrying value.
  Carrying value at March 31, 2020
(Dollars in thousands) Level 1 Level 2 Level 3 Total
Loans held-for-sale—SBAs and USDA $—
 $493,876
 $890
 $494,766
Loans held-for-sale—first mortgages —
 —
 515
 515
Loans, net of unearned income (a) —
 —
 31,535
 31,535
OREO (b) —
 —
 13,881
 13,881
Other assets (c) —
 —
 10,262
 10,262
 Carrying value at March 31, 2021
(Dollars in millions)Level 1Level 2Level 3Total
Loans held for sale—SBAs and USDA$0 $299 $1 $300 
Loans held for sale—first mortgages0 0 1 1 
Loans and leases (a)0 0 69 69 
OREO (b)0 0 11 11 
Other assets (c)0 0 11 11 
 
 Carrying value at December 31, 2020
(Dollars in millions)Level 1Level 2Level 3Total
Loans held for sale—SBAs and USDA$0 $508 $1 $509 
Loans held for sale—first mortgages0 0 1 1 
Loans and leases (a)0 0 77 77 
OREO (b)0 0 15 15 
Other assets (c)0 0 9 9 
  Carrying value at December 31, 2019
(Dollars in thousands) 
 Level 1 Level 2 Level 3 Total
Loans held-for-sale—SBAs and USDA $—
 $492,595
 $929
 $493,524
Loans held-for-sale—first mortgages —
 —
 516
 516
Loans, net of unearned income (a) —
 —
 42,208
 42,208
OREO (b) —
 —
 15,660
 15,660
Other assets (c) —
 —
 10,608
 10,608
(a)Represents carrying value of loans for which adjustments are required to be based on the appraised value of the collateral less estimated costs to sell. Write-downs on these loans are recognized as part of provision for credit losses.
(a)Represents carrying value of loans for which adjustments are required to be based on the appraised value of the collateral less estimated costs to sell. Write-downs on these loans are recognized as part of provision for loan losses.
(b)Represents the fair value and related losses of foreclosed properties that were measured subsequent to their initial classification as OREO. Balance excludes OREO related to government insured mortgages.
(c)Represents tax credit investments accounted for under the equity method.
(b)Represents the fair value and related losses of foreclosed properties that were measured subsequent to their initial classification as OREO. Balance excludes OREO related to government insured mortgages.
(c)Represents tax credit investments accounted for under the equity method.
For assets measured on a nonrecurring basis which were still held on the Consolidated Condensed Statements of ConditionBalance Sheets at period end, the following table provides information about the fair value adjustments recorded during the three months ended March 31, 20202021 and 2019:2020:
Net gains (losses)
Three Months Ended March 31
(Dollars in millions)20212020
Loans held for sale—SBAs and USDA$(1)$(1)
Loans and leases (a)(7)(5)
$(8)$(6)
(a)Write-downs on these loans are recognized as part of provision for credit losses.



















  Net gains/(losses)
Three Months Ended March 31
(Dollars in thousands) 2020 2019
Loans held-for-sale—other consumer $—
 $(200)
Loans held-for-sale—SBAs and USDA (1,391) (683)
Loans held-for-sale—first mortgages 5
 15
Loans, net of unearned income (a) (4,839) 200
OREO (b) (27) 35
Other assets (c) (346) (675)
  $(6,598) $(1,308)
(a)FIRST HORIZON CORPORATIONWrite-downs on these loans are recognized as part of provision for loan losses.551Q21 FORM 10-Q REPORT
(b)Represents losses of foreclosed properties that were measured subsequent to their initial classification as OREO. Balance excludes OREO related to government insured mortgages.
(c)Represents tax credit investments accounted for under the equity method.









FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 64


Note 1617 – Fair Value of Assets &and Liabilities (Continued)

In 2019,For the three months ended March 31, 2021, FHN recognized $4.6$33 million of fixed asset impairments and $.7 million of impairment reversals, respectively, related to dispositions of acquired properties and $1.5$3 million of impairments for lease assets primarily related to continuing acquisition integration efforts associated with reduction of leased office space and branch optimization. Related to its restructuring, repositioning, and efficiency efforts, FHN recognized $14.0 million of impairments and $1.4 million of impairment reversals, respectively, for tangible long-lived assets and lease assets. Related to the Company's rebranding initiative, FHN recognized $7.1 million of impairments within the Corporate segment for long-lived tangible assets, primarily signage, related to the company's rebranding initiative. These amounts were primarily recognized in the Corporate segment.

For the three months ended March 31, 2020, FHN recognized an insignificant amount of impairment.

Lease asset impairments recognized in 2019 represent the reduction in value of the right-of-use assets associated with leases that are being exited in advance of the contractual lease expiration.


















Impairments are measured using a discounted cash flow methodology, which is considered a Level 3 valuation.
Impairments of long-lived tangible assets reflect locations where the associated land and building are either owned or leased. The fair values of owned sites were determined using estimated sales prices from appraisals and broker opinions less estimated costs to sell with adjustments upon final disposition. The fair values of owned assets in leased sites (e.g., leasehold improvements) were determined using a discounted cash flow approach, based on the revised estimated useful lives of the related assets. Both measurement methodologies are considered Level 3 valuations. Impairment adjustments recognized upon disposition of a location are considered Level 2 valuations.


























































FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 65

FIRST HORIZON CORPORATION561Q21 FORM 10-Q REPORT
Table of Contents

Note 1617 – Fair Value of Assets &and Liabilities (Continued)

Level 3 Measurements

The following tables provide information regarding the unobservable inputs utilized in determining the fair value of Level 3 recurring and non-recurring measurements as of March 31, 20202021 and December 31, 2019:2020: 
(Dollars in millions)Values Utilized
Level 3 ClassFair Value at March 31, 2021Valuation TechniquesUnobservable InputRangeWeighted Average (d)
Available for sale securities SBA-interest only strips$22 Discounted cash flowConstant prepayment rate12%12%
Bond equivalent yield10% - 13%11%
Loans held for sale - residential real estate$13 Discounted cash flowPrepayment speeds - First mortgage4% - 13%5%
Foreclosure losses57% - 65%62%
Loss severity trends - First mortgage
9% - 17%
of UPB
12%
Loans held for sale - unguaranteed interest in SBA loans$1 Discounted cash flowConstant prepayment rate8% - 12%10%
Bond equivalent yield8%8%
Loans held for investment$17 Discounted cash flowConstant prepayment rate0% - 46%31%
Constant default rate0% - 15%1%
Loss severity trends0% - 93%7%
Derivative liabilities, other$21 Discounted cash flowVisa covered litigation resolution amount$5.4 billion - $6.0 billion$5.8 billion
Probability of resolution scenarios10% - 50%16%
   Time until resolution12 - 36 months26 months
Loans and leases (a)$69 Appraisals from comparable propertiesMarketability adjustments for specific properties
0% - 10%
of appraisal
NM
Other collateral valuationsBorrowing base certificates adjustment20% - 50% of gross valueNM
   Financial Statements/Auction values adjustment
0% - 25%
of reported value
NM
OREO (b)$11 Appraisals from comparable propertiesAdjustment for value changes since appraisal
0% - 10%
of appraisal
NM
Other assets (c)$11 Discounted cash flowAdjustments to current sales yields for specific properties0% - 15% adjustment to yieldNM
  Appraisals from comparable propertiesMarketability adjustments for specific properties
0% - 25%
of appraisal
NM
(Dollars in thousands)  
        Values Utilized
Level 3 Class Fair Value at
March 31, 2020		 Valuation Techniques Unobservable Input Range Weighted Average (d)
Available-for-sale- securities SBA-interest only strips $23,104
 Discounted cash flow Constant prepayment rate 12% 12%
      Bond equivalent yield 14% - 18% 14%
Loans held-for-sale - residential real estate 14,099
 Discounted cash flow Prepayment speeds - First mortgage 3% - 15% 4.6%
      Foreclosure losses 50% - 66% 64%
      Loss severity trends - First mortgage 2% - 20% of UPB 14.2%
Loans held-for-sale- unguaranteed interest in SBA loans 890
 Discounted cash flow Constant prepayment rate 8% - 12% 10%
      Bond equivalent yield 8% 8%
Derivative liabilities, other 20,890
 Discounted cash flow Visa covered litigation resolution amount $5.4 billion - $6.0 billion $5.8 billion
      Probability of resolution scenarios 10% - 50% 16%
      Time until resolution 12 - 36 months 26 months
Loans, net of unearned
income (a)		 31,535
 Appraisals from comparable properties Marketability adjustments for specific properties 0% - 10% of appraisal NM
    Other collateral valuations Borrowing base certificates adjustment 20% - 50% of gross value NM
      Financial Statements/Auction values adjustment 0% - 25% of reported value NM
OREO (b) 13,881
 Appraisals from comparable properties Adjustment for value changes since appraisal 0% - 10% of appraisal NM
Other assets (c) 10,262
 Discounted cash flow Adjustments to current sales yields for specific properties 0% - 15% adjustment to yield NM
    Appraisals from comparable properties Marketability adjustments for specific properties 0% - 25% of appraisal NM
 
NM - Not meaningful.meaningful
(a)Represents carrying value of loans for which adjustments are required to be based on the appraised value of the collateral less estimated costs to sell. Write-downs on these loans are recognized as part of provision for credit losses.
(b)Represents the fair value of foreclosed properties that were measured subsequent to their initial classification as OREO. Balance excludes OREO related to government insured mortgages.
(c)Represents tax credit investments accounted for under the equity method.
(d)Weighted averages are determined by the relative fair value of the instruments or the relative contribution to an instrument's fair value.
(a)FIRST HORIZON CORPORATIONRepresents carrying value of loans for which adjustments are required to be based on the appraised value of the collateral less estimated costs to sell. Write-downs on these loans are recognized as part of provision for loan losses.571Q21 FORM 10-Q REPORT
(b)Represents the fair value of foreclosed properties that were measured subsequent to their initial classification as OREO. Balance excludes OREO related to government insured mortgages.
(c)Represents tax credit investments accounted for under the equity method.
(d)Weighted averages are determined by the relative fair value of the instruments or the relative contribution to an instrument's fair value.






FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 66

Table of Contents

Note 1617 – Fair Value of Assets &and Liabilities (Continued)

(Dollars in millions)Values Utilized
Level 3 ClassFair Value at December 31, 2020Valuation TechniquesUnobservable InputRangeWeighted Average (d)
Available for sale securities SBA-interest only strips$32 Discounted cash flowConstant prepayment rate12%12%
Bond equivalent yield15% - 17%15%
Loans held for sale - residential real estate$13 Discounted cash flowPrepayment speeds - First mortgage5% - 15%5%
Foreclosure losses59% - 70%63%
Loss severity trends - First mortgage
3% - 19%
of UPB
12%
Loans held for sale - unguaranteed interest in SBA loans$1 Discounted cash flowConstant prepayment rate8% - 12%10%
Bond equivalent yield7% - 8%7%
Loans held for investment$16 Discounted cash flowConstant prepayment rate0% - 26%11%
Constant default rate0% - 14%1%
Loss severity trends0% - 100%11%
Derivative liabilities, other$14 Discounted cash flowVisa covered litigation resolution amount$5.4 billion - $6.0 billion$5.8 billion
Probability of resolution scenarios10% - 50%16%
Time until resolution3 - 27 months19 months
Loans and leases (a)$77 Appraisals from comparable propertiesMarketability adjustments for specific properties
0% - 10%
of appraisal
NM
Other collateral valuationsBorrowing base certificates adjustment20% - 50% of gross valueNM
Financial Statements/Auction values adjustment
0% - 25%
of reported value
NM
OREO (b)$15 Appraisals from comparable propertiesAdjustment for value changes since appraisal
0% - 10%
of appraisal
NM
Other assets (c)$9 Discounted cash flowAdjustments to current sales yields for specific properties0% - 15% adjustment to yieldNM
Appraisals from comparable propertiesMarketability adjustments for specific properties
0% - 25%
of appraisal
NM
(Dollars in thousands)  
        Values Utilized
Level 3 Class Fair Value at
December 31, 2019		 Valuation Techniques Unobservable Input Range Weighted Average (d)
Available-for-sale- securities SBA-interest only strips $19,136
 Discounted cash flow Constant prepayment rate 12% 12%
      Bond equivalent yield 16% - 17% 16%
Loans held-for-sale - residential real estate 14,549
 Discounted cash flow Prepayment speeds - First mortgage 3% - 14% 4.1%
      Prepayment speeds - HELOC 0% - 12% 7.6%
      Foreclosure losses 50% - 66% 64%
      Loss severity trends - First mortgage 3% - 24% of UPB 14.3%
      Loss severity trends - HELOC 0% - 72% of UPB 50%
Loans held-for-sale- unguaranteed interest in SBA loans 929
 Discounted cash flow Constant prepayment rate 8% - 12% 10%
      Bond equivalent yield 9% 9%
Derivative liabilities, other 22,795
 Discounted cash flow Visa covered litigation resolution amount $5.4 billion - $6.0 billion $5.8 billion
      Probability of resolution scenarios 10% - 50% 16%
      Time until resolution 15 - 39 months 29 months
Loans, net of unearned
income (a)		 42,208
 Appraisals from comparable properties Marketability adjustments for specific properties 0% - 10% of appraisal NM
    Other collateral valuations Borrowing base certificates adjustment 20% - 50% of gross value NM
      Financial Statements/Auction values adjustment 0% - 25% of reported value NM
OREO (b) 15,660
 Appraisals from comparable properties Adjustment for value changes since appraisal 0% - 10% of appraisal NM
Other assets (c) 10,608
 Discounted cash flow Adjustments to current sales yields for specific properties 0% - 15% adjustment to yield NM
    Appraisals from comparable properties Marketability adjustments for specific properties 0% - 25% of appraisal NM
NM - Not meaningful.meaningful
(a)Represents carrying value of loans for which adjustments are required to be based on the appraised value of the collateral less estimated costs to sell. Write-downs on these loans are recognized as part of provision for credit losses.
(b)Represents the fair value of foreclosed properties that were measured subsequent to their initial classification as OREO. Balance excludes OREO related to government insured mortgages.
(c)Represents tax credit investments accounted for under the equity method.
(d)Weighted averages are determined by the relative fair value of the instruments or the relative contribution to an instrument's fair value.


(a)FIRST HORIZON CORPORATIONRepresents carrying value of loans for which adjustments are required to be based on the appraised value of the collateral less estimated costs to sell. Write-downs on these loans are recognized as part of provision for loan losses.581Q21 FORM 10-Q REPORT
(b)Represents the fair value of foreclosed properties that were measured subsequent to their initial classification as OREO. Balance excludes OREO related to government insured mortgages.
(c)Represents tax credit investments accounted for under the equity method.
(d)Weighted averages are determined by the relative fair value of the instruments or the relative contribution to an instrument's fair value










FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 67


Note 1617 – Fair Value of Assets &and Liabilities (Continued)

Securities AFS. Increases (decreases) in estimated prepayment rates and bond equivalent yields negatively (positively) affect the value of SBA interest only strips. Management additionally considers whether the loans underlying related SBA-interest only strips are delinquent, in default or prepaying, and adjusts the fair value down 20 - 100% depending on the length of time in default.

Loans held-for-sale.held for sale. Foreclosure losses and prepayment rates are significant unobservable inputs used in the fair value measurement of FHN’s residential real estate loans held-for-sale.held for sale. Loss severity trends are also assessed to evaluate the reasonableness of fair value estimates resulting from discounted cash flows methodologies as well as to estimate fair value for newly repurchased loans and loans that are near foreclosure. Significant increases (decreases) in any of these inputs in isolation would result in significantly lower (higher) fair value measurements. All observable and unobservable inputs are re-assessed quarterly.

Increases (decreases) in estimated prepayment rates and bond equivalent yields negatively (positively) affect the value of unguaranteed interests in SBA loans. Unguaranteed interest in SBA loans held-for-saleheld for sale are carried at less than the outstanding balance due to credit risk estimates. Credit risk adjustments may be reduced if prepayment is likely or as consistent payment history is realized. Management also considers other factors such as delinquency or default and adjusts the fair value accordingly.

Loans held for investment. Constant prepayment rate, constant default rate and loss severity trends are significant unobservable inputs used in the fair value measurement of loans held for investment. Increases (decreases) in each of these inputs in isolation result in negative (positive) effects on the valuation of the associated loans.

Derivative liabilities. In conjunction with the sales of portions of its Visa Class B shares, FHN and the purchasers entered into derivative transactions whereby FHN will make, or receive, cash payments whenever the conversion ratio of the Visa Class B shares into Visa Class A shares is adjusted. FHN uses a discounted cash flow methodology in order to estimate the fair value of FHN’s derivative liabilities associated with its prior sales of Visa Class B shares. The methodology includes estimation of both the resolution amount for Visa’s Covered Litigation matters as well as the length of time until the resolution occurs. Significant increases (decreases) in either of these inputs in isolation would result in significantly higher (lower) fair value measurements for the derivative liabilities.
Additionally, FHN performs a probability weighted multiple resolution scenario to calculate the estimated fair value of these derivative liabilities. Assignment of higher (lower) probabilities to the larger potential resolution scenarios would result in an increase (decrease) in the estimated fair value of the derivative liabilities. Since this estimation process requires application of judgment in developing significant unobservable inputs used to determine the possible outcomes and the probability weighting assigned to each scenario, these derivatives have been classified within Level 3 in fair value measurements disclosures.
Loans net of unearned incomeand leases and Other Real Estate Owned. Collateral-dependent loans and OREO are primarily valued using appraisals based on sales of comparable properties in the same or similar markets. Other collateral (receivables, inventory, equipment, etc.) is valued through borrowing base certificates, financial statements and/or auction valuations. These valuations are discounted based on the quality of reporting, knowledge of the marketability/collectability of the collateral and historical disposition rates.
Other assets – tax credit investments. The estimated fair value of tax credit investments accounted for under the equity method is generally determined in relation to the yield (i.e., future tax credits to be received) an acquirer of these investments would expect in relation to the yields experienced on current new issue and/or secondary market transactions. Thus, as tax credits are recognized, the future yield to a market participant is reduced, resulting in consistent impairment of the individual investments. Individual investments are reviewed for impairment quarterly, which may include the consideration of additional marketability discounts related to specific investments which typically includes consideration of the underlying property’s appraised value.
Fair Value Option
FHN has elected the fair value option on a prospective basis for almostsubstantially all types of mortgage loans originated for sale purposes under the Financial Instruments Topic (“ASC 825”) except for mortgage origination operations which utilize the platform acquired from CBF. FHN determined that the election reduces certain timing differences and better matches changes in the value of such loans with changes in the value of derivatives and forward delivery commitments used as economic hedges for these assets at the time of election.
Repurchased loans relating to mortgage banking operations conducted prior to the IBKC merger are recognized within loans held-for-saleheld for sale at fair value at
FIRST HORIZON CORPORATION591Q21 FORM 10-Q REPORT

Note 17 – Fair Value of Assets and Liabilities (Continued)
the time of repurchase, which includes consideration of the credit status of the loans and the estimated liquidation value. FHN has elected to continue recognition of these loans at fair value in periods subsequent to reacquisition. Due to the credit-distressed nature of the vast majority of repurchased loans and the related loss severities experienced upon repurchase, FHN believes that the fair value election provides a more timely recognition of changes in value for these loans that occur subsequent to repurchase. Absent the fair value election, these loans would be subject to valuation at the LOCOM value, which would prevent subsequent
values from exceeding the initial fair value, determined at the time of repurchase, but would require recognition of subsequent declines in value. Thus, the fair value election provides for a more timely recognition of any potential future recoveries in asset values while not affecting the requirement to recognize subsequent declines in value.
FHN also has a portion of mortgage loans held for investment for which the fair value option was elected upon origination and which continue to be accounted for at fair value.


FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 68

Table of Contents

Note 16 – Fair Value of Assets & Liabilities (Continued)

The following tables reflect the differences between the fair value carrying amount of residential real estate loans held-for-saleheld for sale and held for investment measured at fair value in accordance with management’s election and the aggregate unpaid principal amount FHN is contractually entitled to receive at maturity.
 March 31, 2021
(Dollars in millions)Fair value
carrying
amount		Aggregate
unpaid
principal		Fair value carrying amount
less aggregate unpaid
principal
Residential real estate loans held for sale reported at fair value:
Total loans$449 $445 $4 
Nonaccrual loans2 5 (3)
Loans held for investment reported at fair value:
Total loans$17 $17 $0 
Nonaccrual loans1 1 0 
 December 31, 2020
(Dollars in millions)Fair value
carrying
amount		Aggregate
unpaid
principal		Fair value carrying amount
less aggregate unpaid
principal
Residential real estate loans held for sale reported at fair value:
Total loans$405 $442 $(37)
Nonaccrual loans2 5 (3)
Loans held for investment reported at fair value:
Total loans$16 $17 $(1)
Nonaccrual loans1 1 0 
  March 31, 2020
(Dollars in thousands) 
Fair value
carrying
amount
 
Aggregate
unpaid
principal
 
Fair value carrying amount
less aggregate unpaid
principal
Residential real estate loans held-for-sale reported at fair value:      
Total loans $13,584
 $18,546
 $(4,962)
Nonaccrual loans 3,181
 6,069
 (2,888)
Loans 90 days or more past due and still accruing 190
 268
 (78)
  December 31, 2019
(Dollars in thousands) 
Fair value
carrying
amount
 
Aggregate
unpaid
principal
 
Fair value carrying amount
less aggregate unpaid
principal
Residential real estate loans held-for-sale reported at fair value:      
Total loans $14,033
 $19,278
 $(5,245)
Nonaccrual loans 3,532
 6,646
 (3,114)
Loans 90 days or more past due and still accruing 163
 268
 (105)


Assets and liabilities accounted for under the fair value election are initially measured at fair value with subsequent changes in fair value recognized in earnings. Such changes in the fair value of assets and liabilities for which FHN elected the fair value option are included in current period earnings with classification in the income statement line item reflected in the following table:
 Three Months Ended
March 31,
(Dollars in millions)20212020
Changes in fair value included in net income:
Mortgage banking noninterest income
Loans held for sale$(9)$0 
 Three Months Ended
March 31
(Dollars in thousands)2020 2019
Changes in fair value included in net income:   
Mortgage banking noninterest income   
Loans held-for-sale$329
 $495


FIRST HORIZON CORPORATION601Q21 FORM 10-Q REPORT
Table of Contents

Note 17 – Fair Value of Assets and Liabilities (Continued)
For the three months ended March 31, 2019,2021 and 2020, the amount for residential real estate loans held-for-saleheld for sale included a gainan insignificant amount of $.3 milliongains in pretax earnings that is attributable to changes in instrument-specific credit risk. For the three months ended March 31, 2020 this amount was not material. The portion of the fair value adjustments related to credit risk was determined based on estimated default rates and estimated loss severities. Interest income on residential real estate loans held-for-saleheld for sale measured at fair value is calculated based on the note rate of the loan and is recorded in the interest income section of the Consolidated Condensed Statements of Income as interest on loans held-for-sale.held for sale.
FHN has elected to account for retained interest-only strips from guaranteed SBA loans recorded in available-for-sale securities at fair value through earnings. Since these securities are subject to the risk that prepayments may result in FHN not recovering all or a portion of its recorded investment, the fair value election results in a more timely recognition of the effects of estimated prepayments
through earnings rather than being recognized through other comprehensive income with periodic review for
other-than-temporary impairment. Gains or losses are recognized through fixed income revenues and are presented in the recurring measurements table.
Determination of Fair Value
In accordance with ASC 820-10-35, fairFair values are based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following describes the assumptions and methodologies used to estimate the fair value of financial instruments recorded at fair value in the Consolidated Condensed Statements of ConditionBalance Sheets and for estimating the fair value of financial instruments for which fair value is disclosed under ASC 825-10-50.disclosed.
Short-term financial assets. Federal funds sold, securities purchased under agreements to resell, and interest bearing deposits with other financial institutions and the Federal Reserve are carried at historical cost. The carrying amount is a reasonable estimate of fair value because of the relatively short time between the origination of the instrument and its expected realization.


FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 69

Table of Contents

Note 16 – Fair Value of Assets & Liabilities (Continued)

Trading securities and trading liabilities. Trading securities and trading liabilities are recognized at fair value through current earnings. Trading inventory held for broker-dealer operations is included in trading securities and trading liabilities. Broker-dealer long positions are valued at bid price in the bid-ask spread. Short positions are valued at the ask price. Inventory positions are valued using observable inputs including current market transactions, LIBOR and U.S. treasury curves,
benchmark yields, credit spreads, and consensus prepayment speeds. Trading loans are valued using observable inputs including current market transactions, swap rates, mortgage rates, and consensus prepayment speeds.
Trading securities also include retained interests in prior mortgage securitizations that qualify as financial assets, which include primarily principal-only strips. FHN uses inputs including yield curves, credit spreads, and prepayment speeds to determine the fair value of principal-only strips.
Securities available-for-sale.available for sale. Securities available-for-sale includes the investment portfolio accounted for as available-for-sale under ASC 320-10-25. Valuations of available-for-sale securities are performed using observable inputs obtained from market transactions in similar securities. Typical inputs include LIBOR and U.S. treasury curves,benchmark yields, consensus prepayment estimates,speeds, and credit spreads. When available,Trades from similar securities and broker quotes are used to support these valuations.
Interest only strips are valued at elected fair value based on an income approach using an internal valuation model. The internal valuation model includes assumptions regarding projections of future cash flows, prepayment rates, default rates and interest only strip terms. These securities bear the risk of loan prepayment or default that may result in the CompanyFHN not recovering all or a portion of its recorded investment. When appropriate, valuations are adjusted for various factors including default or prepayment status of the underlying SBA loans. Because of the inherent uncertainty of valuation, those estimated values may be higher or lower than the values that would have been used had a ready market for the securities existed, and may change in the near term.
Loans held-for-sale.held for sale. Residential real estateFHN determines the fair value of loans held-for-saleheld for sale using either current transaction prices or discounted cash flow models. Fair values are valueddetermined using current transaction prices and/or values on similar assets when available, including committed bids for specific loans or loan portfolios. Uncommitted bids may be adjusted based on other available market information. For all other loans FHN determines the fair
Fair value of residential real estate loans held-for-saleheld for sale determined using a discounted cash flow model which incorporates both observable and unobservable inputs. Inputs in the discounted cash flow model include current mortgage rates for similar products, estimated prepayment rates, foreclosure losses, and various loan performance measures (delinquency, LTV, credit score). Adjustments for delinquency and other differences
in loan characteristics are typically reflected in the model’s discount rates. Loss severity trends and the value of underlying collateral are also considered in assessing the appropriate fair value for severely delinquent loans and loans in foreclosure. The valuation of HELOCs also incorporates estimated cancellation rates for loans expected to become delinquent.

FIRST HORIZON CORPORATION611Q21 FORM 10-Q REPORT
Table of Contents

Note 17 – Fair Value of Assets and Liabilities (Continued)
Non-mortgage consumer loans held-for-saleheld for sale are valued using committed bids for specific loans or loan portfolios or current market pricing for similar assets with adjustments for differences in credit standing (delinquency, historical default rates for similar loans), yield, collateral values and prepayment rates. If pricing for similar assets is not available, a discounted cash flow methodology is utilized, which incorporates all of these factors into an estimate of investor required yield for the discount rate.
The CompanyFHN utilizes quoted market prices of similar instruments or broker and dealer quotations to value the SBA and USDA guaranteed loans. The CompanyFHN values SBA-unguaranteed interests in loans held-for-saleheld for sale based on individual loan characteristics, such as industry type and pay history which generally follows an income approach. Furthermore, these valuations are adjusted for changes in prepayment estimates and are reduced due to restrictions on trading. The fair value of other non-residential real estate loans held-for-saleheld for sale is approximated by their carrying values based on current transaction values.
Collateral-Dependent loans.Mortgage loans held for investment at fair value option. The fair value of mortgage loans held for investment at fair value option is determined by a third party using a discounted cash flow model using various assumptions about future loan performance (constant prepayment rate, constant default rate and loss severity trends) and market discount rates.
Loans held for investment. The fair values of mortgage loans are estimated using an exit price methodology that is based on present values using the interest rate that would be charged for a similar loan to a borrower with similar risk, weighted for varying maturity dates and adjusted for a liquidity discount based on the estimated time period to complete a sale transaction with a market participant.
Other loans and leases are valued based on present values using the interest rate that would be charged for a similar instrument to a borrower with similar risk, applicable to each category of instruments, and adjusted for a liquidity discount based on the estimated time period to complete a sale transaction with a market participant.
For loans measured using the estimated fair value of collateral less costs to sell, fair value is estimated using appraisals of the collateral. Collateral values are monitored and additional write-downs are recognized if it is determined that the estimated collateral values have declined further. Estimated costs to sell are based on current amounts of disposal costs for similar assets. Carrying value is considered to reflect fair value for these loans.
Derivative assets and liabilities. The fair value for forwards and futures contracts is based on current transactions involving identical securities. Futures contracts are exchange-traded and thus have no credit risk factor assigned as the risk of non-performance is limited to the clearinghouse used.
Valuations of other derivatives (primarily interest rate related swaps)contracts) are based on inputs observed in active markets for similar instruments. TypicalTypically inputs include the LIBOR curve, Overnight Indexed Swap (“OIS”) curve,benchmark yields, option volatility and option skew. Starting in October 2020, centrally cleared derivatives are discounted using SOFR as required by clearinghouses. In measuring the fair value of these derivative assets and liabilities, FHN has elected to consider credit risk based on the net exposure to individual counterparties. Credit risk is mitigated for these instruments through the use of mutual margining and master netting agreements as well as collateral posting requirements. For derivative contracts with daily cash margin requirements that are considered settlements, the


FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 70

Table of Contents

Note 16 – Fair Value of Assets & Liabilities (Continued)

daily margin amount is netted within derivative assets or liabilities. Any remaining credit risk related to interest rate derivatives is considered in determining fair value through evaluation of additional factors such as customerclient loan grades and debt ratings. Foreign currency related derivatives also utilize observable exchange rates in the determination of fair value. The determination of fair value for FHN’s derivative liabilities associated with its prior sales of Visa Class B shares are classified within Level 3 in the fair value measurements disclosure as previously discussed in the unobservable inputs discussion.
The fair value of risk participations is determined in reference to the fair value of the related derivative contract between the borrower and the lead bank in the participation structure, which is determined consistent with the valuation process discussed above. This value is adjusted for the pro rata portion of the reference derivative’s notional value and an assessment of credit risk for the referenced borrower.
OREO. OREO primarily consists of properties that have been acquired in satisfaction of debt. These properties are carried at the lower of the outstanding loan amount or estimated fair value less estimated costs to sell the real estate. Estimated fair value is determined using appraised values with subsequent adjustments for deterioration in values that are not reflected in the most recent appraisal.
Other assets. For disclosure purposes, other assets consist of tax credit investments, FRB and FHLB Stock, deferred compensation mutual funds and equity investments (including other mutual funds) with readily determinable fair values. Tax credit
FIRST HORIZON CORPORATION621Q21 FORM 10-Q REPORT
Table of Contents

Note 17 – Fair Value of Assets and Liabilities (Continued)
investments accounted for under the equity method are written down to estimated fair value quarterly based on the estimated value of the associated tax credits which incorporates estimates of required yield for hypothetical investors. The fair value of all other tax credit investments is estimated using recent transaction information with adjustments for differences in individual investments. Deferred compensation mutual funds are recognized at fair value, which is based on quoted prices in active markets.
Investments in the stock of the Federal Reserve Bank and Federal Home Loan Banks are recognized at historical cost in the Consolidated Condensed Statements of ConditionBalance Sheets which is considered to approximate fair value. Investments in mutual funds are measured at the funds’ reported closing net asset values. Investments in equity securities are valued using quoted market prices when available.
Defined maturity deposits. The fair value of these deposits is estimated by discounting future cash flows to their present value. Future cash flows are discounted by using the current market rates of similar instruments applicable to the remaining maturity. For disclosure purposes, defined maturity deposits include all time deposits.
Short-term financial liabilities. The fair value of federal funds purchased, securities sold under agreements to repurchase and other short-term borrowings are approximated by the book value. The carrying amount is a reasonable estimate of fair value because of the relatively short time between the origination of the instrument and its expected realization.
Loan commitments. Fair values of these commitments are based on fees charged to enter into similar agreements taking into account the remaining terms of the agreements and the counterparties’ credit standing.
Other commitments. Fair values of these commitments are based on fees charged to enter into similar agreements.
The following fair value estimates are determined as of a specific point in time utilizing various assumptions and estimates. The use of assumptions and various valuation techniques, as well as the absence of secondary markets for certain financial instruments, reduces the comparability of fair value disclosures between financial institutions. Due to market illiquidity, the fair values for loans net of unearned income,and leases, loans held-for-sale,held for sale, and term borrowings as of March 31, 20202021 and December 31, 2019,2020, involve the use of significant internally-developed pricing assumptions for certain components of these line items. The assumptions and valuations utilized for this disclosure are considered to reflect inputs that market participants would use in transactions involving these instruments as of the measurement date. The valuations of legacy assets, particularly consumer loans within the Non-Strategic segment and TRUPS loans within the Corporate segment, are influenced by changes in economic conditions since origination and risk perceptions of the financial sector. These considerations affect the estimate of a potential acquirer’s cost of capital and cash flow volatility assumptions from these assets and the resulting fair value measurements may depart significantly from FHN’s internal estimates of the intrinsic value of these assets.
Assets and liabilities that are not financial instruments have not been included in the following table such as the value of long-term relationships with deposit and trust customers,clients, premises and equipment, goodwill and other intangibles, deferred taxes, and certain other assets and other liabilities. Additionally, these measurements are solely for financial instruments as of the measurement date and do not consider the earnings potential of our various business lines. Accordingly, the total of the fair value amounts does not represent, and should not be construed to represent, the underlying value of FHN.













FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 71

FIRST HORIZON CORPORATION631Q21 FORM 10-Q REPORT

Note 1617 – Fair Value of Assets &and Liabilities (Continued)

The following table summarizestables summarize the book value and estimated fair value of financial instruments recorded in the Consolidated Condensed Statements of ConditionBalance Sheets as of March 31, 2021 and December 31, 2020:
March 31, 2021
 Book
Value		Fair Value
(Dollars in millions)Level 1Level 2Level 3Total
Assets:
Loans and leases, net of allowance for loan and lease losses
Commercial:
Commercial, financial and industrial$33,509 $0 $0 $33,249 $33,249 
Commercial real estate12,238 0 0 12,265 12,265 
Consumer:
Consumer real estate10,831 0 0 11,283 11,283 
Credit card and other1,108 0 0 1,134 1,134 
Total loans and leases, net of allowance for loan and lease losses57,686 0 0 57,931 57,931 
Short-term financial assets:
Interest-bearing deposits with banks11,635 11,635 0 0 11,635 
Federal funds sold463 0 463 0 463 
Securities purchased under agreements to resell57 0 57 0 57 
Total short-term financial assets12,155 11,635 520 0 12,155 
Trading securities (a)1,076 0 1,076 0 1,076 
Loans held for sale:
Mortgage loans (elected fair value) (a)449 0 437 12 449 
USDA & SBA loans - LOCOM300 0 299 1 300 
Other loans - LOCOM4 0 4 0 4 
Mortgage loans - LOCOM58 0 0 58 58 
Total loans held for sale811 0 740 71 811 
Securities available for sale (a)8,351 0 8,329 22 8,351 
Derivative assets (a)561 145 416 0 561 
Other assets:
Tax credit investments410 0 0 400 400 
Deferred compensation mutual funds122 122 0 0 122 
Equity, mutual funds, and other (b)262 25 0 237 262 
Total other assets794 147 0 637 784 
Total assets$81,434 $11,927 $11,081 $58,661 $81,669 
Liabilities:
Defined maturity deposits$4,653 $0 $4,664 $0 $4,664 
Trading liabilities (a)454 0 454 0 454 
Short-term financial liabilities:
Federal funds purchased982 0 982 0 982 
Securities sold under agreements to repurchase1,098 0 1,098 0 1,098 
Other short-term borrowings122 0 122 0 122 
Total short-term financial liabilities2,202 0 2,202 0 2,202 
Term borrowings:
Real estate investment trust-preferred46 0 0 47 47 
Term borrowings—new market tax credit investment45 0 0 45 45 
Secured borrowings15 0 0 15 15 
Junior subordinated debentures239 0 0 237 237 
Other long term borrowings1,326 0 1,462 0 1,462 
Total term borrowings1,671 0 1,462 344 1,806 
Derivative liabilities (a)265 116 130 21 267 
Total liabilities$9,245 $116 $8,912 $365 $9,393 
(a)
  March 31, 2020
  
Book
Value
 Fair Value
(Dollars in thousands) 
  Level 1 Level 2 Level 3 Total
Assets:          
Loans, net of unearned income and allowance for loan losses          
Commercial:          
Commercial, financial and industrial $21,869,914
 $—
 $—
 $22,072,783
 $22,072,783
Commercial real estate 4,592,067
 —
 —
 4,624,811
 4,624,811
Consumer:          
Consumer real estate (a) 5,996,361
 —
 —
 6,141,872
 6,141,872
Credit card & other 475,471
 —
 —
 481,763
 481,763
Total loans, net of unearned income and allowance for loan losses 32,933,813
 —
 —
 33,321,229
 33,321,229
Short-term financial assets:          
Interest-bearing cash 670,525
 670,525
 —
 —
 670,525
Federal funds sold 30,050
 —
 30,050
 —
 30,050
Securities purchased under agreements to resell 562,435
 —
 562,435
 —
 562,435
Total short-term financial assets 1,263,010
 670,525
 592,485
 —
 1,263,010
Trading securities (b) 1,877,514
 —
 1,876,729
 785
 1,877,514
Loans held-for-sale          
Mortgage loans (elected fair value) (b) 13,584
 —
 —
 13,584
 13,584
USDA & SBA loans- LOCOM 494,766
 —
 497,071
 905
 497,976
Other consumer loans- LOCOM 4,940
 —
 4,940
 —
 4,940
Mortgage loans- LOCOM 82,311
 —
 —
 82,311
 82,311
Total loans held-for-sale 595,601
 —
 502,011
 96,800
 598,811
Securities available-for-sale (b) 4,544,907
 —
 4,521,803
 23,104
 4,544,907
Securities held-to-maturity 10,000
 —
 —
 9,824
 9,824
Derivative assets (b) 696,250
 165,516
 530,454
 280
 696,250
Other assets:          
Tax credit investments 250,596
 —
 —
 249,450
 249,450
Deferred compensation mutual funds 41,666
 41,666
 —
 —
 41,666
Equity, mutual funds, and other (c) 715,549
 22,833
 —
 692,716
 715,549
Total other assets 1,007,811
 64,499
 —
 942,166
 1,006,665
Total assets $42,928,906
 $900,540
 $8,023,482
 $34,394,188
 $43,318,210
Liabilities:          
Defined maturity deposits $3,058,198
 $—
 $3,105,082
 $—
 $3,105,082
Trading liabilities (b) 452,611
 —
 452,611
 —
 452,611
Short-term financial liabilities:          
Federal funds purchased 476,013
 —
 476,013
 —
 476,013
Securities sold under agreements to repurchase 788,595
 —
 788,595
 —
 788,595
Other short-term borrowings 4,060,673
 —
 4,060,673
 —
 4,060,673
Total short-term financial liabilities 5,325,281
 —
 5,325,281
 —
 5,325,281
Term borrowings:          
Real estate investment trust-preferred 46,253
 —
 —
 47,000
 47,000
Secured borrowings 17,315
 —
 —
 17,315
 17,315
Junior subordinated debentures 144,928
 —
 —
 129,200
 129,200
Other long term borrowings 584,255
 —
 560,530
 —
 560,530
Total term borrowings 792,751
 —
 560,530
 193,515
 754,045
Derivative liabilities (b) 234,984
 171,604
 42,210
 21,170
 234,984
Total liabilities $9,863,825
 $171,604
 $9,485,714
 $214,685
 $9,872,003
Classes are detailed in the recurring and nonrecurring measurement tables.
(b)Level 1 primarily consists of mutual funds with readily determinable fair values. Level 3 includes restricted investments in FHLB-Cincinnati stock of $34 million and FRB stock of $202 million.
(a)FIRST HORIZON CORPORATIONIn first quarter 2020, the Permanent Mortgage portfolio was combined into Consumer Real Estate portfolio, all prior periods were revised for comparability.641Q21 FORM 10-Q REPORT
(b)Classes are detailed in the recurring and nonrecurring measurement tables.
(c)Level 1 primarily consists of mutual funds with readily determinable fair values. Level 3 includes restricted investments in FHLB-Cincinnati stock of $562.0 million and FRB stock of $130.7 million.


FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 72


Note 1617 – Fair Value of Assets &and Liabilities (Continued)

 December 31, 2020
 Book
Value		Fair Value
(Dollars in millions)Level 1Level 2Level 3Total
Assets:
Loans and leases and allowance for loan and lease losses
Commercial:
Commercial, financial and industrial$32,651 $0 $0 $32,582 $32,582 
Commercial real estate12,033 0 0 12,079 12,079 
Consumer:
Consumer real estate11,483 0 0 11,903 11,903 
Credit card and other1,102 0 0 1,131 1,131 
Total loans and leases, net of allowance for loan and lease losses57,269 0 0 57,695 57,695 
Short-term financial assets:
Interest-bearing deposits with banks8,351 8,351 0 0 8,351 
Federal funds sold65 0 65 0 65 
Securities purchased under agreements to resell380 0 380 0 380 
Total short-term financial assets8,796 8,351 445 0 8,796 
Trading securities (a)1,176 0 1,176 0 1,176 
Loans held for sale:
Mortgage loans (elected fair value) (a)405 0 393 12 405 
USDA & SBA loans - LOCOM509 0 511 1 512 
Other loans - LOCOM31 0 31 0 31 
Mortgage loans - LOCOM77 0 0 77 77 
Total loans held for sale1,022 0 935 90 1,025 
Securities available for sale (a) 8,047 0 8,015 32 8,047 
Derivative assets (a)770 63 706 0 769 
Other assets:
Tax credit investments400 0 0 371 371 
Deferred compensation mutual funds118 118 0 0 118 
Equity, mutual funds, and other (b)288 25 0 263 288 
Total other assets806 143 0 634 777 
Total assets$77,886 $8,557 $11,277 $58,451 $78,285 
Liabilities:
Defined maturity deposits$5,070 $0 $5,083 $0 $5,083 
Trading liabilities (a)353 0 353 0 353 
Short-term financial liabilities:
Federal funds purchased845 0 845 0 845 
Securities sold under agreements to repurchase1,187 0 1,187 0 1,187 
Other short-term borrowings166 0 166 0 166 
Total short-term financial liabilities2,198 0 2,198 0 2,198 
Term borrowings:
Real estate investment trust-preferred46 0 0 47 47 
Term borrowings—new market tax credit investment45 0 0 45 45 
Secured borrowings15 0 0 15 15 
Junior subordinated debentures238 0 0 223 223 
Other long term borrowings1,326 0 1,455 0 1,455 
Total term borrowings1,670 0 1,455 330 1,785 
Derivative liabilities (a)149 71 64 14 149 
Total liabilities$9,440 $71 $9,153 $344 $9,568 
The following table summarizes the book value and estimated fair value of financial instruments recorded(a)Classes are detailed in the Consolidated Statementsrecurring and nonrecurring measurement tables.
(b)Level 1 primarily consists of Condition asmutual funds with readily determinable fair values. Level 3 includes restricted investments in FHLB-Cincinnati stock of December 31, 2019: $61 million and FRB stock of $202 million.



  December 31, 2019
  
Book
Value
 Fair Value
(Dollars in thousands)  Level 1 Level 2 Level 3 Total
Assets:          
Loans, net of unearned income and allowance for loan losses          
Commercial:          
Commercial, financial and industrial $19,928,605
 $—
 $—
 $20,096,397
 $20,096,397
Commercial real estate 4,300,905
 —
 —
 4,300,489
 4,300,489
Consumer:          
Consumer real estate 6,148,696
 —
 —
 6,334,187
 6,334,187
Credit card & other 482,598
 —
 —
 487,079
 487,079
Total loans, net of unearned income and allowance for loan losses 30,860,804
 —
 —
 31,218,152
 31,218,152
Short-term financial assets:          
Interest-bearing cash 482,405
 482,405
 —
 —
 482,405
Federal funds sold 46,536
 —
 46,536
 —
 46,536
Securities purchased under agreements to resell 586,629
 —
 586,629
 —
 586,629
Total short-term financial assets 1,115,570
 482,405
 633,165
 —
 1,115,570
Trading securities (a) 1,346,207
 —
 1,345,266
 941
 1,346,207
Loans held-for-sale          
Mortgage loans (elected fair value) (a) 14,033
 —
 —
 14,033
 14,033
USDA & SBA loans- LOCOM 493,525
 —
 495,323
 947
 496,270
Other consumer loans- LOCOM 5,197
 —
 5,197
 —
 5,197
Mortgage loans- LOCOM 81,035
 —
 —
 81,035
 81,035
Total loans held-for-sale 593,790
 —
 500,520
 96,015
 596,535
Securities available-for-sale (a)  4,445,403
 —
 4,426,267
 19,136
 4,445,403
Securities held-to-maturity 10,000
 —
 —
 10,001
 10,001
Derivative assets (a) 183,115
 20,640
 162,475
 —
 183,115
Other assets:          
Tax credit investments 247,075
 —
 —
 244,755
 244,755
Deferred compensation assets 46,815
 46,815
 —
 —
 46,815
Equity, mutual funds, and other (b) 229,352
 22,643
 —
 206,709
 229,352
Total other assets 523,242
 69,458
 —
 451,464
 520,922
Total assets $39,078,131
 $572,503
 $7,067,693
 $31,795,709
 $39,435,905
Liabilities:          
Deposits:          
Defined maturity $3,618,337
 $—
 $3,631,090
 $—
 $3,631,090
Trading liabilities (a) 505,581
 —
 505,581
 —
 505,581
Short-term financial liabilities:          
Federal funds purchased 548,344
 —
 548,344
 —
 548,344
Securities sold under agreements to repurchase 716,925
 —
 716,925
 —
 716,925
Other short-term borrowings 2,253,045
 —
 2,253,045
 —
 2,253,045
Total short-term financial liabilities 3,518,314
 —
 3,518,314
 —
 3,518,314
Term borrowings:          
Real estate investment trust-preferred 46,236
 —
 —
 47,000
 47,000
Secured Borrowings 21,975
 —
 —
 21,975
 21,975
Junior subordinated debentures 144,593
 —
 —
 142,375
 142,375
Other long term borrowings 578,564
 —
 574,287
 —
 574,287
Total term borrowings 791,368
 —
 574,287
 211,350
 785,637
Derivative liabilities (a) 67,480
 19,807
 24,878
 22,795
 67,480
Total liabilities $8,501,080
 $19,807
 $8,254,150
 $234,145
 $8,508,102
Certain previously reported amounts have been reclassified to agree with current presentation.
(a)FIRST HORIZON CORPORATIONClasses are detailed in the recurring and nonrecurring measurement tables.651Q21 FORM 10-Q REPORT
(b)Level 1 primarily consists of mutual funds with readily determinable fair values. Level 3 includes restricted investments in FHLB-Cincinnati stock of $76.0 million and FRB stock of $130.7 million.



FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 73


Note 1617 – Fair Value of Assets &and Liabilities (Continued)

The following table presents the contractual amount and fair value of unfunded loan commitments and standby and other commitments as of March 31, 20202021 and December 31, 2019:2020:
 Contractual AmountFair Value
(Dollars in millions)March 31, 2021December 31, 2020March 31, 2021December 31, 2020
Unfunded Commitments:
Loan commitments$20,881 $20,796 $1 $2 
Standby and other commitments720 751 6 6 
  Contractual Amount Fair Value
(Dollars in thousands) March 31, 2020 December 31, 2019 March 31, 2020 December 31, 2019
Unfunded Commitments:        
Loan commitments $10,966,768
 $12,355,220
 $2,909
 $3,656
Standby and other commitments 455,028
 459,268
 6,211
 5,513
FIRST HORIZON CORPORATION661Q21 FORM 10-Q REPORT



FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 74


Note 17 – Restructuring, Repositioning, and Efficiency
Beginning in 2019, FHN initiated a company-wide review of business practices with the goal of optimizing its expense base to improve profitability and create capacity to reinvest savings into technology and revenue production activities. Restructuring, repositioning, and efficiency charges related to these corporate-driven actions were not significant in first quarter 2020 and were $12.2 million in first quarter 2019 and are included in the Corporate segment. Significant expenses resulted from the following actions:


Severance and other employee costs primarily related to efficiency initiatives within corporate and bank services functions which are classified as Employee compensation, incentives and benefits within noninterest expense.
Expense largely related to the identification of efficiency opportunities within the organization which is reflected in Professional fees.
Settlement of the obligations arising from current initiatives will be funded from operating cash flows.
Total expense recognized for the three months ended March 31, 2020 and 2019 is presented in the table below:

  Three Months Ended
March 31
Dollars in thousands 2020 2019
Employee compensation, incentives and benefits $57
 $6,505
Professional fees 7
 4,295
Occupancy 2
 817
Other (103) 535
Total restructuring and repositioning charges $(37) $12,152



FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 75


Note 18 – Other Events

Issuance of Series F Preferred Stock

On May 3, 2021, FHN issued 1,500 shares having an aggregate liquidation preference of $150 million of Series F Non-Cumulative Perpetual Preferred Stock for net proceeds of approximately $146 million. Dividends on the Series F Preferred Stock, if declared, accrue and are payable quarterly, in arrears, at a rate of 4.70% per annum. For the issuance, FHN issued depositary shares, each of which represents a fractional ownership interest in a share of FHN's preferred stock.


In April 2020, First Horizon Bank issued $450 million of 5.750% Subordinated Notes due May 1, 2030. Interest payments are due semi-annually on May 1 and November 1, commencing November 1, 2020. The sale of the Notes resulted in net proceeds to the Company of approximately $446 million.


FIRST HORIZON CORPORATION671Q21 FORM 10-Q REPORT

FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 76



Item 2.     Management's Discussion and Analysis of Financial Condition and Results of Operations
---------------------------
ITEM 2. MANAGEMENT’S DISCUSSION AND
ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
---------------------------

TABLE OF ITEM 2 TOPICS
7869
8070
8171
8877
9178
9488
10691
11195
11296
11597
11598



FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 77



FIRST HORIZON CORPORATION681Q21 FORM 10-Q REPORT

General Information
General Information
INTRODUCTION
First Horizon National Corporation (“FHN”) began as(FHN) is a community bank charteredfinancial holding company headquartered in 1864. FHN's sole class of common stock, $.625 par value, is listed and trades on the New York Stock Exchange LLC under the symbol FHN.
Memphis, Tennessee. FHN is the parent company ofprovides diversified financial services primarily through it principal subsidiary, First Horizon Bank. First Horizon Bank's principal divisions and subsidiaries operate under the brands of First Horizon Bank, IBERIABANK, First Horizon Advisors, and FHN Financial. FHN offers regional banking, mortgage lending, title insurance, specialized commercial lending, commercial leasing and equipment financing, brokerage, wealth management and capital market services through the First Horizon family of companies. First Horizon Bank and First Horizon Advisors provide consumer and commercial banking and wealth management services. FHN Financial, which operates partly through a division of First Horizon Bank and partly through subsidiaries, is an industry leader in fixed income sales, trading, and strategies for institutional clients in the U.S. and abroad. First Horizon Bank has over 270490 banking offices in seven southeastern U.S.12 states and FHN Financial has 29 offices in 18 states across the U.S.
Segments
In addition, FHN is composed of the following operating segments:
Regional banking segment offers financial products andhas 29 title services including traditional lending and deposit taking, to consumer and commercial customers primarily in the southeast U.S. and other selected markets. Regional banking also provides investments, wealth management, financial planning, trust services and asset management, mortgage banking, credit card, and cash management. Additionally, the regional banking segment includes correspondent banking which provides credit, depository, and other banking related services to other financial institutions nationally.
Fixed income segment consists of fixed income securities sales, trading, underwriting, and strategies for institutional clients in the U.S. and abroad, as well as loan sales, portfolio advisory services, and derivative sales.
Corporate segment consists of unallocated corporate expenses, expense on subordinated debt issuances, bank-owned life insurance, unallocated interest income associated with excess equity, net impact of raising incremental capital, revenue and expense associated with deferred compensation plans, funds management, tax credit investment activities, derivative valuation adjustments related to prior sales of Visa Class B shares, gain/(loss) on extinguishment of debt, acquisition- and integration-related costs, expenses associated with
rebranding initiatives, and various charges related to restructuring, repositioning, and efficiency efforts.
Non-strategic segment consists of run-off consumer lending activities, pre-2009 mortgage banking elements, and the associated ancillary revenues and expenses related to these businesses. Non-strategic also includes the wind-down trust preferred loan portfolio and exited businesses.

Significant Pending Transactions
On November 4, 2019, FHN and IBERIABANK Corporation ("IBKC") announced that they had entered into an agreement and plan of merger under which IBKC will merge with FHN in a merger-of-equals transaction. IBKC, headquartered in Lafayette, Louisiana, has 319 offices in 12three states mostlyand 15 stand-alone mortgage lending offices in the southern and southeastern U.S., and has reported $32.2 billion of total assets, $24.5 billion in loans, and $25.5 billion in deposits, at March 31, 2020. IBKC's common stock is listed on The NASDAQ Stock Market, LLC under the symbol IBKC. Under the merger agreement, each share of IBKC common stock will be converted into 4.584 shares of FHN common stock. After closing, FHN expects IBKC common shares will be converted into approximately 44 percent of the then-outstanding shares of FHN common stock. The merger agreement requires FHN to expand its board of directors to seventeen persons; after closing, eight board positions will be held by current IBKC directors, and nine will be held by current FHN directors. FHN expects the transaction to close in second quarter, subject to regulatory approvals and other customary closing conditions.seven states.
On November 8, 2019, FHN announced an agreement for First Horizon Bank to purchase 30 branches from SunTrust Bank in conjunction with SunTrust Banks, Inc.'s merger with BB&T Corporation, which created Truist Financial Corp. As part of the agreement, FHN will assume approximately $2.4 billion of branch deposits for a 3.40 percent deposit premium and purchase approximately $410 million of branch loans. The branches are in communities in North Carolina (20 branches), Virginia (8 branches), and Georgia (2 branches). FHN expects the purchase to close in third quarter 2020, subject to customary closing conditions.
In second quarter 2019, FHN sold a subsidiary acquired as part of the Capital Bank Financial Corporation ("CBF") merger (in 2017), that did not fit within FHN's risk profile. The sale resulted in the removal of approximately $25 million UPB of subprime consumer loans from Loans held-for-sale on FHN's Consolidated Condensed Statements of Condition.
In relation to all acquisitions, FHN's operating results include the operating results of the acquired assets and


FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 78



assumed liabilities subsequent to the acquisition date. Refer to Note 2 – Acquisitions and Divestitures in this report and in Item 7 to FHN’s Annual Report on Form 10-K for the year ended December 31, 2019 for additional information.
For the purpose of this management’s discussion and analysis (“This MD&A”), earning assets have been expressed as averages, unless otherwise noted, and loans have been disclosed net of unearned income. The following financial discussion&A should be read in conjunction with the accompanying unaudited Consolidated Condensed Financial Statements and Notes to Consolidated Financial Statements in Part I, Item 1, as well as other information contained in this report. Additional information including the 2019 financial statements, notes,document and MD&A is provided in Item 7 and 8 to FHN’sFHN's 2020 Annual Report on Form 10-K for the year ended December 31, 2019.10-K.
ADOPTION OF ACCOUNTING UPDATESRecent Events
Merger of Equals
Effective JanuaryOn July 1, 2020, FHN adopted ASU 2016-13, "Measurementcompleted its merger of Credit Losses on Financial Instruments," (CECL); which resulted in a $106.4 million increaseequals with IBERIABANK Corporation. Reported results for FHN reflect legacy FHN prior to the allowance for loan losses ("ALLL")completion of the merger and a $24.0 million increase toresults from both FHN and IBKC from the reserve for unfunded commitments, resulting in a $96.1 million decrease of retained earnings (net of taxes). See Note 1– Financial Information for additional information.
Non-GAAP Measures
Certain measures are included in the narrative and tablesmerger closing date forward. As such, comparative income statement data in this MD&A that are “non-GAAP”, meaning (underfor the first quarter of 2020 is only for legacy FHN.
COVID-19 Pandemic
Government and societal reaction to the COVID-19 pandemic caused extraordinary disruption to the U.S. financial reporting rules) they are not presented in accordance with generally accepted accounting principles (“GAAP”)economy, as well as to the local economies within
FHN's footprint, during the final three quarters of 2020 and continuing into the first quarter of 2021. Business activity, especially lending, declined throughout 2020 and into first quarter this year. In certain business lines, FHN reduced or stopped new lending because of the pandemic.
In the fourth quarter of 2020, two extremely effective vaccines were approved in the U.S. Administration of those vaccines began late in 2020, nationwide but on a narrowly targeted basis. In the first quarter of 2021, vaccine production and also are not codifieddistribution increased, and a third vaccine was approved in the U.S. banking regulations currently applicablePublic vaccination in the U.S. has accelerated during the first four months of 2021. In many of FHN's markets, COVID-19 restrictions at least partially were eased by the end of March or during April, and FHN believes further easing is likely in the rest of 2021. COVID-19 restrictions still had a substantial impact on FHN and its clients in the first quarter of 2021, but FHN expects those impacts to FHN.













Although other entities may use calculation methods that differ from those used by FHN for non-GAAP measures, FHN’s management believes such measures are relevant to understandingdiminish over the capital position or financial resultsrest of FHN. Non-GAAP measures are reported to FHN’s management and Board of Directors through various internal reports.
Presentation of regulatory measures, even those which are not GAAP, provide a meaningful base for comparability to other financial institutions subject to the same regulations as FHN, as demonstrated by their use by banking regulators in reviewing capital adequacy of financial institutions. Although not GAAP terms, these regulatory measures are not considered “non-GAAP” under U.S. financial reporting rules as long as their presentation conforms to regulatory standards.
Regulatory measures used in this MD&A include: common equity tier 1 capital, generally defined as common equity less goodwill, other intangibles, and certain other required regulatory deductions; tier 1 capital, generally definedyear as the sum of core capital (including common equity and instruments that cannot be redeemed at the optionvaccinated percentage of the holder) adjustedU.S. population continues to climb. Within the U.S. economy, broadly speaking, manufacturing has largely recovered while services continue to lag significantly, especially in hospitality and leisure.
Risk of resurgence remains as new virus variants continue to be identified around the world. As a result, FHN continues to closely monitor the pandemic and its effects on clients, especially credit quality, on FHN's communities, and on the financial markets. FHN continues to reach out to clients to discuss challenges and solutions, to provide line draws and new extensions to existing clients, to provide support for certain items under risk based capital regulations;small businesses through the Paycheck Protection Program and risk-weighted assets (“RWA”), which isother stimulus programs, and to provide lending and deposit assistance through deferrals and waived fees.
The pandemic has resulted in modest operational disruptions for FHN. Clients' physical access to banking centers has been restricted off and on in many markets and many non-client-facing associates have worked largely on a measure of total on-remote basis. FHN has also implemented additional sick time and off-balance sheet assets adjustedchild care assistance for credit and market risk, used to determine regulatory capital ratios.associates.
The non-GAAP measure presented in this filing is return on average tangible common equity (“ROTCE”). Refer to table 23 for a reconciliation of the non-GAAP to GAAP measure and presentation of the most comparable GAAP item.




FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 79



FIRST HORIZON CORPORATION691Q21 FORM 10-Q REPORT

Financial Summary
Forward-Looking Statements
This MD&A contains forward-looking statements withinQuarterly Financial Performance Summary

First Quarter 2021 versus Fourth Quarter 2020
First quarter 2021 net income available to common shareholders was $225 million, or $0.40 per diluted share, compared to $234 million, or $0.42 per diluted share, in fourth quarter 2020. First quarter 2021 results produced a return on average assets of 1.12% and a return on average common equity of 12.01% compared to 1.16% and 12.53% for fourth quarter 2020.
Net interest income of $508 million declined $14 million from fourth quarter 2020, driven by the meaningimpact of a decrease in average loans, day count and lower short-term rates partially offset by improved funding costs.
The provision for credit losses was a benefit of $45 million for the first quarter of 2021, compared to expense of $1 million for fourth quarter 2020, largely reflecting continued improvement in the overall macroeconomic outlook and a reduction in consumer loans.
Noninterest income of $298 million increased $10 million from fourth quarter 2020, primarily reflecting strong fixed income offset by decreases in mortgage banking and title income, deposit transaction and cash management fees, deferred compensation and derivative sales.
Noninterest expense of $544 million increased $36 million from fourth quarter 2020, largely as a result of IBKC merger integration expenses.
First Quarter 2021 versus First Quarter 2020
First quarter 2021 net income available to common shareholders was $225 million, or $0.40 per diluted share, compared to $12 million, or $0.04 per diluted share, in first quarter 2020 driven by the impact of the Private Securities Litigation Reform ActJuly 1, 2020 IBKC merger and a lower provision for credit losses. First quarter 2021 results produced a return on average assets of 1995 with respect1.12% and a return on average common equity of 12.01% compared to FHN’s beliefs, plans, goals, expectations,0.15% and estimates. Forward-looking statements are not1.05% for the first quarter 2020.
Net interest income increased 68% to $508 million compared to first quarter 2020, driven by an increase in average interest-earning assets as a representationresult of historical information but instead pertainthe
IBKC merger and Truist branch acquisition. Results also reflect the benefit of deposit pricing discipline and PPP lending, which helped to future operations, strategies, financial results, or other developments. partially offset the impact of lower interest rates.
The words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “should,” “is likely,” “will,” “going forward,” and other expressions that indicate future events and trends identify forward-looking statements.provision for credit losses was a benefit of $45 million for the first quarter of 2021, compared to expense of $154 million for first quarter 2020. The decrease in provision was primarily attributable to improvement in the overall macro-economic outlook.
Forward-looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, operational, economic and competitive uncertainties and contingencies, manyNoninterest income of which are beyond FHN’s control, and many of which, with respect to future business decisions and actions (including acquisitions and divestitures)$298 million increased $124 million from first quarter 2020, are subject to change. Examples of uncertainties and contingencies include, among other important factors: general economic and financial market conditions, including expectations of and actual timing and amount of interest rate movements includingprimarily driven by the slopeimpact of the yield curve, competition, customer and investor responses to these conditions, ability to execute business plans, geopolitical developments, recent and future legislative and regulatory developments, natural disasters,IBKC merger. Results also reflect an increase in fixed income revenue during the potential impacts on FHN’s businessesquarter.
Noninterest expense of $544 million increased $242 million from first quarter 2020, largely as a result of the coronavirus COVID-19 pandemic, including negative impactsIBKC merger. Noninterest expense for the first quarter of 2021 included $70 million in merger and acquisition-related costs compared to $6 million in first quarter 2020.
Financial Condition Summary
Total assets at March 31, 2021 of $87.5 billion increased $3.3 billion, or 4%, from quarantines, market declines and volatility, and changes in customer behavior related to COVID-19, potential requirements for FHN to repurchase, or compensate for losses from, previously sold or securitized mortgages or securities based on such mortgages; potential claims alleging mortgage servicing failures, individually, on a class basis, or as master servicer of securitized loans; potential claims relating to participation in government programs, especially lending or other financial services programs; expectations of and actual timing and amount of interest rate movements, including the slope and shape of the yield curve, which can have a significant impact on a financial services institution; market and monetary fluctuations, including fluctuations in mortgage markets; inflation or deflation; customer, investor, competitor, regulatory, and legislative responses to any or all of these conditions; the financial condition of borrowers and other counterparties; competition within and outside the financial services industry;$84.2 billion at December 31, 2020.



geopolitical developments including possible terrorist activity; natural disasters; effectiveness and cost-efficiency of FHN’s hedging practices; technological changes; fraud, theft, or other incursions through conventional, electronic, or other means directly or indirectly affecting FHN or its customers, business counterparties or competitors; demand for FHN’s product offerings; new products and services in the industries in which FHN operates; the increasing use of new technologies to interact with customers and others; and critical accounting estimates. Other factors are those inherent in originating, selling, servicing, and holdingPeriod-end loans and loan-based assets, including prepayment risks, pricing concessions, fluctuationleases of $58.6 billion increased $368 million, or 1%, from December 31, 2020 driven by a $1.0 billion increase in U.S. housingcommercial loans primarily tied to PPP loans, offset by a $674 million decrease in consumer loans. Average loans and other real estate prices, fluctuationleases of collateral values, and changes$58.2 billion in customer profiles. Additionally, the actions of the Securities and Exchange Commission (“SEC”), the Financial Accounting Standards Board (“FASB”), the Tennessee Department of Financial Institutions ("TDFI") and its Commissioner, the Board of Governors of the Federal Reserve System (“Federal Reserve” or “Fed”), the Federal Deposit Insurance Corporation (“FDIC”), the Financial Industry Regulatory Authority (“FINRA”), the U.S. Department of the Treasury (“U.S. Treasury”), the Municipal Securities Rulemaking Board (“MSRB”), the Consumer Financial Protection Bureau (“CFPB”), the Office of the Comptroller of the Currency ("OCC"), the Financial Stability Oversight Council (“Council”), the Public Company Accounting Oversight Board (“PCAOB”), and other regulators and agencies; pending, threatened, or possible future regulatory, administrative, and judicial outcomes, actions, and proceedings; current or future Executive orders; changesfirst quarter 2021 increased $27.7 billion from $30.5 billion in laws and regulations applicable to FHN; and FHN’s success in executing its business plans and strategies and managing the risks involved in the foregoing, could cause actual results to differ, perhaps materially, from those contemplatedfirst quarter 2020 primarily driven by the forward-looking statements.IBKC merger.
Period-end deposits of $73.2 billion increased $3.2 billion, or 5%, from December 31, 2020, largely reflecting growth in noninterest-bearing deposits from the impact of stimulus checks and PPP loan funding. Average deposits of $71.0 billion for first quarter 2021 increased from $32.9 billion for first quarter 2020.
FHN assumes no obligation to update or revise any forward-looking statements that are made in this Quarterly Report of which this MD&A is a part or otherwise from time to time. Actual results could differmaintained strong capital measures. The Tier 1 risk-based capital and expectations could change, possibly materially, because of one or more factors, including those presented in this Forward-Looking Statements section, in other sections of this MD&A, in other parts of and exhibits to this Quarterly Report on Form 10-Q for the period ended total risk-based capital ratios at March 31, 2021 were 11.05% and 12.84%, respectively, compared to 10.74% and 12.57% at December 31, 2020, and in documents incorporated into this Quarterly Report.respectively. The CET1 ratio was 9.97% at March 31, 2021 compared to 9.68% at December 31, 2020.


FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 80



FIRST HORIZON CORPORATION701Q21 FORM 10-Q REPORT

Table 1 - Key Performance Indicators
As of or for the three months ended
(Dollars in millions, except per share data)March 31, 2021December 31, 2020March 31, 2020
Pre-provision net revenue (a)$262 $302 $175 
Diluted earnings per common share$0.40 $0.42 $0.04 
Return on average assets (b)1.12 %1.16 %0.15 %
Return on average common equity (c)12.01 %12.53 %1.05 %
Return on average tangible common equity (a) (d)15.90 %16.73 %1.59 %
Net interest margin (e)2.63 %2.71 %3.16 %
Noninterest income to total revenue (f)37.00 %35.86 %36.59 %
Efficiency ratio (g)67.54 %62.46 %63.26 %
Allowance for loan and lease losses to total loans and leases1.56 %1.65 %1.33 %
Net charge-offs to average loans and leases0.06 %0.19 %0.10 %
Total period-end equity to period-end assets9.49 %9.86 %10.71 %
Tangible common equity to tangible assets (a)6.64 %6.89 %6.81 %
Cash dividends declared per common share$0.15 $0.15 $0.15 
Book value per common share$13.65 $13.59 $14.96 
Tangible book value per common share (a)$10.29 $10.23 $9.96 
Common equity Tier 19.97 %9.68 %8.54 %
Market capitalization$9,341 $7,082 $2,514 
(a)    Represents a non-GAAP measure which is reconciled in the non-GAAP to GAAP reconciliation in Table 20.
(b)    Calculated using annualized net income divided by average assets.
(c)    Calculated using annualized net income available to common shareholders divided by average common equity.
(d)    Calculated using annualized net income available to common shareholders divided by average tangible common equity.
(e)    Net interest margin is computed using total net interest income adjusted to an FTE basis assuming a statutory federal income tax rate of 21% and, where applicable, state income taxes.
(f)    Ratio is noninterest income excluding securities gains (losses) to total revenue excluding securities gains (losses).
(g)    Ratio is noninterest expense to total revenue excluding securities gains (losses).

Results of Operations
Financial Summary
As previously mentioned,Net Interest Income/Net Interest Margin
Net interest income is FHN's largest source of revenue and is the difference between the interest earned on interest-earning assets (generally loans, leases and investment securities) and the interest expense incurred in connection with interest-bearing liabilities (generally deposits and borrowed funds). The level of net interest income is primarily a function of the difference between the effective January 1,yield on average interest-earning assets and the effective cost of interest-bearing liabilities. These factors are influenced by the pricing and mix of interest-earning assets and interest-bearing liabilities which, in turn, are impacted by external factors such as local economic conditions, competition for loans and deposits, the monetary policy of the FRB and market interest rates.
First Quarter 2021 versus Fourth Quarter 2020 FHN adopted ASU 2016-13, (CECL). Application
Net interest income for first quarter 2021 decreased $14 million from fourth quarter 2020. This decrease
reflected a $23 million decrease in interest income, the result of CECL methodology creates larger immediate impactslower average loan balances, a decrease in day count, and lower short-term rates. Partially offsetting the decrease in interest income was a $9 million decrease in interest expense, driven by deposit pricing discipline, as the rate on credit loss estimatesdeposits decreased 6 basis points from fourth quarter 2020, as well as a $243 million decrease in unanticipated rapid declines in economic projections when compared to the prior incurred loss estimation methodology. average long-term borrowings.
The sudden, steep decline in the economic forecast associated with the Coronavirus Disease 2019 (“COVID-19”) pandemic latenet interest margin was 2.63% in first quarter 2021, down 8 basis points from fourth quarter 2020, resulted in a significant increase in loan loss provision expense andwhile the reserve for unfunded commitments, negatively impacting FHN’s operating resultsnet interest spread of 2.52% in first quarter 2020.
In first quarter 2020, FHN reported net income available to common shareholders of $12.1 million, or $.04 per diluted share, compared to net income available to common of $99.0 million, or $.31 per diluted share in first quarter 2019.2021 was down 7 basis points. The decline in resultsnet interest margin for the quarter ended March 31, 2021 was primarily the result of a 13 basis point decrease in earning asset yields, largely driven by an unfavorable mix shift to lower yielding assets.
Average earning assets increased $1.7 billion to $78.7 billion for first quarter 2020 relative to the prior year was driven by a significant increase in loan loss provision expense and an increase in the reserve2021 from $77.0 billion for unfunded commitments, somewhat offset by higher revenue.
Total revenue increased 10 percent to $477.6 million in first quarter 2020 from $435.6 million in first quarter 2019. NII increased to $302.8 million in first quarter 2020 from $294.5 million in first quarter 2019 primarily due to strong loan and deposit growth, favorable deposit costs, and the maturity of $400 million of senior debt in fourth quarter 2019. Lower loan yields compared to first quarter 2019 negatively impacted NII in first quarter 2020, offsetting a portion of the overall increase in NII. Noninterest income increased 24 percent, or $33.7 million, in first quarter 2020 driven by higher fixed income revenue, somewhat offset by a decrease in deferred compensation income relative to first quarter 2019.
Noninterest expense increased 5 percent to $311.9 million in first quarter 2020 from $296.1 million in first quarter 2019. The expense increase in first quarter 2020, was due in large part to an increase in credit expense on unfunded
commitments associated with economic uncertainty attributable to the COVID-19 pandemic, as well as higher personnel-related expenses, somewhat offset by lower restructuring and rebranding related expenses.
Asset quality trends in first quarter 2020 were relatively consistent with trends in first quarter 2019. The NPL ratio and 30+ delinquencies improved from .65 percent and .23 percent, respectively in first quarter 2019 to .57 percent and .19 percent, respectively in first quarter 2020. Net charge offs increased from .07 percent in first quarter 2019 to .10 percent in first quarter 2020, primarily driven by two credits.
Return on average common equity (“ROCE”) and ROTCE were 1.05 percent and 1.59 percent, respectively, in first quarter 2020 compared to 9.09 percent and 14.17 percent, respectively, in first quarter 2019. Return on average assets (“ROA”) declined to .15 percent in first quarter 2020 from 1.03 percent in first quarter 2019. Key financial ratios were negatively impacted in first quarter 2020 by the largea $3.1 billion increase in loan loss provision expense. Common Equity Tier 1, Tier 1, Total Capital, and Leverage ratios were 8.54 percent, 9.52 percent, 10.78 percent, and 9.00 percent, respectively, in first quarter 2020 down from 9.62 percent, 10.65 percent, 11.78 percent, and 9.02 percent, respectively, in first quarter 2019 driven by an increase in risk-weighted assets due to higher loan balances and an increase in fixed income market risk assets. Average assets increased to $43.6 billion in first quarter 2020 from $40.9 billion in first quarter 2019. Average loans and average deposits increased to $30.5 billion and $32.9 billion, respectively, in first quarter 2020, up 12 percent and 1 percent from first quarter 2019. Period-end Shareholders’ equity increased to $5.1 billion in first quarter 2020 from $4.8 billion in first quarter 2019. Average Shareholders’ equity increased to $5.0 billion in first quarter 2020 from $4.8 billion in first quarter 2019.interest-bearing cash,
Business Line ReviewFIRST HORIZON CORPORATION711Q21 FORM 10-Q REPORT

Regional Bankingpartially offset by a $1.6 billion decrease in average loans and leases from a reduction in new originations, continued payoffs, and a decrease in loans to mortgage companies, partially offset by growth in asset-based lending and commercial real estate. The mix shift also contributed to a decline in earning asset yield from the prior quarter.
Pre-taxFirst Quarter 2021 versus First Quarter 2020
Net interest income within the regional banking segment was $25.6increased $205 million in first quarter 2021 from $303 million infirst quarter 2020. The increase was primarily attributable to growth in average earning assets from the IBKC merger and Truist branch acquisition in third quarter 2020, downdeposit pricing discipline, and PPP lending, partially offset by the negative impact of lower interest yields on loans from $147.0 millionthe decline of LIBOR and Prime rates.
The net interest margin in first quarter 2019. The decrease in pre-tax income2021 was primarily driven by an increase in loan loss provision expense, and higher credit expense on unfunded commitments somewhat offset by increase in revenue.
Total revenue increased 6 percent to $382.0 million in first quarter 2020down 53 basis points from $359.1 million in first quarter 2019, driven by increases in NII and noninterest income. The
increase in NII was primarily due to strong loan and deposit growth and favorable deposit costs, which more than offset lower loan yields compared to first quarter 2019. Noninterest income increased 12 percent or $8.8 million to $81.9 million in first quarter 2020 from $73.0 million in the prior year. The increase in noninterest income was primarily driven by an increase in fees from derivative sales, higher brokerage, management fees and commissions, and an increase in other service charges revenue, partially offset by lower fees from deposit transactions and cash management activities relative to first quarter 2019.


FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 81



Provision expense increased to $145.4 million in first quarter 2020 from $13.4 million in first quarter 2019, primarily driven by the application of CECL methodology and a sudden, steep decline in the economic forecast attributable to the COVID-19 pandemic.
Noninterest expense was $211.0 million in first quarter 2020, up from $198.6 million in first quarter 2019. The increase in expense was primarily driven by a $8.8 million increase in the credit expense on unfunded commitments largely associated with the application of CECL methodology with a sudden, steep decline in economic forecast attributable to the COVID-19 pandemic. An increase in FDIC premium expense due to balance sheet growth and expected loss severity ratios as well as $1.0 million of additional credit risk adjustments related to Regional Banking interest rate derivatives and swap participations also contributed to the overall increase in expenses in first quarter 2020 compared to the prior year.
Fixed Income
Pre-tax income in the fixed income segment more than doubled to $25.6 million in first quarter 2020 from $10.6 million in first quarter 2019. The increase in pre-tax income in first quarter 2020 was driven by higher revenue, somewhat offset by an increase in expenses.
Noninterest income increased 78 percent, or $41.9 million to $95.7 million in first quarter 2020 from $53.8 million in first quarter 2019. Average daily revenue (“ADR”) increased to $1.3 million in first quarter 2019 from $729 thousand in first quarter 2019, due to elevated levels of commissionable revenues, partially offset by elevated levels of trading losses driven by extreme market volatility as compared to first quarter 2019. Other product revenue was $17.4 million in first quarter 2020, up from $9.3 million in the prior year, primarily driven by increases in fees from derivative sales. NII was $10.9 million in first quarter 2020, up from $7.3 million in first quarter 2019, primarily due to higher spreads on inventory positions in addition to higher inventory balances compared to prior year.
Noninterest expense was $81.1 million in first quarter 2020 compared to $50.5 million in first quarter 2019, primarily driven by higher variable compensation due to increased commissionable revenues.





Corporate
The pre-tax loss for the corporate segment was $32.5 million in first quarter 2020 compared to $36.3 million in first quarter 2019.
Net interest expense was $13.4 million and $7.9 million in first quarter 2020 and 2019, respectively. Net interest expense was negatively impacted by lower average balances of excess cash at the Federal reserve (“Fed”) and AFS securities, somewhat offset by the maturity of $400 million of senior debt in fourth quarter 2019. Noninterest income/(loss)(including securities gain/losses) in first quarter 2020 was negative $3.7 million compared to $13.4 million in first quarter 2019, primarily due to a $15.0 million decrease in deferred compensation income driven by negative equity market valuations relative to the prior year.
Noninterest expense decreased 63 percent or $26.3 million from $41.8 million in first quarter 2019 to $15.5 million3.16% in first quarter 2020. The net interest spread of 2.52% in first quarter 2021 was down 37 basis points from the first quarter 2020. The decline in net interest margin for the quarter ended March 31, 2021 was primarily the result of a 108 basis point decrease in expenseearning asset yields, as the negative impact of lower short-term interest rates was partially offset by the benefit of purchase accounting accretion and PPP lending. An increase in average excess cash also negatively impacted net interest margin relative to the prior year. Driven by disciplined deposit pricing, the cost of interest-bearing liabilities decreased 71 basis points from first quarter 2020.
Average earning assets increased to $78.7 billion for first quarter 2021 from $38.8 billion for the same quarter of 2020, wasa $39.9 billion increase primarily driven by decreases in deferred compensation expense, restructuring costs associated with efficiency initiativesthe IBKC merger and rebranding expenses relative to first quarter 2019. This expense decrease was somewhat offset by an increase in pension expense.
Non-Strategic
The non-strategic segment had pre-tax income of $2.6 million in first quarter 2020 compared to $9.2 million in first quarter 2019. The decrease in results for first quarter 2020 was driven by a smaller provision credit and a decline in NII relative to first quarter 2019 somewhat offset by a decrease in expenses.
Total revenue was $6.0 million in first quarter 2020 down from $9.9 million in first quarter 2019. NII decreased to $5.1 million in first quarter 2020 from $9.1 million in first quarter 2019, primarily due to continued run-off of the loan portfolios. Noninterest income was $.9 million in first quarter 2020 and 2019.
The provision for loan losses within the non-strategic segment was a provision credit of $.4 million in first quarter 2020 compared to a provision credit of $4.4 million in the prior year. The reduction in provision credit in first quarter 2020 was due to additional consumer reserves associated with a sudden, steep decline in economic forecast attributable to the COVID-19 pandemic.
Noninterest expense decreased 27 percent to $3.8 million in first quarter 2020 from $5.2 million in first quarter 2019.
Truist branch acquisition.



FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 82



Income Statement ReviewFIRST HORIZON CORPORATION721Q21 FORM 10-Q REPORT
Total consolidated revenue was $477.6 million in first quarter 2020, up 10 percent from $435.6 million in first quarter 2019 driven by a 24 percent increase in noninterest income and a 3 percent increase in NII. Provision expense increased significantly from $9.0 million in first quarter 2019 to $145.0 million in first quarter 2020 primarily driven by a sudden, steep decline in the economic forecast attributable to the COVID-19 pandemic. Total consolidated expenses increased 5 percent to $311.3 million in first quarter 2020 from $296.1 million in first quarter 2019, driven by an increase in expense on unfunded commitments and higher personnel-related expenses, somewhat offset by lower restructuring and rebranding related expenses.
Net Interest Income
Net interest income was $302.8 million in first quarter 2020, up from $294.5 million in first quarter 2019. The increase in NII was primarily attributable to strong loan and deposit growth, favorable deposit costs, and the maturity of $400 million of senior debt in fourth quarter 2019, somewhat offset by lower loan yields compared to first quarter 2019. Average earning assets increased to $38.8 billion in first quarter 2020 from $36.3 billion in first quarter 2019.

















The increase in average earning assets was primarily driven by increases in loans, securities purchased under agreement to resell ("asset repos"), and fixed income inventory, somewhat offset by decreases in interest-bearing cash.
For purposes of computing yields andfollowing table presents the net interest margin, FHN adjusts net interest income to reflect tax-exempt income on an equivalent pre-tax basis which provides comparabilitymajor components of net interest income arising from both taxable and tax-exempt sources.
The consolidated net interest margin was 3.16 percent in first quarter 2020 down 15 basis points from 3.31 percent in first quarter 2019. The net interest spread was 2.89 percent in first quarter 2020, down 3 basis points from 2.92 percent in first quarter 2019. The decrease in NIM in first quarter 2020 was primarily the result of the negative impact of interest rates (including LIBOR and Prime) relative to first quarter 2019. Additionally, higher balances of trading securities negatively impacted NIM in first quarter 2020, but was somewhat mitigated by loan and deposit growth, lower balances of cash held at the Fed, and the maturity of $400 million of senior debt in fourth quarter 2019.



FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 83



margin.
Table 1—2—Average Balances, Net Interest MarginIncome and Yields/Rates
 
 Three Months Ended
March 31
 2020 2019
Assets:   
Earning assets:   
Loans, net of unearned income:   
Commercial loans4.33% 5.08%
Consumer loans4.33
 4.59
Total loans, net of unearned income4.33
 4.96
Loans held-for-sale4.67
 5.89
Investment securities:   
U.S. government agencies2.32
 2.68
States and municipalities3.35
 4.33
Corporates and other debt4.67
 4.37
Other33.76
 34.56
Total investment securities2.51
 2.79
Trading securities2.91
 3.80
Other earning assets:   
Federal funds sold1.05
 2.63
Securities purchased under agreements to resell1.13
 2.21
Interest-bearing cash1.13
 2.41
Total other earning assets1.13
 2.38
Interest income / total earning assets3.94% 4.49%
Liabilities:   
Interest-bearing liabilities:   
Interest-bearing deposits:   
Savings0.87% 1.36%
Other interest-bearing deposits0.65
 1.05
Time deposits1.67
 1.91
Total interest-bearing deposits0.90
 1.35
Federal funds purchased1.19
 2.50
Securities sold under agreements to repurchase1.36
 2.06
Fixed income trading liabilities1.76
 3.04
Other short-term borrowings1.20
 3.40
Term borrowings4.01
 4.89
Interest expense / total interest-bearing liabilities1.05
 1.57
Net interest spread2.89% 2.92%
Effect of interest-free sources used to fund earning assets0.27
 0.39
Net interest margin (a)
3.16% 3.31%
Three Months Ended
(Dollars in millions)March 31, 2021December 31, 2020March 31, 2020
Average BalanceInterest Income/ExpenseYield/RateAverage BalanceInterest Income/ExpenseYield/RateAverage BalanceInterest Income/ExpenseYield/Rate
Assets:
Loans and leases:
Commercial loans and leases$45,703 $382 3.39 %$46,596 $405 3.46 %$23,891 $257 4.33 %
Consumer loans12,519 128 4.13 13,224 129 3.89 6,633 71 4.33 
Total loans and leases58,222 510 3.55 59,820 534 3.56 30,524 328 4.33 
Loans held for sale842 7 3.16 1,030 8 3.22 590 7 4.67 
Investment securities8,321 29 1.41 8,213 27 1.29 4,467 28 2.51 
Trading securities1,418 7 2.03 1,292 7 2.05 1,831 13 2.91 
Federal funds sold45 — 0.12 34 — 0.15 10 — 1.05 
Securities purchased under agreements to resell (a)554 — (0.14)405 — 0.02 817 2 1.13 
Interest-bearing deposits with banks9,269 2 0.10 6,201 2 0.10 549 2 1.13 
Total earning assets / Total interest income$78,671 $555 2.86 %$76,995 $578 2.99 %$38,788 $380 3.94 %
Cash and due from banks1,250 1,204 610 
Goodwill and other intangible assets, net1,857 1,871 1,560 
Allowance for loan and lease losses(949)(985)(354)
Other assets4,572 4,724 2,948 
Total assets$85,401 $83,809 $43,552 
Liabilities and Shareholders' Equity:
Interest-bearing deposits:
Savings$27,370 $12 0.19 %$27,090 $18 0.27 %$12,117 $26 0.87 %
Other interest-bearing deposits15,491 6 0.16 15,057 7 0.18 8,743 14 0.65 
Time deposits4,836 6 0.47 5,387 6 0.44 3,356 14 1.67 
Total interest-bearing deposits47,697 24 0.20 47,534 31 0.26 24,216 54 0.90 
Federal funds purchased996 — 0.10 831 — 0.10 747 2 1.19 
Securities sold under agreements to repurchase1,145 1 0.21 1,140 1 0.23 778 3 1.36 
Trading liabilities518 1 0.73 367 1 0.78 751 3 1.76 
Other short-term borrowings139 — 1.01 142 — 0.98 1,686 5 1.20 
Term borrowings1,670 18 4.39 1,913 20 4.16 791 8 4.01 
Total interest-bearing liabilities / Total interest expense$52,165 $44 0.34 %$51,927 $53 0.40 %$28,969 $75 1.05 %
Noninterest-bearing liabilities:
Noninterest-bearing deposits23,284 22,105 8,666 
Other liabilities1,603 1,568 915 
Total liabilities77,052 75,600 38,550 
Shareholders' equity8,054 7,914 4,707 
Noncontrolling interest295 295 295 
Total shareholders' equity8,349 8,209 5,002 
Total liabilities and shareholders' equity$85,401 $83,809 $43,552 
Net earnings assets / Net interest income (TE) / Net interest spread$26,506 $511 2.52 %$25,068 $525 2.59 %$9,819 $305 2.89 %
Taxable equivalent adjustment(3)0.11 (3)0.12 (2)0.27 
Net interest income / Net interest margin (b)$508 2.63 %$522 2.71 %$303 3.16 %
(a) First quarter 2021 yield is driven by negative market rates on reverse repurchase agreements
(b) Calculated using total net interest income adjusted for FTE assuming a statutory federal income tax rate of 21 percent21% and, where applicable, state income taxes.


FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 84



taxes
FHN’s net interest margin is primarily impacted by its balance sheet mix including the levels of fixed and floating rate loans, rate sensitive and non-rate sensitive liabilities, cash levels, trading inventory levels as well as loan fees and cash basis income. For 2020, NIM will also depend on potentially modest loan growth, rate impact from the elevated spread of LIBOR to Fed Funds, widening credit spreads, PPP fees, Fixed Income trading inventory and the extent of assets moving to nonaccrual status.
PROVISION FOR LOAN LOSSES
FIRST HORIZON CORPORATION731Q21 FORM 10-Q REPORT

.
Provision for Credit Losses
The provision for credit losses includes the provision for loan and lease losses and the provision for unfunded lending commitments. The provision for credit losses is the charge to earnings that management determines to beexpense necessary to maintain the ALLL and the accrual for unfunded lending commitments at a sufficient level reflectinglevels appropriate to absorb management’s estimate of expected credit losses expected over the life of the loan and lease portfolio and the portfolio of unfunded loan commitments.
The provision for credit losses benefit of $45 million compared to expense of $1 million in fourth quarter
2020, largely reflecting continued improvement in the loan portfolio. Provision expense was $145.0overall macroeconomic outlook and a reduction in consumer loans. The provision for credit losses decreased $199 million infrom first quarter 2020 calculated under the CECL methodology adopted January 1, 2020, compared to $9.0 million in first quarter 2019 calculated under the “incurred loss” methodology. The increase in provision expense was primarily the result of a sudden, steep declinefrom an improvement in the economic forecast attributable to the COVID-19 pandemic, and to a much less extent associated with loan growth. For additional information about the provision for loan losses refer to the Regional Banking and Non-Strategic sections of the Business Line Review section in this MD&A. overall macroeconomic outlook.
For additional information about general asset quality trends, refer to the Asset Quality section in this MD&A.

NONINTEREST INCOME
Noninterest income (including securities gains/(losses)) was $174.8 million in first quarter 2020 and represented 37 percent of total revenue compared to $141.0 million in first quarter 2019 and 32 percent. The increase in noninterest income in first quarter 2020 was primarily driven by higher fixed income revenue, somewhat offset by a decrease in deferred compensation income relative to first quarter 2019.
Fixed Income Noninterest Income
Fixed income noninterest income was $95.6 million in first quarter 2020, a 78 percent increase from $53.7 million in first quarter 2019. The increase in first quarter 2020 was largely driven by elevated levels of commissionable revenues, partially offset by elevated levels of trading losses driven by extreme market volatility in March 2020. Revenue from other products increased 86 percent to $17.3 million in first quarter 2020 from $9.3 million in first quarter 2019, primarily driven by increases in derivative sales.

The following table summarizes FHN’s fixed income noninterest income for the three months ended March 31, 2020 and 2019.
Table 2—Fixed Income Noninterest Income
  Three Months Ended
March 31		 Percent Change
(Dollars in thousands)
 2020 2019 
Noninterest income:      
Fixed income $78,354
 $44,472
 76%
Other product revenue 17,281
 9,277
 86%
Total fixed income noninterest income $95,635
 $53,749
 78%
Brokerage, Management Fees and Commissions
Noninterest income from brokerage, management fees and commissions increased 22 percent or $2.8 million from $12.6 million in first quarter 2019 to $15.4 million in first quarter 2020. The increase in first quarter 2020 was primarily driven by higher advisory revenue and annuity income as a result of increased transaction volume.
Deposit Transactions and Cash Management
Fees from deposit transactions and cash management activities were $30.3 million in first quarter 2020, down 4 percent from $31.6 million in first quarter 2019. The decrease in first quarter 2020 is largely due to lower debit

card transaction fees as a result of volume incentives received in 2019 and lower NSF/overdraft fee income driven by changes in consumer behavior relative to first quarter 2019, somewhat offset by an increase in fees from cash management activities.
Other Noninterest Income
Other income includes revenues related to other service charges, ATM and interchange fees, mortgage banking (primarily within the non-strategic and regional banking segments), letters of credit fees, dividend income, electronic banking fees, insurance commissions, gain/(loss)


FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 85



on the extinguishment of debt, deferred compensation plans (which are mirrored by changes in noninterest expense) and various other fees.
Revenue from all other income and commissions decreased to $14.4 million in first quarter 2020 from $24.6 million in first quarter 2019. The decrease in all other income and commissions in first quarter 2020 was largely due to a $15.0 million decrease in deferred compensation income driven by negative equity market valuations. Deferred compensation income fluctuates with changes in the market value of the underlying investments and is mirrored
by changes in deferred compensation expense which is included in personnel expense. An increase in other service charges and higher fees from derivative sales relative to first quarter 2019 offset a portion of the overall decline in other noninterest income.
The following table provides detail regarding FHN’s other income.

Table 3—Other Income
  Three Months Ended
March 31		 
Percent
Change
(Dollars in thousands) 2020 2019 
Other income:      
Other service charges

 $5,219
 $3,869
 35 %
ATM and interchange fees 4,212
 3,241
 30 %
Mortgage banking 2,431
 1,886
 29 %
Letter of credit fees 1,462
 1,368
 7 %
Dividend income (a) 1,130
 2,313
 (51)%
Electronic banking fees 1,030
 1,271
 (19)%
Insurance commissions 789
 624
 26 %
Gain/(loss) on extinguishment of debt —
 (1) NM
Deferred compensation (b) (9,507) 5,474
 NM
Other 7,598
 4,586
 66 %
Total $14,364
 $24,631
 (42)%
Certain previously reported amounts have been reclassified to agree with current presentation.
NM – Not meaningful
(a)Represents dividend income from Federal Reserve Bank ("FRB") and Federal Home Loan Bank ("FHLB") holdings. Variability largely driven by dividend rate.
(b)Amounts are driven by market conditions and are mirrored by changes in deferred compensation expense which is included in employee compensation expense. First quarter 2020 decrease was driven by negative equity market valuations.
NONINTEREST EXPENSE
Total noninterest expense increased to $311.3 million in first quarter 2020 from $296.1 million in first quarter 2019. The increase in noninterest expense in first quarter 2020 was primarily driven by an increase in credit expense on unfunded commitments associated with a sudden, steep decline in economic forecast attributable to the COVID-19 pandemic.
To a lesser extent, higher personnel-related expense also contributed to the increase in noninterest expense, somewhat offset by restructuring costs associated with the identification of efficiency opportunities within the organization, strategic initiatives and rebranding expenses recognized in first quarter 2019.


Employee Compensation, Incentives, and Benefits
Employee compensation, incentives, and benefits (personnel expense), the largest component of noninterest expense, increased 3 percent in first quarter 2020 to $183.5 million from $177.9 million in first quarter 2019. The increase in personnel expense in first quarter 2020 was primarily driven by higher variable compensation due to increased commissionable revenues within Fixed Income.
These expense increases were somewhat offset by a $16.6 million decrease in deferred compensation expense driven by negative equity market valuations in first quarter 2020 and a $6.4 million decrease in restructuring costs associated with the identification of efficiency opportunities within the organization.




FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 86



Professional Fees
Professional fees decreased 43 percent or $5.3 million from $12.3 million in first quarter 2019 to $7.0 million in first quarter 2020. The decrease in professional fees was primarily driven by lower restructuring costs associated with the identification of efficiency opportunities within the organization. Additionally, strategic investments recognized in first quarter 2019 to analyze growth potential and product mix for new markets also contributed to the year-over-year decline in professional fees.
FDIC premium expense
FDIC premium expense increased 58 percent from $4.3 million in first quarter 2019 to $6.7 million in first quarter 2020 driven by balance sheet growth and expected loss severity ratios.
Contract employment and outsourcing
Expenses associated with contract employment and outsourcing increased 46 percent or $1.6 million to $4.9 million in first quarter 2020 compared to $3.4 million in first quarter 2019, primarily driven by merger and acquisition related projects.


Other Noninterest Expense
Other expense includes expenses associated with unfunded commitments, travel and entertainment, other insurance and tax expenses, expenses associated with the non-service components of net periodic pension and post-retirement cost, supplies, customer relation expenses, costs associated with employee training and dues, miscellaneous loan costs, tax credit investments expenses, losses from litigation and regulatory matters, expenses associated with OREO, and various other expenses.
All other expenses increased 72 percent to $33.2 million in first quarter 2020 from $19.3 million in first quarter 2019. The increase was primarily driven by an $8.8 million increase in credit expense on unfunded commitments largely associated with the application of CECL methodology with a sudden, steep decline in economic forecast attributable to the COVID-19 pandemic. Additionally, a $2.1 million increase in pension-related costs and $1.0 million of additional credit risk adjustments on Regional Banking interest rate derivatives and swap participations also contributed to the overall increase in all other expenses in first quarter 2020 related to prior year.
The following table provides detail regarding FHN’s other expense.
presents the significant components of noninterest income for each of the periods presented:

Table 4—Other Expense3 - Noninterest Income
  Three Months Ended
March 31		 
Percent
Change
(Dollars in thousands)
 2020 2019 
Other expense:      
Credit expense on unfunded commitments (a) $9,230
 $396
 NM
Travel and entertainment 2,709
 2,712
 *
Other insurance and taxes 2,679
 2,694
 (1)%
Non-service components of net periodic pension and post-retirement cost 2,508
 432
 NM
Supplies 2,411
 1,804
 34 %
Customer relations 2,004
 1,599
 25 %
Employee training and dues 1,341
 1,457
 (8)%
Miscellaneous loan costs 1,094
 1,027
 7 %
Tax credit investments 346
 675
 (49)%
Litigation and regulatory matters 13
 13
 *
OREO (184) (366) 50 %
Other 9,075
 6,888
 32 %
Total $33,226
 $19,331
 72 %
Three Months Ended1Q21 vs. 1Q201Q21 vs. 4Q20
(Dollars in millions)March 31, 2021December 31, 2020March 31, 2020$ Change% Change$ Change% Change
Noninterest income:
Fixed income$126 $104 $96 $30 31 %$22 21 %
Mortgage banking and title income53 57 2 51 NM(4)(7)%
Deposit transactions and cash management42 45 30 12 40 %(3)(7)%
Brokerage, management fees and commissions20 19 16 4 25 %1 5 %
Trust services and investment management12 12 7 5 71 %— — %
Bankcard income11 12 7 4 57 %(1)(8)%
Other income34 39 16 18 NM(5)(13)%
Total noninterest income$298 $288 $174 $124 71 %$10 3 %
Certain previously reported amounts have been reclassified to agree with current presentation.
NM – Not meaningful
* Amount is less than one percent.
The following table summarizes FHN’s fixed income noninterest income for each of the periods presented:
Table 4—Fixed Income
Three Months Ended1Q21 vs. 1Q201Q21 vs. 4Q20
(Dollars in millions)March 31, 2021December 31, 2020March 31, 2020$ Change% Change$ Change% Change
Noninterest income:
Fixed income$115 $94 $78 $37 47 %$21 22 %
Other product revenue11 10 18 (7)(39 %)1 10 %
Total noninterest income$126 $104 $96 $30 31 %$22 21 %



(a)FIRST HORIZON CORPORATIONFirst quarter 2020 increase largely associated with a sudden, steep decline in economic forecast attributable to the COVID-19 pandemic.741Q21 FORM 10-Q REPORT

First Quarter 2021 versus Fourth Quarter 2020
INCOME TAXESCompared to fourth quarter 2020, noninterest income increased $10 million, or 3%, primarily reflecting strong fixed income. Fixed income increased $22 million, or 21%, driven by continued elevated liquidity and weak loan demand among fixed income customers, as well as interest rate volatility.This increase was partially offset by decreases in mortgage banking and title income, deposit transaction and cash management fees, deferred compensation and derivative sales.
First Quarter 2021 versus First Quarter 2020
Noninterest income of $298 million for first quarter 2021, increased $124 million, or 71%, compared to
Ffirst quarter HN recorded2020, primarily driven by the impact of the IBKC merger as well as strong fixed income revenue during the quarter. Fixed income increased $30 million, or 31%, from first quarter 2020. Fixed income product revenue of $115 million increased 47%, largely driven by favorable market conditions including market volatility and increased depository liquidity. Revenue from other products of $11 million decreased 39%, primarily driven by lower fees from derivative and loan sales.



Noninterest Expense

The following table presents the significant components of noninterest expense for each of the periods presented:

Table 5 - Noninterest Expense
Three Months Ended1Q21 vs. 1Q201Q21 vs. 4Q20
(Dollars in millions)March 31, 2021December 31, 2020March 31, 2020$ Change% Change$ Change% Change
Noninterest expense:
Personnel expense$318 $319 $183 $135 74 %$(1)NM
Net occupancy expense37 36 20 17 85 %1 3 %
Computer software28 27 16 12 75 %1 4 %
Legal and professional fees14 19 9 5 56 %(5)(26)%
Operations services16 17 12 4 33 %(1)(6)%
Equipment expense11 13 9 2 22 %(2)(15)%
Amortization of intangible assets14 15 5 9 NM(1)(7)%
Other expense106 62 48 58 NM4471 %
Total noninterest expense$544 $508 $302 $242 80 %$36 7 %
Certain previously reported amounts have been reclassified to agree with current presentation.
NM – Not meaningful


First Quarter 2021 versus Fourth Quarter 2020
Compared to fourth quarter 2020, noninterest expense increased $36 million, or 7%, driven by a $36 million increase in merger and acquisition related expense largely tied to IBKC merger integration costs. First quarter 2021 also included $10 million in derivative valuation adjustments related to prior Visa Class-B share sales.
First Quarter 2021 versus First Quarter 2020
Total noninterest expense of $544 million increased $242 million, or 80%, from first quarter 2020 primarily attributable to the impact of the IBKC merger and Truist branch acquisition. In addition to the impact of
the merger and branch acquisition, the increase in personnel expense reflects an increase in revenue-based compensation due to increases in fixed income tax provision of $4.8and mortgage banking and an increase in deferred compensation expense driven by equity market valuations. Other expense in first quarter 2021 included $33 million in asset impairments related to IBKC merger integration efforts. Total merger and acquisition expense was $70 million in first quarter 2020,2021 compared to $27.1$6 million in first quarter 2020.
Income Taxes
FHN recorded income tax expense of $71 million in first quarter 2021, compared to $56 million in fourth quarter 2020 and $5 million


FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 87



in first quarter 2019.2020. The effective tax rate forwas approximately 23.2%, 18.7%,
FIRST HORIZON CORPORATION751Q21 FORM 10-Q REPORT

and 22.4% for the three months ended March 31, 2020, was approximately 22 percent compared to 21 percent for the three months endedDecember 31, 2020 and March 31, 2019.2020, respectively.
The Company’s effectiveFHN’s effective tax rate is favorably affected by recurring items such as bank-owned life insurance, tax-exempt income, and tax credits and other tax benefits from affordable housingtax credit investments. The effective rate is unfavorably affected by the non-deductibility of a portion of the Company'sFHN's FDIC premium, and executive compensation and merger expenses. The Company’sFHN’s effective tax rate also may be affected by items that may occur in any given period but are not consistent from period to period, such as changes in the deferred tax asset valuation allowance and changes in unrecognized tax benefits. The rate also may be affected by items resulting from business combinations.
A deferred tax asset (“DTA”) or deferred tax liability (“DTL”) is recognized for the tax consequences of temporary differences between the financial statement carrying amounts and the tax bases of existing assets and
liabilities. The tax consequence is calculated by applying enacted statutory tax rates, applicable to future years, to these temporary differences. As of March 31, 2020,2021, FHN’s gross DTA (net of a valuation allowance) and gross DTL were $292.8$472 million and $207.6$448 million, respectively, resulting in a net DTA of $85.2$24 million at March 31, 2020,2021, compared with a net DTA of $69.0less than $1 million at December 31, 2019.
2020.
As of March 31, 2020,2021, FHN had deferred tax asset balances related to federal and state income tax carryforwards of $37.5$39 million and $1.2$9 million, respectively, which will expire at various dates.dates.
FHN believes that it will be able to realize the value of its DTA and that no valuation allowance is needed. FHN monitors its DTA and the need for a valuation allowance on a quarterly basis.
RESTRUCTURING, REPOSITIONING, AND EFFICIENCY INITIATIVES
Beginning in 2019, FHN initiated a company-wide review of business practices with the goal of optimizing its expense base to improve profitability and create capacity to reinvest savings into technology and revenue production activities. The net charges for restructuring, repositioning, and efficiency initiatives were immaterial in first quarter 2020 compared to $12.2 million in first quarter 2019. These expenses are primarily associated with severance and other employee costs and professional fees. Due to the broad nature of the actions being taken, many components of expense are expected to benefit from the current efficiency initiatives. See Note 17 - Restructuring, Repositioning, and Efficiency for additional information.
Business Segment Results
Statement of Condition Review
Total period-end assetsDuring fourth quarter 2020, FHN reorganized its internal management structure and, accordingly, its segment reporting structure. Historically, FHN's primary business segments were $47.2 billion on March 31,Regional Banking, Fixed Income, Corporate, and Non-strategic. On July 1, 2020, up 9 percent from $43.3 billion on December 31, 2019.FHN and IBKC closed their merger of equals transaction. This transaction prompted organizational changes to better integrate and execute the combined Company's strategic priorities across all lines of businesses. As a result, FHN revised its reportable segments to include Regional Banking, Specialty Banking and Corporate. Segment results for the first quarter of 2020 have been recast to adjust for the realignment of the segment reporting structure. See Note 13 - Business Segment Information for additional disclosures related to FHN's operating segments.
Regional Banking
The Regional Banking segment generated pre-tax income of $286 million for first quarter 2021 compared to $231 million for fourth quarter 2020 and pre-tax loss of $4 million for first quarter 2020. The increase in period-end assetsfirst quarter 2021 compared to fourth quarter 2020 was primarily driven by strong loan growth. Additionally, a netdecrease in noninterest expense and lower provision for credit losses reflecting continued improvement in the overall macroeconomic outlook and a reduction in consumer loans. The increase for the first quarter 2021 compared to first quarter 2020 reflected an increase in other earning assets (primarily trading securities), derivative assets and FHLB stock also contributed to the increase in period-end assets. These increases were somewhatrevenue offset by an increase in noninterest expense resulting from the allowanceIBKC merger and a
decrease in the provision for loancredit losses dueresulting from improvement in the macroeconomic outlook.
Specialty Banking

The Specialty Banking segment generated pre-tax income of $197 million for first quarter 2021 compared to the Adoption of ASU 2016-13, “Measurement of Credit Losses on Financial Instruments,” or (“CECL”) and all related ASUs on January 1,$194 million for fourth quarter 2020 and additional reserves recognized$48 million for first quarter 2020. First quarter 2021 results compared to fourth quarter 2020 included an increase in noninterest income and lower provision for credit losses partially offset by lower net interest income and higher noninterest expense. The increase for the first quarter 2021 compared to first quarter 2020 due towas driven by an increase in revenue offset by an increase in noninterest expense resulting from the IBKC merger and a sudden, steep declinedecrease in the economic forecast attributableprovision for credit losses resulting from improvement in the macroeconomic outlook.

Corporate

The Corporate segment generated pre-tax loss of $176 million for first quarter 2021 compared to the COVID-19 pandemic. Average assets increased 2 percent$124 million for fourth quarter 2020 and $23 million for first quarter 2020. The increase in pre-tax loss for first quarter 2021 compared to $43.6 billion in first quarter 2020 from $42.9 billion in fourth quarter 2019. Thereflected an increase in averagenoninterest expense primarily from a $64 million increase in merger and integration-related costs and the impact of the IBKC merger and a decrease in net interest income resulting from the impact of funds transfer pricing, partially offset by an increase in noninterest income primarily resulting from an increase in deferred compensation income
FIRST HORIZON CORPORATION761Q21 FORM 10-Q REPORT

driven by equity market valuations relative to the prior year.

Financial Condition
Total period-end assets were $87.5 billion at March 31, 2021 compared to $84.2 billion at December 31, 2020. Asset growth during first quarter 2021 was driven by higher balances of trading securities and securities purchased under agreements to resell (“asset repos”), somewhat offset by lower average loan balances and an increase in the ALLL due to the adoption of CECL.cash from deposit growth and by loan growth, primarily C&I loans from PPP loan originations.
Total period-end liabilities were $42.1 billion on March 31, 2020, a 10 percent increase from $38.2 billion on December 31, 2019. The net increase in period-end liabilities was primarily due to increases in deposits and
higher balances of short-term borrowings. In first quarter 2020, average liabilities increased to $38.5 billion from $37.8 billion in fourth quarter 2019. The increase in
average liabilities was largely driven by higher balances of short-term borrowings somewhat offset by a decrease in federal funds purchased (“FFP”) relative to fourth quarter 2019.
EARNING ASSETS
Earning assets consist of loans and leases, loans held for sale, investment securities, loans HFS, and other earning assets, such as trading securities and interest-bearing cash. Averagedeposits with banks. A detailed discussion of the major components of earning assets is provided in the following sections.
Loans and Leases
Period-end loans and leases increased 1 percent$368 million, or 1% to $58.6 billion as of March 31, 2021 from $58.2 billion on December 31, 2020, driven by a $1.0 billion increase in commercial loans primarily tied to PPP loans, offset by a $674 million decrease in consumer loans. Average loans and 7 percentleases decreased to $38.8$58.2 billion in first quarter 2021 compared to $59.8 billion in fourth quarter 2020 and increased from $30.5 billion in first quarter 2020 primarily from $38.2 billion and $36.3 billion, respectively, in fourthacquired loans during third quarter 2019 and first quarter 2019. A more detailed discussion of the major line items follows.2020.
Loans
Period-end loans increased 7 percent and 19 percent to $33.4 billion as of March 31, 2020 from $31.1 billion on December 31, 2019 and $28.0 billion as of March 31, 2019. The increase is period-end loan balances compared to December 31, 2019 was primarily due to an increase in


FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 88



loans to mortgage companies during the end of March and additional commercial line draws. Average loans for first quarter 2020 were $30.5 billion compared to $30.7 billion
in fourth quarter 2019 and $27.3 billion in first quarter 2019.
The following table summarizesprovides detail regarding FHN's average deposits for quarters-ended loans and leases as of March 31, 20202021 and December 31, 2019.2020.
Table 5—Average 6—Loans and Leases
 
As of March 31, 2021As of December 31, 2020
(Dollars in millions)AmountPercent of totalAmountPercent of totalGrowth Rate
Commercial:
Commercial, financial, and industrial (a)$33,951 58 %$33,104 57 %3 %
Commercial real estate12,470 21 12,275 21 2 
Total commercial46,421 79 45,379 78 2 
Consumer:
Consumer real estate11,053 19 11,725 20 (6)
Credit card and other1,126 2 1,128 2 — 
Total consumer12,179 21 12,853 22 (5)
Total loans and leases$58,600 100 %$58,232 100 %1 %
  
Quarter Ended
March 31, 2020
 
Quarter Ended
December 31, 2019
  
(Dollars in thousands) Amount Percent of total Amount Percent of total Growth Rate
Commercial:          
Commercial, financial, and industrial $19,469,572
 64% $19,739,937
 64% (1)%
Commercial real estate 4,421,913
 14
 4,263,597
 14
 4
Total commercial 23,891,485
 78
 24,003,534
 78
 *
Consumer:          
Consumer real estate (a) (b) 6,134,390
 20
 6,194,134
 20
 (1)
Credit card, OTC and other 498,290
 2
 508,651
 2
 (2)
Total consumer 6,632,680
 22
 6,702,785
 22
 (1)
Total loans, net of unearned income $30,524,165
 100% $30,706,319
 100% (1)%
(a)Includes equipment financing loans and leases.
* Amount is less than one percent.
(a)Balance as December 31, 2019 includes $7.1 million of restricted and secured real estate loans.
(b)In first quarter 2020, the Permanent Mortgage portfolio was combined into Consumer Real Estate portfolio, all prior periods were revised for comparability.


C&I loans are the largest component of the loan portfolio, comprising 64 percentcomprising 58% of total loans at the end of the first quarter 2021 and 57% at year-end 2020. C&I loans increased 3% from December 31, 2020, largely driven by PPP lending and higher balances within Specialty Banking, primarily from mortgage warehouse lending and growth in both the accommodation and food services and healthcare industries. Commercial real estate loans increased 2% to $12.5 billion in first quarterquarter 2021 driven by growth in Regional Banking and Corporate CRE loans.
Total consumer loans decreased 5% from 2020 and fourth quarter 2019. C&I loans declined 1 percent, from fourth quarter 2019to $12.2 billion as of March 31, 2021, largely driven by lower balances within mortgage warehouse lending, partially mitigated by strong loan growth within other commercial portfolios of Regional Banking. Growthpaydowns in other specialty lending areas, such as franchise finance, private client, asset based lending, and healthcare also offset a portion of the overall decline in average C&I loans in first quarter 2020 compared to fourth quarter 2019.Commercial real estate installment loans experienced a net increase of 4 percent to $4.4 billion in first quarter 2020.and home
Average consumer loans declined 1 percent from fourth quarter 2019 to $6.6 billion in first quarter 2020, largely driven by the continued wind-down of portfolios within the Non-strategic segment and declines in home
equity lines of credit within the Regional Banking segment.
Loans Held for Sale
In 2020, FHN obtained IBKC's mortgage banking operations, which includes origination and servicing of residential first lien mortgage loans, primarily fixed rate single-family residential mortgage loans originated by IBKC and committed to be sold in the secondary market. The legacy FHN loans HFS portfolio consists of small business, other consumer loans, the mortgage warehouse, USDA, student, and home equity loans.
On March 31, 2021 and December 31, 2020, loans HFS were $811 million and $1.0 billion, respectively. The decrease in loans HFS was primarily driven by a
FIRST HORIZON CORPORATION771Q21 FORM 10-Q REPORT

seasonal slowdown in mortgage volume, as well as a reduction in refinance activity impacted by a recent rise in mortgage interest rates. Held-for-sale consumer mortgage loans secured by residential real estate in process of foreclosure totaled $2 million at both March 31, 2021 and December 31, 2020.

ASSET QUALITY

Loan and Lease Portfolio Composition
FHN groups its loans into portfolio segments based on internal classifications reflecting the manner in which the ALLL is established and how credit risk is measured, monitored, and reported. From time to time, and if conditions are such that certain subsegments are uniquely affected by economic or market conditions or are experiencing greater deterioration than other components of the loan portfolio, management may determine the ALLL at a more granular level. Commercial loans and leases are composed of C&I loans and leases and CRE loans. Consumer loans are composed of consumer real estate loans and credit card and other loans. FHN has a concentration of residential real estate loans (19% of total loans). Industry concentrations are discussed under the heading C&I below.
Credit underwriting guidelines are outlined in Item 7 of FHN’s Annual Report on Form 10-K for the year ended December 31, 2020 in the Loan Portfolio Composition discussion in the Asset Quality Section.
FHN’s credit underwriting guidelines and loan product offerings as of March 31, 2021 are generally consistent with those reported and disclosed in FHN’s Form 10-K for the year ended December 31, 2020.
Commercial Loan and Lease Portfolios
C&I
The C&I portfolio totaled $34.0 billion as of March 31, 2021 and $33.1 billion as of December 31, 2020 and is comprised of loans and leases used for general business purposes. Products offered in the C&I portfolio include term loan financing of owner-occupied real estate and fixed assets, direct financing and sales-type leases, working capital lines of credit, and trade credit enhancement through letters of credit. The largest geographical concentrations of balances in the C&I portfolio as of March 31, 2021 were in Tennessee (21%), Florida (12%), Texas (9%), Louisiana (8%), North Carolina (8%), California (7%), and Georgia (5%). No other state represented more than 5% of the portfolio.
The following table provides the composition of the C&I portfolio by industry as of March 31, 2021, and December 31, 2020. For purposes of this disclosure, industries are determined based on the North American Industry Classification System (NAICS) industry codes used by Federal statistical agencies in classifying business establishments for the collection, analysis, and publication of statistical data related to the U.S. business economy.
Table 7 — C&I Loan Portfolio by Industry
 March 31, 2021December 31, 2020
(Dollars in millions) 
AmountPercentAmountPercent
Industry: 
Loans to mortgage companies$5,530 16 %$5,404 16 %
Finance and insurance3,113 9 3,130 10 
Health care and social assistance2,832 8 2,689 8 
Accommodation and food service2,480 7 2,303 7 
Real estate rental and leasing (a)2,377 7 2,365 7 
Wholesale trade2,133 6 2,079 6 
Manufacturing1,968 6 1,907 6 
Energy1,637 5 1,686 5 
Retail trade1,566 5 1,531 5 
Professional, scientific, and technical1,567 5 1,457 4 
Other (construction, transportation, etc.) (b)8,748 26 8,553 26 
Total C&I loan portfolio$33,951 100 %$33,104 100 %
(a)Leasing, rental of real estate, equipment, and goods.
(b)Industries in this category each comprise less than 5% for 2021.


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Industry Concentrations
Loan concentrations exist when there are loans to numerous borrowers engaged in similar activities that would cause them to be similarly impacted by economic or other conditions. Loans to mortgage companies and borrowers in the finance and insurance industry were 25% of FHN’s C&I loan portfolio as of March 31, 2021, and as a result could be affected by items that uniquely impact the financial services industry. As of March 31, 2021, FHN did not have any other concentrations of C&I loans in any single industry of 10% or more of total loans.
Loans to Mortgage Companies
Loans to mortgage companies were 16% of the C&I portfolio as of March 31, 2021 and December 31, 2020. This portfolio generally fluctuates with mortgage rates and seasonal factors and includes commercial lines of credit to qualified mortgage companies primarily for the temporary warehousing of eligible mortgage loans prior to the borrower’s sale of those mortgage loans to third party investors. Generally, new loan originations to mortgage lenders increases when there is a decline in mortgage rates and decreases when rates rise. In periods of economic uncertainty, this trend may not occur even if interest rates are declining. In first quarter 2021, 33% of the loan originations were home purchases and 67% were refinance transactions.
Finance and Insurance
The finance and insurance component represents 9% of the C&I portfolio as of March 31, 2021 compared to 10% as of December 31, 2020, and includes TRUPs (i.e., long-term unsecured loans to bank and insurance-related businesses), loans to bank holding companies, and asset-based lending to consumer finance companies. As of March 31, 2021, asset-based lending to consumer finance companies represents approximately $1.2 billion of the finance and insurance component.
TRUPs lending was originally extended as a form of “bridge” financing to participants in the pooled trust preferred securitization program offered primarily to smaller banking (generally less than $15 billion in total assets) and insurance institutions through FHN’s fixed income business. Origination of TRUPs lending ceased in early 2008. Individual TRUPs are re-graded at least quarterly as part of FHN’s commercial loan review process. The terms of these loans generally include a scheduled 30 year balloon payoff and include an option to defer interest for up to 20 consecutive quarters. As of March 31, 2021, the unpaid principal balance (UPB) of trust preferred loans totaled $228 million. Including an amortizing discount of $18 million, total reserves (ALLL plus the
amortizing discount) for TRUPs and other bank-related loans were $28 million, or 12% of outstanding UPB. As of March 31, 2021, TRUPs loans included $7 million of loans on nonaccrual, which represented a single loan relationship.
Paycheck Protection Program
In 2020, Congress created the Paycheck Protection Program (PPP). Under the PPP, qualifying businesses may receive loans from private lenders, such as FHN, that are fully guaranteed by the Small Business Administration. These loans potentially are partly or fully forgivable, depending upon the borrower’s use of the funds and maintenance of employment levels. To the extent forgiven, the borrower is relieved from payment while the lender is still paid from the program. Congress made revisions to the PPP during first quarter 2021, and may make further revisions in the future.

At March 31, 2021, FHN had 44,717 of PPP loans with an aggregate principal balance of $5.1 billion. For these loans, FHN anticipates being paid net lender fees of approximately $81 million in relation to the PPP loans held at March 31, 2021.
Because PPP loans carry a full SBA guarantee, they do not have any credit risk and will not affect the amount of provision and ALLL recorded. As a result, no ALLL is recorded for PPP loans as of March 31, 2021, and FHN has assigned a risk weight of zero to PPP loans for regulatory capital purposes.
Commercial Real Estate
The CRE portfolio totaled $12.5 billion and $12.3 billion as of March 31, 2021 and December 31, 2020, respectively. The CRE portfolio reflects financings for both commercial construction and nonconstruction loans. The largest geographical concentrations of CRE loan balances as of March 31, 2021 were in Florida (28%), Louisiana (11%), Texas (11%), North Carolina (11%), Tennessee (9%), and Georgia (9%). No other state represented more than 5% of the portfolio. This portfolio contains loans, draws on lines, and letters of credit to commercial real estate developers for the construction and mini-permanent financing of income-producing real estate. Subcategories of the CRE portfolio consist of multi-family (27%), office (22%), retail (18%), industrial (11%), hospitality (11%), land/land development (2%), and other (9%).



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Consumer Loan Portfolios
Consumer Real Estate
The consumer real estate portfolio totaled $11.1 billion and $11.7 billion as of March 31, 2021 and December 31, 2020, respectively , and is primarily composed of home equity lines and installment loans. The largest geographical concentrations of balances as of March 31, 2021, were in Florida (32%), Tennessee (25%), Louisiana (10%), North Carolina (8%), and Texas (5%). No other state represented more than 5% of the portfolio.
As of March 31, 2021, approximately 85% of the consumer real estate portfolio was in a first lien position. At origination, the weighted average FICO score of this portfolio was 753 and the refreshed FICO scores averaged 765 as of March 31, 2021, no significant change from FICO scores of 753 and 763, respectively, as of December 31, 2020. Generally, performance of this portfolio is affected by life events that affect borrowers’ finances, the level of unemployment, and home prices.
As of March 31, 2021 and December 31, 2020, FHN had held-for-investment consumer mortgage loans secured by real estate that were in the process of foreclosure totaling $34 million and $36 million, respectively.
HELOCs comprised $2.3 billion of the consumer real estate portfolio as of March 31, 2021. FHN’s HELOCs typically have a 5 or 10 year draw period followed by a 10 or 20 year repayment period, respectively. During the draw period, a borrower is able to draw on the line and is only required to make interest payments. The line is frozen if a borrower becomes past due on payments. Once the draw period has ended, the line is closed and the borrower is required to make both principal and interest payments monthly until the loan matures. The principal payment generally is fully amortizing, but payment amounts will adjust when variable rates reset to reflect changes in the prime rate.
As of both March 31, 2021 and December 31, 2020, approximately 86% of FHN's HELOCs were in the draw period. It is expected that $438 million, or 22% of HELOCs currently in the draw period, will enter the repayment period during the next 60 months, based on current terms. Generally, delinquencies for HELOCs that have entered the repayment period are initially higher than HELOCs still in the draw period because of the increased minimum payment requirement. However, over time, performance of these loans usually begins to stabilize. HELOCs are monitored closely for those nearing the end of the draw period.
The following table presents HELOCs currently in the draw period and expected timing of conversion to the repayment period.

Table 8—HELOC Draw To Repayment Schedule
 March 31, 2021December 31, 2020
(Dollars in millions)Repayment
Amount		PercentRepayment
Amount		Percent
Months remaining in draw period:
0-12$65 3 %$73 4 %
13-2458 3 66 3 
25-3654 3 62 3 
37-4878 4 67 3 
49-60183 9 187 8 
>601,551 78 1,662 79 
Total$1,989 100 %$2,117 100 %

Credit Card and Other
The credit card and other portfolio, which is primarily within the Regional Banking segment, totaled $1.1 billion as of March 31, 2021 and primarily includes consumer-related credits, including home equity and other personal consumer loans, credit card receivables, and automobile loans. There was no
significant change in the balance of this portfolio from December 31, 2020.
Allowance for Loan and Lease Losses
Management’s policy is to maintain the ALLL at a level sufficient to recognize current expected credit losses on the amortized cost basis of the loan and lease portfolio. The total allowance for loan and lease
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losses decreased to $914 million on March 31, 2021 from $963 million on December 31, 2020. The ALLL as of March 31, 2021 reflects the improvement in the economic forecast from year-end 2020. As a result, the ratio of ALLL to total loans and leases decreased 9 basis points from December 31, 2020 to 1.56% on March 31, 2021.
The provision for loan and lease losses is the charge to or release of earnings necessary to maintain the ALLL at a sufficient level reflecting management’s estimate of current expected losses on the amortized cost basis of the loan and lease portfolio. Provision credit was $41 million in first quarter 2021 compared to a provision expense of $145 million in first quarter 2020. The decrease is primarily attributable to an improving economic forecast, as first quarter 2020 was negatively impacted by the economic uncertainty around the COVID-19 pandemic.
Asset quality trends may continue to be impacted by the economic uncertainty attributable to the COVID-19 pandemic. The C&I portfolio reflects a broad mix of categories with the heaviest concentration in loans to mortgage companies which carry minimal credit risk. The C&I portfolio as of March 31, 2021 includes $5.1 billion of loans made under the Paycheck Protection Program of the SBA. PPP loans are fully government guaranteed with the SBA. Due to the government guarantee and forgiveness provisions, PPP loans are considered to have no credit risk.
The CRE portfolio metrics may continue to be impacted by the COVID-19 pandemic due to travel and occupancy restrictions set by state and local governments affecting the hospitality and retail industries. The consumer portfolio may also continue to be impacted by the COVID-19 pandemic if consumer unemployment continues to remain elevated and clients are unable to continue making loan payments. The consumer portfolio, however, is high quality with no subprime and minimal exposure to other traditional categories of high risk lending.
Consolidated Net Charge-offs
Net charge-offs in first quarter 2021 were $8 million, an annualized charge-off percentage of 0.06% of total loans and leases, consistent with net charge-offs of$8 million in first quarter 2020.
Net charge-offs in first quarter 2021 in the commercial portfolio were $11 million compared to $6 million in first quarter 2020. Net charge-offs were impacted by higher energy charge-offs in the current quarter, as well as a larger commercial portfolio from acquired loans in third quarter 2020.
Net recoveries in the consumer portfolio were $3 million in first quarter 2021, driven by consumer real estate recoveries in the Corporate segment, compared to $2 million in net charge-offs in first quarter 2020.
Table 9—Analysis of Allowance for Loan and Lease Losses and Charge-offs
(Dollars in millions)
Allowance for loan and lease losses (a)March 31, 2021December 31, 2020March 31, 2020
C&I$442 $453 $255 
CRE232 242 48 
Consumer real estate222 242 122 
Credit card and other18 26 19 
Total allowance for loan and lease losses$914 $963 $444 
Period-end loans and leases
C&I$33,951 $33,104 $22,124 
CRE12,470 12,275 4,640 
Consumer real estate11,053 11,725 6,119 
Credit card and other1,126 1,128 495 
Total period-end loans and leases$58,600 $58,232 $33,378 
ALLL / loans and leases % (a)
C&I1.30 %1.37 %1.15 %
CRE1.86 %1.97 %1.03 %
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Consumer real estate2.00 %2.07 %2.00 %
Credit card and other1.63 %2.34 %3.91 %
Total ALLL / loans and leases %1.56 %1.65 %1.33 %
Quarter-to-date net charge-offs (recoveries)
C&I$10 $31 $6 
CRE1 (1)— 
Consumer real estate(5)(3)(1)
Credit card and other2 2 3 
Total net charge-offs$8 $29 $8 
Average loans and leases (b)
C&I$33,279 $34,196 $19,470 
CRE12,424 12,400 4,422 
Consumer real estate11,400 12,030 6,134 
Credit card and other1,119 1,194 498 
Total average loans and leases$58,222 $59,820 $30,524 
Charge-off %
C&I0.12 %0.36 %0.12 %
CRE0.06 %NM— %
Consumer real estateNMNMNM
Credit card and other0.65 %0.68 %2.23 %
Total charge-off %0.06 %0.19 %0.10 %
ALLL / annualized net charge-offs
C&I11.47 x3.67 x10.89 x
CRE33.31 xNMNM
Consumer real estateNMNMNM
Credit card and other2.53 x3.23 x1.74 x
Total ALLL / net charge-offs28.14 x8.41 x13.80 x
ALLL / NPLs
C&I3.07 x3.15 x2.65 x
CRE3.45 x4.15 x21.75 x
Consumer real estate1.23 x1.33 x1.34 x
Credit card and other7.49 x13.13 x53.69 x
Total ALLL / NPLs2.32 x2.49 x2.34 x
NM - not meaningful
(a)The increase in the ALLL from first quarter 2020 was primarily attributable to the allowance recorded on acquired non-PCD loans and the decline in the economic forecast attributable to the COVID-19 pandemic, while the decrease from fourth quarter 2020 was from an improvement in the overall economic forecast.
(b)The increase in period-end and average loans and leases from 1st quarter 2020 is primarily the result of $26.3 billion in acquired loans and leases in third quarter 2020.
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Nonperforming Assets
Nonperforming loans are loans placed on nonaccrual if it becomes evident that full collection of principal and interest is at risk, if impairment has been recognized as a partial charge-off of principal balance due to insufficient collateral value and past due status, or (on a case-by-case basis), if FHN continues to receive payments but there are other borrower-specific issues. Included in nonaccruals are loans that FHN continues to receive payments, including residential real estate loans where the borrower has been discharged of personal obligation through bankruptcy. NPAs consist of nonperforming loans and OREO (excluding OREO from government insured mortgages).
Total NPAs (including NPLs HFS) increased to $410 million as of March 31, 2021 from $406 million as of
December 31, 2020. Despite the marginal increase, the nonperforming assets ratio (nonperforming assets excluding NPLs HFS to total period-end loans plus OREO) was 0.69% as of both March 31, 2021 and December 31, 2020. The ratio of the ALLL to NPLs was 2.3 times as of March 31, 2021 compared to 2.5 times as of December 31, 2020.
Certain nonperforming loans in both the commercial and consumer portfolios are deemed collateral-dependent and are charged down to an estimate of collateral value less costs to sell. Because the estimated loss has been recognized through a partial charge-off, typically an ALLL is not recorded.
Table 10—Nonperforming Assets by Loan Portfolio
(Dollars in millions)March 31, 2021December 31, 2020
Nonperforming loans and leases
C&I$144 $144 
CRE67 58 
Consumer real estate180 182 
Credit card and other3 2 
Total nonperforming loans and leases (a)$394 $386 
Nonperforming loans held for sale (a)$5 $5 
Foreclosed real estate and other assets (b)11 15 
Total nonperforming assets (a) (c)$410 $406 
Nonperforming loans and leases to total loans and leases
C&I0.42 %0.43 %
CRE0.54 %0.48 %
Consumer real estate1.63 %1.56 %
Credit card and other0.22 %0.18 %
Total NPL %0.67 %0.66 %
(a)Excludes loans and leases that are 90 or more days past due and still accruing interest.
(b)Foreclosed real estate from GNMA loans totaled $2 million at both March 31, 2021 and December 31, 2020.
(c)Balances do not include government-insured foreclosed real estate.


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The following table provides nonperforming assets by business segment:

Table 11—Nonperforming Assets by Segment
(Dollars in millions)March 31, 2021December 31, 2020
Nonperforming loans and leases (a) (b)
Regional Banking$226 $216 
Specialty Banking111 117 
Corporate57 53 
Consolidated$394 $386 
Foreclosed real estate (c)
Regional Banking$10 $12 
Specialty Banking— 1 
Corporate1 2 
Consolidated$11 $15 
Nonperforming Assets (a) (b) (c)
Regional Banking$236 $228 
Specialty Banking111 118 
Corporate58 55 
Consolidated$405 $401 
Nonperforming loans and leases to loans and leases
Regional Banking0.56 %0.54 %
Specialty Banking0.64 0.68 
Corporate6.20 5.70 
Consolidated0.67 %0.66 %
NPA % (d)
Regional Banking0.58 %0.57 %
Specialty Banking0.64 0.68 
Corporate6.28 5.87 
Consolidated0.69 %0.69 %
(a)Excludes loans and leases that are 90 or more days past due and still accruing interest.
(b)Excludes loans classified as held for sale.
(c)Excludes foreclosed real estate and receivables related to government insured mortgages of $4 million and $5 million at March 31, 2021, and December 31, 2020, respectively.
(d)Ratio is non-performing assets to total loans and leases plus foreclosed real estate.


Lending Assistance for Borrowers
In addition to PPP loans, other customer support initiatives in response to the COVID-19 pandemic include incremental lending assistance for borrowers through delayed payment programs and fee waivers.
The following table provides the UPB of loans related to deferrals granted to FHN’s customers that have been processed through March 31, 2021.
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Table 12 - Customer Deferrals
(Dollars in millions)As of March 31, 2021
Commercial:
C&I$51
CRE178
Total Commercial$229
Consumer:
HELOC$12
R/E installment loans138
Credit card and other6
Total Consumer156
Total$385
Commercial deferrals were comprised primarily of general commercial (59% or $135 million) and professional commercial real estate (38% or $86 million).

To the extent that loans were past due at March 31, 2021 or December 31, 2020 and had been granted a deferral, they were excluded from loans past due 30 to 89 days and loans past due 90 days or more in the table and discussion below.
Past Due Loans and Potential Problem Assets
Past due loans are loans contractually past due as to interest or principal payments, but which have not yet been put on nonaccrual status. Loans in the portfolio that are 90 days or more past due and still accruing were $13 million on March 31, 2021, compared to $17 million on December 31, 2020. The decrease was primarily driven by consumer real estate loans. Loans 30 to 89 days past due were $81 million on March 31, 2021, compared to $100 million on December 31, 2020. The decrease included a $14 million decrease in consumer real estate loans, a $12 million decrease in CRE loans, and a $4 million decrease in credit card and other consumer loans, partially offset by an increase in C&I loans past due 30 to 89 days.
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Table 13—Accruing Delinquencies
(Dollars in millions)March 31, 2021December 31, 2020
Accruing loans and leases 30+ days past due
C&I$26 $15 
CRE11 23 
Consumer real estate52 69 
Credit card and other5 10 
Total 30+ Delinquency$94 $117 
Accruing loans and leases 30+ days past due %
C&I0.08 %0.05 %
CRE0.09 %0.19 %
Consumer real estate0.47 %0.58 %
Credit card and other0.45 %0.87 %
Total 30+ Delinquency %0.16 %0.20 %
Accruing loans and leases 90+ days past due (a) (b) (c):
C&I$— $— 
CRE— — 
Consumer real Estate13 16 
Credit card and other— 1 
Total accruing loans and leases 90+ days past due$13 $17 
Loans held for sale
30 to 89 days past due (b)7 6 
30 to 89 days past due - guaranteed portion (b) (d)6 5 
90+ days past due (b)13 12 
90+ days past due - guaranteed portion (b) (d)11 10 
(a)Excludes loans classified as held for sale.
(b)Amounts are not included in nonperforming/nonaccrual loans.
(c)Amounts are also included in accruing loans and leases 30+ days past due.
(d)Guaranteed loans include FHA, VA, and GNMA loans repurchased through the GNMA buyout program.


Potential problem assets represent those assets where information about possible credit problems of borrowers has caused management to have serious doubts about the borrower’s ability to comply with present repayment terms and includes loans past due 90 days or more and still accruing. This definition is believed to be substantially consistent with the standards established by Federal banking regulators for loans classified as substandard. Potential problem assets in the loan portfolio were $738 million on March 31, 2021 and $718 million on December 31, 2020. The increase in potential problem assets was from a net increase in classified commercial loans within the C&I portfolio from a limited number of
customer migrations to substandard loans in the current quarter. The current expectation of losses from potential problem assets has been included in management’s analysis for assessing the adequacy of the allowance for loan and lease losses.
Troubled Debt Restructurings and Loan Modifications
As part of FHN’s ongoing risk management practices, FHN attempts to work with borrowers when appropriate to extend or modify loan terms to better align with their current ability to repay. Extensions and modifications to loans are made in accordance with
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internal policies and guidelines which conform to regulatory guidance. Each occurrence is unique to the borrower and is evaluated separately. In a situation where an economic concession has been granted to a borrower that is experiencing financial difficulty, FHN identifies and reports that loan as a TDR.
For loan modifications that were made during 2021 and 2020 that met the TDR relief provisions outlined in either the CARES Act, as extended by the CAA, or revised Interagency Guidance, FHN has excluded these modifications from consideration as a TDR, and has excluded loans with these qualifying modifications from designation as a TDR in the
information and discussion that follows. See Note 4 – Loans and Leases for further discussion regarding TDRs and loan modifications.
On March 31, 2021 and December 31, 2020, FHN had $288 million and $307 million portfolio loans classified as TDRs, respectively. For TDRs in the loan portfolio, FHN had loan loss reserves of $11 million and $12 million, or 4% of TDR balances as of both March 31, 2021 and December 31, 2020, respectively. Additionally, FHN had $41 million and $42 million of HFS loans classified as TDRs as of March 31, 2021 and December 31, 2020, respectively.
The following table provides a summary of TDRs for the periods ended March 31, 2021 and December 31, 2020:
Table 14—Troubled Debt Restructurings
(Dollars in millions)As of
March 31, 2021		As of
December 31, 2020
Held-to-maturity:
Consumer real estate:
Current$71 $77 
Delinquent2 2 
Non-accrual (a)57 61 
Total consumer real estate130 140 
Credit card and other:
Current1 1 
Delinquent— — 
Non-accrual— — 
Total credit card and other1 1 
Commercial loans:
Current74 82 
Delinquent— — 
Non-accrual83 84 
Total commercial loans157 166 
Total held-to-maturity$288 $307 
Held-for-sale:
Current$35 $36 
Delinquent5 5 
Non-accrual1 1 
Total held-for-sale41 42 
Total troubled debt restructurings$329 $349 
(a)Balances as of March 31, 2021 and December 31, 2020, include $13 million and $11 million, respectively, of discharged bankruptcies.
Investment Securities
FHN’s investment portfolio consists principally of debt securities, including government agency issued mortgage-backed securities (“MBS”) and government agency issued collateralized mortgage obligations, (“CMO”), substantially all of
which are classified as available-for-sale (“AFS”). FHN utilizes theAFS. The securities portfolio asprovides a source of income and liquidity and collateral for repurchase agreements, for public funds,is an important tool used to balance the interest rate risk of the loan and as a tool for managing riskdeposit portfolios. The securities portfolio is periodically evaluated in light of established ALM objectives, changing market
FIRST HORIZON CORPORATION871Q21 FORM 10-Q REPORT

conditions that could affect the profitability of the portfolio, the regulatory environment, and the level of interest rate movements. Period-end investmentrisk to which FHN is exposed.
Investment securities were $4.6 billionwere $8.4 billion on March 31, 2020 compared to $4.52021, up from $8.0 billion on December 31, 2019.
Average investment securities were $4.5 billion in first quarter 2020 and $4.4 billion in fourth quarter 2019, representing 12 percentrepresented approximately 10% of average earningtotal assets in first quarter 2020for both periods. See Note 3 - Investment Securities for more information about the securities portfolio, including gross unrealized gains and fourth quarter 2019. The increase in period-end and average investment securities was drivenlosses by FHN's reinvestment strategy in 2020. FHN manages the size and mix of the investment portfolio to assist in assettype
liability management, provide liquidity,of security, contractual maturities, and optimize risk adjusted returns.securities pledged.
Loans Held-for-SaleDeposits
Loans HFS consistsTotal deposits as of small business, other consumer loans, the mortgage warehouse, USDA, student, and home equity loans. On March 31, 2020, loans H2021 FS were $595.6 million and $593.8 million, respectively. The average balance of loans HFS increased 5% to $590.5 million in first quarter 2020$73.2 billion from $581.8 million in fourth quarter 2019. The increase in period-end and average loans HFS was primarily driven by an increase in small business loans, somewhat offset by a decrease in USDA loans.
Other Earning Assets
Other earning assets include trading securities, securities purchased under agreements to resell ("asset repos"), federal funds sold (“FFS”), and interest-bearing deposits with the Fed and other financial institutions. Other earning assets averaged $3.2 billion in first quarter 2020, a 28 percent increase from $2.5 billion in fourth quarter 2019. The increase in average other earning assets was primarily driven by increases in fixed income trading inventory and asset repos relative to fourth quarter 2019. Fixed income's trading inventory fluctuates daily based on customer demand. Asset repos are used in fixed income trading activity and generally fluctuate with the level of fixed income trading liabilities (short-positions) as securities collateral from asset repo transactions are used to fulfill trades. Other earning assets were $3.1 billion on March 31, 2020, up from $2.5$70.0 billion on December 31, 2019, primarily2020 driven by increasesan increase in fixed income trading inventorynon-interest bearing deposits largely reflecting the impact of government stimulus checks and interest-bearing cash.PPP loan funding.


The following table summarizes FHN's average other earning assets for quarters-endedthe major components of deposits as of March 31, 20202021 and December 31, 2019.2020.
Table 6—Average Other Earning Assets15— Deposits
  Quarter Ended
March 31, 2020		 Quarter Ended
December 31, 2019		  
(Dollars in thousands) Amount Percent of total Amount Percent of total Growth Rate
Other earning assets          
Trading securities $1,831,492
 57% $1,263,633
 50% 45 %
Securities purchased under agreements to resell 816,794
 25
 645,979
 26
 26
Interest-bearing cash 548,036
 17
 586,495
 23
 (7)
Federal funds sold 10,192
 1
 9,700
 1
 5
Total other earning assets $3,206,514
 100% $2,505,807
 100% 28 %
 March 31, 2021December 31, 2020 
(Dollars in millions)AmountPercent of totalAmountPercent of totalChangePercent
Savings$27,023 37 %$27,324 39 %$(301)(1)%
Time deposits4,653 6 5,070 7 (417)(8)
Other interest-bearing deposits16,444 23 15,415 22 1,029 7 
Interest-bearing deposits48,120 66 47,809 68 311 1 
Noninterest-bearing deposits25,046 34 22,173 32 2,873 13 
Total deposits$73,166 100 %$69,982 100 %$3,184 5 %



FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 89



Non-earning assetsShort-Term Borrowings
Period-end non-earning assetsTotal short-term borrowings were $5.5 $2.2 billion and $4.7 billion onas of March 31, 20202021 and December 31, 2019, respectively, driven largely by increases in derivative assets, equity investments (primarily FHLB stock), and fixed income receivables, partially offset by an increase in the ALLL and a decrease in cash balances. Derivative assets and fixed income receivable balances were higher as a result of extreme market volatility during first quarter 2020 and an increase in required margin posting. The increase in the ALLL was due to the adoption of ASU 2016-13 (CECL) on January 1, 2020 and additional reserves established during first quarter 2020 associated with a sudden, steep decline in the economic forecast attributable to the COVID-19 pandemic.
Deposits
Average deposits increased to $32.9 billion during first quarter 2020 from $32.8 billion in fourth quarter 2019 and $32.5 billion in first quarter 2019. The increase in average deposits from fourth quarter 2019 was driven by a seasonal influx of consumer deposits (both non-interest bearing and interest bearing), coupled with an increase in market-indexed deposits, partially offset by lower commercial interest deposits. The increase in first quarter 2020 relative to first quarter 2019 was driven by increases in non-interest
bearing and consumer interest deposits as a result of FHN’s strategic focus on growing deposits during 2019, partially offset by decreases in commercial interest and market-indexed deposits. FHN's mix of interest-bearing deposits and noninterest-bearing deposits remained relatively consistent between periods.
Period-end deposits increased 6 percent to $34.4 billion on March 31, 2020, from $32.4 billion on December 31, 2019 and $32.5 billion on March 31, 2019. The increase in deposits from December 31, 2019 and March 31, 2019 was largely the result of management’s decision to increase market-indexed deposits (given the favorable benefits of this funding source in lower interest-rate environments) to fund loan growth, as well as significant deposit inflows in March 2020 as brokerage customers exited equity markets to move in cash positions given the market volatility associated with the COVID-19 pandemic.


The following table summarizes FHN's average deposits for quarters-ended March 31, 2020 and December 31, 2019.2020.
Table 7—Average Deposits
  Quarter Ended
March 31, 2020		 Quarter Ended
December 31, 2019		  
(Dollars in thousands) Amount Percent of total Amount Percent of total Growth Rate
Interest-bearing deposits:          
Consumer $13,760,968
 42% $13,718,820
 42% *
Commercial 6,006,364
 18
 6,145,681
 19
 (2)
Market-indexed (a) 4,448,587
 14
 4,370,025
 13
 2
Total interest-bearing deposits 24,215,919
 74
 24,234,526
 74
 *
Noninterest-bearing deposits 8,666,087
 26
 8,542,521
 26
 1
Total deposits $32,882,006
 100% $32,777,047
 100% *
* Amount is less than one percent.
(a)Market-indexed deposits are tied to an index not administered by FHN and are comprised of insured network deposits, correspondent banking deposits, and trust/sweep deposits.
Short-Term Borrowings
Short-term borrowings (federal funds purchased (“FFP”), securities sold under agreements to repurchase, trading liabilities, and other short-term borrowings) averaged $4.0 billion in first quarter 2020, up 20 percent from $3.3 billion in fourth quarter 2019. As noted in the table below, the increase in short-term borrowings between first quarter 2020 and fourth quarter 2019 was primarily driven by increases in other short-term borrowings and trading liabilities, partially offset by a decrease in FFP. Other short-term borrowings balances fluctuate largely based on



the level of FHLB borrowing as a result of loan demand, deposit levels and balance sheet funding strategies. Trading liabilities fluctuates based on expectations of customer demand. FFPFederal funds purchased fluctuates depending on the amount of excess funding of FHN’s correspondent bank customers. Period-end short-term borrowings increased 44 percentBalances of securities sold under agreements to $5.8 billion on March 31, 2020 from $4.0 billion on December 31, 2019, primarily driven by an increase in other short-term borrowings, somewhat offset by a decreases in FFP. The increase in short-term borrowings was used to fund commercial loan growth including an uptick in loans to mortgage companies in the latter part of the quarter.



resell fluctuate based on cost attractiveness relative to FHLB borrowing levels and the ability to pledge securities toward such transactions.
FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 90



Table 8—Average Short-Term Borrowings
  Quarter Ended
March 31, 2020		 Quarter Ended
December 31, 2019		  
(Dollars in thousands) Amount Percent of total Amount Percent of total Growth Rate
Short-term borrowings:          
Securities sold under agreements to repurchase $777,692
 20% $701,213
 21% 11 %
Trading liabilities 750,520
 19
 585,889
 18
 28
Federal funds purchased 746,686
 19
 1,163,701
 35
 (36)
Other short-term borrowings 1,686,690
 42
 844,558
 26
 NM
Total short-term borrowings $3,961,588
 100% $3,295,361
 100% 20 %
NM – Not meaningful
Term Borrowings
Term borrowings include senior and subordinated borrowings with original maturities greater than one year. Average termTerm borrowings were $.8 $1.7 billion in first quarter 2020 and $.9 billion in fourth quarter 2019. Period-end term borrowings were $.8 billion on as of March 31,, 2020 2021 and December 31, 2019. In April 2020, First Horizon Bank issued $450 million of subordinated notes.2020.
Other Liabilities
Period-end other liabilities were $1.2 billion on March 31, 2020, up from $1.0 billion on December 31, 2019, primarily driven by increases in derivative liabilities and fixed income payables.
Capital
Capital
Management’s objectives are to provide capital sufficient to cover the risks inherent in FHN’s businesses, to maintain excess capital to well-capitalizedwell-capitalized standards, and to assure ready access to the capital markets. Period-endTotal equity decreased $20.4 million from $5.1 billion on was $8.3 billion at both March 31, 2021 and December 31, 2019 to $5.1 billion on March 31, 2020. Average equity decreased $37.5
Significant changes included net income of $236 million to $5.0 billion in first quarter 2020 from $5.0 billion in fourth quarter 2019. Thewhich was offset by a decrease in period-end and average equity was largely attributable to the adoption impactAOCI of ASU 2016-13 (CECL) which
resulted$101 million, $92 million in a net decrease to retained earnings of $96.1 million on January 1, 2020, coupled with common and preferred dividends, paid, somewhat offset by net income recognized since fourth quarter 2019. A decreaseand $62 million in accumulated other comprehensive income ("AOCI"), largely the result of an increase in unrealized gains associated with AFS debt securities partially mitigated the decrease in period-end and average equity.

common share repurchases.


FIRST HORIZON CORPORATION881Q21 FORM 10-Q REPORT
FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 91




The following tables provide a reconciliation of Shareholders’shareholders’ equity from the Consolidated Condensed Statements of ConditionBalance Sheets to Common Equity Tier 1, Tier 1 and Total Regulatory Capital as well as certain selected capital ratios:
Table 9—16—Regulatory Capital and Ratios
(Dollars in millions)March 31, 2021December 31, 2020
Shareholders’ equity$8,012 $8,012 
Modified CECL transitional amount (a)178 191 
FHN non-cumulative perpetual preferred(470)(470)
Common equity tier 1 before regulatory adjustments$7,720 $7,733 
Regulatory adjustments:
Disallowed goodwill and other intangibles(1,745)(1,757)
Net unrealized (gains) losses on securities available for sale(5)(108)
Net unrealized (gains) losses on pension and other postretirement plans256 260 
Net unrealized (gains) losses on cash flow hedges(10)(12)
Disallowed deferred tax assets(1)(5)
Other deductions from common equity tier 1(1)(1)
Common equity tier 1$6,214 $6,110 
FHN non-cumulative perpetual preferred (b)377 377 
Qualifying noncontrolling interest— First Horizon Bank preferred stock295 295 
Tier 1 capital$6,886 $6,782 
Tier 2 capital1,120 1,153 
Total regulatory capital$8,006 $7,935 
Risk-Weighted Assets
First Horizon Corporation$62,339 $63,140 
First Horizon Bank61,610 62,508 
Average Assets for Leverage
First Horizon Corporation83,959 82,347 
First Horizon Bank83,242 81,709 
(Dollars in thousands)
 March 31, 2020 December 31, 2019
Shareholders’ equity $4,760,149
 $4,780,577
Modified CECL transitional amount (a) 132,811
 —
FHN non-cumulative perpetual preferred (95,624) (95,624)
Common equity $4,797,336
 $4,684,953
Regulatory adjustments:    
Disallowed goodwill and other intangibles (1,501,286) (1,505,971)
Net unrealized (gains)/losses on securities available-for-sale (119,357) (31,079)
Net unrealized (gains)/losses on pension and other postretirement plans 271,809
 273,914
Net unrealized (gains)/losses on cash flow hedges (16,288) (3,227)
Disallowed deferred tax assets (9,502) (8,610)
Other deductions from common equity tier 1 (949) (1,044)
Common equity tier 1 $3,421,763
 $3,408,936
FHN non-cumulative perpetual preferred 95,624
 95,624
Qualifying noncontrolling interest—First Horizon Bank preferred stock 294,816
 255,890
Tier 1 capital $3,812,203
 $3,760,450
Tier 2 capital 507,181
 394,435
Total regulatory capital $4,319,384
 $4,154,885
Risk-Weighted Assets    
First Horizon National Corporation $40,055,114
 $37,045,782
First Horizon Bank 39,670,943
 36,626,993
Average Assets for Leverage    
First Horizon National Corporation 42,348,418
 41,583,446
First Horizon Bank 41,632,972
 40,867,365


 March 31, 2021December 31, 2020
 RatioAmountRatioAmount
Common Equity Tier 1
First Horizon Corporation9.97 %$6,214 9.68 %$6,110 
First Horizon Bank10.72 6,606 10.46 6,537 
Tier 1
First Horizon Corporation11.05 6,886 10.74 6,782 
First Horizon Bank11.20 6,901 10.93 6,832 
Total
First Horizon Corporation12.84 8,006 12.57 7,935 
First Horizon Bank12.75 7,855 12.52 7,827 
Tier 1 Leverage
First Horizon Corporation8.20 6,886 8.24 6,782 
First Horizon Bank8.29 6,901 8.36 6,832 
Other Capital Ratios
Total period-end equity to period-end assets9.49 9.86 
Tangible common equity to tangible assets (c)6.64 6.89 
Adjusted tangible common equity to risk weighted assets (c)9.12 8.82 
(a)The modified CECL transitional amount is calculated as defined in the final rule issued by the banking regulators on August 26, 2020 and includes the full amount of the impact to retained earnings from the initial adoption of CECL plus 25% of the change in the adjusted allowance for credit losses since FHN’s initial adoption of CECL through March 31, 2021 and December 31, 2020.
(b)The $93 million carrying value of the Series D preferred stock does not qualify as Tier 1 capital because the earliest redemption date is less than five years from the issuance date.
(c)Tangible common equity to tangible assets and Adjusted tangible common equity to risk-weighted assets are non-GAAP measures and are reconciled to total equity to total assets (GAAP) in the Non-GAAP to GAAP Reconciliation - Table 20.
  March 31, 2020 December 31, 2019
  Ratio Amount Ratio Amount
Common Equity Tier 1        
First Horizon National Corporation 8.54% $3,421,763
 9.20% $3,408,936
First Horizon Bank 8.70
 3,450,974
 9.38
 3,433,867
Tier 1        
First Horizon National Corporation 9.52
 3,812,203
 10.15
 3,760,450
First Horizon Bank 9.44
 3,745,790
 10.18
 3,728,683
Total        
First Horizon National Corporation 10.78
 4,319,384
 11.22
 4,154,885
First Horizon Bank 10.37
 4,113,057
 10.77
 3,944,613
Tier 1 Leverage        
First Horizon National Corporation 9.00
 3,812,203
 9.04
 3,760,450
First Horizon Bank 9.00
 3,745,790
 9.12
 3,728,683
(a)FIRST HORIZON CORPORATIONThe modified CECL transitional amount is calculated as defined in the CECL interim final rule issued by the banking regulators on March 27, 2020 and includes the full amount of the impact to retained earnings from the initial adoption of CECL plus 25 percent of the change in the adjusted allowance for credit losses (“AACL”) since FHN’s initial adoption of CECL through March 31, 2020.891Q21 FORM 10-Q REPORT

Banking regulators define minimum capital ratios for bank holding companies and their bank subsidiaries. Based on the capital rules and definitions prescribed by the banking regulators, should any depository institution’s capital ratios decline below predetermined levels, it would become subject to a series of increasingly restrictive regulatory actions.
The system categorizes a depository institution’s
capital position into one of five categories ranging from well-capitalized to critically under-capitalized. For an
institution the size of FHN to qualify as well-capitalized, Common Equity Tier 1, Tier 1 Capital, Total Capital, and Leverage capital ratios must be at least 6.5 percent, 8 percent, 10 percent,6.50%, 8.00%, 10.00%, and 5 percent,5.00%, respectively. Furthermore, beginning January 1, 2019, a capital conservation buffer of 50 basis points above these levels


FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 92



must be maintained on the Common Equity Tier 1, Tier 1 Capital and Total Capital ratios to avoid restrictions on dividends, share repurchases and certain discretionary bonuses.
As of March 31, 2020,2021, each of FHN and First Horizon Bank had sufficientsufficient capital to qualify as well-capitalized institutions. FHN also had sufficient capitalinstitutions and to meet the capital conservation buffer requirement while First Horizon Bank fell slightly below based on its Totalrequirement. Capital Ratio. (See discussion on dividend limitations for First Horizon Bank in the “Liquidity Risk Management” section of this MD&A.) In April 2020, First Horizon Bank generated additional Tier 2 capital through the issuance of $450 million of subordinated notes. The first quarter 2020 capital ratios for both FHN and First Horizon Bank are calculated under the interim final rule issued by the banking regulators in late March 2020 to delay the effects of CECL on regulatory capital for two years, followed by a three-year transition period.
For both FHN and First Horizon Bank, the risk-based regulatory capital ratios decreasedincreased in first quarter 20202021 relative to fourth quarter 20192020 primarily due to increased risk-weightedfrom the impact of net income less dividends and share repurchases during the first three months of 2021 and a decrease in risk weighted assets, due to period-end commercialprimarily from loan growth (primarily loans to mortgage companies) and higher draw activity in March, coupled with an increase in market risk assets driven by a spike in VaR due to extreme volatility in March.activity. During 2020,2021, capital ratios are expected
to remain above well-capitalized standards.standards plus the required capital conservation buffer.

Common Stock Purchase ProgramsLoans to Mortgage Companies
PursuantLoans to board authority, FHN may repurchase sharesmortgage companies were 16% of its common stock from timethe C&I portfolio as of March 31, 2021 and December 31, 2020. This portfolio generally fluctuates with mortgage rates and seasonal factors and includes commercial lines of credit to time and will evaluate the level of capital and take action designed to generate or use capital, as appropriate,qualified mortgage companies primarily for the intereststemporary warehousing of eligible mortgage loans prior to the borrower’s sale of those mortgage loans to third party investors. Generally, new loan originations to mortgage lenders increases when there is a decline in mortgage rates and decreases when rates rise. In periods of economic uncertainty, this trend may not occur even if interest rates are declining. In first quarter 2021, 33% of the shareholders, subjectloan originations were home purchases and 67% were refinance transactions.
Finance and Insurance
The finance and insurance component represents 9% of the C&I portfolio as of March 31, 2021 compared to legal10% as of December 31, 2020, and regulatory restrictions. Two common stock purchase programs currently authorized are discussed below. FHN’s board has not authorized a preferred stock purchase program.
General Authority
On January 23, 2018, FHN announced a $250 million share purchase authority with an expiration date of January 31, 2020. On January 29, 2019, FHN announced a $250 million increase in that authority along with an extension of the expiration dateincludes TRUPs (i.e., long-term unsecured loans to January 31, 2021. Purchases may be made in the open market or through privately negotiated transactionsbank and are subjectinsurance-related businesses), loans to market conditions, accumulation of excess equity, prudent capital management,bank holding companies, and legal and regulatory restrictions.asset-based lending to consumer finance companies. As of March 31, 2020, $229.3 million in purchases had been made under this authority at an average price per share of $15.09, $15.07 excluding commissions. Management currently does not anticipate purchasing a material number of shares under this authority during the first half of 2020 due2021, asset-based lending to the pending merger of equals with IBKC.
Table 10a—Issuer Purchases of Common Stock - General Authority
(Dollar values and volume in thousands, except per share data) Total number
of shares
purchased		 Average price
paid per share (a)		 Total number of
shares purchased
as part of publicly
announced programs		 Maximum approximate dollar value that may yet be purchased under the programs
2020        
January 1 to January 31 —
 NA —
 $270,654
February 1 to February 29 —
 NA —
 270,654
March 1 to March 31 —
 NA —
 270,654
Total —
 N/A —
  
(a) Represents total costs including commissions paid.

Compensation Authority
A consolidated compensation plan share purchase program was announced on August 6, 2004. This program consolidated into a single share purchase program allconsumer finance companies represents approximately $1.2 billion of the previously authorized compensation plan share programsfinance and insurance component.
TRUPs lending was originally extended as wella form of “bridge” financing to participants in the pooled trust preferred securitization program offered primarily to smaller banking (generally less than $15 billion in total assets) and insurance institutions through FHN’s fixed income business. Origination of TRUPs lending ceased in early 2008. Individual TRUPs are re-graded at least quarterly as the renewalpart of the authorizationFHN’s commercial loan review process. The terms of these loans generally include a scheduled 30 year balloon payoff and include an option to purchase sharesdefer interest for use in connection with two compensation plans for which the share purchase authority had expired.


The total amount authorized under this consolidated compensation plan share purchase program, inclusive of a program amendment on April 24, 2006, is 29.6 million shares calculated before adjusting for stock dividends distributed through January 1, 2011. The authorization has been reduced for that portion which relatesup to compensation plans for which no options remain outstanding. The shares may be purchased over the option exercise period of the various compensation plans on or before December 31, 2023. Purchases may be made in the


FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 93



open market or through privately negotiated transactions and are subject to market conditions, accumulation of excess equity, prudent capital management, and legal and regulatory restrictions.20 consecutive quarters. As of March 31, 2020,2021, the unpaid principal balance (UPB) of trust preferred loans totaled $228 million. Including an amortizing discount of $18 million, total reserves (ALLL plus the
maximum numberamortizing discount) for TRUPs and other bank-related loans were $28 million, or 12% of sharesoutstanding UPB. As of March 31, 2021, TRUPs loans included $7 million of loans on nonaccrual, which represented a single loan relationship.
Paycheck Protection Program
In 2020, Congress created the Paycheck Protection Program (PPP). Under the PPP, qualifying businesses may receive loans from private lenders, such as FHN, that are fully guaranteed by the Small Business Administration. These loans potentially are partly or fully forgivable, depending upon the borrower’s use of the funds and maintenance of employment levels. To the extent forgiven, the borrower is relieved from payment while the lender is still paid from the program. Congress made revisions to the PPP during first quarter 2021, and may be purchased undermake further revisions in the program was 24.3future.

At March 31, 2021, FHN had 44,717 of PPP loans with an aggregate principal balance of $5.1 billion. For these loans, FHN anticipates being paid net lender fees of approximately $81 million shares. Management currently doesin relation to the PPP loans held at March 31, 2021.
Because PPP loans carry a full SBA guarantee, they do not anticipate purchasinghave any credit risk and will not affect the amount of provision and ALLL recorded. As a material numberresult, no ALLL is recorded for PPP loans as of shares under this authority during 2020.March 31, 2021, and FHN has assigned a risk weight of zero to PPP loans for regulatory capital purposes.
Commercial Real Estate
The CRE portfolio totaled $12.5 billion and $12.3 billion as of March 31, 2021 and December 31, 2020, respectively. The CRE portfolio reflects financings for both commercial construction and nonconstruction loans. The largest geographical concentrations of CRE loan balances as of March 31, 2021 were in Florida (28%), Louisiana (11%), Texas (11%), North Carolina (11%), Tennessee (9%), and Georgia (9%). No other state represented more than 5% of the portfolio. This portfolio contains loans, draws on lines, and letters of credit to commercial real estate developers for the construction and mini-permanent financing of income-producing real estate. Subcategories of the CRE portfolio consist of multi-family (27%), office (22%), retail (18%), industrial (11%), hospitality (11%), land/land development (2%), and other (9%).





Table 10b—Issuer Purchase of Common Stock - Compensation Authority
(Volume in thousands, except per share data) 
Total number
of shares
purchased
 
Average price
paid per share
 
Total number of
shares purchased
as part of publicly
announced programs
 
Maximum number
of shares that may
yet be purchased
under the programs
2020        
January 1 to January 31 26
 $16.81
 26
 24,431
February 1 to February 29 7
 16.30
 7
 24,424
March 1 to March 31 108
 14.05
 108
 24,316
Total 141
 $14.67
 141
  
FIRST HORIZON CORPORATION791Q21 FORM 10-Q REPORT

Consumer Loan Portfolios
Consumer Real Estate
The consumer real estate portfolio totaled $11.1 billion and $11.7 billion as of March 31, 2021 and December 31, 2020, respectively , and is primarily composed of home equity lines and installment loans. The largest geographical concentrations of balances as of March 31, 2021, were in Florida (32%), Tennessee (25%), Louisiana (10%), North Carolina (8%), and Texas (5%). No other state represented more than 5% of the portfolio.
As of March 31, 2021, approximately 85% of the consumer real estate portfolio was in a first lien position. At origination, the weighted average FICO score of this portfolio was 753 and the refreshed FICO scores averaged 765 as of March 31, 2021, no significant change from FICO scores of 753 and 763, respectively, as of December 31, 2020. Generally, performance of this portfolio is affected by life events that affect borrowers’ finances, the level of unemployment, and home prices.
As of March 31, 2021 and December 31, 2020, FHN had held-for-investment consumer mortgage loans secured by real estate that were in the process of foreclosure totaling $34 million and $36 million, respectively.
HELOCs comprised $2.3 billion of the consumer real estate portfolio as of March 31, 2021. FHN’s HELOCs typically have a 5 or 10 year draw period followed by a 10 or 20 year repayment period, respectively. During the draw period, a borrower is able to draw on the line and is only required to make interest payments. The line is frozen if a borrower becomes past due on payments. Once the draw period has ended, the line is closed and the borrower is required to make both principal and interest payments monthly until the loan matures. The principal payment generally is fully amortizing, but payment amounts will adjust when variable rates reset to reflect changes in the prime rate.
As of both March 31, 2021 and December 31, 2020, approximately 86% of FHN's HELOCs were in the draw period. It is expected that $438 million, or 22% of HELOCs currently in the draw period, will enter the repayment period during the next 60 months, based on current terms. Generally, delinquencies for HELOCs that have entered the repayment period are initially higher than HELOCs still in the draw period because of the increased minimum payment requirement. However, over time, performance of these loans usually begins to stabilize. HELOCs are monitored closely for those nearing the end of the draw period.
The following table presents HELOCs currently in the draw period and expected timing of conversion to the repayment period.

Table 8—HELOC Draw To Repayment Schedule
 March 31, 2021December 31, 2020
(Dollars in millions)Repayment
Amount		PercentRepayment
Amount		Percent
Months remaining in draw period:
0-12$65 3 %$73 4 %
13-2458 3 66 3 
25-3654 3 62 3 
37-4878 4 67 3 
49-60183 9 187 8 
>601,551 78 1,662 79 
Total$1,989 100 %$2,117 100 %

Credit Card and Other
The credit card and other portfolio, which is primarily within the Regional Banking segment, totaled $1.1 billion as of March 31, 2021 and primarily includes consumer-related credits, including home equity and other personal consumer loans, credit card receivables, and automobile loans. There was no
significant change in the balance of this portfolio from December 31, 2020.
Allowance for Loan and Lease Losses
Management’s policy is to maintain the ALLL at a level sufficient to recognize current expected credit losses on the amortized cost basis of the loan and lease portfolio. The total allowance for loan and lease
FIRST HORIZON CORPORATION801Q21 FORM 10-Q REPORT

losses decreased to $914 million on March 31, 2021 from $963 million on December 31, 2020. The ALLL as of March 31, 2021 reflects the improvement in the economic forecast from year-end 2020. As a result, the ratio of ALLL to total loans and leases decreased 9 basis points from December 31, 2020 to 1.56% on March 31, 2021.
The provision for loan and lease losses is the charge to or release of earnings necessary to maintain the ALLL at a sufficient level reflecting management’s estimate of current expected losses on the amortized cost basis of the loan and lease portfolio. Provision credit was $41 million in first quarter 2021 compared to a provision expense of $145 million in first quarter 2020. The decrease is primarily attributable to an improving economic forecast, as first quarter 2020 was negatively impacted by the economic uncertainty around the COVID-19 pandemic.
Asset quality trends may continue to be impacted by the economic uncertainty attributable to the COVID-19 pandemic. The C&I portfolio reflects a broad mix of categories with the heaviest concentration in loans to mortgage companies which carry minimal credit risk. The C&I portfolio as of March 31, 2021 includes $5.1 billion of loans made under the Paycheck Protection Program of the SBA. PPP loans are fully government guaranteed with the SBA. Due to the government guarantee and forgiveness provisions, PPP loans are considered to have no credit risk.
The CRE portfolio metrics may continue to be impacted by the COVID-19 pandemic due to travel and occupancy restrictions set by state and local governments affecting the hospitality and retail industries. The consumer portfolio may also continue to be impacted by the COVID-19 pandemic if consumer unemployment continues to remain elevated and clients are unable to continue making loan payments. The consumer portfolio, however, is high quality with no subprime and minimal exposure to other traditional categories of high risk lending.
Consolidated Net Charge-offs
Net charge-offs in first quarter 2021 were $8 million, an annualized charge-off percentage of 0.06% of total loans and leases, consistent with net charge-offs of$8 million in first quarter 2020.
Net charge-offs in first quarter 2021 in the commercial portfolio were $11 million compared to $6 million in first quarter 2020. Net charge-offs were impacted by higher energy charge-offs in the current quarter, as well as a larger commercial portfolio from acquired loans in third quarter 2020.
Net recoveries in the consumer portfolio were $3 million in first quarter 2021, driven by consumer real estate recoveries in the Corporate segment, compared to $2 million in net charge-offs in first quarter 2020.
Table 9—Analysis of Allowance for Loan and Lease Losses and Charge-offs
(Dollars in millions)
Allowance for loan and lease losses (a)March 31, 2021December 31, 2020March 31, 2020
C&I$442 $453 $255 
CRE232 242 48 
Consumer real estate222 242 122 
Credit card and other18 26 19 
Total allowance for loan and lease losses$914 $963 $444 
Period-end loans and leases
C&I$33,951 $33,104 $22,124 
CRE12,470 12,275 4,640 
Consumer real estate11,053 11,725 6,119 
Credit card and other1,126 1,128 495 
Total period-end loans and leases$58,600 $58,232 $33,378 
ALLL / loans and leases % (a)
C&I1.30 %1.37 %1.15 %
CRE1.86 %1.97 %1.03 %
FIRST HORIZON CORPORATION811Q21 FORM 10-Q REPORT

Consumer real estate2.00 %2.07 %2.00 %
Credit card and other1.63 %2.34 %3.91 %
Total ALLL / loans and leases %1.56 %1.65 %1.33 %
Quarter-to-date net charge-offs (recoveries)
C&I$10 $31 $6 
CRE1 (1)— 
Consumer real estate(5)(3)(1)
Credit card and other2 2 3 
Total net charge-offs$8 $29 $8 
Average loans and leases (b)
C&I$33,279 $34,196 $19,470 
CRE12,424 12,400 4,422 
Consumer real estate11,400 12,030 6,134 
Credit card and other1,119 1,194 498 
Total average loans and leases$58,222 $59,820 $30,524 
Charge-off %
C&I0.12 %0.36 %0.12 %
CRE0.06 %NM— %
Consumer real estateNMNMNM
Credit card and other0.65 %0.68 %2.23 %
Total charge-off %0.06 %0.19 %0.10 %
ALLL / annualized net charge-offs
C&I11.47 x3.67 x10.89 x
CRE33.31 xNMNM
Consumer real estateNMNMNM
Credit card and other2.53 x3.23 x1.74 x
Total ALLL / net charge-offs28.14 x8.41 x13.80 x
ALLL / NPLs
C&I3.07 x3.15 x2.65 x
CRE3.45 x4.15 x21.75 x
Consumer real estate1.23 x1.33 x1.34 x
Credit card and other7.49 x13.13 x53.69 x
Total ALLL / NPLs2.32 x2.49 x2.34 x
NM - not meaningful
(a)The increase in the ALLL from first quarter 2020 was primarily attributable to the allowance recorded on acquired non-PCD loans and the decline in the economic forecast attributable to the COVID-19 pandemic, while the decrease from fourth quarter 2020 was from an improvement in the overall economic forecast.
(b)The increase in period-end and average loans and leases from 1st quarter 2020 is primarily the result of $26.3 billion in acquired loans and leases in third quarter 2020.
FIRST HORIZON CORPORATION821Q21 FORM 10-Q REPORT

Nonperforming Assets
Nonperforming loans are loans placed on nonaccrual if it becomes evident that full collection of principal and interest is at risk, if impairment has been recognized as a partial charge-off of principal balance due to insufficient collateral value and past due status, or (on a case-by-case basis), if FHN continues to receive payments but there are other borrower-specific issues. Included in nonaccruals are loans that FHN continues to receive payments, including residential real estate loans where the borrower has been discharged of personal obligation through bankruptcy. NPAs consist of nonperforming loans and OREO (excluding OREO from government insured mortgages).
Total NPAs (including NPLs HFS) increased to $410 million as of March 31, 2021 from $406 million as of
December 31, 2020. Despite the marginal increase, the nonperforming assets ratio (nonperforming assets excluding NPLs HFS to total period-end loans plus OREO) was 0.69% as of both March 31, 2021 and December 31, 2020. The ratio of the ALLL to NPLs was 2.3 times as of March 31, 2021 compared to 2.5 times as of December 31, 2020.
Certain nonperforming loans in both the commercial and consumer portfolios are deemed collateral-dependent and are charged down to an estimate of collateral value less costs to sell. Because the estimated loss has been recognized through a partial charge-off, typically an ALLL is not recorded.
Table 10—Nonperforming Assets by Loan Portfolio
(Dollars in millions)March 31, 2021December 31, 2020
Nonperforming loans and leases
C&I$144 $144 
CRE67 58 
Consumer real estate180 182 
Credit card and other3 2 
Total nonperforming loans and leases (a)$394 $386 
Nonperforming loans held for sale (a)$5 $5 
Foreclosed real estate and other assets (b)11 15 
Total nonperforming assets (a) (c)$410 $406 
Nonperforming loans and leases to total loans and leases
C&I0.42 %0.43 %
CRE0.54 %0.48 %
Consumer real estate1.63 %1.56 %
Credit card and other0.22 %0.18 %
Total NPL %0.67 %0.66 %
(a)Excludes loans and leases that are 90 or more days past due and still accruing interest.
(b)Foreclosed real estate from GNMA loans totaled $2 million at both March 31, 2021 and December 31, 2020.
(c)Balances do not include government-insured foreclosed real estate.


FIRST HORIZON CORPORATION831Q21 FORM 10-Q REPORT

The following table provides nonperforming assets by business segment:

Table 11—Nonperforming Assets by Segment
(Dollars in millions)March 31, 2021December 31, 2020
Nonperforming loans and leases (a) (b)
Regional Banking$226 $216 
Specialty Banking111 117 
Corporate57 53 
Consolidated$394 $386 
Foreclosed real estate (c)
Regional Banking$10 $12 
Specialty Banking— 1 
Corporate1 2 
Consolidated$11 $15 
Nonperforming Assets (a) (b) (c)
Regional Banking$236 $228 
Specialty Banking111 118 
Corporate58 55 
Consolidated$405 $401 
Nonperforming loans and leases to loans and leases
Regional Banking0.56 %0.54 %
Specialty Banking0.64 0.68 
Corporate6.20 5.70 
Consolidated0.67 %0.66 %
NPA % (d)
Regional Banking0.58 %0.57 %
Specialty Banking0.64 0.68 
Corporate6.28 5.87 
Consolidated0.69 %0.69 %
(a)Excludes loans and leases that are 90 or more days past due and still accruing interest.
(b)Excludes loans classified as held for sale.
(c)Excludes foreclosed real estate and receivables related to government insured mortgages of $4 million and $5 million at March 31, 2021, and December 31, 2020, respectively.
(d)Ratio is non-performing assets to total loans and leases plus foreclosed real estate.


Lending Assistance for Borrowers
In addition to PPP loans, other customer support initiatives in response to the COVID-19 pandemic include incremental lending assistance for borrowers through delayed payment programs and fee waivers.
The following table provides the UPB of loans related to deferrals granted to FHN’s customers that have been processed through March 31, 2021.
FIRST HORIZON CORPORATION841Q21 FORM 10-Q REPORT

Table 12 - Customer Deferrals
(Dollars in millions)As of March 31, 2021
Commercial:
C&I$51
CRE178
Total Commercial$229
Consumer:
HELOC$12
R/E installment loans138
Credit card and other6
Total Consumer156
Total$385
Commercial deferrals were comprised primarily of general commercial (59% or $135 million) and professional commercial real estate (38% or $86 million).

To the extent that loans were past due at March 31, 2021 or December 31, 2020 and had been granted a deferral, they were excluded from loans past due 30 to 89 days and loans past due 90 days or more in the table and discussion below.
Past Due Loans and Potential Problem Assets
Past due loans are loans contractually past due as to interest or principal payments, but which have not yet been put on nonaccrual status. Loans in the portfolio that are 90 days or more past due and still accruing were $13 million on March 31, 2021, compared to $17 million on December 31, 2020. The decrease was primarily driven by consumer real estate loans. Loans 30 to 89 days past due were $81 million on March 31, 2021, compared to $100 million on December 31, 2020. The decrease included a $14 million decrease in consumer real estate loans, a $12 million decrease in CRE loans, and a $4 million decrease in credit card and other consumer loans, partially offset by an increase in C&I loans past due 30 to 89 days.
FIRST HORIZON CORPORATION851Q21 FORM 10-Q REPORT

Table 13—Accruing Delinquencies
(Dollars in millions)March 31, 2021December 31, 2020
Accruing loans and leases 30+ days past due
C&I$26 $15 
CRE11 23 
Consumer real estate52 69 
Credit card and other5 10 
Total 30+ Delinquency$94 $117 
Accruing loans and leases 30+ days past due %
C&I0.08 %0.05 %
CRE0.09 %0.19 %
Consumer real estate0.47 %0.58 %
Credit card and other0.45 %0.87 %
Total 30+ Delinquency %0.16 %0.20 %
Accruing loans and leases 90+ days past due (a) (b) (c):
C&I$— $— 
CRE— — 
Consumer real Estate13 16 
Credit card and other— 1 
Total accruing loans and leases 90+ days past due$13 $17 
Loans held for sale
30 to 89 days past due (b)7 6 
30 to 89 days past due - guaranteed portion (b) (d)6 5 
90+ days past due (b)13 12 
90+ days past due - guaranteed portion (b) (d)11 10 
(a)Excludes loans classified as held for sale.
(b)Amounts are not included in nonperforming/nonaccrual loans.
(c)Amounts are also included in accruing loans and leases 30+ days past due.
(d)Guaranteed loans include FHA, VA, and GNMA loans repurchased through the GNMA buyout program.


Potential problem assets represent those assets where information about possible credit problems of borrowers has caused management to have serious doubts about the borrower’s ability to comply with present repayment terms and includes loans past due 90 days or more and still accruing. This definition is believed to be substantially consistent with the standards established by Federal banking regulators for loans classified as substandard. Potential problem assets in the loan portfolio were $738 million on March 31, 2021 and $718 million on December 31, 2020. The increase in potential problem assets was from a net increase in classified commercial loans within the C&I portfolio from a limited number of
customer migrations to substandard loans in the current quarter. The current expectation of losses from potential problem assets has been included in management’s analysis for assessing the adequacy of the allowance for loan and lease losses.
Troubled Debt Restructurings and Loan Modifications
As part of FHN’s ongoing risk management practices, FHN attempts to work with borrowers when appropriate to extend or modify loan terms to better align with their current ability to repay. Extensions and modifications to loans are made in accordance with
FIRST HORIZON CORPORATION861Q21 FORM 10-Q REPORT

internal policies and guidelines which conform to regulatory guidance. Each occurrence is unique to the borrower and is evaluated separately. In a situation where an economic concession has been granted to a borrower that is experiencing financial difficulty, FHN identifies and reports that loan as a TDR.
For loan modifications that were made during 2021 and 2020 that met the TDR relief provisions outlined in either the CARES Act, as extended by the CAA, or revised Interagency Guidance, FHN has excluded these modifications from consideration as a TDR, and has excluded loans with these qualifying modifications from designation as a TDR in the
information and discussion that follows. See Note 4 – Loans and Leases for further discussion regarding TDRs and loan modifications.
On March 31, 2021 and December 31, 2020, FHN had $288 million and $307 million portfolio loans classified as TDRs, respectively. For TDRs in the loan portfolio, FHN had loan loss reserves of $11 million and $12 million, or 4% of TDR balances as of both March 31, 2021 and December 31, 2020, respectively. Additionally, FHN had $41 million and $42 million of HFS loans classified as TDRs as of March 31, 2021 and December 31, 2020, respectively.
The following table provides a summary of TDRs for the periods ended March 31, 2021 and December 31, 2020:
Table 14—Troubled Debt Restructurings
(Dollars in millions)As of
March 31, 2021		As of
December 31, 2020
Held-to-maturity:
Consumer real estate:
Current$71 $77 
Delinquent2 2 
Non-accrual (a)57 61 
Total consumer real estate130 140 
Credit card and other:
Current1 1 
Delinquent— — 
Non-accrual— — 
Total credit card and other1 1 
Commercial loans:
Current74 82 
Delinquent— — 
Non-accrual83 84 
Total commercial loans157 166 
Total held-to-maturity$288 $307 
Held-for-sale:
Current$35 $36 
Delinquent5 5 
Non-accrual1 1 
Total held-for-sale41 42 
Total troubled debt restructurings$329 $349 
(a)Balances as of March 31, 2021 and December 31, 2020, include $13 million and $11 million, respectively, of discharged bankruptcies.
Investment Securities
FHN’s investment portfolio consists principally of debt securities, including government agency issued mortgage-backed securities and government agency issued collateralized mortgage obligations, all of
which are classified as AFS. The securities portfolio provides a source of income and liquidity and is an important tool used to balance the interest rate risk of the loan and deposit portfolios. The securities portfolio is periodically evaluated in light of established ALM objectives, changing market
FIRST HORIZON CORPORATION871Q21 FORM 10-Q REPORT

conditions that could affect the profitability of the portfolio, the regulatory environment, and the level of interest rate risk to which FHN is exposed.
Investment securities were $8.4 billion on March 31, 2021, up from $8.0 billion on December 31, 2020 and represented approximately 10% of total assets for both periods. See Note 3 - Investment Securities for more information about the securities portfolio, including gross unrealized gains and losses by type
of security, contractual maturities, and securities pledged.
Deposits
Total deposits as of March 31, 2021 increased 5% to $73.2 billion from $70.0 billion on December 31, 2020 driven by an increase in non-interest bearing deposits largely reflecting the impact of government stimulus checks and PPP loan funding.
The following table summarizes the major components of deposits as of March 31, 2021 and December 31, 2020.
Table 15— Deposits
 March 31, 2021December 31, 2020 
(Dollars in millions)AmountPercent of totalAmountPercent of totalChangePercent
Savings$27,023 37 %$27,324 39 %$(301)(1)%
Time deposits4,653 6 5,070 7 (417)(8)
Other interest-bearing deposits16,444 23 15,415 22 1,029 7 
Interest-bearing deposits48,120 66 47,809 68 311 1 
Noninterest-bearing deposits25,046 34 22,173 32 2,873 13 
Total deposits$73,166 100 %$69,982 100 %$3,184 5 %


Short-Term Borrowings
Total short-term borrowings were $2.2 billion as of March 31, 2021 and December 31, 2020.
Short-term borrowings balances fluctuate largely based on the level of FHLB borrowing as a result of loan demand, deposit levels and balance sheet funding strategies. Federal funds purchased fluctuates depending on the amount of excess funding of FHN’s correspondent bank customers. Balances of securities sold under agreements to
resell fluctuate based on cost attractiveness relative to FHLB borrowing levels and the ability to pledge securities toward such transactions.
Term Borrowings
Term borrowings include senior and subordinated borrowings with original maturities greater than one year. Term borrowings were $1.7 billion as of March 31, 2021 and December 31, 2020.
Capital
Management’s objectives are to provide capital sufficient to cover the risks inherent in FHN’s businesses, to maintain excess capital to well-capitalized standards, and to assure ready access to the capital markets. Total equity was $8.3 billion at both March 31, 2021 and December 31, 2020.
Significant changes included net income of $236 million which was offset by a decrease in AOCI of $101 million, $92 million in common and preferred dividends, and $62 million in common share repurchases.
Asset Quality
FIRST HORIZON CORPORATION881Q21 FORM 10-Q REPORT

The following tables provide a reconciliation of shareholders’ equity from the Consolidated Balance Sheets to Common Equity Tier 1, Tier 1 and Total Regulatory Capital as well as certain selected capital ratios:
Table 16—Regulatory Capital and Ratios
(Dollars in millions)March 31, 2021December 31, 2020
Shareholders’ equity$8,012 $8,012 
Modified CECL transitional amount (a)178 191 
FHN non-cumulative perpetual preferred(470)(470)
Common equity tier 1 before regulatory adjustments$7,720 $7,733 
Regulatory adjustments:
Disallowed goodwill and other intangibles(1,745)(1,757)
Net unrealized (gains) losses on securities available for sale(5)(108)
Net unrealized (gains) losses on pension and other postretirement plans256 260 
Net unrealized (gains) losses on cash flow hedges(10)(12)
Disallowed deferred tax assets(1)(5)
Other deductions from common equity tier 1(1)(1)
Common equity tier 1$6,214 $6,110 
FHN non-cumulative perpetual preferred (b)377 377 
Qualifying noncontrolling interest— First Horizon Bank preferred stock295 295 
Tier 1 capital$6,886 $6,782 
Tier 2 capital1,120 1,153 
Total regulatory capital$8,006 $7,935 
Risk-Weighted Assets
First Horizon Corporation$62,339 $63,140 
First Horizon Bank61,610 62,508 
Average Assets for Leverage
First Horizon Corporation83,959 82,347 
First Horizon Bank83,242 81,709 

 March 31, 2021December 31, 2020
 RatioAmountRatioAmount
Common Equity Tier 1
First Horizon Corporation9.97 %$6,214 9.68 %$6,110 
First Horizon Bank10.72 6,606 10.46 6,537 
Tier 1
First Horizon Corporation11.05 6,886 10.74 6,782 
First Horizon Bank11.20 6,901 10.93 6,832 
Total
First Horizon Corporation12.84 8,006 12.57 7,935 
First Horizon Bank12.75 7,855 12.52 7,827 
Tier 1 Leverage
First Horizon Corporation8.20 6,886 8.24 6,782 
First Horizon Bank8.29 6,901 8.36 6,832 
Other Capital Ratios
Total period-end equity to period-end assets9.49 9.86 
Tangible common equity to tangible assets (c)6.64 6.89 
Adjusted tangible common equity to risk weighted assets (c)9.12 8.82 
(a)The modified CECL transitional amount is calculated as defined in the final rule issued by the banking regulators on August 26, 2020 and includes the full amount of the impact to retained earnings from the initial adoption of CECL plus 25% of the change in the adjusted allowance for credit losses since FHN’s initial adoption of CECL through March 31, 2021 and December 31, 2020.
(b)The $93 million carrying value of the Series D preferred stock does not qualify as Tier 1 capital because the earliest redemption date is less than five years from the issuance date.
(c)Tangible common equity to tangible assets and Adjusted tangible common equity to risk-weighted assets are non-GAAP measures and are reconciled to total equity to total assets (GAAP) in the Non-GAAP to GAAP Reconciliation - Table 20.
Loan Portfolio Composition
FIRST HORIZON CORPORATION891Q21 FORM 10-Q REPORT
FHN groups its loans into portfolio segments based on internal classifications reflecting the manner in which the ALLL is established and how credit risk is measured, monitored, and reported. From time to time, and if conditions are such that certain subsegments are uniquely affected by economic or market conditions or are experiencing greater deterioration than other components of the loan portfolio, management may determine the ALLL at a more granular level. Commercial loans are composed of commercial, financial, and industrial (“C&I”) and commercial real estate (“CRE”). Consumer loans are composed of consumer real estate; and credit card and other. In first quarter 2020, FHN consolidated its permanent mortgage portfolio into consumer real estate. Loans previously classified in permanent mortgage included primarily jumbo mortgages and one-time-close (“OTC”) completed construction loans in the non-strategic segment that were originated through pre-2009 mortgage businesses. FHN has a concentration of residential real estate loans (19 percent of total loans). Industry concentrations are discussed under the heading C&I below.
Consolidated key asset quality metrics for each of these portfolios can be found in Table 17 – Asset Quality by Portfolio. Credit underwriting guidelines are outlined in Exhibit 13 to FHN’s Annual Report on Form 10-K for the year ended December 31, 2019, in the Loan Portfolio Composition discussion in the Asset Quality Section
Banking regulators define minimum capital ratios for bank holding companies and their bank subsidiaries. Based on the capital rules and definitions prescribed by the banking regulators, should any depository institution’s capital ratios decline below predetermined levels, it would become subject to a series of increasingly restrictive regulatory actions.
beginningThe system categorizes a depository institution’s capital position into one of five categories ranging from well-capitalized to critically under-capitalized. For an institution the size of FHN to qualify as well-capitalized, Common Equity Tier 1, Tier 1 Capital, Total Capital, and Leverage capital ratios must be at least 6.50%, 8.00%, 10.00%, and 5.00%, respectively. Furthermore, a capital conservation buffer of 50 basis points above these levels must be maintained on page 67the Common Equity Tier 1, Tier 1 Capital and continuingTotal Capital ratios to page 87. FHN’s credit underwriting guidelinesavoid restrictions on dividends, share repurchases and loan product offerings ascertain discretionary bonuses.
As of March 31, 2021, each of FHN and First Horizon Bank had sufficient capital to qualify as well-capitalized institutions and to meet the capital conservation buffer requirement. Capital ratios for both FHN and First Horizon Bank are calculated under the final rule issued by the banking regulators in 2020 are generally consistent with those reported and disclosed into delay the Company’s Form 10-Keffects of CECL on regulatory capital for the year ended December 31, 2019.
COMMERCIAL LOAN PORTFOLIOS
C&I
The C&I portfolio was $22.1 billion on March 31, 2020, and is comprised of loans used for general business purposes. Typical products include working capital lines of credit, term loan financing of owner-occupied real estate and fixed assets, and trade credit enhancement through letters of credit. The largest geographical concentrations of balances as of March 31, 2020, are in Tennessee (29 percent), North Carolina (10 percent), California (9 percent), Texas (6 percent), Florida (6 percent), Georgia (4 percent), South Carolina (3 percent), and Virginia (3 percent), with no other state representing more than 3 percent of the portfolio.two years, followed by a three-year transition period.
The following table providesFor both FHN and First Horizon Bank, the compositionrisk-based regulatory capital ratios increased in first quarter 2021 relative to fourth quarter 2020 primarily from the impact of net income less dividends and share repurchases during the C&I portfolio by industry asfirst three months of March 31, 2020,2021 and December 31, 2019. For purposes of this disclosure, industriesa decrease in risk weighted assets, primarily from loan activity. During 2021, capital ratios are determined based on the North American Industry Classification System (“NAICS”) industry codes used by Federal statistical agencies in classifying business establishments for the collection, analysis, and publication of statistical data related to the U.S. business economy.
expected
Table 11—C&I Loan Portfolio by Industry


to remain above well-capitalized standards plus the required capital conservation buffer.
FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 94



  March 31, 2020 December 31, 2019
(Dollars in thousands) 
 Amount Percent Amount Percent
Industry: 
        
Loans to mortgage companies $5,713,914
 26% $4,410,883
 22%
Finance & insurance 2,797,370
 13
 2,778,411
 14
Real estate rental & leasing (a) 1,584,095
 7
 1,454,336
 7
Health care & social assistance 1,527,531
 7
 1,499,178
 8
Accommodation & food service 1,504,690
 7
 1,364,833
 7
Wholesale trade 1,464,847
 6
 1,372,147
 7
Manufacturing 1,343,586
 6
 1,150,701
 6
Other (education, arts, entertainment, etc) (b) 6,188,397
 28
 6,020,602
 29
Total C&I loan portfolio $22,124,430
 100% $20,051,091
 100%
(a)Leasing, rental of real estate, equipment, and goods.
(b)
Industries in this category each comprise less than 5 percent for 2020.
Industry Concentrations
Loan concentrations are considered to exist for a financial institution when there are loans to numerous borrowers engaged in similar activities that would cause them to be similarly impacted by economic or other conditions. 39 percent of FHN’s C&I portfolio (Finance and insurance plus Loans to mortgage companies) could be affected by items that uniquely impact the financial services industry. Except “Finance and Insurance” and “Loans to Mortgage Companies”, as discussed below, on March 31, 2020, FHN did not have any other concentrations of C&I loans in any single industry of 10 percent or more of total loans.
Loans to Mortgage Companies
The balance of loansLoans to mortgage companies was 26 percwere 16% of thent of thee C&I portfolio as of March 31, 2020, 22 percent as of2021 and December 31, 2019 and 13 percent as of March 31, 2019, and includes balances related to both home purchase and refinance activity.2020. This portfolio class, which generally fluctuates with mortgage rates and seasonal factors and includes commercial lines of credit to qualified mortgage companies primarily for the temporary warehousing of eligible mortgage loans prior to the borrower’s sale of those mortgage loans to third party investors. Generally, lendingnew loan originations to mortgage lenders increases when there is a decline in mortgage rates and decreases when rates rise.In periods of economic uncertainty, this trend may not occur even if interest rates are declining. In first quarter 2020, 46 percent2021, 33% of the loans fundedloan originations were home purchases and 54 percent67% were refinance transactions.transactions.
Finance and Insurance
The finance and insurance component representreps 13 presents 9% of ercent of the C&I portfolio as of March 31, 20202021 compared to 14 percent10% as of December 31, 2019,2020, and includes TRUPSTRUPs (i.e., long-term unsecured loans to bank

and insurance-related businesses), loans to bank holding companies, and asset-based lending to consumer finance companies. As of March 31, 2020,2021, asset-based lending to consumerconsumer finance companies represents approximatelyapproximately $1.2 billion ofof the finance and insurance component.
TRUPSTRUPs lending was originally extended as a form of “bridge” financing to participants in the pooled trust preferred securitization program offered primarily to smaller banking (generally less than $15 billion in total assets) and insurance institutions through FHN’s fixed income business. Origination of TRUPSTRUPs lending ceased in early 2008. Individual TRUPSTRUPs are re-graded at least quarterly as part of FHN’s commercial loan review process. The terms of these loans generally include a scheduled 30 year balloon payoff and include an option to defer interest for up to 20 consecutive quarters. As of March 31, 2020, no TRUP relationship was on interest deferral.
As of March 31, 2020,2021, the unpaid principal balance (“UPB”)(UPB) of trust preferred loans totaled $234.2 million ($173.6 milliontotaled $228 million. Including an amortizing discount of bank TRUPS and $60.7 million of insurance TRUPS) with the UPB of other bank-related loans totaling $282.3 million. Inclusive of a valuation allowance on TRUPS of $18.9 million,$18 million, total reserves (ALLL plus the valuation allowance)
amortizing discount) for TRUPSTRUPs and other bank-related loans were $29.9$28 million, or 6 percent12% of outstandingoutstanding UPB.
C&I Asset Quality Trends
The C&I portfolio trends remained stable in first quarter 2020; however, the impact of economic uncertainty attributable to the COVID-19 pandemic could negatively impact future trends. The C&I ALLL increased $132.0 million from December 31, 2019, to $254.5 million asAs of March 31, 2020,2021, TRUPs loans included $7 million of loans on nonaccrual, which represented a single loan relationship.
Paycheck Protection Program primarily due
In 2020, Congress created the Paycheck Protection Program (PPP). Under the PPP, qualifying businesses may receive loans from private lenders, such as FHN, that are fully guaranteed by the Small Business Administration. These loans potentially are partly or fully forgivable, depending upon the borrower’s use of the funds and maintenance of employment levels. To the extent forgiven, the borrower is relieved from payment while the lender is still paid from the program. Congress made revisions to the sudden, steep decline


FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 95



PPP during first quarter 2021, and may make further revisions in the economic forecast attributablefuture.

At March 31, 2021, FHN had 44,717 of PPP loans with an aggregate principal balance of $5.1 billion. For these loans, FHN anticipates being paid net lender fees of approximately $81 million in relation to the COVID-19 pandemic and the adoption of ASU 2016-13.
The allowance as a percentage of period-endPPP loans increased 54 basis points to 1.15 percent as ofheld at March 31, 2020, compared to .61 percent as2021.
Because PPP loans carry a full SBA guarantee, they do not have any credit risk and will not affect the amount of year-end 2019. Nonperforming C&I loans increased $21.8 million from December 31, 2019, to $96.1 million on March 31, 2020. The nonperforming loan (“NPL”) ratio increased to .43 percent of C&Iprovision and ALLL recorded. As a result, no ALLL is recorded for PPP loans as of March 31, 2020, from .37 percent as2021, and FHN has assigned a risk weight of December 31, 2019. The increase in NPLs was primarily driven by one credit.
The 30+ delinquency ratio increased 3 basis pointszero to .08 percent as of March 31, 2020. First quarter 2020 experienced net charge-offs of $5.8 million compared to $3.3 million and $2.3 million of net charge-offs in fourth quarter 2019 and first quarter 2019, respectively. First quarter 2020 net charge-offs were primarily driven by one credit.PPP loans for regulatory capital purposes.
The following table shows C&I asset quality trends by segment.
Table 12—C&I Asset Quality Trends by Segment
  2020
  Three months ended
(Dollars in thousands) Regional Bank Non-Strategic Consolidated
Allowance for loan losses as of January 1 $122,426
 $60
 $122,486
ASU Adoption 2016-13 9,086
 9,696
 18,782
Charge-offs (6,751) —
 (6,751)
Recoveries 931
 4
 935
Provision/(provision credit) for loan losses 118,970
 94
 119,064
Allowance for loan losses as of March 31 $244,662
 $9,854
 $254,516
Net charge-offs % (qtr. annualized) 0.12% NM
 0.12%
Allowance / net charge-offs 10.45x NM
 10.88x
       
  As of March 31
Period-end loans $21,798,168
 $326,262
 $22,124,430
Nonperforming loans 96,081
 —
 96,081
Troubled debt restructurings 40,439
 —
 40,439
30+ Delinq. % (a) 0.07% 0.50% 0.08%
NPL % 0.44
 —
 0.43
Allowance / loans % 1.12
 3.02
 1.15
       
  2019
  Three months ended
(Dollars in thousands) Regional Bank Non-Strategic Consolidated
Allowance for loan losses as of January 1 $97,617
 $1,330
 $98,947
Charge-offs (3,101) —
 (3,101)
Recoveries 801
 28
 829
Provision/(provision credit) for loan losses 7,076
 (38) 7,038
Allowance for loan losses as of March 31 $102,393
 $1,320
 $103,713
Net charge-offs % (qtr. annualized) 0.06%              NM
 0.06%
Allowance / net charge-offs 10.98x              NM
 11.26x
       
  As of December 31
Period-end loans $19,721,457
 $329,634
 $20,051,091
Nonperforming loans 74,312
 —
 74,312
Troubled debt restructurings 42,199
 —
 42,199
30+ Delinq. % (a) 0.05% —% 0.05%
NPL % 0.38
 —
 0.37
Allowance / loans % 0.62
 0.02
 0.61
NM—Not meaningful
Loans are expressed net of unearned income. 
(a)30+ Delinquency % includes all accounts delinquent more than one month and still accruing interest.


FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 96



Commercial Real Estate
The CRE portfolio was $4.6totaled $12.5 billion and $12.3 billion onas of March 31, 2020.2021 and December 31, 2020, respectively. The CRE portfolio includes bothreflects financings for both commercial construction and nonconstruction loans. The largest geographical concentrations of CRE loan balances as of March 31, 2020 are2021 were in Florida (28%), Louisiana (11%), Texas (11%), North Carolina (28 percent)(11%), Tennessee (20 percent), Florida (13 percent), South Carolina (8 percent), Texas (8 percent), Georgia (6 percent)(9%), and Kentucky (3 percent), with noGeorgia (9%). No other state representingrepresented more than 3 percent5% of the portfolio. Thisportfolio is segregated between the income-producing CRE class which contains loans, draws on lines, and letters of credit to commercial real estate developers for the construction and mini-permanent financing of income-producing real estate, andestate. Subcategories of the residential CRE class. Subcategories of income CREportfolio consist of multi-family (27%), office (27 percent), multi-family (22 percent)(22%), retail (19 percent)(18%), industrial (13 percent)(11%), hospitality (12 percent)(11%), land/land development (1 percent)(2%), and other (6 percent)(9%).
The residential CRE class includes loans to residential builders and developers for the purpose of constructing single-family homes, condominiums, and town homes, and on a limited basis, for developing residential subdivisions. After the fulfillment of existing commitments over the near term, the residential CRE class will be in a wind-down state with the expectation of full runoff in the foreseeable future.

















CRE Asset Quality Trends
The CRE portfolio as of March 31, 2020 was not significantly affected by the global COVID-19 pandemic, with nonperforming loans up $.4 million fro
m December 31, 2019. However, economic uncertainty attributable to COVID-19 could impact future CRE portfolio trends. The allowance increased to $47.6 million as of March 31, 2020, from $36.1 million as of December 31, 2019 primarily due to COVID-19. Allowance as a percentage of loans increased 20 basis points from .83 percent as of December 31, 2019, to 1.03 percent as of March 31, 2020. Nonperforming loans as a percentage of total CRE loans increased 1 basis point from December 31, 2019, to .05 percent as of March 31, 2020.
Accruing delinquencies as a percentage of period-end loans decreased to .01 percent as of March 31, 2020, from .02 percent as of December 31, 2019. Net charge-offs were not significant in first quarter 2020 and were $377 thousand in first quarter 2019.
The following table shows commercial real estate asset quality trends by segment.



FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 97



Table 13—Commercial Real Estate Asset Quality Trends by Segment
  2020
  Three months ended
(Dollars in thousands) Regional Bank Non-Strategic Consolidated
Allowance for loan losses as of January 1 $33,729
 $2,383
 $36,112
ASU Adoption 2016-13 (5,191) (2,157) (7,348)
Charge-offs (581) —
 (581)
Recoveries 573
 —
 573
Provision/(provision credit) for loan losses 18,399
 470
 18,869
Allowance for loan losses as of March 31 $46,929
 $696
 $47,625
Net charge-offs % (qtr. annualized) —% —
 —%
Allowance / net charge-offs NM
 NM
 NM
       
  As of March 31
Period-end loans $4,608,103
 $31,589
 $4,639,692
Nonperforming loans 2,190
 —
 2,190
Troubled debt restructurings 1,153
 —
 1,153
30+ Delinq. % (a) 0.01% —% 0.01%
NPL % 0.05
 —
 0.05
Allowance / loans % 1.02
 2.20
 1.03
       
  2019
  Three months ended
(Dollars in thousands) Regional Bank Non-Strategic Consolidated
Allowance for loan losses as of January 1 $31,311
 $—
 $31,311
Charge-offs (434) —
 (434)
Recoveries 57
 —
 57
Provision/(provision credit) for loan losses 3,448
 —
 3,448
Allowance for loan losses as of March 31 $34,382
 $—
 $34,382
Net charge-offs % (qtr. annualized) 0.04% NM
 0.04%
Allowance / net charge-offs 22.50x              NM
 22.50x
       
  As of December 31
Period-end loans $4,292,199
 $44,818
 $4,337,017
Nonperforming loans 1,825
 —
 1,825
Troubled debt restructurings 1,200
 —
 1,200
30+ Delinq. % (a) 0.02% —% 0.02%
NPL % 0.04
 —
 0.04
Allowance / loans % 0.79
 5.32
 0.83
NM—Not meaningful
Loans are expressed net of unearned income. 
(a)FIRST HORIZON CORPORATION30+ Delinquency % includes all accounts delinquent more than one month and still accruing interest.791Q21 FORM 10-Q REPORT




FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 98




CONSUMER LOAN PORTFOLIOSConsumer Loan Portfolios
Consumer Real Estate
The consumer real estate portfolio was $6.1totaled $11.1 billion and $11.7 billion onas of March 31, 2021 and December 31, 2020, respectively , and is primarily composed of home equity lines and installment loans including restricted balances (loans consolidated under ASC 810).loans. The largest geographical concentrationsconcentrations of balances as of March 31, 2020, are in2021, were in Florida (32%), Tennessee (55 percent)(25%), Louisiana (10%), North Carolina (15 percent), Florida (14 percent)(8%), and California (3 percent), with noTexas (5%). No other state representingrepresented more than 3 percent5% of the portfoliportfolio.
o. As of March 31, 2020,2021, approximately 85 percent85% of the consumer real estate portfolio was in a first lien position. At origination, the weighted average FICO score of this portfolio was 755753 and the refreshed FICO scores averaged 754 on765 as of March 31, 2021, no significant change from FICO scores of 753 and 763, respectively, as of December 31, 2020. Generally, performanceperformance of this portfolio is affected by life events that affect borrowers’ finances, the level of unemployment, and home prices.
Home equity linesAs of credit (“HELOCs”) comprise $1.3 billionMarch 31, 2021 and December 31, 2020, FHN had held-for-investment consumer mortgage loans secured by real estate that were in the process of foreclosure totaling $34 million and $36 million, respectively.
HELOCs comprised $2.3 billion of the consumer real estate portfolio as of March 31, 2020.2021. FHN’s HELOCs typically have a 5 or 10 year draw period followed by a 10 or 20 year repayment period, respectively. During the draw period, a borrower is able to draw on the line and is only required to make interest payments. The line is automatically frozen if a borrower becomes 45 days or more past due on payments. Once the draw period has concluded,ended, the line is closed and the borrower is required to make both principal and interest


payments monthly until the loan matures. The principal payment generally is fully amortizing, but payment amounts will adjust when variable rates reset to reflect changes in the prime rate.
As of both March 31, 2020, approximately2021 and 78 peDecember 31, 2020rcent, approximately 86% of FHN's HELOCs arewere in the draw period compared to approximately 76 percent as of December 31, 2019. Based on when draw periods are scheduled to end per the line agreement, itperiod. It is expected that $306.7 $438 million, or 32 percent of22% of HELOCs currently in the draw period, will enter the repayment period during the next 60 months. Delinquencies and charge-off ratesmonths, based on current terms. Generally, delinquencies for HELOCs that have entered the repayment period are initially higher than HELOCs still in the draw period because of the increased minimum payment requirement; however, after some seasoning,requirement. However, over time, performance of these loans usually begins to stabilize. The home equity lines of the consumer real estate portfolioHELOCs are being monitored closely for those nearing the end of the draw period and borrowers are initially being contacted at least 24 months before the repayment period begins to remind the customer of the terms of their agreement and to inform them of options.period.
The following table shows thepresents HELOCs currently in the draw period and expected timing of conversion to the repayment period.

Table 14—8—HELOC Draw To Repayment Schedule
 
 March 31, 2021December 31, 2020
(Dollars in millions)Repayment
Amount		PercentRepayment
Amount		Percent
Months remaining in draw period:
0-12$65 3 %$73 4 %
13-2458 3 66 3 
25-3654 3 62 3 
37-4878 4 67 3 
49-60183 9 187 8 
>601,551 78 1,662 79 
Total$1,989 100 %$2,117 100 %
  March 31, 2020 December 31, 2019
(Dollars in thousands) 
Repayment
Amount
 Percent 
Repayment
Amount
 Percent
Months remaining in draw period:        
0-12 $46,788
 5% $47,455
 5%
13-24 59,132
 6
 58,843
 6
25-36 64,613
 7
 65,833
 7
37-48 60,114
 6
 67,692
 7
49-60 76,089
 8
 75,246
 7
>60 665,293
 68
 666,001
 68
Total $972,029
 100% $981,070
 100%

Consumer Real Estate Asset Quality Trends
Overall, performance of the consumer real estate portfolio remained stable in first quarter 2020. Economic uncertainty attributable to COVID-19 could impact future trends. The non-strategic segment is a run-off portfolio and while the absolute dollars of delinquencies and nonaccruals as well as the 30+ accruing delinquencies ratio improved from year-end, nonperforming loans ratios deteriorated. That trend of increasing deterioration of ratios in the non-strategic


segment is likely to continue and may become more skewed as the portfolio shrinks and some of the stronger borrowers payoff or refinance elsewhere. NPLs as a percentage of loans increased 10 basis point from year-end to 1.49 percent as of March 31, 2020. The ALLL increased $94.6 million from December 31, 2019, to $123.0 million as of March 31, 2020, primarily due to the adoption of ASU 2016-13. The allowance as a percentage of loans increased 155 basis points to 2.01 percent as of March 31, 2020, compared to year-end. The balance of nonperforming loans increased $5.5 million to $91.2


FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 99



million as of March 31, 2020. Loans delinquent 30 or more days and still accruing declined from $42.9 million as of December 31, 2019, to $40.1 million as of March 31, 2020. The portfolio realized net recoveries of $1.2 million in first quarter 2020 compared to net recoveries of $3.3 million in
fourth quarter 2019 and net recoveries of $1.2 million in first quarter 2019.
The following table shows consumer real estate asset quality trends by segment.
Table 15—Consumer Real Estate Asset Quality Trends by Segment
  2020
  Three months ended
(Dollars in thousands) Regional Bank Corporate Non-Strategic Consolidated
Allowance for loan losses as of January 1 $13,340
 N/A
 $15,103
 $28,443
ASU Adoption 2016-13 88,004
 N/A
 4,988
 92,992
Charge-offs (488) N/A
 (1,822) (2,310)
Recoveries 690
 N/A
 2,865
 3,555
Provision/(provision credit) for loan losses 1,412
 N/A
 (1,070) 342
Allowance for loan losses as of March 31 $102,958
 N/A
 $20,064
 $123,022
Net charge-offs % (qtr. annualized) NM
 N/A
              NM
              NM
Allowance / net charge-offs NM
 N/A
              NM
              NM
         
  As of March 31
Period-end loans $5,716,888
 $30,613
 $371,882
 $6,119,383
Nonperforming loans 44,536
 1,302
 45,344
 91,182
Troubled debt restructurings 43,360
 2,041
 106,992
 152,393
30+ Delinq. % (a) 0.51% 5.39% 2.56% 0.66%
NPL % 0.78
 4.25
 12.19
 1.49
Allowance / loans % 1.80
 N/A
 5.40
 2.01
         
  2019
  Three months ended (a)
(Dollars in thousands) Regional Bank Corporate Non-Strategic Consolidated
Allowance for loan losses as of January 1 $14,555
 N/A
 $22,884
 $37,439
Charge-offs (1,641) N/A
 (1,163) (2,804)
Recoveries 1,036
 N/A
 3,005
 4,041
Provision/(provision credit) for loan losses 1,253
 N/A
 (5,775) (4,522)
Allowance for loan losses as of March 31 $15,203
 N/A
 $18,951
 $34,154
Net charge-offs % (qtr. annualized) 0.04% N/A
              NM
              NM
Allowance / net charge-offs 6.20x N/A
              NM
              NM
         
  As of December 31 (a)
Period-end loans $5,738,455
 $31,473
 $407,211
 $6,177,139
Nonperforming loans 37,014
 1,327
 47,353
 85,694
Troubled debt restructurings 46,031
 2,457
 113,758
 162,246
30+ Delinq. % (b) 0.50% 5.29% 3.10% 0.70%
NPL % 0.65
 4.22
 11.63
 1.39
Allowance / loans % 0.23
 N/A
 3.71
 0.46
NM—Not meaningful
Loans are expressed net of unearned income. 
(a)In first quarter 2020, the Permanent Mortgage portfolio was combined into Consumer Real Estate portfolio, all prior periods were revised for comparability.
(b)30+ Delinquency % includes all accounts delinquent more than one month and still accruing interest.




FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 100



Credit Card and Other
The credit card and other portfolio, which is primarily within the regional bankingRegional Banking segment, was $.5 billiontotaled $1.1 billion as of March 31, 2020,2021 and primarily includes creditconsumer-related credits, including home equity and other personal consumer loans, credit card receivables, other consumer-related credits, and automobile loans. The allowance increased to $19.3 million asThere was no
significant change in the balance of March 31, 2020, from $13.3 million as December 31, 2019, primarily driven by the sudden, steep decline in the


economic forecast attributable to the COVID-19 pandemic and the adoption of ASU 2016-13. Loans 30 days or more delinquent and accruing as a percentage of loans increased 6 basis pointsthis portfolio from December 31, 2019, to .99 percent as of March 31, 2020. Net charge-offs were $2.6 million in first quarter 2020 compared to $3.1 million in first quarter 2019.
Table 16—Credit Card and Other Asset Quality Trends by Segment
  2020
  Three months ended
(Dollars in thousands) Regional Bank Non-Strategic Consolidated
Allowance for loan losses as of January 1 $13,235
 $31
 $13,266
ASU Adoption 2016-13 1,607
 361
 1,968
Charge-offs (3,408) (403) (3,811)
Recoveries 915
 264
 1,179
Provision/(provision credit) for loan losses 6,654
 71
 6,725
Allowance for loan losses as of March 31 $19,003
 $324
 $19,327
Net charge-offs % (qtr. annualized) 2.14% 1.82% 2.12%
Allowance / net charge-offs 1.89x 0.58x 1.83x
       
  As of March 31
Period-end loans $468,183
 $26,615
 $494,798
Nonperforming loans 109
 251
 360
Troubled debt restructurings 667
 32
 699
30+ Delinq. % (a) 0.90% 2.60% 0.99%
NPL % 0.02
 0.94
 0.07
Allowance / loans % 4.06
 1.21
 3.91
       
  2019
  Three months ended
(Dollars in thousands) Regional Bank Non-Strategic Consolidated
Allowance for loan losses as of January 1 $12,595
 $132
 $12,727
Charge-offs (3,002) (1,186) (4,188)
Recoveries 745
 342
 1,087
Provision/(provision credit) for loan losses 2,179
 857
 3,036
Allowance for loan losses as of March 31 $12,517
 $145
 $12,662
Net charge-offs % (qtr. annualized) 2.10% 4.35% 2.44%
Allowance / net charge-offs 1.37x 0.04x 1.01x
       
  As of December 31
Period-end loans $460,742
 $35,122
 $495,864
Nonperforming loans 36
 298
 334
Troubled debt restructurings 615
 38
 653
30+ Delinq. % (a) 0.69% 4.05% 0.93%
NPL % 0.01
 0.85
 0.07
Allowance / loans % 2.87
 0.09
 2.68
NM—Not meaningful
Loans are expressed net of unearned income. 
(a)30+ Delinquency % includes all accounts delinquent more than one month and still accruing interest.



FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 101



The following table provides additional asset quality data by loan portfolio:
Table 17—Asset Quality by Portfolio
  March 31 December 31
  2020 2019
Key Portfolio Details    
C&I    
Period-end loans ($ millions) $22,124
 $20,051
30+ Delinq. % (a) 0.08% 0.05%
NPL % 0.43
 0.37
Charge-offs % (qtr. annualized) 0.12
 0.07
Allowance / loans % 1.15% 0.61%
Allowance / net charge-offs 10.88x 9.25x
Commercial Real Estate    
Period-end loans ($ millions) $4,640
 $4,337
30+ Delinq. % (a) 0.01% 0.02%
NPL % 0.05
 0.04
Charge-offs % (qtr. annualized) —
 NM
Allowance / loans % 1.03% 0.83%
Allowance / net charge-offs NM
 NM
Consumer Real Estate (b)    
Period-end loans ($ millions) $6,119
 $6,177
30+ Delinq. % (a) 0.66% 0.70%
NPL % 1.49
 1.39
Charge-offs % (qtr. annualized)            NM
              NM
Allowance / loans % 2.01% 0.46%
Allowance / net charge-offs            NM
 
             NM

Credit Card and Other    
Period-end loans ($ millions) $495
 $496
30+ Delinq. % (a) 0.99% 0.93%
NPL % 0.07
 0.07
Charge-offs % (qtr. annualized) 2.12
 2.29
Allowance / loans % 3.91% 2.68%
Allowance / net charge-offs 1.83x 1.14x
NM – Not meaningful
Loans are expressed net of unearned income. 
(a)30+ Delinquency % includes all accounts delinquent more than one month and still accruing interest.
(b)In first quarter 2020, the Permanent Mortgage portfolio was combined into Consumer Real Estate portfolio, all prior periods were revised for comparability.



FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 102



Allowance for Loan and Lease Losses
Management’s policy is to maintain the ALLL at a level sufficient to recognize current expected credit losses on the amortized cost basis of the loan and lease portfolio. The total allowance for loan and lease
FIRST HORIZON CORPORATION801Q21 FORM 10-Q REPORT

losses increaseddecreased to $444.5$914 million on March 31, 2020,2021 from $200.3$963 million on December 31, 2019.2020. The ALLL as of March 31, 2020,2021 reflects the adoption of ASU 2016-13 on January 1, 2020 and the sudden, steep declineimprovement in the economic forecast attributable tofrom year-end 2020. As a result, the COVID-19 pandemic. The ratio of allowance for credit lossesALLL to total loans net of unearned income, increase 69and leases decreased 9 basis points from December 31, 2020 to 1.33 percent1.56% on March 31, 2020, compared to .64 percent on December 31, 2019.2021.
The provision for loan and lease losses is the charge to or release of earnings necessary to maintain the ALLL at a sufficient level reflecting management’s estimate of current expected losses on the amortized cost basis of the loan and lease portfolio. Provision expensecredit was $145.0$41 million in first quarter 2020,2021 compared to $9.0 milliona provision expense of $145 million in first quarter 2019.2020. The increasedecrease is primarily attributable to the decliningan improving economic forecast, attributable toas first quarter 2020 was negatively impacted by the economic uncertainty around the COVID-19 pandemic.
FHN expects assetAsset quality trends may continue to be impacted by the economic uncertainty attributable to the COVID-19 pandemic. The C&I portfolio reflects a broad mix of categories with the heaviest concentration in loans to mortgage companies which carry minimal credit risk. The C&I portfolio as of March 31, 2021 includes $5.1 billion of loans made under the Paycheck Protection Program of the SBA. PPP loans are fully government guaranteed with the SBA. Due to the government guarantee and forgiveness provisions, PPP loans are considered to have no credit risk.
The CRE portfolio metrics couldmay continue to be impacted by the COVID-19 pandemic due to travel and occupancy restrictions set by state and local governments affecting CRE- Hospitalitythe hospitality and CRE-Retail.retail industries. The consumer portfolio couldmay also continue to be impacted by the COVID-19 pandemic if consumer unemployment continues to riseremain elevated and customersclients are unable to continue making loan payments. The consumer portfolio, however, is high quality with no subprime and minimal exposure to other traditional categories of high risk lending. The remaining non-strategic consumer real estate should continue to steadily wind down; however, it could be impacted if unemployment continues to rise and borrowers have difficulty making loan payments. Asset quality metrics within non-strategic have become skewed as the portfolio continues to shrink.
Consolidated Net Charge-offs
In first quarter 2020, FHN experienced net charge-offs of $7.2 million compared to $4.5 million of netNet charge-offs in first quarter 2019.
The commercial portfolio experienced $5.82021 were $8 million, an annualized charge-off percentage of 0.06% of total loans and leases, consistent with net charge-offs of$8 million in first quarter 2020.
Net charge-offs in first quarter 2021 in the commercial portfolio were $11 million compared to $2.6$6 million in first quarter 2020. Net charge-offs were impacted by higher energy charge-offs in the current quarter, as well as a larger commercial portfolio from acquired loans in third quarter 2020.
Net recoveries in the consumer portfolio were $3 million in first quarter 2021, driven by consumer real estate recoveries in the Corporate segment, compared to $2 million in net charge-offs in first quarter 2019. In addition,2020.
Table 9—Analysis of Allowance for Loan and Lease Losses and Charge-offs
(Dollars in millions)
Allowance for loan and lease losses (a)March 31, 2021December 31, 2020March 31, 2020
C&I$442 $453 $255 
CRE232 242 48 
Consumer real estate222 242 122 
Credit card and other18 26 19 
Total allowance for loan and lease losses$914 $963 $444 
Period-end loans and leases
C&I$33,951 $33,104 $22,124 
CRE12,470 12,275 4,640 
Consumer real estate11,053 11,725 6,119 
Credit card and other1,126 1,128 495 
Total period-end loans and leases$58,600 $58,232 $33,378 
ALLL / loans and leases % (a)
C&I1.30 %1.37 %1.15 %
CRE1.86 %1.97 %1.03 %
FIRST HORIZON CORPORATION811Q21 FORM 10-Q REPORT

Consumer real estate2.00 %2.07 %2.00 %
Credit card and other1.63 %2.34 %3.91 %
Total ALLL / loans and leases %1.56 %1.65 %1.33 %
Quarter-to-date net charge-offs (recoveries)
C&I$10 $31 $6 
CRE1 (1)— 
Consumer real estate(5)(3)(1)
Credit card and other2 2 3 
Total net charge-offs$8 $29 $8 
Average loans and leases (b)
C&I$33,279 $34,196 $19,470 
CRE12,424 12,400 4,422 
Consumer real estate11,400 12,030 6,134 
Credit card and other1,119 1,194 498 
Total average loans and leases$58,222 $59,820 $30,524 
Charge-off %
C&I0.12 %0.36 %0.12 %
CRE0.06 %NM— %
Consumer real estateNMNMNM
Credit card and other0.65 %0.68 %2.23 %
Total charge-off %0.06 %0.19 %0.10 %
ALLL / annualized net charge-offs
C&I11.47 x3.67 x10.89 x
CRE33.31 xNMNM
Consumer real estateNMNMNM
Credit card and other2.53 x3.23 x1.74 x
Total ALLL / net charge-offs28.14 x8.41 x13.80 x
ALLL / NPLs
C&I3.07 x3.15 x2.65 x
CRE3.45 x4.15 x21.75 x
Consumer real estate1.23 x1.33 x1.34 x
Credit card and other7.49 x13.13 x53.69 x
Total ALLL / NPLs2.32 x2.49 x2.34 x
NM - not meaningful
(a)The increase in the consumer real estate portfolio experienced net recoveries of $1.2 million in bothALLL from first quarter 2020 was primarily attributable to the allowance recorded on acquired non-PCD loans and first quarter 2019. Credit card and other consumer experienced net charge-offs of $2.6 millionthe decline in firstthe economic forecast attributable to the COVID-19 pandemic, while the decrease from fourth quarter 2020 compared to $3.1 million a year ago.was from an improvement in the overall economic forecast.
(b)The increase in period-end and average loans and leases from 1st quarter 2020 is primarily the result of $26.3 billion in acquired loans and leases in third quarter 2020.
FIRST HORIZON CORPORATION821Q21 FORM 10-Q REPORT

Nonperforming Assets
Nonperforming loans are loans placed on nonaccrual if it becomes evident that full collection of principal and interest is at risk, if impairment has been recognized as a partial charge-off of principal balance due to insufficient collateral value and past due status, or on(on a case-by-case basisbasis), if FHN continues to receive payments but there are other borrower-specific issues. Included in nonaccruals are loans in whichthat FHN continues to receive payments, including residential real estate loans where the borrower has been discharged of personal obligation through bankruptcy,bankruptcy. NPAs consist of nonperforming loans and second liens, regardless of delinquency status, behind first liens that are 90 or more days past due, are bankruptcies, or are TDRs. These, along with OREO excluding(excluding OREO from government insured mortgages, represent nonperforming assets (“NPAs”)mortgages).
Total nonperforming assetsNPAs (including NPLs HFS) increased to $207.3$410 million onas of March 31, 2020,2021 from $181.9$406 million on as of
December 31, 2019. The2020. Despite the marginal increase, the nonperforming assets ratio (nonperforming assets excluding NPLs HFS to total period-end loansloans plus OREO and other assets) increased to .61 percentOREO) was 0.69% as of both March 31, 2020, from .57 percent as of2021 and December 31, 2019. Portfolio nonperforming loans increased to $189.8 million as of March 31, 2020, from $162.2 million as of December 31, 2019. The increase in nonperforming loans was driven by the C&I portfolio.
2020. The ratio of the ALLL to NPLs in the loan portfolio was 2.342.3 times as of March 31, 2020,2021 compared to 1.242.5 times as of December 31, 2019. 2020.
Certain nonperforming loans in both the commercial and consumer portfolios are deemed collateral-dependent and are charged down to an estimate of collateral value less costs to sell. Because the estimated loss content has been recognized through a partial charge-off, typically reserves arean ALLL is not recorded.
Table 10—Nonperforming Assets by Loan Portfolio
(Dollars in millions)March 31, 2021December 31, 2020
Nonperforming loans and leases
C&I$144 $144 
CRE67 58 
Consumer real estate180 182 
Credit card and other3 2 
Total nonperforming loans and leases (a)$394 $386 
Nonperforming loans held for sale (a)$5 $5 
Foreclosed real estate and other assets (b)11 15 
Total nonperforming assets (a) (c)$410 $406 
Nonperforming loans and leases to total loans and leases
C&I0.42 %0.43 %
CRE0.54 %0.48 %
Consumer real estate1.63 %1.56 %
Credit card and other0.22 %0.18 %
Total NPL %0.67 %0.66 %
Table 19 provides an activity rollforward of OREO balances for (a)Excludes loans and leases that are 90 or more days past due and still accruing interest.
(b)Foreclosed real estate from GNMA loans totaled $2 million at both March 31, 20202021 and 2019. The balance of OREO, exclusive of inventory from government insured mortgages, decreased to $13.9 million as of MarchDecember 31, 2020, f2020.
(c)rom $20.7 millioBalances do not include government-insured foreclosed real estate.
n as of March 31, 2019, driven by the sale of OREO. Moreover, property values have stabilized which also affects the balance of OREO.



FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 103



Table 18—Rollforward of OREO
  Three Months Ended
March 31
(Dollars in thousands) 2020 2019
Beginning balance $15,660
 $22,387
Valuation adjustments (27) 35
New foreclosed property 928
 1,607
Disposal (2,680) (3,353)
Ending balance, March 31 (a) $13,881
 $20,676
(a)FIRST HORIZON CORPORATIONExcludes OREO and receivables related to government insured mortgages of $7.8 million and $3.4 million as of March 31, 2020 and 2019, respectively.831Q21 FORM 10-Q REPORT

The following table provides consolidated asset quality informationnonperforming assets by business segment:

Table 11—Nonperforming Assets by Segment
(Dollars in millions)March 31, 2021December 31, 2020
Nonperforming loans and leases (a) (b)
Regional Banking$226 $216 
Specialty Banking111 117 
Corporate57 53 
Consolidated$394 $386 
Foreclosed real estate (c)
Regional Banking$10 $12 
Specialty Banking— 1 
Corporate1 2 
Consolidated$11 $15 
Nonperforming Assets (a) (b) (c)
Regional Banking$236 $228 
Specialty Banking111 118 
Corporate58 55 
Consolidated$405 $401 
Nonperforming loans and leases to loans and leases
Regional Banking0.56 %0.54 %
Specialty Banking0.64 0.68 
Corporate6.20 5.70 
Consolidated0.67 %0.66 %
NPA % (d)
Regional Banking0.58 %0.57 %
Specialty Banking0.64 0.68 
Corporate6.28 5.87 
Consolidated0.69 %0.69 %
(a)Excludes loans and leases that are 90 or more days past due and still accruing interest.
(b)Excludes loans classified as held for sale.
(c)Excludes foreclosed real estate and receivables related to government insured mortgages of $4 million and $5 million at March 31, 2021, and December 31, 2020, respectively.
(d)Ratio is non-performing assets to total loans and leases plus foreclosed real estate.


Lending Assistance for Borrowers
In addition to PPP loans, other customer support initiatives in response to the three months endedCOVID-19 pandemic include incremental lending assistance for borrowers through delayed payment programs and fee waivers.
The following table provides the UPB of loans related to deferrals granted to FHN’s customers that have been processed through March 31, 2021.
FIRST HORIZON CORPORATION841Q21 FORM 10-Q REPORT

Table 12 - Customer Deferrals
(Dollars in millions)As of March 31, 2021
Commercial:
C&I$51
CRE178
Total Commercial$229
Consumer:
HELOC$12
R/E installment loans138
Credit card and other6
Total Consumer156
Total$385
Commercial deferrals were comprised primarily of general commercial (59% or $135 million) and professional commercial real estate (38% or $86 million).

To the extent that loans were past due at March 31, 2021 or December 31, 2020 and 2019,had been granted a deferral, they were excluded from loans past due 30 to 89 days and as of March 31, 2020,loans past due 90 days or more in the table and December 31, 2019:
Table 19—Asset Quality Information
  Three Months Ended
March 31
(Dollars in thousands) 2020 2019
Allowance for loan losses:    
Beginning balance on January 1 $200,307
 $180,424
ASU Adoption 2016-13 106,394
 —
Provision/(provision credit) for loan losses 145,000
 9,000
Charge-offs (13,453) (10,527)
Recoveries 6,242
 6,014
Ending balance on March 31 $444,490
 $184,911
Reserve for remaining unfunded commitments 39,303
 8,014
Total allowance for loan losses and reserve for unfunded commitments $483,793
 $192,925
Key ratios    
Allowance / net charge-offs (a) 15.33x 10.10x
Net charge-offs % (b) 0.10% 0.07%
     
  As of March 31 As of December 31
Nonperforming Assets by Segment 
 2020 2019
Regional Banking: 
    
Nonperforming loans (c) $142,916
 $113,187
OREO (e) 10,278
 12,347
Total Regional Banking 153,194
 125,534
Non-Strategic:    
Nonperforming loans (c) 45,595
 47,651
Nonperforming loans held-for-sale net of fair value adjustment (c) 3,611
 4,047
OREO (e) 3,603
 3,313
Total Non-Strategic 52,809
 55,011
Corporate:    
Nonperforming loans (c) 1,302
 1,327
Total Corporate 1,302
 1,327
Total nonperforming assets (c) (d)
 $207,305
 $181,872
NM - Not meaningful.
(a)Ratio is total allowance divided by annualized net charge-offs.
(b)Ratio is annualized net charge-offs divided by quarterly average loans, net of unearned income.


FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 104



(c)Excludes loans that are 90 or more days past due and still accruing interest.
(d)Excludes OREO from government-insured mortgages.
  As of March 31 As of December 31
  2020 2019
Loans and commitments:    
Total period-end loans, net of unearned income $33,378,303
 $31,061,111
Potential problem assets (a) 411,122
 346,896
Loans 30 to 89 days past due 48,498
 36,052
Loans 90 days past due (b) (c) 14,144
 21,859
Loans held-for-sale 30 to 89 days past due (c) 4,164
 3,732
Loans held-for-sale 30 to 89 days past due—guaranteed portion (c) (d) 4,049
 3,424
Loans held-for-sale 90 days past due (c) 5,397
 6,484
Loans held-for-sale 90 days past due—guaranteed portion (c) (d) 5,165
 6,417
Remaining unfunded commitments $10,966,768
 $12,355,220
Key ratios    
Allowance / loans % 1.33% 0.64%
Allowance / NPL 2.34x 1.24x
NPA % (e) 0.61% 0.57%
NPL % 0.57% 0.52%
(a)Includes past due loans.
(b)Excludes loans classified as held-for-sale.
(c)Amounts are not included in nonperforming/nonaccrual loans.
(d)Guaranteed loans include FHA, VA, SBA, USDA, and GNMA loans repurchased through the GNMA buyout program.
(e)Ratio is non-performing assets related to the loan portfolio to total loans plus OREO and other assets.

discussion below.
Past Due Loans and Potential Problem Assets
Past due loans are loans contractually past due as to interest or principal payments, but which have not yet been put on nonaccrual status. Loans in the portfolio that are 90 days or more past due and still accruing were $14.1$13 million on March 31, 2020,2021, compared to $21.9$17 million on December 31, 2019.2020. The decrease was primarily driven by consumer real estate loans. Loans 30 to 89 days past due were $48.5$81 million on March 31, 2020,2021, compared to $36.1$100 million on December 31, 2019.2020. The decrease included a $14 million decrease in consumer real estate loans, a $12 million decrease in CRE loans, and a $4 million decrease in credit card and other consumer loans, partially offset by an increase was primarily driven by thein C&I portfolio.loans past due 30 to 89 days.
FIRST HORIZON CORPORATION851Q21 FORM 10-Q REPORT

Table 13—Accruing Delinquencies
(Dollars in millions)March 31, 2021December 31, 2020
Accruing loans and leases 30+ days past due
C&I$26 $15 
CRE11 23 
Consumer real estate52 69 
Credit card and other5 10 
Total 30+ Delinquency$94 $117 
Accruing loans and leases 30+ days past due %
C&I0.08 %0.05 %
CRE0.09 %0.19 %
Consumer real estate0.47 %0.58 %
Credit card and other0.45 %0.87 %
Total 30+ Delinquency %0.16 %0.20 %
Accruing loans and leases 90+ days past due (a) (b) (c):
C&I$— $— 
CRE— — 
Consumer real Estate13 16 
Credit card and other— 1 
Total accruing loans and leases 90+ days past due$13 $17 
Loans held for sale
30 to 89 days past due (b)7 6 
30 to 89 days past due - guaranteed portion (b) (d)6 5 
90+ days past due (b)13 12 
90+ days past due - guaranteed portion (b) (d)11 10 
(a)Excludes loans classified as held for sale.
(b)Amounts are not included in nonperforming/nonaccrual loans.
(c)Amounts are also included in accruing loans and leases 30+ days past due.
(d)Guaranteed loans include FHA, VA, and GNMA loans repurchased through the GNMA buyout program.


Potential problem assets represent those assets where information about possible credit problems of borrowers has caused management to have serious doubts about the borrower’s ability to comply with present repayment terms and includes loans past due 90 days or more and still accruing. This definition is believed to be substantially consistent with the standards established by Federal banking regulators for loans classified as substandard. Potential problem assets in the loan portfolio were $411.1$738 million on March 31, 2020, $346.92021 and $718 million on December 31, 2019, and $270.4 million on March 31, 2019.2020. The increase in potential problem assets compared to December 31, 2019 was due tofrom a net increase in classified commercial loans within the C&I portfolio.portfolio from a limited number of
customer migrations to substandard loans in the current quarter. The current expectation of losses from potential problem assets has been included in management’s analysis for assessing the adequacy of the allowance for loan and lease losses.
Troubled Debt RestructuringRestructurings and Loan Modifications
As part of FHN’s ongoing risk management practices, FHN attempts to work with borrowers when appropriate to extend or modify loan terms to better align with their current ability to repay. Extensions and modifications to loans are made in accordance with
FIRST HORIZON CORPORATION861Q21 FORM 10-Q REPORT

internal policies and guidelines which conform to regulatory guidance. Each occurrence is unique to the borrower and is evaluated separately. In a situation where an economic concession has been granted to a borrower that is experiencing financial difficulty, FHN identifies and reports that loan as a Troubled Debt Restructuring (“TDR”).TDR.
For loan modifications that were made during 2021 and 2020 that met the TDR relief provisions outlined in either the CARES Act, as extended by the CAA, or revised Interagency Guidance, FHN has excluded these modifications from consideration as a TDR, and has excluded loans with these qualifying modifications from designation as a TDR in the
information and discussion that follows. See Note 4 – Loans and Leases for further discussion regarding TDRs and loan modifications.
On March 31, 20202021 and December 31, 2019,2020, FHN had $194.7$288 million and $206.3$307 million portfolio loans classified as TDRs, respectively. For TDRs in the loan portfolio, FHN had loan loss reserves of $13.9$11 million and $19.7$12 million, or 7 percent and 10 percent4% of TDR balances as of both March 31, 20202021 and December 31, 2019,2020, respectively. Additionally, FHN had $50.5$41 million and $51.1$42 million of HFS loans classified as TDRs as of March 31, 20202021 and December 31, 2019,2020, respectively.


FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 105



The following table provides a summary of TDRs for the periods ended March 31, 20202021 and December 31, 2019:2020:
Table 20—14—Troubled Debt Restructurings
(Dollars in millions)As of
March 31, 2021		As of
December 31, 2020
Held-to-maturity:
Consumer real estate:
Current$71 $77 
Delinquent2 2 
Non-accrual (a)57 61 
Total consumer real estate130 140 
Credit card and other:
Current1 1 
Delinquent— — 
Non-accrual— — 
Total credit card and other1 1 
Commercial loans:
Current74 82 
Delinquent— — 
Non-accrual83 84 
Total commercial loans157 166 
Total held-to-maturity$288 $307 
Held-for-sale:
Current$35 $36 
Delinquent5 5 
Non-accrual1 1 
Total held-for-sale41 42 
Total troubled debt restructurings$329 $349 
 
(Dollars in thousands) 
As of
March 31, 2020
 
As of
December 31, 2019
Held-to-maturity:    
Consumer real estate (a):    
Current 98,965
 105,525
Delinquent 4,871
 4,634
Non-accrual (b) 48,557
 52,087
Total consumer real estate 152,393
 162,246
Credit card and other:    
Current 654
 615
Delinquent 45
 38
Non-accrual —
 —
Total credit card and other 699
 653
Commercial loans:    
Current 10,401
 10,558
Delinquent —
 —
Non-accrual 31,191
 32,841
Total commercial loans 41,592
 43,399
Total held-to-maturity $194,684
 $206,298
Held-for-sale:    
Current $38,914
 $39,014
Delinquent 7,555
 8,008
Non-accrual 4,042
 4,106
Total held-for-sale 50,511
 51,128
Total troubled debt restructurings $245,195
 $257,426
(a)Balances as of March 31, 2021 and December 31, 2020, include $13 million and $11 million, respectively, of discharged bankruptcies.
Investment Securities
FHN’s investment portfolio consists principally of debt securities, including government agency issued mortgage-backed securities and government agency issued collateralized mortgage obligations, all of
which are classified as AFS. The securities portfolio provides a source of income and liquidity and is an important tool used to balance the interest rate risk of the loan and deposit portfolios. The securities portfolio is periodically evaluated in light of established ALM objectives, changing market
(a)FIRST HORIZON CORPORATIONIn first quarter 2020, the Permanent Mortgage portfolio was combined into Consumer Real Estate portfolio, all prior periods were revised for comparability.871Q21 FORM 10-Q REPORT

conditions that could affect the profitability of the portfolio, the regulatory environment, and the level of interest rate risk to which FHN is exposed.
Investment securities were $8.4 billion on March 31, 2021, up from $8.0 billion on December 31, 2020 and represented approximately 10% of total assets for both periods. See Note 3 - Investment Securities for more information about the securities portfolio, including gross unrealized gains and losses by type
of security, contractual maturities, and securities pledged.
Deposits
Total deposits as of March 31, 2021 increased 5% to $73.2 billion from $70.0 billion on December 31, 2020 driven by an increase in non-interest bearing deposits largely reflecting the impact of government stimulus checks and PPP loan funding.
The following table summarizes the major components of deposits as of March 31, 2021 and December 31, 2020.
Table 15— Deposits
 March 31, 2021December 31, 2020 
(Dollars in millions)AmountPercent of totalAmountPercent of totalChangePercent
Savings$27,023 37 %$27,324 39 %$(301)(1)%
Time deposits4,653 6 5,070 7 (417)(8)
Other interest-bearing deposits16,444 23 15,415 22 1,029 7 
Interest-bearing deposits48,120 66 47,809 68 311 1 
Noninterest-bearing deposits25,046 34 22,173 32 2,873 13 
Total deposits$73,166 100 %$69,982 100 %$3,184 5 %


Short-Term Borrowings
Total short-term borrowings were $2.2 billion as of March 31, 2021 and December 31, 2020.
Short-term borrowings balances fluctuate largely based on the level of FHLB borrowing as a result of loan demand, deposit levels and balance sheet funding strategies. Federal funds purchased fluctuates depending on the amount of excess funding of FHN’s correspondent bank customers. Balances of securities sold under agreements to
resell fluctuate based on cost attractiveness relative to FHLB borrowing levels and the ability to pledge securities toward such transactions.
Term Borrowings
Term borrowings include senior and subordinated borrowings with original maturities greater than one year. Term borrowings were $1.7 billion as of March 31, 2021 and December 31, 2020.
(b)Balances as of March 31, 2020 and December 31, 2019, include $12.1 million and $12.6 million, respectively, of discharged bankruptcies.
Capital
Management’s objectives are to provide capital sufficient to cover the risks inherent in FHN’s businesses, to maintain excess capital to well-capitalized standards, and to assure ready access to the capital markets. Total equity was $8.3 billion at both March 31, 2021 and December 31, 2020.
Significant changes included net income of $236 million which was offset by a decrease in AOCI of $101 million, $92 million in common and preferred dividends, and $62 million in common share repurchases.
FIRST HORIZON CORPORATION881Q21 FORM 10-Q REPORT

The following tables provide a reconciliation of shareholders’ equity from the Consolidated Balance Sheets to Common Equity Tier 1, Tier 1 and Total Regulatory Capital as well as certain selected capital ratios:
Table 16—Regulatory Capital and Ratios
(Dollars in millions)March 31, 2021December 31, 2020
Shareholders’ equity$8,012 $8,012 
Modified CECL transitional amount (a)178 191 
FHN non-cumulative perpetual preferred(470)(470)
Common equity tier 1 before regulatory adjustments$7,720 $7,733 
Regulatory adjustments:
Disallowed goodwill and other intangibles(1,745)(1,757)
Net unrealized (gains) losses on securities available for sale(5)(108)
Net unrealized (gains) losses on pension and other postretirement plans256 260 
Net unrealized (gains) losses on cash flow hedges(10)(12)
Disallowed deferred tax assets(1)(5)
Other deductions from common equity tier 1(1)(1)
Common equity tier 1$6,214 $6,110 
FHN non-cumulative perpetual preferred (b)377 377 
Qualifying noncontrolling interest— First Horizon Bank preferred stock295 295 
Tier 1 capital$6,886 $6,782 
Tier 2 capital1,120 1,153 
Total regulatory capital$8,006 $7,935 
Risk-Weighted Assets
First Horizon Corporation$62,339 $63,140 
First Horizon Bank61,610 62,508 
Average Assets for Leverage
First Horizon Corporation83,959 82,347 
First Horizon Bank83,242 81,709 

 March 31, 2021December 31, 2020
 RatioAmountRatioAmount
Common Equity Tier 1
First Horizon Corporation9.97 %$6,214 9.68 %$6,110 
First Horizon Bank10.72 6,606 10.46 6,537 
Tier 1
First Horizon Corporation11.05 6,886 10.74 6,782 
First Horizon Bank11.20 6,901 10.93 6,832 
Total
First Horizon Corporation12.84 8,006 12.57 7,935 
First Horizon Bank12.75 7,855 12.52 7,827 
Tier 1 Leverage
First Horizon Corporation8.20 6,886 8.24 6,782 
First Horizon Bank8.29 6,901 8.36 6,832 
Other Capital Ratios
Total period-end equity to period-end assets9.49 9.86 
Tangible common equity to tangible assets (c)6.64 6.89 
Adjusted tangible common equity to risk weighted assets (c)9.12 8.82 
(a)The modified CECL transitional amount is calculated as defined in the final rule issued by the banking regulators on August 26, 2020 and includes the full amount of the impact to retained earnings from the initial adoption of CECL plus 25% of the change in the adjusted allowance for credit losses since FHN’s initial adoption of CECL through March 31, 2021 and December 31, 2020.
(b)The $93 million carrying value of the Series D preferred stock does not qualify as Tier 1 capital because the earliest redemption date is less than five years from the issuance date.
(c)Tangible common equity to tangible assets and Adjusted tangible common equity to risk-weighted assets are non-GAAP measures and are reconciled to total equity to total assets (GAAP) in the Non-GAAP to GAAP Reconciliation - Table 20.
FIRST HORIZON CORPORATION891Q21 FORM 10-Q REPORT

Banking regulators define minimum capital ratios for bank holding companies and their bank subsidiaries. Based on the capital rules and definitions prescribed by the banking regulators, should any depository institution’s capital ratios decline below predetermined levels, it would become subject to a series of increasingly restrictive regulatory actions.
The system categorizes a depository institution’s capital position into one of five categories ranging from well-capitalized to critically under-capitalized. For an institution the size of FHN to qualify as well-capitalized, Common Equity Tier 1, Tier 1 Capital, Total Capital, and Leverage capital ratios must be at least 6.50%, 8.00%, 10.00%, and 5.00%, respectively. Furthermore, a capital conservation buffer of 50 basis points above these levels must be maintained on the Common Equity Tier 1, Tier 1 Capital and Total Capital ratios to avoid restrictions on dividends, share repurchases and certain discretionary bonuses.
As of March 31, 2021, each of FHN and First Horizon Bank had sufficient capital to qualify as well-capitalized institutions and to meet the capital conservation buffer requirement. Capital ratios for both FHN and First Horizon Bank are calculated under the final rule issued by the banking regulators in 2020 to delay the effects of CECL on regulatory capital for two years, followed by a three-year transition period.
For both FHN and First Horizon Bank, the risk-based regulatory capital ratios increased in first quarter 2021 relative to fourth quarter 2020 primarily from the impact of net income less dividends and share repurchases during the first three months of 2021 and a decrease in risk weighted assets, primarily from loan activity. During 2021, capital ratios are expected
to remain above well-capitalized standards plus the required capital conservation buffer.
Common Stock Purchase Programs
General Authority
Pursuant to Board authority, FHN may repurchase shares of its common stock from time to time and will evaluate the level of capital and take action designed to generate or use capital, as appropriate, for the interests of the shareholders, subject to legal and regulatory restrictions. FHN’s Board has not authorized a preferred stock purchase program.
On January 27, 2021, FHN announced that its Board of Directors approved a new $500 million common share purchase program that will expire on January 31, 2023. The new program is not tied to any compensation plan, and replaced the previous general share repurchase program, which was terminated by the Board. Purchases may be made in the open market or through privately negotiated transactions, including under Rule 10b5-1 plans as well as accelerated share repurchase and other structured transactions. The timing and exact amount of common share repurchases will be subject to various factors, including FHN's capital position, financial performance, capital impacts of strategic initiatives, market conditions and regulatory considerations.
As of March 31, 2021, $59 million in purchases had been made under this authority at an average price per share of $16.12, or $16.10 excluding commissions.
Table 17a—Issuer Purchases of Common Stock - General Authority
(Dollar values and volume in thousands, except per share data)Total number
of shares
purchased		Average price
paid per share (a)		Total number of
shares purchased
as part of publicly
announced programs		Maximum approximate dollar value that may yet be purchased under the programs
2021
January 1 to January 31— N/A— $500,000 
February 1 to February 282,128 15.59 2,128 466,828 
March 1 to March 311,515 16.88 1,515 441,258 
Total3,643 $16.12 3,643 
N/A - not applicable
(a) Represents total costs including commissions paid.


Compensation Authority
A consolidated compensation plan share purchase program was announced on August 6, 2004. This
program consolidated into a single share purchase program all of the previously authorized compensation plan share programs as well as the renewal of the authorization to purchase shares for
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use in connection with two compensation plans for which the share purchase authority had expired.
The total amount authorized under this consolidated compensation plan share purchase program is 29.6 million shares calculated before adjusting for stock dividends distributed through January 1, 2011. The authorization has been reduced for that portion which relates to compensation plans for which no options remain outstanding. The shares may be purchased over the option exercise period of the various compensation plans on or before
December 31, 2023. Purchases may be made in the open market or through privately negotiated transactions and are subject to various factors including FHN's capital position, financial performance, capital impacts of strategic initiatives, market market conditions and regulatory restrictions. As of March 31, 2021, the maximum number of shares that may be purchased under the program was 23.8 million shares. Management currently does not anticipate purchasing a material number of shares under this authority during 2021.

Table 17b—Issuer Purchase of Common Stock - Compensation Authority
(Volume in thousands, except per share data)Total number
of shares
purchased		Average price
paid per share		Total number of
shares purchased
as part of publicly
announced programs		Maximum number
of shares that may
yet be purchased
under the programs
2021
January 1 to January 31170 $13.54 170 23,861 
February 1 to February 288 13.97 8 23,854 
March 1 to March 3144 16.69 44 23,810 
Total221 $14.18 221 

Risk Management
There have been no significant changes to FHN’s risk management practices as described under “Risk Management” beginning on page 88 ofincluded in Item 7 toof FHN’s 2020 Annual Report on Form 10-K for the year ended December 31, 2019.10-K.
MARKET RISK MANAGEMENT
There have been no significant changes to FHN’s market risk management practices as described under “Market Risk Management” beginning on page 89 of Item 7 to FHN’s Annual Report on Form 10-K for the year ended December 31, 2019.

Value-at-Risk (“VaR”) and Stress Testing
VaR is a statistical risk measure used to estimate the potential loss in value from adverse market movements over an assumed fixed holding period within a stated confidence level. FHN employs a model to compute daily VaR measures for its trading
securities inventory. FHN computes VaR using historical simulation with a 1-year lookback period at a 99 percent99% confidence level and 1-day and 10-day time horizons. Additionally, FHN computes a Stressed VaR (“SVaR”) measure. The SVaR computation uses the same model but with model inputs reflecting historical data from a continuous 12-month period that reflects a period of significant financial stress appropriate for our trading securities portfolio.




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A summary of FHN’s VaR and SVaR measures for 1-day and 10-day time horizons is as follows:
Table 21—18—VaR and SVaR Measures

 Three Months Ended
March 31, 2021		As of
March 31, 2021
(Dollars in millions)MeanHighLow 
1-day
VaR$3 $4 $1 $1 
SVaR3 4 2 3 
10-day
VaR12 21 1 4 
SVaR15 21 11 13 
 Three Months Ended
March 31, 2020		As of
March 31, 2020
(Dollars in millions)MeanHighLow 
1-day
VaR$2 $7 $1 $5 
SVaR9 18 5 5 
10-day
VaR7 25 2 19 
SVaR27 43 16 19 
 Year Ended
December 31, 2020		As of
December 31, 2020
(Dollars in millions)MeanHighLow 
1-day
VaR$3 $7 $1 $2 
SVaR5 18 1 2 
10-day
VaR13 25 2 10 
SVaR18 43 6 10 

  Three Months Ended
March 31, 2020		 As of
March 31, 2020
(Dollars in thousands) Mean High Low  
1-day        
VaR $2,291
 $6,783
 $1,023
 $4,970
SVaR 8,526
 17,727
 4,592
 4,970
10-day        
VaR 6,940
 24,880
 1,807
 18,568
SVaR 26,510
 43,221
 15,887
 18,568
         
  Three Months Ended
March 31, 2019		 As of
March 31, 2019
(Dollars in thousands) Mean High Low  
1-day        
VaR $1,433
 $1,907
 $1,018
 $1,307
SVaR 8,243
 9,629
 6,242
 8,144
10-day        
VaR 3,390
 4,280
 2,592
 3,046
SVaR 21,757
 28,086
 16,032
 21,812
         
  Year Ended
December 31, 2019		 As of
December 31, 2019
(Dollars in thousands) Mean High Low  
1-day        
VaR $1,068
 $1,907
 $503
 $1,325
SVaR 6,198
 9,629
 3,157
 4,579
10-day        
VaR 2,824
 7,000
 1,499
 2,233
SVaR 17,367
 28,086
 8,803
 14,975

First quarter 2020 VaR and SVaR increased due to extreme volatility as a result of economic uncertainty associated with the COVID-19 pandemic.
FHN’s overall VaR measure includes both interest rate risk and credit spread risk. Separate measures of these component risks are as follows:
Table 22—19—Schedule of Risks Included in VaR
 As of March 31, 2021As of March 31, 2020As of December 31, 2020
(Dollars in millions)1-day10-day1-day10-day1-day10-day
Interest rate risk$1 $2 $1 $3 $1 $2 
Credit spread risk— 1 2 12 2 6 
  As of March 31, 2020 As of March 31, 2019 As of December 31, 2019
(Dollars in thousands) 1-day 10-day 1-day 10-day 1-day 10-day
Interest rate risk $1,255
 $2,628
 $560
 $1,412
 $693
 $3,929
Credit spread risk 2,301
 11,758
 398
 726
 417
 828

First quarter 2020 VaR and SVaR increased due to extreme volatility as a result of economic uncertainty associated with the COVID-19 pandemic.
The potential risk of loss reflected by FHN’s VaR measures assumes the trading securities inventory is static. Because FHN’s Fixed Income divisionFHN Financial procures fixed income securities for purposes of distribution to customers,clients, its trading securities inventory turns over regularly.
Additionally, Fixed IncomeFHNF traders actively manage the trading securities inventory continuously throughout each trading day. Accordingly, FHN’s trading securities inventory is highly dynamic, rather than
static. As a result, it would be rare for Fixed IncomeFHNF to incur a negative


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revenue day in its fixed income activities of the level indicated by its VaR measurements.
In addition to being used in FHN’s daily market risk management process, the VaR and SVaR measures are also used by FHN in computing its regulatory market risk capital requirements in accordance with the Market Risk Capital rules. For additional
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information regarding FHN's capital adequacy refer to the "Capital"Capital section of this MD&A.
FHN also performs stress tests on its trading securities portfolio to calculate the potential loss under various assumed market scenarios. Key assumed stresses used in those tests are:

Down 25 bps - assumes an instantaneous downward move in interest rates of 25 basis points at all points on the interest rate yield curve.

Up 25 bps - assumes an instantaneous upward move in interest rates of 25 basis points at all points on the interest rate yield curve.

Curve flattening - assumes an instantaneous flattening of the interest rate yield curve through an increase in short-term rates and a decrease in long-term rates. The 2-year point on the Treasury yield curve is assumed to increase 15 basis points and the 10-year point on the Treasury yield curve is assumed to decrease 15 basis points. Shifts in other points on the yield curve are predicted based on their correlation to the 2-year and 10-year points.

Curve steepening - assumes an instantaneous steepening of the interest rate yield curve through a decrease in short-term rates and an increase in long-term rates. The 2-year point on the Treasury yield curve is assumed to decrease 15 basis points and the 10-year point on the Treasury yield curve is assumed to increase 15 basis points. Shifts in other points on the yield curve are predicted based on their correlation to the 2-year and 10-year points.
Credit spread widening - assumes an instantaneous increase in credit spreads (the difference between yields on Treasury securities and non-Treasury securities) of 25 basis points.
Model Validation
Trading risk management personnel within Fixed IncomeFHN Financial have primary responsibility for model risk management with respect to the model used by FHN to compute its VaR measures and perform stress testing on the trading inventory. Among other procedures, these personnel monitor model results and perform periodic backtesting as part of an ongoing process of validating the accuracy of the model. These model risk management activities are subject to annual review by FHN’s Model Validation Group, an independent assurance group charged with oversight responsibility for FHN’s model risk management.
INTEREST RATE RISK MANAGEMENT
There have been no significant changes to FHN's interest rate risk management practices as described under "Interest Rate Risk Management" beginning on page 90 of Item 7 to FHN's Annual Report on Form 10-K for the year ended December 31, 2019.
Net Interest Income Simulation Analysis

The information provided in this section, including the discussion regarding the outcomes of simulation analysis and rate shock analysis, is forward-looking. Actual results, if the assumed scenarios were to occur, could differ because of interest rate movements, the ability of management to execute its business plans, and other factors, including those presented in the Forward-Looking Statements section of this MD&A.Report.

Management uses a simulation model to measure interest rate risk and to formulate strategies to improve balance sheet positioning, earnings, or both, within FHN’s interest rate risk, liquidity, and capital guidelines. Interest rate exposure is measured by forecasting 12 months of NII under various interest rate scenarios and comparing the percentage change in NII for each scenario to a base case scenario where interest rates remain unchanged. Assumptions are made regarding future balance sheet composition, interest rate movements, and loan and deposit pricing. In addition, assumptions are made about the magnitude of asset prepayments and earlier than anticipated deposit withdrawals. The results of these scenarios help FHN develop strategies for managing exposure to interest rate risk. While management believes the assumptions used and scenarios selected in its simulations are reasonable, simulation modeling provides only an estimate, not a precise calculation, of exposure to any given change in interest rates.
Based on a static balance sheet as of March 31, 2020,2021, NII exposuresexposures over the next 12 months assuming rate shocks of plus 25 basis points, 50 basis points, 100 basis points, and 200 basis points are estimated to have favorable variances of 2.2 percent, 3.5 percent, 5.1 percent,2.5%, 4.7%, 9.3%, and 6.5 percent,16.0%, respectively compared to base NII. A steepening yield curve scenario where long-term rates increase by 50 basis points and short-term rates are static, results in a favorable NII variance of 1.7 percent.of 0.7%. A flattening yield curve scenario where long-term rates decrease by 50 basis points and short-term rates are static, results in an unfavorable NII variance of 1.9 percent.of 0.9%. Rate shocks of minus 25 basis points and 50 basis points result in unfavorable NII variances of 4.1 percent1.7% and 8.7 percent.2.0%, assuming the absence of negative rates. These hypothetical scenarios are used to create a risk measurement framework, and do not necessarily represent management’s current view of future interest rates or market developments.
During March 2020, the Federal Reserve lowered the Fed Funds range to 0.00% - 0.25%. However, due to


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dislocation in the short end of the curve, LIBOR has remained elevated compared to the Fed Funds rate. As most of FHN’s assets are indexed to LIBOR while most of FHN’s floating liabilities are indexed to Fed Funds, this has a material impact on the shock scenarios.
FHN’s net interest income mayhas been, and likely will continue to be, impacted by the disruption from the recent COVID-19 crisis. pandemic and the low rate environment.
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The increase in the unemployment rate, customerclient loan deferral requests, the impact of government assistance programs, and other developments could influencehave influenced net interest income results. FHN is monitoring the current economic situationtrends and potential exposures closely.
CAPITAL RISK MANAGEMENT AND ADEQUACY
There have been no significant changes to FHN's capital management practices as described under "Capital Risk Management and Adequacy" on page 91 of Item 7 to FHN's Annual Report on Form 10-K for the year ended December 31, 2019.
OPERATIONAL RISK MANAGEMENT
There have been no significant changes to FHN's operational risk management practices as described under "Operational Risk Management" beginning on page 91 of Item 7 to FHN's Annual Report on Form 10-K for the year ended December 31, 2019.
COMPLIANCE RISK MANAGEMENT
There have been no significant changes to FHN's compliance risk management practices as described under "Compliance Risk Management" on page 92 of Item 7 to FHN's Annual Report on Form 10-K for the year ended December 31, 2019.
CREDIT RISK MANAGEMENT
There have been no significant changes to FHN's credit risk management practices as described under "Credit Risk Management" beginning on page 92 of Item 7 to FHN's Annual Report on Form 10-K for the year ended December 31, 2019.

LIQUIDITY RISK MANAGEMENT
Among other things, ALCO also focuses onis responsible for liquidity management: the funding of assets with liabilities of appropriate duration, while mitigating the risk of unexpected cash needs. ALCO and the Board of Directors have adopted a Liquidity Policy. ThePolicy of which the objective of the Liquidity Policy is to ensure that FHN meets its cash and collateral obligations promptly, in a cost-effective manner and with the highest degree of reliability. The maintenance of adequate levels of asset and liability liquidity should provide FHN with the ability to meet both expected and unexpected cash and collateral needs. Key liquidity ratios, asset liquidity levels and the amount available from funding sources are reported to ALCO on a regular basis. FHN’s Liquidity Policy
establishes liquidity limits that are deemed appropriate for FHN’s risk profile.
In accordance with the Liquidity Policy, ALCO manages FHN’s exposure to liquidity risk through a dynamic, real time forecasting methodology. Base liquidity forecasts are reviewed by ALCO and are updated as financial conditions dictate. In addition to the baseline liquidity reports, robust stress testing of assumptions and funds availability are periodically reviewed. FHN maintains a contingency funding plan that may be executed, should unexpected difficulties arise in accessing funding that affects FHN, the industry, as a whole, or both. Subject to market conditions and compliance with applicable regulatory requirements from time to time, funds are available from a number of sources including the available-for-sale securities portfolio, dealer and commercial customer repurchase agreements, access to the overnight and term Federal FundsFunds markets, incremental borrowing capacitycapacity at the FFHLHLBB ($2.113.9 billion was was available atas of March 31, 2020)2021), brokered deposits, loan sales, syndications, and access to the Federal Reserve Bank.
Core deposits are a significant source of funding and have historically been a stable source of liquidity for banks. Generally, core deposits represent funding from a financial institution's customer base which provide inexpensive, predictable pricing. The Federal Deposit Insurance Corporation insures these deposits to the extent authorized by law. Generally, these limits are $250 thousand per account owner for interest bearing and non-interest bearing accounts. The ratio of total loans, excludingexcluding loans HFS and restricted real estate loans, to core deposits was 100 percent on86% for March 31, 2020 co2021 andmpared to 98 percent on 97% for December 31, 2019.2020.
FHN may also may use unsecured short-term borrowings as a source of liquidity. Currently, the largest concentration of unsecured borrowings is federalFederal funds purchased from correspondent bank customers. These fundsclients are considered to be
substantially more stable than funds purchased in the national broker markets for federal funds due to the long, historical, and reciprocal nature of banking services provided by FHN to these correspondent banks. The remainder of FHN’s wholesale short-term borrowings isconsists of securities sold under agreements to repurchase transactions accounted for as secured borrowings with Regional Banking’s business customersclients or Fixed Income’s broker dealer counterparties.
Both FHN and First Horizon Bank may access the debt markets in order to provide funding through the issuance of senior or subordinated unsecured debt subject to market conditions and compliance with applicable regulatory requirements. In April 2020, First Horizon Bank issued $450 million of subordinated notes. These subordinated notes qualify as Tier 2 capital for First Horizon Bank as well as FHN, up to certain regulatory limits for minority interest capital instruments.


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Both FHN and First Horizon Bank have the ability to generate liquidity by issuing senior or subordinated unsecured debt, preferred equity and (for FHN) by issuing common equity, subject to market conditions and compliance with applicable regulatory requirements. In January 2013, FHN issued $100 millionAs of Non-Cumulative Perpetual Preferred Stock, Series A. As ofMarch 31, 2020,2021, FHN had outstanding $1.3 billion in senior and subordinated unsecured debt and $470 million in non-cumulative perpetual preferred stock. As of March 31, 2021, First Horizon Bank and subsidiaries had outstanding preferred shares of $295.4$295 million, which are reflected as noncontrolling interest on the Consolidated Condensed Statements of Condition.Balance Sheets.
Parent company liquidity is primarily provided by cash flows stemming from dividends and interest payments collected from subsidiaries. These sources of cash represent the primary sources of funds to pay cash dividends to shareholders and principal and interest to debt holders of FHN. The amount paid to the parent company through First Horizon Bank common dividends is managed as part of FHN’s overall cash management process, subject to applicable regulatory restrictions. Certain regulatory restrictions exist regarding the ability of First Horizon Bank to transfer funds to FHN in the form of cash, common dividends, loans, or advances. At any given time, the pertinent portions of those regulatory restrictions allow First Horizon Bank to declare preferred or common dividends without prior regulatory approval in an aggregate amount equal to First Horizon Bank’s retained net income for the two most recent completed years plus the current year to date. For any period, First Horizon Bank’s ‘retained net income’ generally is equal to First Horizon Bank’s regulatory net income reduced by the preferred and common dividends declared by First Horizon Bank. Applying the dividend restrictions imposed under applicable federal and state rules as outlined above, the Bank’s total amount available for dividends was $294.7$969 million as of April 1, 2020. Additionally, a capital conservation buffer of 50 basis points above well-capitalized levels (equal to an extra 2.5 percent above minimum levels) must be maintained on the Common Equity Tier 1, Tier 1 Capital and Total Capital ratios to avoid restrictions on dividends. Since the Total Capital ratio for First Horizon Bank fell slightly below the required buffer as of March 31, 2020, these capital conservation buffer rules limit the amount of dividends that the Bank can declare in second quarter 2020 to its sole common stockholder, FHN, or to its preferred shareholders without prior regulatory approval at $70.9 million.2021. First Horizon Bank declared and paid common dividends to the parent company in the amount of $183 million in first quarter 2021 and $65 million in first quarter 2020 and $345.0 million in 2019. First Horizon Bank declared and paid preferred dividends in first quarter 2020 and each quarter of 2019. Additionally,2020. First Horizon Bank declared preferred dividends in secondthe first quarter 2020,of 2021 which were payable in JulyApril 2021 and declared and paid preferred dividends in each quarter of 2020.
Payment of a dividend to shareholders of FHN is dependent on several factors which are considered by the Board. These factors include FHN’s current and
prospective capital, liquidity, and other needs, applicable regulatory restrictions, and also availability of funds to FHN through a dividend from First Horizon Bank. FHN is subject to the capital conservation buffer requirements as described in the above paragraph for First Horizon Bank. Additionally, banking regulators generally require insured banks and bank holding companies to pay cash dividends only out of current operating earnings. Consequently, the decision of whether FHN will pay future dividends and the amount of dividends will be affected by current operating results. FHN paid a cash dividend of $.15$0.15 per common share on April 1, 2020, and in April 2020 the Board approved a $.15 per common share cash dividend payable on July 1, 2020, to shareholders of record on June 12, 2020.2021. FHN paid a cash dividenddividends of $1,550.00$1,550 per Series A preferred share and $1,625 per Series E preferred share on April 10, 2020,12, 2021 and $165 per Series C preferred share and $305 per Series D preferred share on May 3, 2021. In addition, in April 20202021, the Board approved a $1,550.00 per preferred share cash dividend payable on July 10, 2020, to shareholders of record on June 25, 2020.
CASH FLOWS
The Consolidated Condensed Statements of Cash Flows provide information on cash flows from operating, investing, and financing activities for the three months ended March 31, 2020 and 2019. The level of cash and cash equivalents decreased $136.8 million during first quarter 2020 and $192.5 million in first quarter 2019.
Net cash provided in financing activities was $3.7 billion in first quarter 2020, largely driven by an inflow of deposits and higher short-term borrowings (primarily FHLB stock). Net cash used by investing activities was $2.5 billion in first quarter 2020, driven by strong loan growth and an increase in interest-bearing cash. Net cash used by operating activities was $1.4 billion in first quarter 2020 primarily due to net cash outflows of $407.9 million related to loans held-for-sale as purchases and originations outpaced proceeds from sales and settlements, $285.4 million related to fixed income trading activities and $323.8 million related to an increase in derivatives.
Net cash used in financing activities was $222.2 million in first quarter 2019, largely driven by a decrease in deposits, share repurchases and cash dividends paid during first quarter 2019, somewhat offset by an increaseper share in other short-term borrowings, primarily FFP. Net cash used by investing activities was $92.7 million in first quarter 2019, largely driven by increases in loan balances somewhat offset by a decrease in interest-bearing cash and a net decrease in AFS debt securities, as maturities and sales outpaced purchases. Net cash provided by operating activities was $122.5 million in first quarter 2019 primarily due to net cash inflows of $369.2 million related to fixed income trading activities and favorably driven cash-relatedthe following amounts:


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net income items, somewhat offset by outflows of $358.6 million related to loans held-for-sale.
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Dividend/ShareRecord DatePayment Date
Common Stock$0.15 06/11/202107/01/2021
Preferred Stock
Series A$1,550.00 06/25/202107/12/2021
Series B$331.25 07/16/202108/02/2021
Series C$165.00 07/16/202108/02/2021
Series E$1,625.00 06/25/202107/12/2021

Repurchase Obligations and Off-Balance Sheet Arrangements
Repurchase Obligations, Off-Balance Sheet Arrangements, and Other Contractual Obligations
Obligations from Pre-2009 Mortgage Businesses
Prior to September 2008, FHN originated loans through its pre-2009 mortgage business, primarily first lien home loans, with the intention of selling them. Sales typically were effected either as non-recourse whole loan sales or through non-recourse proprietary securitizations. Conventional conforming single-family residential mortgage loans were sold predominately to two government-sponsored entities, or "GSEs": Fannie Mae and Freddie Mac. Also, federally insured or guaranteed whole loans were pooled, and payments to investors were guaranteed through Ginnie Mae. Many mortgage loan originations, especially nonconforming mortgage loans, were sold to investors, or certificate-holders, predominantly through First Horizon proprietary securitizations but also, to a lesser extent, through other whole loans sold to private non-Agency purchasers. FHN used only one trustee for all of its First Horizon proprietary securitizations. In addition to First Horizon proprietary securitization and other whole loan sales activities, FHN also originated and sometimes sold or securitized second-lien, line of credit, and government-insured mortgage loans.
From these pre-2009 activities, FHN has incurred substantial losses stemming from obligations to repurchase loans, pay make-whole amounts, or otherwise resolve claims that loans which FHN originated, or FHN's servicing of those loans, were deficient in a manner for which FHN was liable. Many years ago, FHN established a repurchase and foreclosure liability, or reserve, in connection with those claims. FHN has settled many claims, and the reserve is reduced each time a claim is settled. As discussed in Note 1011 - Contingencies and Other Disclosures, FHN's principal remaining exposures for those activities relate to (i) indemnification claims by underwriters, loan purchasers, and other parties which assert that FHN-originated loans caused or contributed to losses which FHN is legally obliged to indemnify, and (ii) indemnification or other claims related to FHN's servicing of pre-2009 mortgage loans.
Servicing Obligations
FHN's national servicing business was sold as part of the platform sale in 2008. A significant amount of mortgage servicing rights ("MSR") was sold at that time, and a significant amount was retained. The related servicing activities, including foreclosure and loss mitigation practices, not sold in 2008 were outsourced including a subservicing arrangement initiated in 2011 (the "2011 subservicer"). In fourth quarter 2013 and first quarter 2014, FHN sold and transferred a substantial majority of its
remaining servicing obligations and servicing assets (including advances) to the 2011 subservicer. The servicing still retained by FHN is not significant and continues to be subserviced.
As servicer, FHN had contractual obligations to the owners of the loans (primarily GSEs) and securitization trustees to handle billing, custodial, and other tasks related to each loan. Each subservicer undertook to perform those obligations on FHN's behalf during the applicable subservicing period, although FHN legally remained the servicer of record for those loans that were subserviced.
As mentioned in Note 10 - Contingencies and Other Disclosures - FHN has received a notice of indemnification claims from its 2011 subservicer, Nationstar Mortgage LLC, currently doing business as "Mr. Cooper." The notice asserts several categories of indemnity obligations by FHN to Nationstar in connection with mortgage loans under the subservicing arrangement and under the purchase transaction. This matter currently is not in formal litigation, but litigation in the future is possible.
Repurchase Accrual Methodology
FHN’s approach for determining the adequacy of the repurchase and foreclosure reserve has evolved, sometimes substantially, based on changes in information available. Repurchase/make-whole rates vary based on purchaser, vintage, and claim type. For those loans repurchased or covered by a make-whole payment, cumulative average loss severities range between 50 and 60 percent of the UPB.
Repurchase Accrual Approach
In determining potential loss content, claims are analyzed by purchaser, vintage, and claim type. FHN considers various inputs including claim rate estimates, historical average repurchase and loss severity rates, mortgage insurance cancellations, and mortgage insurance curtailment requests. Inputs are applied to claims in the active pipeline, as well as to historical average inflows to estimate loss content related to potential future inflows. Management also evaluates the nature of claims from purchasers and/or servicers of loans sold to determine if qualitative adjustments are appropriate.

Repurchase and Foreclosure Liability
TheFHN’s repurchase and foreclosure liability, primarily related to its pre-2009 mortgage business, is comprised of accruals to cover estimated loss content
in the active pipeline (consisting of mortgage loan repurchase, make-whole, foreclosure/servicing demands and certain related exposures), estimated future inflows, and estimated loss content related to certain known claims not currently


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included in the active pipeline. The liability contemplates repurchase/make-whole and damages obligations and estimates for probable incurred losses associated with loan populations excluded from the settlements with the GSEs, as well as other whole loans sold, mortgage insurance cancellations rescissions, and loans included in bulk servicing sales effected prior to the settlements with the GSEs. FHN compares the estimated probable incurred losses determined under the applicable loss estimation
approaches for the respective periods with current reserve levels. Changes in the estimated required liability levels are recorded as necessary through the repurchase and foreclosure provision. The repurchase and foreclosure liability decreased to $13.5was $16 million on as of March 31, 2019 from $14.5 million on2021 and December 31, 2019.2020.

Off-Balance Sheet Arrangements

In the normal course of business, FHN is a party to a number of activities that contain credit, market and operational risk that are not reflected in whole or in part in the consolidated financial statements. Such activities include traditional off-balance sheet credit-related financial instruments. FHN provides customers with off-balance sheet credit support through loan commitments, lines of credit, and standby letters of credit. Many of the commitments are expected to expire unused or be only partially used; therefore, the total amount of commitments does not necessarily represent future cash requirements. Based on its available liquidity and available borrowing capacity, FHN anticipates it will continue to have sufficient funds to meet its current commitments.

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Market Uncertainties and Prospective Trends
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 the availability and the administration of stimulus relief for the economy andeconomy. Additional impacts include how the pandemic affects FHN’s customers related to the recent global COVID-19 pandemic,clients, as well as political uncertainty, potential changes in federal policies and the potential impact to our customers,clients, and FHN’s strategic initiatives. In addition, pre-2009 mortgage business matters in the Non-strategic segment could continue to impact FHN’s quarterly results in ways which are both difficult to predict and unrelated to current operations.
Performance by FHN, and the entire U.S. financial services industry, is affected considerably by the overall health of the U.S. and global economy and outlook. Furthermore, FHN may be directly or indirectly impacted by global events that impact our customers and their businesses. The recent global COVID-19 pandemic has led to periods of significant volatility in financial commodities (including oil and gas) and other markets, and has adversely affected FHN’s and its clients' ability to conduct normal business, has adversely affected FHN customers, and is likely tocould harm FHN’s business and future results of operations.
In March 2020, the Federal Reserve lowered short-term interest rates twice and started a “quantitative easing” program intended to lower longer-term interest rates and foster access to credit. The effective yields of 10-year and 30-year U.S. Treasury securities achieved record low rates and the U.S. Congress enacted relief legislation which, among other things, iswas intended to provide emergency credit to businesses at risk for failure from government and public actions related to the COVID-19 pandemic, and to mitigate the severity of an economic recession. These changes in interest rates and the volatility in the market are likely to negatively impactimpacted FHN’s net interest margin. In the near term, amortizationAmortization of net processing fees related to government relief programs, including the Paycheck Protection Program, ("PPP"), mayhas offset a portion of the net interest margin decline. In addition, credit spreads have widened. For new loans, wider spreads should help mitigate net interest margin compression. However, FHN will not be able
COVID-19 Pandemic
Government and societal reaction to capture the widened spreads quickly for outstanding floating-rate loans.
The economic effects of the COVID-19 pandemic have significantly alteredcaused extraordinary disruption to the U.S. economy, as well as to the local economies within FHN's footprint, during the final three quarters of 2020 and continuing into the first quarter of 2021. Business activity, especially lending, declined throughout 2020 and into first quarter this year. In certain business lines, FHN reduced or stopped new lending because of the pandemic.
In the fourth quarter of 2020, two extremely effective vaccines were approved in the U.S. Administration of those vaccines began late in 2020, nationwide but on a narrowly targeted basis. In the first quarter of 2021, vaccine production and globally leadingdistribution increased, and a third vaccine was approved in the U.S. Public vaccination in the U.S. has accelerated during the first four months of 2021. In many of FHN's markets, COVID-19 restrictions at least partially were eased by the end of March or during April, and FHN believes further easing is likely in the rest of 2021. COVID-19 restrictions still had a substantial impact on FHN and its clients in the first quarter of 2021, but FHN expects those impacts to partial or full business closures, individuals being furloughed or laid off, significant increasesdiminish over the rest of this year as the vaccinated percentage of the U.S. population continues to climb. Within the U.S. economy, broadly speaking, manufacturing has largely recovered while services continue to lag significantly, especially in unemployment,hospitality and workers being partially or wholly orderedleisure.
Risk of resurgence remains as new virus variants continue to work from home. Disruptionbe identified around the world. As a result, FHN continues to FHN’s customers dueclosely monitor the pandemic and its effects on clients, especially credit quality, on FHN's communities, and on the financial markets. FHN continues to governmentalreach out to clients to discuss challenges and societal responsessolutions, to COVID-19 are likelyprovide line draws and new extensions to adversely affect FHN’s loanexisting clients, to provide support for small businesses through the Paycheck Protection Program and other stimulus programs, and to provide lending and deposit fee income as well as create downward loan migrationassistance through deferrals and a corresponding increase in loan loss expense and reserves. In addition, loan charge-offs likely will increase over time, especially if economic disruption related to COVID-19 continues for more than a few months. Furthermore, government programs under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and other guidance intended to provide relief to customers through temporary modifications and deferrals, may in some instances mask or postpone reporting of credit problems and potential defaults. In these circumstances, current credit quality indicators may not be reflective of the underlying health of FHN's portfolios.waived fees.
Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the impact of the COVID-19 pandemic on the businesses of FHN for the remainder of 2020 or afterward.
LIBOR Reform
In 2017, the Chief Executive of the United Kingdom Financial Conduct Authority, which regulates the London InterBankInter-Bank Offered Rate (“LIBOR”)(LIBOR), announced that it intends to halt persuading or compelling banks to submit rates for the calculation of LIBOR after 2021.
In March 2021, the United Kingdom’s Financial Conduct Authority (the “FCA”), the governmental regulator of the administrator of LIBOR, announced that U.S. Dollar LIBOR will no longer be representative as of:
•One week and two month USD LIBOR after December 31, 2021; and
•All other USD LIBOR tenors (e.g., overnight, 1-month, 3-month, 6-month and 12-month tenors) after June 30, 2023.

FIRST HORIZON CORPORATION961Q21 FORM 10-Q REPORT

The administrator of LIBOR thereafter announced that USD LIBOR will cease to be published immediately after the dates set out above.
Previous to these announcements, the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation issued SR 20-27 to encourage banks to transition away from U.S. dollar LIBOR as soon as practicable and noted that entering into new contracts that use LIBOR as a reference rate after December 31, 2021 would create safety and soundness risks. As a result, market participants will be required to transition away from LIBOR as currently operated may not continue afterbeginning in 2021. FHN is not currently able to predict the impact that the transition from LIBOR will have on the Company;FHN; however, because FHN has instruments with floating rate terms based on LIBOR, FHN may experience increases in interest, dividends, and other costs relative to these instruments subsequent to 2021. Additionally, the transition from LIBOR could impact or change FHN’s hedge accounting practices.

FHN has initiated efforts to 1) develop an inventory of affected loans, securities, and derivatives, 2) evaluate and draftassess modifications as needed to address loans outstanding at the time of LIBOR retirement,discontinuance, 3) obtain an understanding of the potential


FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 112



effects for applicable securities and derivatives, and 4) assess revisions to productsystems, processes, and pricing structures based onneeded to implement alternative reference rates. rates, and 5) update fallback language for all new loans that reference LIBOR.

In March 2020, the FASB issued ASU 2020-04, “Facilitation of the Effects of Reference Rate Reform on Financial Reporting,” which provides several optional expedients and exceptions to ease the potential burden in accounting for reference rate
reform. The scope of ASU 2020-04 was expanded with the January 2021 issuance of ASU 2021-01, "Scope". Refer to the Accounting Changes Issued but Not Currently Effective section of Note 1 - Financial InformationBasis of Presentation and Accounting Policies for additional information. Additionally, the IRS has released a proposalguidance that is intended to facilitate the transition of existing contracts from LIBOR to new reference rates without triggering modification accounting or taxable exchange treatment for those contracts. This proposal contains specific guidance thatspecifies what must be met in order to qualify for the beneficial transition approach and FHN is considering this guidance in its transition plans.

Limited Data Security Incident

In mid-April, FHN became aware of a data security incident affecting a limited number of customer accounts. Based on its ongoing investigation, FHN determined that an unauthorized party had obtained login credentials from an unknown source and attempted access to client accounts. Using the credentials and exploiting a vulnerability in third-party security software, the unauthorized party gained unauthorized access to under 200 on-line client bank accounts, had access to personal information in those accounts, and fraudulently obtained an aggregate of less than $1 million from some of those accounts. FHN has prioritized expense disciplineremediated the software vulnerability, reset the passwords for the identified accounts, is working with the affected clients to include reducing or controlling certain expenses including realization of expense efficiencies fromclose existing accounts and open new ones, has reimbursed clients for the stolen funds, and has notified the appropriate regulators and enforcement authorities. Based on its 2017 merger with CBF and investing in revenue-producing activities, customer-facing technology, and critical infrastructure. FHN remains committed to organic growth through customer retention, key hires, targeted incentives, and other traditional means.
When FHN closes its proposed merger with IBKC, under applicable accounting guidance FHN will be required to record IBKC's loans at estimated fair value asongoing assessment of the closing date. In addition,incident to date, FHN does not believe that this event will be required to assess the current (at that time) expected credit losses associated with IBKC loans. That credit loss assessment will be separate from the fair value estimation, and will result inhave a charge to FHN's income for certain loans for the period in which closing occurs. FHN is not able make that assessment at this time, but believes that the associated charge to income will be substantial to quarterly income.
Lastly, while FHN has resolved most matters from the pre-2009 mortgagematerial adverse effect on its business, some remain unresolved. The timingresults of operations, or financial impact of resolution of these matters cannot be predicted with accuracy. Accordingly, the non-strategic segment may occasionally and unexpectedly impact FHN’s overall quarterly results negatively or positively with reserve accruals or releases. Also, although new pre-2009 mortgage business matters of significance arise at a much slower pace than in years past and some formerly common legal claims no longer can be made due to the passage of time, potential for new pre-2009 mortgage business matters remains.condition.
Foreclosure Practices
FHN retains exposure for potential deficiencies in servicing related to its pre-2009 mortgage servicing business and subservicing arrangements. Further details regarding these matters are provided in
"Obligations from Pre-2009 Mortgage Businesses - Servicing Obligations" under "Repurchase Obligations, Off-Balance Sheet Arrangements, and Other Contractual Obligations."
FHN response to the COVID-19 pandemic
As previously mentioned, the COVID-19 pandemic has, and will continue, to directly and indirectly impact FHN and our customers. FHN has adapted many operations to help ensure the health and safety of employees and customers during these uncertain times. Among other things, FHN has implemented remote work policies, branch activities handled by appointment or via drive-through only, as well as additional sick time and child care assistance for employees. Additionally, FHN’s foundation has donated $2.5 million to support community relief efforts.
Loans
FHN is actively monitoring the COVID-19 pandemic and its impact on customers and FHN’s credit quality. In response, FHN is proactively reaching out to customers to discuss challenges and solutions, is providing line draws and new extensions to existing customers, is providing support for small businesses through the PPP (discussed in more detail below) and other stimulus programs, as well as providing lending and deposit assistance through deferrals and waived fees. Additionally, in certain sectors, FHN has reduced or stopped new lending.
Paycheck Protection Program

On March 27, 2020, the CARES Act was signed into law. Sections 1102 and 1106 of the CARES Act include a PPP that made $349 billion of funds available for qualifying businesses to receive fully-guaranteed loans via the Small Business Administration’s Section 7(a) lending program. These loans are potentially fully forgivable, depending upon the borrower’s use of the funds and maintenance of employment levels.

PPP loans are intended to provide cash-flow assistance to nonprofit and small business employers for expenses incurred between February 15, 2020, and June 30, 2020. Generally, the maximum loan amount per qualified borrower is the lesser of 1) 250 percent of average monthly payroll costs (e.g., salaries and wages up to $100,000 and benefits) during the previous one-year period plus the outstanding amount of any existing SBA Economic Injury Disaster Loan made from January 1, 2020 through April 3, 2020, that is being refinanced under the PPP and 2) $10 million. Eligible borrowers include any of the following that were in operation on February 15, 2020:

Businesses, including nonprofit organizations under Internal Revenue Code (“IRC”) Section 501(c)(3), veterans’ organizations under IRC Section 501(c)(19), and tribal organizations, that


FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 113



have 500 or fewer employees (or the Small Business Administration’s employee-based or revenue-based industry size standard, if higher).

Businesses in the food and accommodations industry (as defined in NAICS 724) with 500 or fewer employees per location.

Sole proprietors, independent contractors, and self-employed individuals.

All PPP loans carry the same terms which are as follows:

Fixed interest rate of 1 percent per annum

Maturity date of two years, with the ability to prepay earlier with no fees

First payment deferred for six months
Waiver of “credit elsewhere” SBA 7(a) requirement

No collateral or personal guarantees required

No borrower fees charged to obtain such loans

Under Section 1106 of the CARES Act, borrowers are eligible for forgiveness of principal and accrued interest on PPP loans to the extent that the proceeds are used to cover eligible payroll, interest, rent, and utility costs over the eight-week period after the loan is made as long as the borrower retains its employees and their compensation levels. However, no more than 25 percent of loan forgiveness may be attributable to eligible rent, utilities and interest. In addition, loans qualifying for forgiveness will not be included in the borrower’s taxable income.
Lenders making these PPP loans are paid a fee by the Small Business Administration on the date the loans are made. Lender fees are based on the following sliding scale.

Loans $350,000 and under: 5.00%

Loans greater than $350,000 to $2 million: 3.00%

Loans greater than $2 million: 1.00%

Borrowers can use agents to assist in the preparation of their PPP applications. Those agents are paid from the SBA fees received from the originating bank. Additionally, originating banks have certain internal costs of originating PPP loans. For applicable loans, agent fees are paid by originating banks based on the following scale.

Loans $350,000 and under: 1.00%

Loans greater than $350,000 to $2 million: 0.50%

Loans greater than $2 million: 0.25%
The SBA provides a 100 percent guarantee on PPP loans, which is an increase to the existing guarantee percentages under current SBA loan programs. In the event that a lender sells a PPP loan on the secondary market, the guarantee will transfer with the loan. Lenders are not required to conduct any verification regarding loan forgiveness provided that a borrower submits documentation supporting its request for loan forgiveness and attests that it has accurately verified the eligibility of the expenditures made. Lenders will be held harmless if they rely on such documentation. Lenders must make a decision on the forgiveness within 60 days. Section 1106 of the CARES Act indicates that any lender or purchaser of PPP loans may report to the SBA an expected forgiveness amount, and the SBA will purchase the expected forgiveness amounts, plus any interest accrued to date, within 15 days after such requests are received. Requests for forgiveness may occur as early as seven weeks after the loan is originated.

As part of FHN’s efforts to support customers through various stimulus programs, FHN originated 6,761 of PPP loans with an aggregate principal of $1.7 billion in April 2020. For these loans, FHN anticipates recognizing net origination fees of approximately $45 to $50 million. Additional lower origination volumes are anticipated in May. FHN has decided to hold its PPP loans for investment. Therefore, the net amount of SBA fees and total direct origination costs are deferred as a discount to the recorded carrying value of the PPP loans. This discount is being amortized prospectively to interest income. SBA loan forgiveness payments are considered prepayments of the related loans. Under existing accounting principles, amortization of net origination fees can reflect expected prepayment activity if prepayments are determined to be probable and both the timing and volume can be reasonably estimated. Based on the terms of the PPP loans, including the expected end of the payment deferral period, FHN estimates that substantially all of the prepayment-eligible portions of PPP loans will be prepaid in 2020 as these loans are forgiven. These estimated prepayments will result in a similar amount of the net fees being recognized in interest income in 2020.

Since PPP loans carry a full SBA guarantee, they do not have any credit risk and will not affect the amount of provision and ALLL recorded. Consistent with this view, the CARES Act indicates that investors should assign a risk weight of zero to PPP loans for regulatory capital purposes.

The initial funding for the $359 billion PPP loans was exhausted by April 16, 2020. However, on April 24, 2020, an additional $320 billion of funding was approved for the PPP. These funds will likely be exhausted in early May.




FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 114



Lending Assistance for Borrowers
Other customer support initiatives include incremental lending assistance for borrowers through delayed payment programs and fee waivers. The following table provides the UPB of loans related to deferrals granted to FHN’s customers that have been processed through April 30, 2020.
(Dollars in thousands) As of April 30, 2020
Commercial:  
General C&I $1,582,903
Loans to mortgage companies —
TRUPS —
Income CRE 1,061,452
Residential CRE 1,715
Total Commercial $2,646,070
Consumer:  
HELOC $69,531
R/E installment loans 494,205
Credit Card & Other 3,279
Total Consumer 567,015
Total $3,213,085

Commercial deferrals processed are comprised primarily of general commercial (39 percent or $1.0 billion), commercial real estate (28 percent or $731.3 million - primarily within our Mid-Atlantic, Southeast Tennessee,
and Middle Tennessee markets), franchise finance (13 percent or $334.9 million), business banking (8 percent or $208.9 million), and private client (6 percent - $152.0 million).

Deposits

Deposit levels were also significantly impacted in April due to the impacts of COVID-19 pandemic which resulted in an increase in period-end deposits of $3.7 billion, or 11 percent, from March 31, 2020 levels. This increase was due to an increase in commercial deposits as FHN saw many firms deposit funds (from lines of credit, PPP loans, operational revenues, etc.) into non-interest bearing operating accounts in order to increase their liquidity positions. Additionally, as various government stimulus programs were rolled out FHN saw increases in deposits from the Healthcare industry as Medicare reimbursements related to COVID-19 became available and a jump in deposits in Correspondent banking due to stimulus and PPP funds deposited into client banks. Consumer deposit inflows were also impacted by approximately $300 million in initial stimulus payments in mid-April.



Critical Accounting Policies and Estimates
Critical Accounting Policies
Except for the changes to the following Allowance for Loan Losses section, there have beenFHN has made no significant changes to FHN’sin its critical accounting policies as describedand estimates from those disclosed in “Critical Accounting Policies” beginning on page 99 of Item 7 to FHN’sits 2020 Annual Report on Form 10-K for the year ended December 31, 2019.10-K.
ALLOWANCE FOR LOAN LOSSESAccounting Changes With Extended Transition Periods
Management’s policy isRefer to maintain the ALLL at a level sufficient to absorb expected credit losses in the loan portfolio. Management performs periodicNote 1 – Basis of Presentation and systematic detailed reviews of its loan portfolio to identify trends and to assess the overall collectability of the loan portfolio. Management believes the accounting estimate related to the ALLL is a “critical accounting estimate” as: (1) changes in it can materially affect the provision for loan losses and net income, (2) it requires management to predict borrowers’ likelihood or capacity to repay, including evaluation of inherently uncertain future economic conditions, (3) prepayment activity must be projected to estimate of the life of loans that often are shorter than contractual terms, (4) it requires estimation of a reasonable and supportable forecast period for credit losses for loan portfolio segments before reversion to historical loss levels over the remaining life of a loan and (5) expected future recoveries of amounts previously charged off must be estimated. Accordingly, this is a highly subjective process and requires significant judgment since it is difficult to evaluate current and future economic conditions in relation to an overall credit cycle and estimate the timing and extent of loss events that are expected to occur prior to end of a loan’s estimated life. The ALLL is increased by the provision for loan losses and recoveries and is decreased by charged-off loans. Principal loan amounts are charged off against the ALLL in the period in which the loan or any portion of the loan is deemed to be uncollectible. This critical accounting estimate applies to the regional banking, non-strategic, and corporate segments. A management committee comprised of representatives from Risk Management, Finance, Credit, and Treasury performs a quarterly review of the assumptions used in FHN’s ALLL analytical models, makes qualitative assessments of the loan portfolio, and determines if qualitative adjustments should be recommended to the modeled results. On a quarterly basis, as a part of Enterprise Risk reporting and discussion, management addresses credit reserve adequacy and credit losses with the Executive and Risk Committee of FHN’s Board of Directors.
FHN believes that the critical assumptions underlying the accounting estimates made by management include: (1) the commercial loan portfolio has been properly risk graded based on information about borrowers in specific industries and specific issues with respect to single borrowers; (2) borrower specific information made available to FHN is current and accurate; (3) the loan portfolio has been segmented properly and individual loans have similar credit risk characteristics and will behave similarly; (4) the lives for loan portfolio pools have been estimated properly, including consideration of expected prepayments; (5) the economic forecasts utilized in the modeling of expected credit losses are reflective of future economic conditions; (6) entity-specific historical loss information has been properly assessed for all loan portfolio segments as the
initial basis for estimating expected credit losses; (7) the reasonable and supportable periods for loan portfolio segments have been properly determined; (8) the reversion methodologies and timeframes for migration from the reasonable and supportable period to the use of historical loss rates are reasonable; (9) expected recoveries of prior charge off amounts have been properly estimated; and (10)  qualitative adjustments to modeled loss results reasonably reflect expected future credit losses as of the date of the financial statements.
While management uses the best information available to establish the ALLL, future adjustments to the ALLL and methodology may be necessary if economic or other conditions differ substantially from the assumptions used in making the estimates. Such adjustments to original estimates, as necessary, are made in the period in which these factors and other relevant considerations indicate that loss levels vary from previous estimates.
See Note 1 - Summary of Significant Accounting Policies and Note 5 - Allowance for Loan Losses for detail regarding FHN’s processes, models, and methodology for determining the ALLL.
ACCOUNTING CHANGES ISSUED BUT NOT CURRENTLY EFFECTIVE
Refer to Note 1 – Financial Information forfor a detail of accounting standards that have been issued but are not currently effective,changes with extended transition periods, which section is incorporated into MD&A by this reference.
FIRST HORIZON CORPORATION971Q21 FORM 10-Q REPORT

Non-GAAP Information
Non-GAAP Information
The following table provides a reconciliation of non-GAAP items presented in this MD&A to the most comparable GAAP presentation:






FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 115



Table 23—20—Non-GAAP to GAAP Reconciliation
  Three Months Ended
March 31
(Dollars in thousands)
 2020 2019
Average Tangible Common Equity (Non-GAAP)    
Average total equity (GAAP) $5,002,394
 $4,809,235
Less: Average noncontrolling interest (a) 295,431
 295,431
Less: Average preferred stock (a) 95,624
 95,624
(A) Total average common equity $4,611,339
 $4,418,180
Less: Average intangible assets (GAAP) (b) 1,560,340
 1,584,694
(B) Average Tangible Common Equity (Non-GAAP) $3,050,999
 $2,833,486
Net Income Available to Common Shareholders    
(C) Net income available to common shareholders (annualized) (GAAP) $48,545
 $401,642
Ratios    
(C)/(A) Return on average common equity (“ROCE”) (GAAP) (c) 1.05% 9.09%
(C)/(B) Return on average tangible common equity (“ROTCE”) (Non-GAAP) (d) 1.59
 14.17
Three Months Ended
(Dollars in millions; shares in thousands)March 31, 2021December 31, 2020March 31, 2020
Pre-provision Net Revenue (Non-GAAP)
Net interest income (GAAP)$508 $522 $303 
Plus: Noninterest income (GAAP)298 288 175 
Total revenues (GAAP)806 810 478 
Less: Noninterest expense (GAAP)544 508 302 
Pre-provision net revenue (Non-GAAP)$262 $302 $176 
Average Tangible Common Equity (Non-GAAP)
Average total equity (GAAP)$8,349 $8,209 $5,002 
Less: Average noncontrolling interest (a)295 295 295 
Less: Average preferred stock (a)470 470 96 
(A) Total average common equity$7,584 $7,444 $4,611 
Less: Average intangible assets (GAAP) (b)1,857 1,871 1,560 
(B) Average Tangible Common Equity (Non-GAAP)$5,727 $5,573 $3,051 
Net Income Available to Common Shareholders
(C) Net income available to common shareholders (annualized) (GAAP)$911 $933 $49 
Tangible Common Equity (Non-GAAP)
(D) Total equity (GAAP)$8,307 $8,307 $5,056 
Less: Noncontrolling interest (a)295 295 295 
Less: Preferred stock (a)470 470 96 
(E) Total common equity$7,542 $7,542 $4,665 
Less: Intangible assets (GAAP) (b)1,850 1,865 1,558 
(F) Tangible common equity (Non-GAAP)5,692 5,677 3,107 
Less: Unrealized gains (losses) on AFS securities, net of tax5 108 119 
(G) Adjusted tangible common equity (Non-GAAP)$5,687 $5,569 $2,988 
Tangible Assets (Non-GAAP)
(H) Total assets (GAAP)$87,513 $84,209 $47,197 
Less: Intangible assets (GAAP) (b)1,850 1,865 1,558 
(I) Tangible assets (Non-GAAP)$85,663 $82,344 $45,639 
Risk-Weighted Assets
(J) Risk-weighted assets (c)$62,339 $63,140 $40,055 
Period-end Shares Outstanding
(K) Period-end shares outstanding552,374 555,031 311,863 
Ratios
(C)/(A) Return on average common equity (GAAP)12.01 %12.53 %1.05 %
(C)/(B) Return on average tangible common equity (Non-GAAP)15.90 16.73 1.59 
(D)/(H) Total period-end equity to period-end assets (GAAP)9.49 9.86 10.71 
(F)/(I) Tangible common equity to tangible assets (Non-GAAP)6.64 6.89 6.81 
(G)/(J) Adjusted tangible common equity to risk weighted assets (Non-GAAP)9.12 8.82 7.46 
(E)/(K) Book value per common share (GAAP)$13.65 $13.59 $14.96 
(F)/(K) Tangible book value per common share (Non-GAAP)$10.29 $10.23 $9.96 
(a)Included in Total equity on the Consolidated Condensed Statements of Condition.Balance Sheets.
(b)Includes Goodwill and other intangible assets, net of amortization.
(c) Defined by and calculated in conformity with bank regulations applicable to FHN.

(c)Ratio is annualized net income available to common shareholders to average common equity.
(d)Ratio is annualized net income available to common shareholders to average tangible common equity.
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FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 116



Item 3.     Quantitative and Qualitative Disclosures about Market Risk

The information called for by this item is contained in
(a)
Management’s Discussion and Analysis of Financial Condition and Results of Operations included as Item 2 of Part I of this report, including in particular the section entitled “Risk Management” beginning on page 10691 of this report and the subsections entitled “Market Risk Management” beginning on page 10691 and “Interest Rate Risk Management” beginning on page 10893 of this report, and
(b)
Note 1415 to the Consolidated Condensed Financial Statements appearing on pages 51-5742-48 of this report,
all of which materials are incorporated herein by reference. For additional information concerning market risk and our management of it, refer to: Management’s Discussion and Analysis of Financial Condition and Results of Operations appearing inItem 7to FHN’s Annual Report on Form 10-K for the year ended December 31, 2019,2020, including in particular the section entitled “Risk Management” beginning on page 8887 of that Report and the subsections entitled “Market Risk Management” beginning on page 8988 and “Interest Rate Risk Management” beginning on page 90 of that Report; and Note 22 to the Consolidated Financial Statements appearing on pages 194-200202-209 of Item 8 to FHN’s Annual Report on Form 10-K for the year ended December 31, 2019.2020.


Item 4.     Controls and Procedures
(a)Evaluation of Disclosure Controls and Procedures. FHN’s management, with the participation of FHN’s chief executive officer and chief financial officer, has evaluated the effectiveness of FHN’s disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) as of the end of the period covered by this quarterly report. Based on that evaluation, the chief executive officer and the chief financial officer have concluded that FHN’s disclosure controls and procedures were effective as of the end of the period covered by this report.
(b)    Changes in Internal Control over Financial Reporting. Other than as explained below, there have not been any changes in our internal control over financial reporting during the first fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
On July 1, 2020, FHN and IBERIABANK Corporation ("IBKC") closed their merger-of-equals transaction. As permitted by Securities and Exchange Commission rules, we elected to exclude IBKC from our assessment of internal control over financial reporting as of December 31, 2020. Our integration of IBKC’s systems and processes with our own could cause changes to our internal controls over financial reporting in future periods.







(a)FIRST HORIZON CORPORATIONEvaluation of Disclosure Controls and Procedures. FHN’s management, with the participation of FHN’s chief executive officer and chief financial officer, has evaluated the effectiveness of FHN’s disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) as of the end of the period covered by this quarterly report. Based on that evaluation, the chief executive officer and the chief financial officer have concluded that FHN’s disclosure controls and procedures were effective as of the end of the period covered by this report.991Q21 FORM 10-Q REPORT
(b)Changes in Internal Control over Financial Reporting. There have not been any changes in FHN’s internal control over financial reporting during FHN’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, FHN’s internal control over financial reporting.






FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 117



---------------------------
PartPART II. OTHER INFORMATION
---------------------------


Item 1.    Legal Proceedings
The “Contingencies” section of Note 1011 to the Consolidated Condensed Financial Statements beginning on page 4032 of this Report is incorporated into this Item by reference.


Item 1A.    Risk Factors

Changes from previous risk factor disclosures:

The following supplementsupdates and restates the third highlighted topic under "Operational Risks" within Item 1A of ourFHN's annual report on Form 10-K for the year ended December 31, 2019. It relates2020, which appeared on page 30 of that report.

An information technology security (cybersecurity) breach or other incident can cause significant damage, and can be difficult to most discussions withindetect even after it occurs. Among other things, that Item, particularly discussions under the captions: “Operational Risks,” “Risks Associateddamage can occur due to outright theft, loss or extortion of our funds or our clients’ funds, fraud or identity theft perpetrated on clients, loss of confidential or proprietary information, business disruption, or adverse publicity associated with Economic Downturnsa breach or incident and Changes,” “Risks Associatedits potential effects. Perpetrators potentially can be associates, clients, and certain vendors, all of whom legitimately have access to some portion of our systems, as well as outsiders with Monetary Events,” “Reputation Risks,” “Credit Risks,” “Service Risks,” “Regulatory, Legislative, and Legal Risks,” “Risks of Expense Control,” “Insurance,” “Liquidity and Funding Risks,” “Credit Ratings,” “Interest Rate and Yield Curve Risks,” “Asset Inventories and Market Risks,” and “Stockholding and Governance Risks.”

Supplemental Risk Factor Disclosures related to COVID-19

The recent global COVID-19 pandemic has led to periods of significant volatilityno legitimate access. For example, in financial, commodities (including oil and gas) and other markets, has adversely affected FHN’s ability to conduct normal business, has adversely affected FHN customers, and is likely to harm FHN’s businesses and future results of operations.
In December 2019,April 2021 we experienced a coronavirus (COVID-19) was reported in China, and has since spread to most countries in the world, including the United States. Starting in late February 2020, financial market volatility increased dramatically based on concerns that COVID-19, and the steps being undertaken in many countries to mitigate its spread, would significantly disrupt economic activity.
In March 2020, financial market volatility increased further, with several one-day stock market swings that resulted in significant market declines. Additionally, in March: market pricing deteriorated in virtually all sectors and asset classes except U.S. Treasury securities; the World Health Organization declared COVID-19 to be a pandemic; the U.S. President declared the COVID-19 pandemic to be a national emergency, allowing several federal disaster programs to be accessed by states and cities; many states and cities in the U.S. declared health emergencies, lockdowns, travel restrictions, and quarantines, prohibiting gatherings of more thandata security incident affecting a small number of people and ordering or urging most businesses and workplaces to close or operate on a very restricted basis; the Federal Reserve lowered short-term interest rates twice and started a “quantitative easing” program intended to lower longer-term interest rates and fosterclient accounts. An unauthorized party gained access to credit;certain client login credentials from an unknown source. Using those credentials and exploiting a vulnerability in third-party security software, the effective yields of 10-year and 30-year U.S. Treasury securities achieved record low rates; andunauthorized party was able to fraudulently obtain funds from client accounts. Although our monetary loss from that incident was minimal, the U.S. Congress enacted relief legislation which, among other things, is intended to provide emergency credit to businessesincident illustrates that we are at risk for failure


from government and public actionsvulnerabilities not fully within our control, in this case related to third-party software and client credentials.

Because of the COVID-19 pandemic,potential for very serious consequences associated with these risks, our electronic systems and their upgrades need to mitigate an economic recession which has not been officially declared but is widely believedaddress internal and external security concerns to have begun in March. Government programs instituted recently include loan programs administered by banksa high degree, and our systems must comply with applicable banking and other private-sector lenders, liquidity programs administered by the U.S. Treasury,regulations pertaining to bank safety and favorable accountingclient protection. Although many of our defenses are systemic and highly technical, others are much older and more basic. For example, periodically we train all our associates to recognize red flags associated with fraud, theft, and other electronic crimes, and we educate our clients as well through regular and episodic security-oriented communications. We expect our systems and regulatory treatment (for lenders) of certain loan payment deferrals.
The economic effects of theserequirements to continue to evolve as technology and related actions and events in the U.S. have included: large numbers of partial or full business closures; large numbers of people being furloughed or laid off; large increases in unemployment; large numbers of workers being partially or wholly orderedcriminal techniques also continue to work from home; large numbers of businesses at risk of insolvency as revenues drop off precipitously, especially in businesses related to travel, leisure, and physical personal services; large numbers of investors realizing substantial losses in their portfolios and retirement funds; and large numbers of consumers being unwilling to undertake significant discretionary spending. In addition, worldwide demand for oil has fallen sharply in conjunction with the pandemic resulting in sharp drops in oil prices and sharp drops in the values of oil-related assets. Further, certain banking organizations globally have limited share buybacks and other capital actions. The most significant effects already experienced by FHN, and actions already taken by FHN, are mentioned in Part I, Item 2 of this report under the captions “Financial Summary,” “Income Statement Review,” “Asset Quality,” and “Market Uncertainties and Prospective Trends,” beginning on pages 81, 83, 94, and 112 of this report, respectively.
Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the impact of the COVID-19 pandemic on the businesses of FHN for the remainder of 2020 or afterward. FHN’s efforts to mitigate


FIRST HORIZON NATIONAL CORP. 1Q20 FORM 10-Q REPORT 118



evolve.
the adverse impacts of COVID-19 may not be effective, and in any case are likely to be only a partial mitigate. The full extent of impacts resulting from the COVID-19 pandemic and other events beyond the control of FHN will depend on future developments, which are highly uncertain and unpredictable, including new information which may emerge concerning the severity of the pandemic and further actions taken to prevent, treat, or mitigate the spread of COVID-19, among others. Moreover, global markets for oil and gas have been, and may continue to be, severely impacted by events beyond the control of FHN. The current low commodity prices, especially if sustained, could have a negative impact on the economies of several states in which FHN conducts business, as well as FHN’s customers, businesses, and assets in those states.
In addition, the COVID-19 pandemic could result in business disruption to FHN, and if unable to recover from such a business disruption on a timely basis, FHN’s businesses, financial condition, and results of operations would be adversely affected. The efforts to integrate the businesses of IBKC and those of FHN may also be delayed and adversely affected by the COVID-19 pandemic, and become more costly. FHN may also incur additional costs to remedy damages caused by such disruptions, which could adversely affect FHN’s financial condition and results of operations.
Changes in interest rates due to Federal Reserve actions and market forces, mentioned above, are likely to negatively impact FHN’s net interest margin (a measure of the average profit margin applicable to
lending). In addition, “spreads” (the difference between U.S. Treasury borrowing rates and private sector borrowing rates) have widened. For new loans, wider spreads should help mitigate net interest margin compression. However, FHN will not be able to capture the widened spreads quickly for outstanding floating-rate loans: for loans pre-dating the COVID-19 crisis, spreads are fixed by the loan contracts based on pre-COVID pricing.
FHN’s customers have been adversely impacted by governmental and societal responses to COVID-19; those impacts are likely to adversely affect FHN’s noninterest income from loans and deposits as well as create downward loan migration (a reduction in loan-grading) and a corresponding increase in loan loss provision expense and reserves. In addition, loan charge-offs likely will increase over time, especially if economic disruption related to COVID-19 continues for more than a few months.
In the U.S., initial government responses to the COVID-19 pandemic were intended mainly to slow the spread of illness, regardless of the impact on economic activity. As governments relax restrictions in an effort re-invigorate the economy, it is not clear how well or how quickly the economy will recover. Substantial uncertainty regarding COVID-19, and the resulting economic damage, likely will continue until a substantial percentage of the population no longer fears contracting it.


Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds


(a) & (b)Not Applicable
(a) & (b)Not Applicable
(c)
The "Common Stock Purchase Programs” section including tables 10(a)17(a) and 10(b)17(b) and explanatory discussions included in Item 2 of Part I of this report under the heading “First Horizon National Corporation Management’s Discussion and Analysis of Financial Condition and Results of Operations,” beginning on page 9390 of this report, is incorporated herein by reference.

Items 3., 4., and 5.

Not applicable


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Item 6.    Exhibits
(a) Exhibits
In the Exhibit Table below: the “Filed Here” column denotes each exhibit which is filed or furnished (as applicable) with this report; the “Mngt Exh” column denotes each exhibit that represents a management contract or compensatory plan or arrangement required to be identified as such; and the “Furnished” column denotes each exhibit that is “furnished” pursuant to 18 U.S.C. Section 1350 or otherwise, and is not “filed” as part of this Report or as a separate disclosure document.
In many agreements filed as exhibits, each party makes representations and warranties to other parties. Those representations and warranties are made only to and for the benefit of those other parties in the context of a business contract. Exceptions to such representations and warranties may be partially or fully waived by such parties, or not enforced by such parties, in their discretion. No such representation or warranty may be relied upon by any other person for any purpose.
EXHIBIT TABLE
Exh NoDescription of Exhibit to this ReportFiled HereMngt ExhFurn-ishedIncorporated by Reference to
FormExh No.Filing Date
4.10FHN agrees to furnish to the Securities and Exchange Commission upon request a copy of each instrument defining the rights of the holders of the senior and subordinated long-term debt of FHN and its consolidated subsidiaries.
10.1XX
10.2XX
10.3XX
10.4XX
10.5X8-K10.11/29/2021
10.6XProxy 2021App. A3/15/2021
31(a)X
31(b)X
32(a)XX
32(b)XX
XBRL Exhibits
101The following financial information from First Horizon Corporation’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, formatted in Inline XBRL: (i) Consolidated Balance Sheets at March 31, 2021 and December 31, 2020; (ii) Consolidated Statements of Income for the Three Months Ended March 31, 2021 and 2020; (iii) Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2021 and 2020; (iv) Consolidated Statements of Changes in Equity for the Three Months Ended March 31, 2021 and 2020; (v) Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2021 and 2020; (vi) Notes to Consolidated Financial Statements.X
101. INSXBRL Instance Document -- the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101. SCHInline XBRL Taxonomy Extension SchemaX
101. CALInline XBRL Taxonomy Extension Calculation LinkbaseX
101. LABInline XBRL Taxonomy Extension Label LinkbaseX
FIRST HORIZON CORPORATION1011Q21 FORM 10-Q REPORT

Exh NoDescription of Exhibit to this ReportFiled HereMngt ExhFurn-ishedIncorporated by Reference to
FormExh NoNo.Filing Date
4.2FHN agrees to furnish to the Securities and Exchange Commission upon request a copy of each instrument defining the rights of the holders of the senior and subordinated long-term debt of FHN and its consolidated subsidiaries.
10.1
Form of Grant Notice for Executive Performance Stock Units [2020]
XX
10.2
Form of Grant Notice for Executive Stock Options [2020]
XX
10.3
Form of Grant Notice for Executive Restrictive Stock Units [2020]
XX
10.4
Form of Grant Notice for MIP-Driven Cash-Settled RSUs (FHN Financial) [2020]
XX
31(a)
Rule 13a-14(a) Certifications of CEO (pursuant to Section 302 of Sarbanes-Oxley Act of 2002)
X
31(b)
Rule 13a-14(a) Certifications of CFO (pursuant to Section 302 of the Sarbanes-Oxley Act of 2002)
X
32(a)
18 USC 1350 Certifications of CEO (pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)
XX
32(b)
18 USC 1350 Certifications of CFO (pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)
XX
XBRL Exhibits
101The following financial information from First Horizon National Corporation’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, formatted in Inline XBRL: (i) Consolidated Condensed Statements of Condition at March 31, 2020 and December 31, 2019; (ii) Consolidated Condensed Statements of Income for the Three Months Ended March 31, 2020 and 2019; (iii) Consolidated Condensed Statements of Comprehensive Income for the Three Months Ended March 31, 2020 and 2019; (iv) Consolidated Condensed Statements of Equity for the Three Months Ended March 31, 2020 and 2019; (v) Consolidated Condensed Statements of Cash Flows for the Three Months Ended March 31, 2020 and 2019; (vi) Notes to Consolidated Condensed Financial Statements.
101. INSXBRL Instance Document- the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101. SCHInline XBRL Taxonomy Extension SchemaX
101.CALInline XBRL Taxonomy Extension Calculation LinkbaseX
101.LABInline XBRL Taxonomy Extension Label LinkbaseX
101. PREInline XBRL Taxonomy Extension Presentation LinkbaseX
101.DEF101. DEFInline XBRL Taxonomy Extension Definition LinkbaseX
104Cover Page Interactive Data File, formatted in Inline XBRL (included in Exhibit 101)X


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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
FIRST HORIZON NATIONAL CORPORATION
(Registrant)                                 
Date: May 8, 20206, 2021By:/s/ William C. Losch III
Name:William C. Losch III
Title:Senior Executive Vice President and Chief Financial Officer
(Duly Authorized Officer and Principal Financial Officer)


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FIRST HORIZON CORPORATION1031Q21 FORM 10-Q REPORT