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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 June 30, 2020
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
____________________________________ 
First Horizon National Corporation
(Exact name of registrant as specified in its charter)
 ______________________________________  
TN
 
62-0803242
(State or other jurisdiction
incorporation of organization)
 
(IRS Employer
Identification No.)
 
 
 
165 Madison Avenue
 
 
Memphis,
Tennessee
 
38103
(Address of principal executive office)
 
(Zip Code)
(Registrant’s telephone number, including area code) (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 Class
Trading Symbol(s)
Name of Exchange on which Registered
 
$.625 Par Value Common Capital Stock
 FHN
New 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 A
New 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 B
New 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 C
New 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 D
New 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 E
New York Stock Exchange LLC
 
 
* Denotes class of security issued and outstanding on the date this report is filed, but not at June 30, 2020.

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

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


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. 
Class
  
Outstanding on June 30, 2020
Common Stock, $.625 par value
  
312,358,668
 
 
 
 
 



Table of Contents
FIRST HORIZON NATIONAL CORPORATION
INDEX
 
 
 
 
 
 
 



---------------------------
PART 1. FINANCIAL INFORMATION
---------------------------
 
Item 1. Financial Statements
 
 
 
 
 
 
 
 
 
 
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. 2Q20 FORM 10-Q REPORT 1



CONSOLIDATED CONDENSED STATEMENTS OF CONDITION
 
 
First Horizon National Corporation
 
 
(Unaudited)
 
December 31
 
 
June 30
 
(Dollars in thousands, except per share amounts)
 
2020
 
2019
Assets:
 
 
 
 
Cash and due from banks
 
$
604,280

 
$
633,728

Federal funds sold
 
113,000

 
46,536

Securities purchased under agreements to resell (Note 15)
 
302,267

 
586,629

Total cash and cash equivalents
 
1,019,547

 
1,266,893

Interest-bearing cash
 
3,135,844

 
482,405

Trading securities
 
1,116,450

 
1,346,207

Loans held-for-sale (a)
 
745,655

 
593,790

Securities available-for-sale (Note 3)
 
5,476,156

 
4,445,403

Securities held-to-maturity (Note 3)
 
10,000

 
10,000

Loans, net of unearned income (Note 4) (b)
 
32,708,937

 
31,061,111

Less: Allowance for loan losses (Note 5)
 
537,881

 
200,307

Total net loans
 
32,171,056

 
30,860,804

Goodwill (Note 6)
 
1,432,787

 
1,432,787

Other intangible assets, net (Note 6)
 
119,608

 
130,200

Fixed income receivables
 
145,455

 
40,114

Premises and equipment, net (June 30, 2020 and December 31, 2019 include $7.0 million and $9.7 million, respectively, classified as held-for-sale)
 
448,028

 
455,006

Other real estate owned (“OREO”) (c)
 
15,134

 
17,838

Derivative assets (Note 14)
 
599,704

 
183,115

Other assets
 
2,209,235

 
2,046,338

Total assets
 
$
48,644,659

 
$
43,310,900

Liabilities and equity:
 
 
 
 
Deposits:
 
 
 
 
Savings
 
$
13,532,127

 
$
11,664,906

Time deposits, net
 
2,655,702

 
3,618,337

Other interest-bearing deposits
 
9,783,704

 
8,717,341

Interest-bearing
 
25,971,533

 
24,000,584

Noninterest-bearing
 
11,787,818

 
8,428,951

Total deposits
 
37,759,351

 
32,429,535

Federal funds purchased
 
778,529

 
548,344

Securities sold under agreements to repurchase (Note 15)
 
1,482,585

 
716,925

Trading liabilities
 
232,742

 
505,581

Other short-term borrowings
 
130,583

 
2,253,045

Term borrowings
 
2,032,476

 
791,368

Fixed income payables
 
24,735

 
49,535

Derivative liabilities (Note 14)
 
94,389

 
67,480

Other liabilities
 
900,884

 
873,079

Total liabilities
 
43,436,274

 
38,234,892

Equity:
 
 
 
 
First Horizon National Corporation Shareholders’ Equity:
 
 
 
 
Preferred stock - Non-cumulative perpetual, no par value, liquidation preference of $100,000 per share - (Series A shares authorized - 1,000; shares issued - 1,000 on June 30, 2020 and December 31, 2019. Series E shares authorized - 1,725; shares issued - 1,500 on June 30, 2020)
 
240,289

 
95,624

Common stock - $.625 par value (shares authorized - 400,000,000; shares issued - 312,358,668 on June 30, 2020 and 311,469,056 on December 31, 2019)
 
195,224

 
194,668

Capital surplus
 
2,940,610

 
2,931,451

Undivided profits
 
1,671,629

 
1,798,442

Accumulated other comprehensive loss, net (Note 8)
 
(134,798
)
 
(239,608
)
Total First Horizon National Corporation Shareholders’ Equity
 
4,912,954

 
4,780,577

Noncontrolling interest
 
295,431

 
295,431

Total equity
 
5,208,385

 
5,076,008

Total liabilities and equity
 
$
48,644,659

 
$
43,310,900

See accompanying notes to consolidated condensed financial statements.
(a)
June 30, 2020 and December 31, 2019 include $2.5 million and $6.8 million, respectively, of held-for-sale consumer mortgage loans secured by residential real estate in process of foreclosure.
(b)
June 30, 2020 and December 31, 2019 include $16.9 million and $18.8 million, respectively, of held-to-maturity consumer mortgage loans secured by residential real estate in process of foreclosure.
(c)
June 30, 2020 and December 31, 2019 include $7.8 million and $9.2 million, respectively, of foreclosed residential real estate.


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



CONSOLIDATED CONDENSED STATEMENTS OF INCOME
 
First Horizon National Corporation
 
Three Months Ended
June 30
 
Six Months Ended
June 30
(Dollars and shares in thousands except per share data, unless otherwise noted) (Unaudited)
2020
 
2019
 
2020
 
2019
Interest income:
 
 
 
 
 
 
 
Interest and fees on loans
$
305,913

 
$
352,112

 
$
632,512

 
$
684,050

Interest on investment securities available-for-sale
24,977

 
31,247

 
52,733

 
63,090

Interest on investment securities held-to-maturity
132

 
132

 
263

 
263

Interest on loans held-for-sale
6,596

 
8,128

 
13,495

 
18,005

Interest on trading securities
8,723

 
13,154

 
21,840

 
26,702

Interest on other earning assets
283

 
7,316

 
4,149

 
20,594

Total interest income
346,624

 
412,089

 
724,992

 
812,704

Interest expense:
 
 
 
 
 
 
 
Interest on deposits:
 
 
 
 
 
 
 
Savings
12,520

 
36,806

 
38,853

 
76,720

Time deposits
9,259

 
22,439

 
23,202

 
42,693

Other interest-bearing deposits
2,966

 
19,757

 
17,179

 
41,799

Interest on trading liabilities
974

 
3,756

 
4,266

 
6,572

Interest on short-term borrowings
1,455

 
11,038

 
11,319

 
17,782

Interest on term borrowings
14,106

 
14,683

 
22,027

 
29,020

Total interest expense
41,280

 
108,479

 
116,846

 
214,586

Net interest income
305,344

 
303,610

 
608,146

 
598,118

Provision/(provision credit) for loan losses
110,000

 
13,000

 
255,000

 
22,000

Net interest income after provision/(provision credit) for loan losses
195,344

 
290,610

 
353,146

 
576,118

Noninterest income:
 
 
 
 
 
 
 
Fixed income
112,421

 
66,414

 
208,056

 
120,163

Deposit transactions and cash management
30,787

 
32,374

 
61,077

 
63,995

Brokerage, management fees and commissions
13,800

 
14,120

 
29,205

 
26,753

Trust services and investment management
7,733

 
7,888

 
14,928

 
14,914

Bankcard income
6,652

 
6,355

 
13,905

 
13,307

Bank-owned life insurance ("BOLI")
6,380

 
5,126

 
10,969

 
9,528

Debt securities gains/(losses), net (Note 3 and Note 8)
—

 
(267
)
 
—

 
(267
)
Equity securities gains/(losses), net (Note 3)
(1,493
)
 
316

 
(1,468
)
 
347

All other income and commissions (Note 7)
29,989

 
25,667

 
44,353

 
50,298

Total noninterest income
206,269

 
157,993

 
381,025

 
299,038

Adjusted gross income after provision/(provision credit) for loan losses
401,613

 
448,603

 
734,171

 
875,156

Noninterest expense:
 
 
 
 
 
 
 
Employee compensation, incentives, and benefits
200,259

 
171,643

 
383,729

 
349,568

Occupancy
21,445

 
20,719

 
41,008

 
41,412

Computer software
16,522

 
15,001

 
32,549

 
30,140

Operations services
11,654

 
11,713

 
23,346

 
23,201

Professional fees
10,310

 
11,291

 
17,306

 
23,590

Equipment rentals, depreciation, and maintenance
8,384

 
8,375

 
16,936

 
17,204

FDIC premium expense
6,432

 
4,247

 
13,174

 
8,520

Communications and courier
5,868

 
7,380

 
11,396

 
13,833

Amortization of intangible assets
5,284

 
6,206

 
10,592

 
12,422

Contract employment and outsourcing
5,236

 
3,078

 
10,172

 
6,449

Advertising and public relations
2,525

 
5,574

 
9,981

 
12,816

Legal fees
2,498

 
6,486

 
4,321

 
9,317

All other expense (Note 7)
35,751

 
28,681

 
68,977

 
48,012

Total noninterest expense
332,168

 
300,394

 
643,487

 
596,484

Income/(loss) before income taxes
69,445

 
148,209

 
90,684

 
278,672

Provision/(benefit) for income taxes
12,780

 
34,467

 
17,547

 
61,525

Net income/(loss)
$
56,665

 
$
113,742

 
$
73,137

 
$
217,147

Net income attributable to noncontrolling interest
2,851

 
2,852

 
5,703

 
5,672

Net income/(loss) attributable to controlling interest
$
53,814

 
$
110,890

 
$
67,434

 
$
211,475

Preferred stock dividends
1,550

 
1,550

 
3,100

 
3,100

Net income/(loss) available to common shareholders
$
52,264

 
$
109,340

 
$
64,334

 
$
208,375

Basic earnings/(loss) per share (Note 9)
$
0.17

 
$
0.35

 
$
0.21

 
$
0.66

Diluted earnings/(loss) per share (Note 9)
$
0.17

 
$
0.35

 
$
0.21

 
$
0.66

Weighted average common shares (Note 9)
312,090

 
314,063

 
311,843

 
315,740

Diluted average common shares (Note 9)
312,936

 
315,786

 
312,792

 
317,720


Certain previously reported amounts have been reclassified to agree with current presentation.
See accompanying notes to consolidated condensed financial statements.



FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 3



CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
 
 
First Horizon National Corporation
 
Three Months Ended
June 30
 
Six Months Ended
June 30
(Dollars in thousands) (Unaudited)
2020
 
2019
 
2020
 
2019
Net income/(loss)
$
56,665

 
$
113,742

 
$
73,137

 
$
217,147

Other comprehensive income/(loss), net of tax:
 
 
 
 
 
 
 
Net unrealized gains/(losses) on securities available-for-sale
(1,030
)
 
48,192

 
87,248

 
96,807

Net unrealized gains/(losses) on cash flow hedges
17

 
8,909

 
13,078

 
14,296

Net unrealized gains/(losses) on pension and other postretirement plans
2,379

 
1,561

 
4,484

 
3,024

Other comprehensive income/(loss)
1,366

 
58,662

 
104,810

 
114,127

Comprehensive income
58,031

 
172,404

 
177,947

 
331,274

Comprehensive income attributable to noncontrolling interest
2,851

 
2,852

 
5,703

 
5,672

Comprehensive income attributable to controlling interest
$
55,180

 
$
169,552

 
$
172,244

 
$
325,602

Income tax expense/(benefit) of items included in Other comprehensive income:
 
 
 
 
 
 
 
Net unrealized gains/(losses) on securities available-for-sale
$
(336
)
 
$
15,819

 
$
28,451

 
$
31,777

Net unrealized gains/(losses) on cash flow hedges
5

 
2,924

 
4,265

 
4,692

Net unrealized gains/(losses) on pension and other postretirement plans
776

 
513

 
1,462

 
993

See accompanying notes to consolidated condensed financial statements.



FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 4



CONSOLIDATED CONDENSED STATEMENTS OF EQUITY 

First Horizon National Corporation
Six months ended June 30, 2020
 
 
Preferred Stock
 
Common Stock
 
 
 
 
 
 
 
 
 
 
(Dollars and shares in thousands, except per share data) (unaudited)
 
Shares
 
Amount
 
Shares
 
Amount
 
Capital
Surplus
 
Undivided
Profits
 
Accumulated
Other
Comprehensive
Income/(Loss) (a)
 
Noncontrolling Interest
 
     Total
Balance, December 31, 2019
 
1,000

 
$
95,624

 
311,469

 
$
194,668

 
$
2,931,451

 
$
1,798,442

 
$
(239,608
)
 
$
295,431

 
$
5,076,008

Adjustment to reflect adoption of ASU 2016-13
 
—

 
—

 
—

 
—

 
—

 
(96,057
)
 
—

 
—

 
(96,057
)
Beginning balance, as adjusted
 
1,000

 
95,624

 
311,469

 
194,668

 
2,931,451

 
1,702,385

 
(239,608
)
 
295,431

 
4,979,951

Net income/(loss)
 
—

 
—

 
—

 
—

 
—

 
13,620

 
—

 
2,852

 
16,472

Other comprehensive income/(loss)
 
—

 
—

 
—

 
—

 
—

 
—

 
103,444

 
—

 
103,444

Comprehensive income/(loss)
 
—

 
—

 
—

 
—

 
—

 
13,620

 
103,444

 
2,852

 
119,916

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
)
 
(88
)
 
(1,976
)
 
—

 
—

 
—

 
(2,064
)
Common stock issued for:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock options and restricted stock - equity awards
 
—

 
—

 
652

 
407

 
3,733

 
—

 
—

 
—

 
4,140

Stock-based compensation expense
 
—

 
—

 
—

 
—

 
7,281

 
—

 
—

 
—

 
7,281

Dividends declared - noncontrolling interest of subsidiary preferred stock
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(2,852
)
 
(2,852
)
Other (b)
 
—

 
—

 
(117
)
 
(73
)
 
(1,819
)
 
—

 
—

 
—

 
(1,892
)
Balance, March 31, 2020
 
1,000

 
$
95,624

 
311,863

 
$
194,914

 
$
2,938,670

 
$
1,667,105

 
$
(136,164
)
 
$
295,431

 
$
5,055,580

Net income/(loss)
 
—

 
—

 
—

 
—

 
—

 
53,814

 
—

 
2,851

 
56,665

Other comprehensive income/(loss)
 
—

 
—

 
—

 
—

 
—

 
—

 
1,366

 
—

 
1,366

Comprehensive income/(loss)
 
—

 
—

 
—

 
—

 
—

 
53,814

 
1,366

 
2,851

 
58,031

Cash dividends declared:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock ($1,550 per share)
 
—

 
—

 
—

 
—

 
—

 
(1,550
)
 
—

 
—

 
(1,550
)
Common stock ($.15 per share)
 
—

 
—

 
—

 
—

 
—

 
(47,740
)
 
—

 
—

 
(47,740
)
Preferred stock issuance (1,500 shares issued at $100,000 per share net of offering costs)
 
1,500

 
144,665

 
—

 
—

 
—

 
—

 
—

 
—

 
144,665

Common stock repurchased
 
—

 
—

 
(183
)
 
(114
)
 
(1,354
)
 
—

 
—

 
—

 
(1,468
)
Common stock issued for:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock options and restricted stock - equity awards
 
—

 
—

 
679

 
424

 
(424
)
 
—

 
—

 
—

 
—

Stock-based compensation expense
 
—

 
—

 
—

 
—

 
3,718

 
—

 
—

 
—

 
3,718

Dividends declared - noncontrolling interest of subsidiary preferred stock
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(2,851
)
 
(2,851
)
Balance, June 30, 2020
 
2,500

 
$
240,289

 
312,359

 
$
195,224

 
$
2,940,610

 
$
1,671,629

 
$
(134,798
)
 
$
295,431

 
$
5,208,385


(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 Capital Bank Financial Corporation ("CBF") dissenters' appraisal process.




FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 5



Six months ended June 30, 2019
 
 
Preferred Stock
 
Common Stock
 
 
 
 
 
 
 
 
 
 
(Dollars and shares in thousands, except per share data) (unaudited)
 
Shares
 
Amount
 
Shares
 
Amount
 
Capital
Surplus
 
Undivided
Profits
 
Accumulated
Other
Comprehensive
Income/(Loss) (a)
 
Noncontrolling Interest
 
Total
Balance, December 31, 2018
 
1,000

 
$
95,624

 
318,573

 
$
199,108

 
$
3,029,425

 
$
1,542,408

 
$
(376,616
)
 
$
295,431

 
$
4,785,380

Adjustment to reflect adoption of ASU 2016-02
 
—

 
—

 
—

 
—

 
—

 
(1,011
)
 
—

 
—

 
(1,011
)
Beginning balance, as adjusted
 
1,000

 
95,624

 
318,573

 
199,108

 
3,029,425

 
1,541,397

 
(376,616
)
 
295,431

 
4,784,369

Net income/(loss)
 
—

 
—

 
—

 
—

 
—

 
100,585

 
—

 
2,820

 
103,405

Other comprehensive income/(loss)
 
—

 
—

 
—

 
—

 
—

 
—

 
55,465

 
—

 
55,465

Comprehensive income/(loss)
 
—

 
—

 
—

 
—

 
—

 
100,585

 
55,465

 
2,820

 
158,870

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
)
 
(2,246
)
 
(51,190
)
 
—

 
—

 
—

 
(53,436
)
Common stock issued for:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock options and restricted stock - equity awards
 
—

 
—

 
382

 
239

 
281

 
—

 
—

 
—

 
520

Stock-based compensation expense
 
—

 
—

 
—

 
—

 
5,432

 
—

 
—

 
—

 
5,432

Dividends declared - noncontrolling interest of subsidiary preferred stock
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(2,820
)
 
(2,820
)
Balance, March 31, 2019
 
1,000

 
$
95,624

 
315,361

 
$
197,101

 
$
2,983,948

 
$
1,595,568

 
$
(321,151
)
 
$
295,431

 
$
4,846,521

Net income/(loss)
 
—

 
—

 
—

 
—

 
—

 
110,890

 
—

 
2,852

 
113,742

Other comprehensive income/(loss)
 
—

 
—

 
—

 
—

 
—

 
—

 
58,662

 
—

 
58,662

Comprehensive income/(loss)
 
—

 
—

 
—

 
—

 
—

 
110,890

 
58,662

 
2,852

 
172,404

Cash dividends declared:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock ($1,550 per share)
 
—

 
—

 
—

 
—

 
—

 
(1,550
)
 
—

 
—

 
(1,550
)
Common stock ($.14 per share)
 
—

 
—

 
—

 
—

 
—

 
(44,388
)
 
—

 
—

 
(44,388
)
Common stock repurchased (b)
 
—

 
—

 
(3,654
)
 
(2,284
)
 
(49,938
)
 
—

 
—

 
—

 
(52,222
)
Common stock issued for:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock options and restricted stock - equity awards
 
—

 
—

 
771

 
482

 
2,462

 
—

 
—

 
—

 
2,944

Stock-based compensation expense
 
—

 
—

 
—

 
—

 
5,224

 
—

 
—

 
—

 
5,224

Dividends declared - noncontrolling interest of subsidiary preferred stock
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(2,852
)
 
(2,852
)
Balance, June 30, 2019
 
1,000

 
$
95,624

 
312,478

 
$
195,299

 
$
2,941,696

 
$
1,660,520

 
$
(262,489
)
 
$
295,431

 
$
4,926,081



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 and $50.2 million repurchased under share repurchase programs in first and second quarter 2019, respectively.



FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 6



CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
 
 
 
First Horizon National Corporation
 
 
Six Months Ended June 30
(Dollars in thousands) (Unaudited)
 
2020
 
2019
Operating Activities
 
 
 
 
Net income/(loss)
 
$
73,137

 
$
217,147

Adjustments to reconcile net income/(loss) to net cash provided/(used) by operating activities:
 
 
 
 
Provision/(provision credit) for loan losses
 
255,000

 
22,000

Provision/(benefit) for deferred income taxes
 
(38,528
)
 
60,943

Depreciation and amortization of premises and equipment
 
21,040

 
22,564

Amortization of intangible assets
 
10,592

 
12,422

Net other amortization and accretion
 
7,838

 
(2,542
)
Net (increase)/decrease in derivatives
 
(368,592
)
 
(119,415
)
Fair value adjustment on interest-only strips
 
2,528

 
1,399

(Gains)/losses and write-downs on OREO, net
 
117

 
(304
)
Litigation and regulatory matters
 
—

 
(8,330
)
Stock-based compensation expense
 
10,999

 
10,656

Gain on sale and pay down of held-to-maturity loans
 
—

 
(1,105
)
Equity securities (gains)/losses, net
 
1,468

 
(347
)
Debt securities (gains)/losses, net
 
—

 
267

Net (gains)/losses on sale/disposal of fixed assets
 
1,816

 
19,182

(Gain)/loss on BOLI
 
(3,880
)
 
(2,578
)
Loans held-for-sale:
 
 
 
 
Purchases and originations
 
(1,096,917
)
 
(1,003,375
)
Gross proceeds from settlements and sales
 
322,517

 
361,895

(Gain)/loss due to fair value adjustments and other
 
6,619

 
36,138

Net (increase)/decrease in:
 
 
 
 
Trading securities
 
833,483

 
581,187

Fixed income receivables
 
(105,341
)
 
(108,713
)
Interest receivable
 
(6,917
)
 
(6,120
)
Other assets
 
(131,628
)
 
7,394

Net increase/(decrease) in:
 
 
 
 
Trading liabilities
 
(272,839
)
 
222,967

Fixed income payables
 
(24,800
)
 
56,797

Interest payable
 
(9,850
)
 
12,435

Other liabilities
 
9,183

 
(45,278
)
Total adjustments
 
(576,092
)
 
130,139

Net cash provided/(used) by operating activities
 
(502,955
)
 
347,286

Investing Activities
 
 
 
 
Available-for-sale securities:
 
 
 
 
Sales
 
8,703

 
171,423

Maturities
 
571,676

 
339,315

Purchases
 
(1,498,312
)
 
(144,534
)
Premises and equipment:
 
 
 
 
Sales
 
2,382

 
8,157

Purchases
 
(20,851
)
 
(12,487
)
Proceeds from sales of OREO
 
4,475

 
9,651

Proceeds from sale and pay down of loans classified as held-to-maturity
 
—

 
20,100

Proceeds from BOLI
 
7,826

 
8,945

Net (increase)/decrease in:
 
 
 
 
Loans
 
(1,648,847
)
 
(2,183,862
)
Interests retained from securitizations classified as trading securities
 
130

 
298

Interest-bearing cash
 
(2,653,439
)
 
684,431

Net cash provided/(used) by investing activities
 
(5,226,257
)
 
(1,098,563
)
Financing Activities
 
 
 
 
Common stock:
 
 
 
 
Stock options exercised
 
4,145

 
3,464

Cash dividends paid
 
(91,925
)
 
(83,711
)
Repurchase of shares (a)
 
(3,543
)
 
(105,658
)
Cancellation of common shares (b)
 
(1,892
)
 
—

Preferred stock issuance
 
144,665

 
—



FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 7



Cash dividends paid - preferred stock - noncontrolling interest
 
(5,734
)
 
(5,703
)
Cash dividends paid - Series A preferred stock
 
(3,100
)
 
(3,100
)
Term borrowings:
 
 
 
 
Issuance (c)
 
1,241,534

 
—

Payments/maturities
 
—

 
(1,180
)
Increases/(decreases) in restricted and secured term borrowings
 
(5,483
)
 
4,481

Net increase/(decrease) in:
 
 
 
 
Deposits
 
5,329,816

 
(374,675
)
Short-term borrowings
 
(1,126,617
)
 
1,161,739

Net cash provided/(used) by financing activities
 
5,481,866

 
595,657

Net increase/(decrease) in cash and cash equivalents
 
(247,346
)
 
(155,620
)
Cash and cash equivalents at beginning of period
 
1,266,893

 
1,405,325

Cash and cash equivalents at end of period
 
$
1,019,547

 
$
1,249,705

Supplemental Disclosures
 
 
 
 
Total interest paid
 
$
125,368

 
$
200,625

Total taxes paid
 
6,486

 
14,842

Total taxes refunded
 
541

 
27,742

Transfer from loans to OREO
 
1,888

 
3,343

Transfer from loans HFS to trading securities
 
603,856

 
802,259

See accompanying notes to consolidated condensed financial statements.
(a) 2019 includes $101.7 million repurchased under share repurchase programs.
(b) Represents shares canceled in connection with the resolution of remaining CBF dissenters' appraisal process.
(c) In second quarter 2020, FHN issued $800 million of senior notes and First Horizon Bank issued $450 million of subordinated notes.

 




FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 8



Notes to the Consolidated Condensed Financial Statements (Unaudited)

Note 1 – Financial Information

Basis of Accounting. The unaudited interim consolidated condensed financial statements of First Horizon National Corporation (“FHN”), including its subsidiaries, have been prepared in conformity with accounting principles generally accepted in the United States of America 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 the 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 the opinion of management, all necessary adjustments have been made for a fair presentation of financial position and results of operations for the periods presented. These adjustments are of a normal recurring nature unless otherwise disclosed in this Quarterly Report on Form 10-Q. The operating results for the interim 2020 period are not necessarily indicative of the results that may be expected going forward. For further information, refer to the audited consolidated financial statements in Item 8 to FHN’s Annual Report on Form 10-K for the year ended December 31, 2019.

Revenues. Revenue is recognized when the performance obligations under the terms 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 period 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 June 30, 2020, accounts receivable related to products and services on non-interest income were $8.9 million. For the three months ended June 30, 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 June 30, 2020. Credit risk is assessed on these accounts receivable each reporting period and the amount of estimated uncollectible receivables is not material.
 

Transaction Price Allocated to Remaining Performance Obligations. For the three and six months ended June 30, 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. 2Q20 FORM 10-Q REPORT 9



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.

FHN has continued to accrue interest on loans for which payment deferrals have been extended to borrowers affected by the COVID-19 pandemic ("COVID-19 Deferrals"). Deferrals are made for durations up to six months, which is beyond FHN's normal write-off practices for accrued interest. Therefore, these interest deferrals do not qualify for FHN's election to not recognize a credit loss allowance for accrued interest. Accordingly, FHN has estimated credit losses for COVID-19 interest deferrals which is included within AIR in 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 losses included in the loan valuation.
Purchased Credit-Impaired Loans. Prior to 2020, ASC 310-30 “Accounting 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.


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Note 1 – Financial Information (Continued)

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.
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


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Note 1 – Financial Information (Continued)

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.
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


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Note 1 – Financial Information (Continued)

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 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 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


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Note 1 – Financial Information (Continued)

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 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.



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Note 1 – Financial Information (Continued)

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.

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 Effective

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


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Note 1 – Financial Information (Continued)

developing modification plans for those contracts. FHN anticipates that it will utilize the optional expedients and exceptions provided by ASU 2020-04 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.



FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 17



Note 2 – Acquisitions and Divestitures

On July 1, 2020, FHN and IBERIABANK Corporation ("IBKC") closed their merger-of-equals transaction. FHN issued approximately 242 million shares of FHN common stock, plus three new series of preferred stock (Series B, Series C, and Series D) in a transaction valued at $2.5 billion. At the time of closing, IBKC operated 319 offices in 12 states, mostly in the southern and southeastern U.S. In the merger: FHN acquired approximately $34.7 billion
 
in assets, including approximately $26.1 billion in loans and $3.5 billion in AFS securities; and, FHN assumed approximately $28.3 billion of IBKC deposits. Due to the timing of the merger closing in relation to quarter end and the uncertainty of valuations in the current economic environment, FHN's assessment of the fair value of IBKC's assets and liabilities is incomplete. However, FHN currently expects to recognize a purchase accounting gain.
Total merger expenses for the IBKC merger recognized for the three and six months ended June 30, 2020 are presented in the table below:
 
 
June 30, 2020
(Dollars in thousands)
 
Three Months Ended
 
Six Months Ended
Professional fees (a)
 
$
3,748

 
$
4,410

Employee compensation, incentives and benefits (b)
 
4,705

 
5,394

Miscellaneous expense (c)
 
1,003

 
1,257

Total IBKC acquisition expense
 
$
9,456

 
$
11,061

(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 July 17, 2020, First Horizon Bank completed its purchase of 30 branches from Truist Bank. As part of the transaction, FHN assumed approximately $2.2 billion of branch deposits for a 3.40 percent deposit premium and purchased approximately $423.7 million of branch loans. The branches are in communities in North Carolina (20 branches), Virginia (8 branches), and Georgia (2 branches). This transaction qualifies as a business combination. Due to the timing of the merger closing in relation to quarter end and the uncertainty of valuations in the current economic environment, FHN's assessment of the fair value of the acquired assets and liabilities is incomplete.
 
See Note 2- Acquisitions and Divestitures in the Notes to Consolidated Financial Statements on Form 10-K for the year ended December 31, 2019, for additional information about FHN's other acquisitions.
Expenses related to FHN's merger and integration activities are recorded in FHN's Corporate segment.


FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 18

Table of Contents

Note 2 – Acquisitions and Divestitures (Continued)

Total other merger and integration expense recognized for the three and six months ended June 30, 2020 and 2019 are presented in the table below:
 
 
Three Months Ended
June 30
 
Six Months Ended
June 30
(Dollars in thousands)
 
2020
 
2019
 
2020
 
2019
Professional fees (a)
 
$
1,327

 
$
4,478

 
$
2,126

 
$
6,345

Employee compensation, incentives and benefits (b)
 
87

 
1,472

 
483

 
2,989

Contract employment and outsourcing (c)
 
420

 
17

 
726

 
17

Occupancy (d)
 
(82
)
 
1,505

 
(107
)
 
1,623

Miscellaneous expense (e)
 
503

 
79

 
1,325

 
1,148

All other expense (f)
 
2,610

 
1,096

 
4,484

 
2,185

Total
 
$
4,865

 
$
8,647

 
$
9,037

 
$
14,307

Certain previously reported amounts have been reclassified to agree with current presentation.
(a)
Primarily comprised of fees for legal, accounting, and merger consultants.
(b)
Primarily comprised of fees for severance and retention.
(c)
Primarily relates to fees for temporary assistance for merger and integration activities.
(d)
Primarily relates to expenses associated with lease exits.
(e)
Consists of fees for operations services, communications and courier, equipment rentals, depreciation and maintenance, supplies, travel and entertainment, computer software, and advertising and public relations.
(f)
Primarily relates to contract termination charges, internal technology development costs, costs of shareholder matters and asset impairments, as well as other miscellaneous expenses.

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 NATIONAL CORP. 2Q20 FORM 10-Q REPORT 19



Note 3 – Investment Securities
The following tables summarize FHN’s investment securities on June 30, 2020 and December 31, 2019:
 
 
June 30, 2020
(Dollars in thousands)
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
Securities available-for-sale:
 
 
 
 
 
 
 
 
U.S. treasuries
 
$
999,974

 
$
5

 
$
(4
)
 
$
999,975

Government agency issued mortgage-backed securities (“MBS”)
 
2,383,956

 
103,506

 
(80
)
 
2,487,382

Government agency issued collateralized mortgage obligations (“CMO”)
 
1,383,703

 
31,570

 
(8
)
 
1,415,265

Other U.S. government agencies
 
403,008

 
14,284

 
—

 
417,292

Corporates and other debt
 
39,950

 
463

 
—

 
40,413

States and municipalities
 
83,155

 
7,228

 
—

 
90,383

 
 
$
5,293,746

 
$
157,056

 
$
(92
)
 
5,450,710

AFS debt securities recorded at fair value through earnings:
 
 
 
 
 
 
 
 
SBA-interest only strips (a)
 
 
 
 
 
 
 
25,446

Total securities available-for-sale (b)
 
 
 
 
 
 
 
$
5,476,156

Securities held-to-maturity:
 
 
 
 
 
 
 
 
Corporates and other debt
 
$
10,000

 
$
—

 
$
(119
)
 
$
9,881

Total securities held-to-maturity
 
$
10,000

 
$
—

 
$
(119
)
 
$
9,881

 
(a)
SBA-interest only strips are recorded at elected fair value. See Note 16 - Fair Value for additional information.
(b)
Includes $4.7 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. 2Q20 FORM 10-Q REPORT 20

Table of Contents

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 portfolios on June 30, 2020 are provided below:
 
 
 
Held-to-Maturity
 
Available-for-Sale
(Dollars in thousands)
 
Amortized
Cost
 
Fair
Value
 
Amortized
Cost
 
Fair
Value
Within 1 year
 
$
—

 
$
—

 
$
1,106,238

 
$
1,108,000

After 1 year; within 5 years
 
—

 
—

 
137,571

 
142,491

After 5 years; within 10 years
 
10,000

 
9,881

 
3,573

 
9,623

After 10 years
 
—

 
—

 
278,705

 
313,395

Subtotal
 
10,000

 
9,881

 
1,526,087

 
1,573,509

Government agency issued MBS and CMO (a)
 
—

 
—

 
3,767,659

 
3,902,647

Total
 
$
10,000

 
$
9,881

 
$
5,293,746

 
$
5,476,156

 
(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 gains and gross losses from debt investment securities for the three and six months ended June 30, 2020 and 2019.
 
 
Three Months Ended
June 30
 
Six Months Ended
June 30
(Dollars in thousands)
2020
 
2019
 
2020
 
2019
Gross gains on sales of securities
$
—

 
$
—

 
$
—

 
$
—

Gross (losses) on sales of securities
—

 
(267
)
 
—

 
(267
)
Net gain/(loss) on sales of securities (a)
$
—

 
$
(267
)
 
$
—

 
$
(267
)
 
(a)
Cash proceeds for the three and six months ended June 30, 2020 were not material. Cash proceeds for the three and six months ended June 30, 2019 were $171.4 million.

The following tables provide information on investments within the available-for-sale portfolio that had unrealized losses as of June 30, 2020 and December 31, 2019:

 
 
As of June 30, 2020
 
 
Less than 12 months
 
12 months or longer
 
Total
(Dollars in thousands)
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
U.S. treasuries
 
$
499,895

 
$
(4
)
 
$
—

 
$
—

 
$
499,895

 
$
(4
)
Government agency issued MBS
 
40,798

 
(80
)
 
—

 
—

 
40,798

 
(80
)
Government agency issued CMO
 
15,982

 
(8
)
 
—

 
—

 
15,982

 
(8
)
Total temporarily impaired securities
 
$
556,675

 
$
(92
)
 
$
—

 
$
—

 
$
556,675

 
$
(92
)
 


FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 21

Table of Contents

Note 3 – Investment Securities (Continued)

 
 
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
U.S. treasuries
 
$
—

 
$
—

 
$
100

 
$
—

 
$
100

 
$
—

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
)

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 $12.4 million as of June 30, 2020. Consistent with its 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 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 $24.7 million and $25.6 million at June 30, 2020 and December 31, 2019, respectively. The year-to-date 2020 and 2019 gross amounts of upward and downward valuation adjustments were not significant.
Unrealized gains of $4.8 million and $1.2 million were recognized in the three months ended June 30, 2020 and 2019, respectively, and unrealized losses of $0.9 million and unrealized gains of $4.6 million were recognized in the six months ended June 30, 2020 and 2019, respectively, for equity investments with readily determinable fair values.




FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 22



Note 4 – Loans
The following table provides the balance (amortized cost basis) of loans, net of unearned income, by portfolio segment as of June 30, 2020 and December 31, 2019:
 
 
June 30
 
December 31
(Dollars in thousands)
 
2020
 
2019
Commercial:
 
 
 
 
Commercial, financial, and industrial
 
$
21,393,893

 
$
20,051,091

Commercial real estate
 
4,813,341

 
4,337,017

Consumer:
 
 
 
 
Consumer real estate (a)
 
6,052,393

 
6,177,139

Credit card & other
 
449,310

 
495,864

Loans, net of unearned income
 
$
32,708,937

 
$
31,061,111

Allowance for loan losses
 
537,881

 
200,307

Total net loans
 
$
32,171,056

 
$
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.

COMPONENTS OF THE LOAN PORTFOLIO
The loan portfolio is disaggregated into 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 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. Commercial loan portfolio segments include commercial, financial and industrial (“C&I”) and commercial real estate ("CRE"). Commercial classes within C&I include general C&I, 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 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 include consumer real estate, 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 credit card and other.
 
Credit Risk Characteristics Inherent in the Loan Portfolio
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 amount of credit risk depends on 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, particularly in the specialty lending 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.


FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 23

Table of Contents
Note 4 – Loans (Continued)

Commercial Loans
The C&I portfolio is comprised 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.
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 95 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.
Paycheck Protection Program Loans
Included in commercial loans are $2.1 billion of C&I loans made under the Paycheck Protection Program ("PPP Loans") of the Small Business Administration ("SBA"). PPP Loans have been extended to businesses in response to the economic effects of the COVID-19 pandemic. PPP Loans are fully government guaranteed with the SBA making prepayments through a provision whereby partial or complete forgiveness is granted based on the nature and extent of each borrower's expenditures in relation to program requirements for payroll-related and other types of expenses. PPP Loans have maximum terms ranging from two to five years, with SBA prepayments expected to occur in the latter half of 2020 and the first half of 2021. Amounts not forgiven by the SBA will amortize over the applicable remaining loan term. Due to the government guarantee and forgiveness provisions, PPP Loans are considered to have no credit risk and receive no risk weighting for capital calculations.
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.
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


FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 24

Table of Contents
Note 4 – Loans (Continued)

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 $2.5 billion (12 percent of the C&I portfolio, or 8 percent of the total loans). FHN had loans to mortgage companies totaling $4.0 billion (19 percent of the C&I segment, or 12 percent of total loans) as of June 30, 2020. As a result, 31 percent of the C&I segment is sensitive to impacts on the financial services industry.
 
Asset 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 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 input to inform probability of default forecasts under certain macroeconomic scenarios. Each PD grade corresponds to an estimated one-year default probability percentage; a PD 1 has the lowest expected default 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).
Pass loan grades are required to be reassessed annually or earlier whenever there has been a material change in the financial condition 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 discipline is regularly reviewed internally by Credit 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.












FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 25

Table of Contents
Note 4 – Loans (Continued)

The following tables provide the amortized cost basis of the commercial loan portfolio by year of origination and credit quality indicator as of June 30, 2020:

 
 
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 (d)
 
$
2,078,712

 
$
99,978

 
$
121,167

 
$
75,521

 
$
106,700

 
$
108,574

 
$
—

 
$
83,309

 
$
56

 
$
2,674,017

2
 
56,810

 
223,191

 
100,816

 
79,318

 
168,838

 
90,484

 
—

 
95,035

 
126

 
814,618

3
 
42,983

 
153,671

 
49,176

 
89,945

 
30,381

 
97,338

 
741,382

 
125,470

 
3,490

 
1,333,836

4
 
261,626

 
335,130

 
145,047

 
122,185

 
129,859

 
142,129

 
685,876

 
259,379

 
10,653

 
2,091,884

5
 
304,710

 
496,565

 
220,632

 
145,650

 
96,325

 
163,676

 
700,944

 
384,874

 
12,654

 
2,526,030

6
 
360,649

 
714,704

 
246,607

 
195,634

 
53,597

 
155,755

 
1,198,775

 
667,570

 
558

 
3,593,849

7
 
309,088

 
723,728

 
339,953

 
145,385

 
100,069

 
171,016

 
552,192

 
598,772

 
48,291

 
2,988,494

8
 
343,391

 
593,106

 
194,030

 
175,289

 
36,044

 
96,204

 
93,900

 
379,261

 
7,110

 
1,918,335

9
 
171,524

 
293,768

 
89,519

 
66,927

 
65,539

 
75,753

 
25,198

 
283,883

 
10,670

 
1,082,781

10
 
96,735

 
171,901

 
85,644

 
60,721

 
50,429

 
54,729

 
15,325

 
227,301

 
5,082

 
767,867

11
 
53,872

 
82,677

 
74,977

 
58,964

 
70,190

 
38,059

 
—

 
148,656

 
3,233

 
530,628

12
 
51,861

 
33,083

 
52,013

 
47,162

 
20,214

 
29,674

 
6,999

 
95,943

 
477

 
337,426

13
 
39,047

 
57,585

 
10,231

 
15,916

 
51,816

 
45,984

 
—

 
114,971

 
498

 
336,048

14,15,16
 
10,898

 
23,808

 
39,008

 
29,306

 
40,627

 
13,194

 
—

 
98,165

 
2,548

 
257,554

Collectively evaluated for impairment
 
4,181,906

 
4,002,895

 
1,768,820

 
1,307,923

 
1,020,628

 
1,282,569

 
4,020,591

 
3,562,589

 
105,446

 
21,253,367

Individually evaluated for impairment
 
21,146

 
6,613

 
12,454

 
21,995

 
1,909

 
22,114

 
—

 
50,319

 
3,976

 
140,526

Total C&I loans
 
$
4,203,052

 
$
4,009,508

 
$
1,781,274

 
$
1,329,918

 
$
1,022,537

 
$
1,304,683

 
$
4,020,591

 
$
3,612,908

 
$
109,422

 
$
21,393,893

(a)
TRUPS loans were originated prior to 2016. Total balance of TRUPS as of June 30, 2020 is $209.2 million, with $3.3 million in PD 3, $60.9 million in PD 4, $47.9 million in PD 5, $38.6 million in PD 6, $13.4 million in PD 7, $20.7 million in PD 9, $18.6 million in PD 10, and $5.8 million in PD 13.
(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)
$22.7 million of C&I loans were converted from revolving to term in 2020.
(d)
2020 balance includes PPP loans.


FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 26

Table of Contents
Note 4 – Loans (Continued)

 
 
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
 
$
21,886

 
$
—

 
$
392

 
$
106

 
$
158

 
$
1,190

 
$
—

 
$
—

 
$
23,732

2
 
7,798

 
30,919

 
405

 
216

 
617

 
3,145

 
—

 
—

 
43,100

3
 
97,338

 
212,413

 
75,483

 
34,863

 
42,468

 
25,511

 
78,004

 
181

 
566,261

4
 
90,915

 
292,657

 
100,058

 
130,549

 
94,836

 
45,975

 
839

 
238

 
756,067

5
 
320,904

 
279,229

 
138,520

 
152,573

 
112,018

 
45,048

 
37,306

 
6,224

 
1,091,822

6
 
264,892

 
215,714

 
125,075

 
107,697

 
33,716

 
119,742

 
37,800

 
7,930

 
912,566

7
 
164,896

 
293,784

 
121,601

 
64,796

 
20,076

 
24,648

 
40,187

 
1,224

 
731,212

8
 
23,028

 
93,700

 
55,579

 
11,850

 
28,382

 
50,403

 
6,845

 
128

 
269,915

9
 
35,357

 
36,942

 
25,157

 
22,936

 
2,219

 
19,126

 
280

 
—

 
142,017

10
 
23,623

 
8,323

 
7,323

 
2,803

 
9,125

 
17,320

 
—

 
—

 
68,517

11
 
6,936

 
21,414

 
6,890

 
7,347

 
3,862

 
19,638

 
—

 
1,330

 
67,417

12
 
2,962

 
14,437

 
2,383

 
905

 
652

 
13,476

 
64

 
228

 
35,107

13
 
525

 
455

 
771

 
16,185

 
—

 
570

 
328

 
—

 
18,834

14,15,16
 
515

 
10,808

 
45

 
19,065

 
128

 
3,882

 
7,553

 
—

 
41,996

Collectively evaluated for impairment
 
1,061,575

 
1,510,795

 
659,682

 
571,891

 
348,257

 
389,674

 
209,206

 
17,483

 
4,768,563

Individually evaluated for impairment
 
—

 
—

 
—

 
—

 
—

 
160

 
—

 
—

 
160

Total CRE-IP
 
$
1,061,575

 
$
1,510,795

 
$
659,682

 
$
571,891

 
$
348,257

 
$
389,834

 
$
209,206

 
$
17,483

 
$
4,768,723


 
 
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
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
20

 
$
—

 
$
—

 
$
20

2
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

3
 
—

 
151

 
268

 
482

 
—

 
95

 
—

 
—

 
996

4
 
—

 
722

 
—

 
—

 
—

 
106

 
—

 
—

 
828

5
 
93

 
—

 
—

 
—

 
76

 
12

 
—

 
—

 
181

6
 
14,512

 
106

 
43

 
333

 
30

 
234

 
—

 
—

 
15,258

7
 
348

 
470

 
2,904

 
1,776

 
—

 
241

 
13

 
—

 
5,752

8
 
467

 
24

 
443

 
—

 
6

 
89

 
100

 
—

 
1,129

9
 
325

 
520

 
262

 
—

 
490

 
76

 
—

 
—

 
1,673

10
 
179

 
960

 
277

 
—

 
—

 
6

 
—

 
—

 
1,422

11
 
4,093

 
8,660

 
218

 
156

 
—

 
50

 
—

 
—

 
13,177

12
 
154

 
1,530

 
44

 
—

 
—

 
538

 
—

 
—

 
2,266

13
 
1,310

 
—

 
—

 
—

 
—

 
132

 
—

 
—

 
1,442

14,15,16
 
171

 
264

 
—

 
—

 
—

 
39

 
—

 
—

 
474

Collectively evaluated for impairment
 
21,652

 
13,407

 
4,459

 
2,747

 
602

 
1,638

 
113

 
—

 
44,618

Individually evaluated for impairment
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Total CRE-RES
 
$
21,652

 
$
13,407

 
$
4,459

 
$
2,747

 
$
602

 
$
1,638

 
$
113

 
$
—

 
$
44,618




FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 27

Table of Contents
Note 4 – Loans (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”) 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.


FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 28

Table of Contents
Note 4 – Loans (Continued)

The following table reflects the amortized cost basis by year of origination and refreshed FICO scores for consumer real estate as of June 30, 2020. Within consumer real estate, classes include home equity line of credit ("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 table 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. All loans in the following table classified in a vintage year are real estate installment loans.
 
 
Consumer Real Estate
(Dollars in thousands)
 
2020
 
2019
 
2018
 
2017
 
2016
 
Prior to 2016
 
Revolving
Loans
 
Revolving
Loans converted
to term loans (a)
 
Total
FICO score 740 or greater
 
$
394,137

 
$
576,132

 
$
410,188

 
$
420,822

 
$
527,019

 
$
1,255,357

 
$
626,844

 
$
135,436

 
$
4,345,935

FICO score 720-739
 
43,808

 
67,904

 
26,383

 
37,259

 
48,677

 
132,407

 
76,045

 
28,913

 
461,396

FICO score 700-719
 
31,459

 
66,155

 
28,201

 
26,164

 
45,038

 
110,244

 
54,941

 
29,613

 
391,815

FICO score 660-699
 
41,314

 
51,096

 
33,382

 
32,745

 
36,625

 
153,335

 
76,593

 
44,067

 
469,157

FICO score 620-659
 
12,524

 
17,140

 
10,922

 
12,789

 
13,178

 
70,067

 
24,185

 
29,940

 
190,745

FICO score less than 620
 
2,180

 
11,168

 
5,832

 
9,227

 
14,456

 
79,599

 
25,526

 
45,357

 
193,345

Total
 
$
525,422

 
$
789,595

 
$
514,908

 
$
539,006

 
$
684,993

 
$
1,801,009

 
$
884,134

 
$
313,326

 
$
6,052,393

(a) $10.8 million of HELOC loans were converted from revolving to term in 2020.

The following table reflects the amortized cost basis by year of origination and refreshed FICO scores for other consumer loans as of June 30, 2020.
 
 
Other Consumer
(Dollars in thousands)
 
2020
 
2019
 
2018
 
2017
 
2016
 
Prior to 2016
 
Revolving
Loans
 
Revolving
Loans converted
to term loans (a)
 
Total
FICO score 740 or greater
 
$
16,160

 
$
36,450

 
$
21,476

 
$
10,499

 
$
3,988

 
$
14,774

 
$
173,832

 
$
4,401

 
$
281,580

FICO score 720-739
 
3,238

 
5,226

 
2,784

 
1,615

 
747

 
1,844

 
27,603

 
1,319

 
44,376

FICO score 700-719
 
2,168

 
4,246

 
2,542

 
1,521

 
706

 
1,980

 
19,983

 
1,052

 
34,198

FICO score 660-699
 
3,654

 
6,546

 
3,149

 
2,172

 
1,423

 
2,737

 
27,534

 
1,581

 
48,796

FICO score 620-659
 
1,269

 
2,386

 
1,576

 
891

 
836

 
1,813

 
10,759

 
963

 
20,493

FICO score less than 620
 
333

 
1,059

 
1,044

 
522

 
2,311

 
3,167

 
10,037

 
1,394

 
19,867

Total
 
$
26,822

 
$
55,913

 
$
32,571

 
$
17,220

 
$
10,011

 
$
26,315

 
$
269,748

 
$
10,710

 
$
449,310

(a) $3.9 million of other consumer loans were converted from revolving to term in 2020.

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 loans 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.


FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 29

Table of Contents
Note 4 – Loans (Continued)

Nonaccrual and Past Due Loans
Nonperforming loans 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 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, and second liens, regardless of delinquency status, behind first liens that are 90 or more days past due, are bankruptcies, or are TDRs. Past due loans are loans contractually past due as to interest or principal payments, but which have not yet been put on nonaccrual status.
The following table reflects accruing and non-accruing loans by class on June 30, 2020:
 
 
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)
 
$
17,031,822

 
$
4,671

 
$
287

 
$
17,036,780

 
$
79,022

 
$
254

 
$
48,069

 
$
127,345

 
$
17,164,125

Loans to mortgage companies
 
4,019,766

 
825

 
—

 
4,020,591

 
—

 
—

 
—

 
—

 
4,020,591

TRUPS (b)
 
209,177

 
—

 
—

 
209,177

 
—

 
—

 
—

 
—

 
209,177

Total commercial (C&I)
 
21,260,765

 
5,496

 
287

 
21,266,548

 
79,022

 
254

 
48,069

 
127,345

 
21,393,893

Commercial real estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income CRE
 
4,766,561

 
95

 
—

 
4,766,656

 
797

 
—

 
1,270

 
2,067

 
4,768,723

Residential CRE
 
44,618

 
—

 
—

 
44,618

 
—

 
—

 
—

 
—

 
44,618

Total commercial real estate
 
4,811,179

 
95

 
—

 
4,811,274

 
797

 
—

 
1,270

 
2,067

 
4,813,341

Consumer real estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
HELOC
 
1,136,288

 
5,736

 
6,800

 
1,148,824

 
41,608

 
1,720

 
5,308

 
48,636

 
1,197,460

R/E installment loans
 
4,787,467

 
13,778

 
6,000

 
4,807,245

 
31,786

 
2,077

 
13,825

 
47,688

 
4,854,933

Total consumer real estate
 
5,923,755

 
19,514

 
12,800

 
5,956,069

 
73,394

 
3,797

 
19,133

 
96,324

 
6,052,393

Credit card & other:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Credit card
 
164,527

 
1,520

 
1,297

 
167,344

 
—

 
—

 
—

 
—

 
167,344

Other
 
281,066

 
531

 
114

 
281,711

 
86

 
77

 
92

 
255

 
281,966

Total credit card & other
 
445,593

 
2,051

 
1,411

 
449,055

 
86

 
77

 
92

 
255

 
449,310

Total loans, net of unearned income
 
$
32,441,292

 
$
27,156

 
$
14,498

 
$
32,482,946

 
$
153,299

 
$
4,128

 
$
68,564

 
$
225,991

 
$
32,708,937


(a) $65.3 million of general C&I loans are nonaccrual loans with no related allowance.
(b) TRUPS is presented net of an amortizing discount of $18.4 million.


FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 30

Table of Contents
Note 4 – Loans (Continued)

The following table reflects accruing and non-accruing loans by class on December 31, 2019:
 
 
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 agree 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.

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.
For all classes within the commercial portfolio segment, 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 consumer loans are generally structured using parameters of U.S. government-sponsored programs such as the former Home Affordable Modification Program (“HAMP”). Within the HELOC 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. 2Q20 FORM 10-Q REPORT 31

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.
On June 30, 2020 and December 31, 2019, FHN had $192.6 million and $206.3 million of portfolio loans classified as TDRs, respectively. For TDRs in the loan portfolio, FHN had loan loss reserves of $13.6 million, or 7 percent as of June 30, 2020, and $19.7 million, or 10 percent as of December 31, 2019. Additionally, $45.1 million and $51.1 million of loans held-for-sale as of June 30, 2020 and December 31, 2019, respectively, were classified as TDRs.
The following tables reflect portfolio loans that were classified as TDRs during the three and six months ended June 30, 2020 and 2019:
 
 
Three Months Ended June 30, 2020
 
Six Months Ended June 30, 2020
(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
 
1

 
$
4,649

 
$
4,699

 
4

 
$
10,576

 
$
9,132

   Total commercial (C&I)
 
1

 
4,649

 
4,699

 
4

 
10,576

 
9,132

Consumer real estate:
 
 
 
 
 
 
 
 
 
 
 
 
HELOC
 
4

 
152

 
151

 
12

 
1,064

 
1,042

R/E installment loans
 
40

 
7,793

 
7,741

 
50

 
9,304

 
9,238

   Total consumer real estate
 
44

 
7,945

 
7,892

 
62

 
10,368

 
10,280

Credit card & other
 
16

 
96

 
91

 
40

 
254

 
237

Total troubled debt restructurings
 
61

 
$
12,690

 
$
12,682

 
106

 
$
21,198

 
$
19,649


 
 
Three Months Ended June 30, 2019
 
Six Months Ended June 30, 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
 
1

 
$
222

 
$
222

 
3

 
$
14,117

 
$
14,042

   Total commercial (C&I)
 
1

 
222

 
222

 
3

 
14,117

 
14,042

Consumer real estate:
 
 
 
 
 
 
 
 
 
 
 
 
HELOC
 
25

 
3,271

 
3,235

 
44

 
5,375

 
5,319

R/E installment loans
 
19

 
1,534

 
1,523

 
66

 
8,959

 
8,936

   Total consumer real estate
 
44

 
4,805

 
4,758

 
110

 
14,334

 
14,255

Credit card & other
 
18

 
109

 
103

 
33

 
183

 
174

Total troubled debt restructurings
 
63

 
$
5,136

 
$
5,083

 
146

 
$
28,634

 
$
28,471





FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 32

Table of Contents
Note 4 – Loans (Continued)

The following tables present TDRs which re-defaulted during the three and six months ended June 30, 2020 and 2019, and 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 June 30, 2020
 
Six Months Ended June 30, 2020
(Dollars in thousands)
 
Number
 
Recorded
Investment
 
Number
 
Recorded
Investment
Commercial (C&I):
 
 
 
 
 
 
 
 
General C&I
 
—

 
$
—

 
—

 
$
—

Total commercial (C&I)
 
—

 
—

 
—

 
—

Consumer real estate:
 
 
 
 
 
 
 
 
HELOC
 
3

 
882

 
7

 
1,842

R/E installment loans
 
5

 
1,351

 
10

 
1,695

Total consumer real estate
 
8

 
2,233

 
17

 
3,537

Credit card & other
 
7

 
29

 
14

 
60

Total troubled debt restructurings
 
15

 
$
2,262

 
31

 
$
3,597



 
 
Three Months Ended June 30, 2019
 
Six Months Ended June 30, 2019
(Dollars in thousands)
 
Number
 
Recorded
Investment
 
Number
 
Recorded
Investment
Commercial (C&I):
 
 
 
 
 
 
 
 
General C&I
 
—

 
$
—

 
—

 
$
—

Total commercial (C&I)
 
—

 
—

 
—

 
—

Consumer real estate:
 
 
 
 
 
 
 
 
HELOC
 
1

 
66

 
2

 
99

R/E installment loans
 
1

 
38

 
1

 
38

Total consumer real estate
 
2

 
104

 
3

 
137

Credit card & other
 
7

 
14

 
15

 
32

Total troubled debt restructurings
 
9

 
$
118

 
18

 
$
169



Accrued Interest

In accordance with its accounting policy elections, FHN has excluded AIR from the amortized cost basis of Loans, net of unearned income. AIR is included within Other assets in the Consolidated Condensed Statements of Condition and the amounts by portfolio segment are presented in the following table.
 
 
June 30
(Dollars in thousands)
 
2020
Commercial:
 
 
Commercial, financial, and industrial
 
$
56,828

Commercial real estate
 
16,528

Consumer:
 
 
Consumer real estate
 
18,020

Credit card & other
 
1,546

Allowance for Credit Losses on COVID-19 Deferrals
 
(860
)
Total accrued interest
 
$
92,062






FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 33

Table of Contents
Note 4 – Loans (Continued)

Purchased Credit-Impaired Loans

The following table presents a rollforward of the accretable yield for the year ended December 31, 2019:
 
 
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.

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.

The following table reflects the outstanding principal balance and carrying amounts of the acquired PCI loans as of December 31, 2019:
 
 
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




FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 34

Table of Contents
Note 4 – Loans (Continued)

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 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. 2Q20 FORM 10-Q REPORT 35

Table of Contents
Note 4 – Loans (Continued)

 
Three Months Ended June 30
 
Six Months Ended June 30
 
 
2019
 
2019
(Dollars in thousands)
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
Average
Recorded
Investment
 
Interest
Income
Recognized
Impaired loans with no related allowance recorded:
 
 
 
 
 
 
 
 
Commercial:
 
 
 
 
 
 
 
 
   General C&I
 
$
67,337

 
$
178

 
$
61,552

 
$
357

Loans to mortgage companies
 
18,628

 
—

 
9,314

 
—

   Income CRE
 
1,481

 
13

 
1,518

 
27

   Residential CRE
 
—

 
—

 
—

 
—

   Total
 
$
87,446

 
$
191

 
$
72,384

 
$
384

Consumer:
 
 
 
 
 
 
 
 
   HELOC (a)
 
$
6,462

 
$
—

 
$
7,030

 
$
—

   R/E installment loans (a)
 
8,910

 
—

 
8,773

 
—

   Total
 
$
15,372

 
$
—

 
$
15,803

 
$
—

Impaired loans with related allowance recorded:
 
 
 
 
 
 
 
 
Commercial:
 
 
 
 
 
 
 
 
   General C&I
 
$
10,760

 
$
—

 
$
9,026

 
$
—

   TRUPS
 
2,806

 
—

 
2,835

 
—

   Income CRE
 
347

 
—

 
357

 
9

   Residential CRE
 
—

 
—

 
—

 
—

   Total
 
$
13,913

 
$
—

 
$
12,218

 
$
9

Consumer:
 
 
 
 
 
 
 
 
   HELOC
 
$
62,623

 
$
504

 
$
63,819

 
$
1,026

   R/E installment loans
 
107,892

 
815

 
107,975

 
1,637

   Credit card & other
 
692

 
4

 
691

 
9

   Total
 
$
171,207

 
$
1,323

 
$
172,485

 
$
2,672

Total commercial
 
$
101,359

 
$
191

 
$
84,602

 
$
393

Total consumer
 
$
186,579

 
$
1,323

 
$
188,288

 
$
2,672

Total impaired loans
 
$
287,938

 
$
1,514

 
$
272,890

 
$
3,065

(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. 2Q20 FORM 10-Q REPORT 36



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 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.
Periods after 2019
The ALLL has been determined in accordance with ASC 326-20, which requires a recognition of current expected credit losses on the amortized cost basis of loans. During the first half of 2020, expected credit loss estimates were adversely affected across all portfolio segments due to the 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.
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. FHN selected Moody’s baseline forecast as the primary source for its macroeconomic inputs which are inclusive of the following assumptions related to the economic effects of the COVID-19 pandemic:
•
1.6mm confirmed COVID-19 cases, begin to abate by early July. Assumes no second wave.
•
Unemployment peak at 20mm in 2Q20
•
Annualized GDP growth rate of -33% in 2Q20, 16% in 3Q20, & 0.6% in 4Q20
•
Quicker recovery than Great Recession
•
V-shaped recovery for housing including residential construction and sales
•
Manufacturing should have a stronger initial bounce
 
•
More caution due to COVID-19 drives a slower and longer recovery for the service sector; may depend on vaccine.
Where macroeconomic forecast variables used in the models do 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 inputs qualitatively to account for this assistance.
FHN also utilized targeted reviews of higher stressed loan portfolio (industries) that are most exposed to the effects of the COVID-19 pandemic, including Franchise Finance, Energy, Non-Profit, Arts & Entertainment, Restaurants outside of Franchise Finance, Nursing/Assisted Living and Hospitality within the C&I segment and CRE-Hospitality and CRE-Retail within the Commercial Real Estate segment. This analysis reviewed the level of impact from COVID-19 and the likelihood of additional financial assistance needed beyond 180 days. This analysis was utilized in developing qualitative adjustments to increase the recorded ALLL attributable to these components beyond the modeled results. FHN reviewed consumer deferrals and forbearance payment rates to analyze the likelihood customers will have difficulty making payments after the deferral or forbearance period ends. The analysis was utilized to develop an additional qualitative adjustment to increase the recorded ALLL for consumer real estate loans. 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 loans in C&I and CRE have shorter expected lives, based on the contractual term of loan agreements, prepayment estimates and a limited amount of renewal or extension options that are not unconditionally cancellable by FHN. Estimated weighted average lives are normally under 3 years. TRUPs loans are an exception due to longer contractual lives, beneficial borrower terms and balloon payoff structure. Consumer HELOC and installment 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.
As of June 30, 2020, FHN had General C&I loans with amortized cost of approximately $65 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


FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 37

Table of Contents

Note 5 – Allowance for Loan Losses (Continued)

generally consists of business assets including land, buildings, equipment and financial assets. During the three and six months ended June 30, 2020, respectively, FHN recognized charge-offs of approximately $1.5 million and $13.0 million on these loans related to reductions in estimated collateral values.
Consumer HELOC and installment loans with amortized cost based on the value of underlying real estate collateral were approximately $10 million and $26 million, respectively, as of June 30, 2020. At a minimum, the estimated value of the collateral for each loan equals the current book value. Charge offs during the three and six months ended June 30, 2020 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 the first half of 2020 resulted in higher credit expense for unfunded commitments. However, in Q1 2020 this effect of higher loss forecasts was offset somewhat because many borrowers drew on available lines prior to the end of the 1st quarter which resulted in higher loan balances (and ALLL). During the second quarter, borrowers paid down on available lines which combined with higher loss rates caused credit loss expense to increase. Total credit loss expense for unfunded commitments was $11.2 million and $20.4 million, respectively, for the three and six months ended June 30, 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-dependent and were charged down to net realizable value (collateral value less estimated costs to sell).



FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 38

Table of Contents

Note 5 – Allowance for Loan Losses (Continued)

The following table provides a rollforward of the allowance for loan losses by portfolio segment for the three and six months ended June 30, 2020 and 2019:
(Dollars in thousands)
 
C&I
 
Commercial
Real Estate
 
Consumer
Real Estate (a)
 
Credit Card
and Other
 
Total
Balance as of April 1, 2020
 
$
254,516

 
$
47,625

 
$
123,022

 
$
19,327

 
$
444,490

Charge-offs
 
(18,201
)
 
(61
)
 
(1,968
)
 
(2,677
)
 
(22,907
)
Recoveries
 
1,073

 
156

 
3,987

 
1,082

 
6,298

Provision/(provision credit) for loan losses
 
81,334

 
9,565

 
18,716

 
385

 
110,000

Balance as of June 30, 2020
 
318,722

 
57,285

 
143,757

 
18,117

 
537,881

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
 
(24,952
)
 
(642
)
 
(4,278
)
 
(6,488
)
 
(36,360
)
Recoveries
 
2,008

 
729

 
7,542

 
2,261

 
12,540

Provision/(provision credit) for loan loses
 
200,398

 
28,434

 
19,058

 
7,110

 
255,000

Balance as of June 30, 2020
 
318,722

 
57,285

 
143,757

 
18,117

 
537,881

Allowance - individually evaluated for impairment
 
16,577

 
—

 
13,275

 
352

 
30,204

Allowance - collectively evaluated for impairment
 
302,145

 
57,285

 
130,482

 
17,765

 
507,677

Loans, net of unearned as of June 30, 2020:
 
 
 
 
 
 
 
 
 
 
  Individually evaluated for impairment
 
140,526

 
160

 
148,543

 
688

 
289,917

  Collectively evaluated for impairment
 
21,253,367

 
4,813,181

 
5,903,850

 
448,622

 
32,419,020

Total loans, net of unearned income (b)
 
$
21,393,893

 
$
4,813,341

 
$
6,052,393

 
$
449,310

 
$
32,708,937

Balance as of April 1, 2019
 
$
103,713

 
$
34,382

 
$
34,154

 
$
12,662

 
$
184,911

Charge-offs
 
(6,590
)
 
(121
)
 
(1,714
)
 
(3,798
)
 
(12,223
)
Recoveries 
 
519

 
(88
)
 
5,525

 
1,105

 
7,061

Provision/(provision credit) for loan losses 
 
18,454

 
(1,220
)
 
(6,433
)
 
2,199

 
13,000

Balance as of June 30, 2019
 
116,096

 
32,953

 
31,532

 
12,168

 
192,749

Balance as of January 1, 2019
 
98,947

 
31,311

 
37,439

 
12,727

 
180,424

Charge-offs
 
(9,691
)
 
(555
)
 
(4,518
)
 
(7,986
)
 
(22,750
)
Recoveries
 
1,348

 
(31
)
 
9,566

 
2,192

 
13,075

Provision/(provision credit) for loan losses
 
25,492

 
2,228

 
(10,955
)
 
5,235

 
22,000

Balance as of June 30, 2019
 
116,096

 
32,953

 
31,532

 
12,168

 
192,749

Allowance - individually evaluated for impairment 
 
8,484

 
—

 
22,255

 
442

 
31,181

Allowance - collectively evaluated for impairment 
 
106,758

 
32,953

 
8,199

 
11,669

 
159,579

Allowance - purchased credit-impaired loans
 
854

 
—

 
1,078

 
57

 
1,989

Loans, net of unearned as of June 30, 2019:
 
 
 
 
 
 
 
 
 
 
  Individually evaluated for impairment 
 
115,808

 
1,777

 
182,442

 
699

 
300,726

  Collectively evaluated for impairment
 
18,904,621

 
3,852,027

 
6,093,863

 
492,774

 
29,343,285

  Purchased credit-impaired loans
 
33,840

 
7,227

 
26,829

 
903

 
68,799

Total loans, net of unearned income
 
$
19,054,269

 
$
3,861,031

 
$
6,303,134

 
$
494,376

 
$
29,712,810



a) In first quarter 2020, the Permanent Mortgage portfolio was combined into Consumer Real Estate portfolio, all prior periods were revised for comparability.
b) C&I loans as of June 30, 2020 include $2.1 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 losses.

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. As of June 30, 2020, FHN recognized approximately $860 thousand in allowance for expected credit losses on COVID-19 deferrals that do not qualify for the election.
 
The total amount of interest reversals from loans placed on nonaccrual status during the three and six months ended June 30, 2020 was not material. In addition, the amount of income recognized on nonaccrual loans for the three and six months ended in June 30, 2020 was not material.


FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 39



Note 6 – Intangible Assets
The following is a summary of other intangible assets included in the Consolidated Condensed Statements of Condition:
 
 
 
June 30, 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

 
$
(56,561
)
 
$
100,589

 
$
157,150

 
$
(47,372
)
 
$
109,778

Customer relationships (a)
 
23,000

 
(6,158
)
 
16,842

 
77,865

 
(60,150
)
 
17,715

Other (b)
 
5,622

 
(3,445
)
 
2,177

 
5,622

 
(2,915
)
 
2,707

Total
 
$
185,772

 
$
(66,164
)
 
$
119,608

 
$
240,637

 
$
(110,437
)
 
$
130,200


(a)
2020 decrease in gross carrying amounts and accumulated amortization associated with $54.9 million of customer relationships fully amortized at December 31, 2019.
(b)
Balance primarily includes noncompete covenants, as well as $.3 million related to state banking licenses not subject to amortization.
Amortization expense was $5.3 million and $6.2 million for the three months ended June 30, 2020 and 2019, respectively and
$10.6 million and $12.4 million for six months ended June 30, 2020 and 2019, respectively. As of June 30, 2020 the estimated aggregated amortization expense is expected to be:
 
(Dollars in thousands)
 
 
Year
 
Amortization
Remainder of 2020
 
$
10,568

2021
 
19,547

2022
 
17,412

2023
 
16,117

2024
 
14,679

2025
 
12,580


Gross goodwill, accumulated impairments, and accumulated divestiture related write-offs were determined beginning January 1, 2002, when a change 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 to the non-strategic segment, resulting in $0 net goodwill allocated to the non-strategic segment as of June 30, 2020 and December 31, 2019. The regional banking and fixed income segments do not have any accumulated impairments or divestiture related write-offs. The following is a summary of goodwill by reportable segment included in the Consolidated Condensed Statements of Condition as of June 30, 2020 and December 31, 2019.
 
(Dollars in thousands)
 
Regional
Banking
 
Fixed
Income
 
Total
December 31, 2018
 
$
1,289,819

 
$
142,968

 
$
1,432,787

Additions
 
—

 
—

 
—

June 30, 2019
 
$
1,289,819

 
$
142,968

 
$
1,432,787

 
 
 
 
 
 
 
December 31, 2019
 
$
1,289,819

 
$
142,968

 
$
1,432,787

Additions
 
—

 
—

 
—

June 30, 2020
 
$
1,289,819

 
$
142,968

 
$
1,432,787





FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 40



Note 7 – Other Income and Other Expense
Following is detail of All other income and commissions and All other expense as presented in the Consolidated Condensed Statements of Income:
 
 
Three Months Ended
June 30
 
Six Months Ended
June 30
(Dollars in thousands)
2020
 
2019
 
2020
 
2019
All other income and commissions:
 
 
 
 
 
 
 
Deferred compensation (a)
$
8,171

 
$
1,938

 
$
(1,336
)
 
$
7,412

Other service charges
4,582

 
5,624

 
9,801

 
9,493

Mortgage banking
4,138

 
2,572

 
6,569

 
4,458

ATM and interchange fees
4,009

 
4,262

 
8,221

 
7,503

Letter of credit fees
1,559

 
1,253

 
3,021

 
2,621

Electronic banking fees
1,182

 
1,267

 
2,212

 
2,538

Dividend income
1,057

 
1,809

 
2,187

 
4,122

Insurance commissions
401

 
566

 
1,190

 
1,190

Gain/(loss) on extinguishment of debt
—

 
—

 
—

 
(1
)
Other
4,890

 
6,376

 
12,488

 
10,962

Total
$
29,989

 
$
25,667

 
$
44,353

 
$
50,298

All other expense:
 
 
 
 
 
 
 
Credit expense on unfunded commitments (b)
$
11,158

 
$
(489
)
 
$
20,388

 
$
(93
)
Non-service components of net periodic pension and post-retirement cost
2,961

 
559

 
5,469

 
991

Other insurance and taxes
2,599

 
2,495

 
5,278

 
5,189

Miscellaneous loan costs
2,356

 
857

 
3,450

 
1,884

Supplies
1,933

 
1,342

 
4,344

 
3,146

Employee training and dues
654

 
1,251

 
1,995

 
2,708

Customer relations
632

 
1,540

 
2,636

 
3,139

Travel and entertainment
474

 
2,906

 
3,183

 
5,618

OREO
437

 
25

 
253

 
(341
)
Tax credit investments
426

 
267

 
772

 
942

Litigation and regulatory matters (c)
3

 
(8,230
)
 
16

 
(8,217
)
Other
12,118

 
26,158

 
21,193

 
33,046

Total
$
35,751

 
$
28,681

 
$
68,977

 
$
48,012


Certain previously reported amounts have been reclassified to agree with current presentation.
(a)
Amounts driven by market conditions and are mirrored by changes in deferred compensation expense which is included in employee compensation expense; Six months ended June 30, 2020 decrease driven by equity market valuations.
(b)
Three and six months ended June 30, 2020 increases largely driven by the economic forecast attributable to the COVID-19 pandemic.
(c)
Litigation and regulatory matters for the three and six months ended June 30, 2019 includes an $8.3 million expense reversal related to the settlement of litigation matters within the Non-Strategic segment.



FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 41



Note 8 – Components of Other Comprehensive Income/(loss)
The following table provides the changes in accumulated other comprehensive income/(loss) by component, net of tax, for the three and six months ended June 30, 2020 and 2019:
 
(Dollars in thousands)
 
Securities AFS
 
Cash Flow
Hedges
 
Pension and
Post-retirement
Plans
 
Total
Balance as of April 1, 2020
 
$
119,357

 
$
16,288

 
$
(271,809
)
 
$
(136,164
)
Net unrealized gains/(losses)
 
(1,030
)
 
1,640

 
—

 
610

Amounts reclassified from AOCI
 
—

 
(1,623
)
 
2,379

 
756

Other comprehensive income/(loss)
 
(1,030
)
 
17

 
2,379

 
1,366

Balance as of June 30, 2020
 
$
118,327

 
$
16,305

 
$
(269,430
)
 
$
(134,798
)
 
 
 
 
 
 
 
 
 
Balance as of January 1, 2020
 
$
31,079

 
$
3,227

 
$
(273,914
)
 
$
(239,608
)
Net unrealized gains/(losses)
 
87,248

 
14,795

 
—

 
102,043

Amounts reclassified from AOCI
 
—

 
(1,717
)
 
4,484

 
2,767

Other comprehensive income/(loss)
 
87,248

 
13,078

 
4,484

 
104,810

Balance as of June 30, 2020
 
$
118,327

 
$
16,305

 
$
(269,430
)
 
$
(134,798
)


(Dollars in thousands)
 
Securities AFS
 
Cash Flow
Hedges
 
Pension and
Post-retirement
Plans
 
Total
Balance as of April 1, 2019
 
$
(27,121
)
 
$
(6,725
)
 
$
(287,305
)
 
$
(321,151
)
Net unrealized gains/(losses)
 
47,991

 
7,575

 
—

 
55,566

Amounts reclassified from AOCI
 
201

 
1,334

 
1,561

 
3,096

Other comprehensive income/(loss)
 
48,192

 
8,909

 
1,561

 
58,662

Balance as of June 30, 2019
 
$
21,071

 
$
2,184

 
$
(285,744
)
 
$
(262,489
)
 
 
 
 
 
 
 
 
 
Balance as of January 1, 2019
 
$
(75,736
)
 
$
(12,112
)
 
$
(288,768
)
 
$
(376,616
)
Net unrealized gains/(losses)
 
96,606

 
11,511

 
—

 
108,117

Amounts reclassified from AOCI
 
201

 
2,785

 
3,024

 
6,010

Other comprehensive income/(loss)
 
96,807

 
14,296

 
3,024

 
114,127

Balance as of June 30, 2019
 
$
21,071

 
$
2,184

 
$
(285,744
)
 
$
(262,489
)






















FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 42


Reclassifications from AOCI, and related tax effects, were as follows:
(Dollars in thousands)
 
Three Months Ended
June 30
 
Six Months Ended
June 30
 
 
Details about AOCI
 
2020
 
2019
 
2020
 
2019
 
Affected line item in the statement where net income is presented
Securities AFS:
 
 
 
 
 
 
 
 
 
 
Realized (gains)/losses on securities AFS
 
$
—

 
$
267

 
$
—

 
$
267

 
Debt securities gains/(losses), net
Tax expense/(benefit)
 
—

 
(66
)
 
—

 
(66
)
 
Provision/(benefit) for income taxes
 
 
—

 
201

 
—

 
201

 
 
Cash flow hedges:
 
 
 
 
 
 
 
 
 
 
Realized (gains)/losses on cash flow hedges
 
(2,153
)
 
1,772

 
(2,277
)
 
3,699

 
Interest and fees on loans
Tax expense/(benefit)
 
530

 
(438
)
 
560

 
(914
)
 
Provision/(benefit) for income taxes
 
 
(1,623
)
 
1,334

 
(1,717
)
 
2,785

 
 
Pension and Postretirement Plans:
 
 
 
 
 
 
 
 
 
 
Amortization of prior service cost and net actuarial gain/(loss)
 
3,155

 
2,074

 
5,946

 
4,017

 
All other expense
Tax expense/(benefit)
 
(776
)
 
(513
)
 
(1,462
)
 
(993
)
 
Provision/(benefit) for income taxes
 
 
2,379

 
1,561

 
4,484

 
3,024

 
 
Total reclassification from AOCI
 
$
756

 
$
3,096

 
$
2,767

 
$
6,010

 
 













FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 43


Note 9 – Earnings Per Share
The following table provides reconciliations of net income to net income available to common shareholders and the difference between average basic common shares outstanding and average diluted common shares outstanding:
 
 
Three Months Ended
June 30
 
Six Months Ended
June 30
(Dollars and shares in thousands, except per share data)
2020
 
2019
 
2020
 
2019
Net income/(loss)
$
56,665

 
$
113,742

 
$
73,137

 
$
217,147

Net income attributable to noncontrolling interest
2,851

 
2,852

 
5,703

 
5,672

Net income/(loss) attributable to controlling interest
53,814

 
110,890

 
67,434

 
211,475

Preferred stock dividends
1,550

 
1,550

 
3,100

 
3,100

Net income/(loss) available to common shareholders
$
52,264

 
$
109,340

 
$
64,334

 
$
208,375

 
 
 
 
 
 
 
 
Weighted average common shares outstanding—basic
312,090

 
314,063

 
311,843

 
315,740

Effect of dilutive securities
846

 
1,723

 
949

 
1,980

Weighted average common shares outstanding—diluted
312,936

 
315,786

 
312,792

 
317,720

 
 
 
 
 
 
 
 
Net income/(loss) per share available to common shareholders
$
0.17

 
$
0.35

 
$
0.21

 
$
0.66

Diluted income/(loss) per share available to common shareholders
$
0.17

 
$
0.35

 
$
0.21

 
$
0.66


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
June 30
 
Six Months Ended
June 30
(Shares in thousands)
 
2020
 
2019
 
2020
 
2019
Stock options excluded from the calculation of diluted EPS
 
5,134

 
2,773

 
3,291

 
2,692

Weighted average exercise price of stock options excluded from the calculation of diluted EPS
 
$
15.80

 
$
21.03

 
$
18.26

 
$
21.39

Other equity awards excluded from the calculation of diluted EPS
 
4,389

 
2,403

 
3,934

 
1,985




















FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 44



Note 10 – 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 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, and FHN is cooperating in those matters. Pending and threatened litigation matters sometimes are settled by the parties, and sometimes pending matters are resolved in court or before an arbitrator. 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 are disclosures for certain pending or threatened litigation matters, including all matters mentioned in (i) or (ii) and certain matters mentioned in (iii). In addition, certain other types of matters are discussed relating to FHN’s pre-2009 mortgage origination and servicing businesses. In all litigation matters discussed, 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 June 30, 2020, the aggregate amount of liabilities established for all such loss contingency matters was $.3 million. These liabilities are separate from those discussed under the heading “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 June 30, 2020, FHN is unable to estimate any material reasonably possible loss ("RPL") for contingency matters in future periods in excess of currently established liabilities.
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
In the first quarter of 2020, a former shareholder of Capital Bank Financial Corp. ("CBF") 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


FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 45

Table of Contents

Note 10 – Contingencies and Other Disclosures (Continued)

that might be awarded, if any; of any such damages amount, the amount that FHN would be obliged to indemnify; the availability of applicable insurance; and the outcome of discovery, which has not yet begun.
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 with 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 until April 2020, 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.
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 $12.9 million and $14.5 million as of June 30, 2020 and December 31, 2019, respectively. Accrued liabilities for FHN’s estimate of these obligations are reflected in Other liabilities on the Consolidated Condensed Statements of Condition. Charges/expense reversals to increase/decrease the liability are included within Repurchase and foreclosure provision/(provision credit) 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 these factors could significantly impact the estimate of FHN’s liability.
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.


FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 46



Note 11 – Pension, Savings, and Other Employee Benefits

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. Management does not currently anticipate that FHN will make a contribution to the qualified pension plan for the remainder of 2020.
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 million for 2019. FHN anticipates making benefit payments under the non-qualified plans of $5.2 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.
Service cost is included in Employee compensation, incentives, and benefits in the Consolidated Condensed Statements of Income. All other components of net periodic benefit cost are included in All other expense.
The components of net periodic benefit cost for the three months ended June 30 are as follows:

 
 
Pension Benefits
 
Other Benefits
(Dollars in thousands)
 
2020
 
2019
 
2020
 
2019
Components of net periodic benefit cost
 
 
 
 
 
 
 
 
Service cost
 
$
8

 
$
8

 
$
24

 
$
24

Interest cost
 
5,910

 
7,575

 
307

 
351

Expected return on plan assets
 
(6,169
)
 
(9,173
)
 
(311
)
 
(269
)
Amortization of unrecognized:
 
 
 
 
 
 
 
 
Prior service cost/(credit)
 
—

 
—

 
8

 
—

Actuarial (gain)/loss
 
3,224

 
2,435

 
(79
)
 
(117
)
Net periodic benefit cost/(credit)
 
$
2,973

 
$
845

 
$
(51
)
 
$
(11
)










FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 47

Table of Contents

Note 11 – Pension, Savings, and Other Employee Benefits (Continued)

The components of net periodic benefit cost for the six months ended June 30 are as follows:

 
 
Pension Benefits
 
Other Benefits
(Dollars in thousands)
 
2020
 
2019
 
2020
 
2019
Components of net periodic benefit cost
 
 
 
 
 
 
 
 
Service cost
 
$
16

 
$
16

 
$
49

 
$
48

Interest cost
 
11,819

 
15,150

 
611

 
702

Expected return on plan assets
 
(12,337
)
 
(18,346
)
 
(622
)
 
(538
)
Amortization of unrecognized:
 
 
 
 
 
 
 
 
Prior service cost/(credit)
 
—

 
—

 
16

 
—

Actuarial (gain)/loss
 
6,448

 
4,870

 
(154
)
 
(234
)
Net periodic benefit cost/(credit)
 
$
5,946

 
$
1,690

 
$
(100
)
 
$
(22
)








FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 48



Note 12 – Business Segment Information

FHN has four business segments: regional banking, fixed income, corporate, and non-strategic. The regional banking segment offers financial products and services, including traditional lending and deposit taking, to consumer and commercial customers 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. The 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. The 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. The 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.
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.

The following table reflects the amounts of consolidated revenue, expense, tax, and average assets for each segment for the three and six months ended June 30:
 
 
Three Months Ended
June 30
 
Six Months Ended
June 30
(Dollars in thousands)
 
2020
 
2019
 
2020
 
2019
Consolidated
 
 
 
 
 
 
 
 
Net interest income
 
$
305,344

 
$
303,610

 
$
608,146

 
$
598,118

Provision/(provision credit) for loan losses (a)
 
110,000

 
13,000

 
255,000

 
22,000

Noninterest income
 
206,269

 
157,993

 
381,025

 
299,038

Noninterest expense
 
332,168

 
300,394

 
643,487

 
596,484

Income/(loss) before income taxes
 
69,445

 
148,209

 
90,684

 
278,672

Provision/(benefit) for income taxes
 
12,780

 
34,467

 
17,547

 
61,525

Net income/(loss)
 
$
56,665

 
$
113,742

 
$
73,137

 
$
217,147

Average assets
 
$
47,934,074

 
$
41,243,007

 
$
45,742,993

 
$
41,064,093

(a)
Increase in provision expense for the three and six months ended June 30, 2020 is primarily due to the economic forecast attributable to the COVID-19 pandemic.









 










FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 49

Table of Contents

Note 12 – Business Segment Information (Continued)

 
 
Three Months Ended
June 30
 
Six Months Ended
June 30
(Dollars in thousands)
 
2020
 
2019
 
2020
 
2019
Regional Banking
 
 
 
 
 
 
 
 
Net interest income
 
$
349,749

 
$
297,534

 
$
649,936

 
$
583,636

Provision/(provision credit) for loan losses (a)
 
108,311

 
17,776

 
253,752

 
31,218

Noninterest income
 
79,312

 
81,565

 
161,208

 
154,626

Noninterest expense
 
202,297

 
192,413

 
413,331

 
391,043

Income/(loss) before income taxes
 
118,453

 
168,910

 
144,061

 
316,001

Provision/(benefit) for income taxes
 
26,948

 
39,788

 
31,349

 
73,909

Net income/(loss)
 
$
91,505

 
$
129,122

 
$
112,712

 
$
242,092

Average assets
 
$
35,732,966

 
$
30,210,728

 
$
33,952,986

 
$
29,515,773

Fixed Income
 
 
 
 
 
 
 
 
Net interest income
 
$
13,545

 
$
6,171

 
$
24,459

 
$
13,503

Noninterest income
 
113,235

 
65,622

 
208,958

 
119,429

Noninterest expense
 
83,039

 
55,534

 
164,102

 
106,067

Income/(loss) before income taxes
 
43,741

 
16,259

 
69,315

 
26,865

Provision/(benefit) for income taxes
 
10,679

 
3,840

 
16,778

 
6,297

Net income/(loss)
 
$
33,062

 
$
12,419

 
$
52,537

 
$
20,568

Average assets
 
$
3,260,362

 
$
3,127,305

 
$
3,512,277

 
$
2,988,548

Corporate
 
 
 
 
 
 
 
 
Net interest income/(expense)
 
$
(63,493
)
 
$
(7,146
)
 
$
(76,852
)
 
$
(15,060
)
Noninterest income (b)
 
12,943

 
9,401

 
9,225

 
22,754

Noninterest expense (b) (c) (d)
 
43,218

 
56,873

 
58,667

 
98,652

Income/(loss) before income taxes
 
(93,768
)
 
(54,618
)
 
(126,294
)
 
(90,958
)
Provision/(benefit) for income taxes
 
(25,097
)
 
(13,525
)
 
(31,469
)
 
(25,296
)
Net income/(loss)
 
$
(68,671
)
 
$
(41,093
)
 
$
(94,825
)
 
$
(65,662
)
Average assets
 
$
8,168,307

 
$
6,827,937

 
$
7,476,249

 
$
7,439,591

Non-Strategic
 
 
 
 
 
 
 
 
Net interest income
 
$
5,543

 
$
7,051

 
$
10,603

 
$
16,039

Provision/(provision credit) for loan losses (a)
 
1,689

 
(4,776
)
 
1,248

 
(9,218
)
Noninterest income
 
779

 
1,405

 
1,634

 
2,229

Noninterest expense
 
3,614

 
(4,426
)
 
7,387

 
722

Income/(loss) before income taxes
 
1,019

 
17,658

 
3,602

 
26,764

Provision/(benefit) for income taxes
 
250

 
4,364

 
889

 
6,615

Net income/(loss)
 
$
769

 
$
13,294

 
$
2,713

 
$
20,149

Average assets
 
$
772,439

 
$
1,077,037

 
$
801,481

 
$
1,120,181

Certain previously reported amounts have been reclassified to agree with current presentation.
(a)
Increase in provision expense for the three and six months ended June 30, 2020 is primarily due to the economic forecast attributable to the COVID-19 pandemic.
(b)
Balance for the six months ended June 30, 2020 includes a 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 acquisition-related expenses and restructuring-related costs associated with efficiency initiatives; refer to Note 2 - Acquisitions and Divestitures and Note 17 - Restructuring, Repositioning, and Efficiency for additional information.
(d)
Three and six months ended June 30, 2019 includes $9.1 million of asset impairments, professional fees, and other customer-contact and technology-related expenses associated with rebranding initiatives.








FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 50

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 June 30, 2020 and 2019:
 
Three months ended June 30, 2020
(Dollars in thousands)
Regional Banking
 
Fixed Income
 
Corporate
 
Non-Strategic
 
Consolidated
Noninterest income:
 
 
 
 
 
 
 
 
 
Fixed income (a)
$
81

 
$
112,340

 
$
—

 
$
—

 
$
112,421

Deposit transactions and cash management
29,541

 
—

 
1,204

 
42

 
30,787

Brokerage, management fees and commissions
13,800

 
—

 
—

 
—

 
13,800

Trust services and investment management
7,750

 
—

 
(17
)
 
—

 
7,733

Bankcard income
6,551

 
—

 
74

 
27

 
6,652

BOLI (b)
—

 
—

 
6,380

 
—

 
6,380

Debt securities gains/(losses), net (b)
—

 
—

 
—

 
—

 
—

Equity securities gains/(losses), net (b)
—

 
—

 
(1,493
)
 
—

 
(1,493
)
All other income and commissions (c)
21,589

 
895

 
6,795

 
710

 
29,989

     Total noninterest income
$
79,312

 
$
113,235

 
$
12,943

 
$
779

 
$
206,269

(a)
Includes $8.8 million of underwriting, portfolio advisory, and other noninterest income in scope of Accounting Standards Codification ("ASC") 606, "Revenue From Contracts With Customers."
(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.

 
Three months ended June 30, 2019
(Dollars in thousands)
Regional Banking
 
Fixed Income
 
Corporate
 
Non- Strategic
 
Consolidated
Noninterest income:
 
 
 
 
 
 
 
 
 
Fixed income (a)
$
46

 
$
65,262

 
$
—

 
$
1,106

 
$
66,414

Deposit transactions and cash management
30,632

 
1

 
1,707

 
34

 
32,374

Brokerage, management fees and commissions
14,120

 
—

 
—

 
—

 
14,120

Trust services and investment management
7,902

 
—

 
(14
)
 
—

 
7,888

Bankcard income
6,597

 
—

 
60

 
(302
)
 
6,355

BOLI (b)
—

 
—

 
5,126

 
—

 
5,126

Debt securities gains/(losses), net (b)
—

 
—

 
(267
)
 
—

 
(267
)
Equity securities gains/(losses), net (b)
—

 
—

 
316

 
—

 
316

All other income and commissions (c)
22,268

 
359

 
2,473

 
567

 
25,667

     Total noninterest income
$
81,565

 
$
65,622

 
$
9,401

 
$
1,405

 
$
157,993

Certain previously reported amounts have been reclassified to agree with current presentation.
(a)
Includes $7.1 million of underwriting, portfolio advisory, and other noninterest income in scope of Accounting Standards
Codification ("ASC") 606, "Revenue From Contracts With Customers."
(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.











FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 51

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 six months ended June 30, 2020 and 2019:
 
Six Months Ended June 30, 2020
(Dollars in thousands)
Regional Banking
 
Fixed Income
 
Corporate
 
Non-Strategic
 
Consolidated
Noninterest income:
 
 
 
 
 
 
 
 
 
Fixed income (a)
$
202

 
$
207,854

 
$
—

 
$
—

 
$
208,056

Deposit transactions and cash management
58,368

 
—

 
2,640

 
69

 
61,077

Brokerage, management fees and commissions
29,205

 
—

 
—

 
—

 
29,205

Trust services and investment management
14,963

 
—

 
(35
)
 
—

 
14,928

Bankcard income
13,703

 
—

 
143

 
59

 
13,905

BOLI (b)
—

 
—

 
10,969

 
—

 
10,969

Debt securities gains/(losses), net (b)
—

 
—

 
—

 
—

 
—

Equity securities gains/(losses), net (b)
—

 
—

 
(1,468
)
 
—

 
(1,468
)
All other income and commissions (c) (d)
44,767

 
1,104

 
(3,024
)
 
1,506

 
44,353

     Total noninterest income
$
161,208

 
$
208,958

 
$
9,225

 
$
1,634

 
$
381,025

(a)
Includes $18.1 million of underwriting, portfolio advisory, and other noninterest income in scope of Accounting Standards Codification ("ASC") 606, "Revenue From Contracts With Customers."
(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)
Corporate balance includes negative deferred compensation income driven by equity market valuations.

 
Six Months Ended June 30, 2019
(Dollars in thousands)
Regional Banking
 
Fixed Income
 
Corporate
 
Non- Strategic
 
Consolidated
Noninterest income:
 
 
 
 
 
 
 
 
 
Fixed income (a)
$
63

 
$
118,994

 
$
—

 
$
1,106

 
$
120,163

Deposit transactions and cash management
60,658

 
4

 
3,270

 
63

 
63,995

Brokerage, management fees and commissions
26,753

 
—

 
—

 
—

 
26,753

Trust services and investment management
14,958

 
—

 
(44
)
 
—

 
14,914

Bankcard income
13,640

 
—

 
122

 
(455
)
 
13,307

BOLI (b)
—

 
—

 
9,528

 
—

 
9,528

Debt securities gains/(losses), net (b)
—

 
—

 
(267
)
 
—

 
(267
)
Equity securities gains/(losses), net (b)
—

 
—

 
347

 
—

 
347

All other income and commissions (c)
38,554

 
431

 
9,798

 
1,515

 
50,298

     Total noninterest income
$
154,626

 
$
119,429

 
$
22,754

 
$
2,229

 
$
299,038

Certain previously reported amounts have been reclassified to agree with current presentation.
(a)
Includes $14.4 million of underwriting, portfolio advisory, and other noninterest income in scope of Accounting Standards
Codification ("ASC") 606, "Revenue From Contracts With Customers."
(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.




FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 52



Note 13 – Variable Interest Entities
ASC 810 defines a VIE as a legal entity where (a) the equity investors, as a group, lack 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. A variable interest is a contractual ownership or other interest that fluctuates with changes in the fair value of the VIE’s net assets exclusive of variable interests. Under ASC 810, as amended, a primary beneficiary is required to consolidate a VIE when it has a 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 performance and the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant.
 
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 June 30, 2020 and December 31, 2019:
 
 
 
 
 
(Dollars in thousands)
 
June 30, 2020
 
December 31, 2019
Assets:
 
 
 
 
Other assets
 
$
93,212

 
$
91,873

Total assets
 
$
93,212

 
$
91,873

Liabilities:
 
 
 
 
Other liabilities
 
$
71,783

 
$
70,830

Total liabilities
 
$
71,783

 
$
70,830


Nonconsolidated Variable Interest Entities
Low Income Housing Partnerships. First Horizon Community Investment Group, Inc. ("FHCIG"), a wholly-owned subsidiary of 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. 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 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 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. 2Q20 FORM 10-Q REPORT 53

Table of Contents

Note 13 – Variable Interest Entities (Continued)

(benefit). LIHTC investments that do not qualify for the proportional amortization method are accounted for using the equity method. Expenses associated with these
 
investments were not material for the three or six months ended June 30, 2020 and 2019.
The following table summarizes the impact to the Provision/(benefit) for income taxes on the Consolidated Condensed Statements of Income for the three and six months ended June 30, 2020, and 2019 for LIHTC investments accounted for under the proportional amortization method.
 
 
Three Months Ended
June 30
 
Six Months Ended
June 30
(Dollars in thousands)
 
2020
 
2019
 
2020
 
2019
Provision/(benefit) for income taxes:
 
 
 
 
 
 
 
 
Amortization of qualifying LIHTC investments
 
$
5,752

 
$
4,287

 
$
11,313

 
$
8,285

Low income housing tax credits
 
(4,758
)
 
(3,522
)
 
(9,356
)
 
(7,151
)
Other tax benefits related to qualifying LIHTC investments
 
(2,583
)
 
(1,609
)
 
(5,138
)
 
(3,219
)


Other Tax Credit Investments. First Tennessee New Markets Corporation (“FTNMC”), a wholly-owned subsidiary of First Horizon Bank, periodically makes equity investments through wholly-owned subsidiaries as a non-managing member in various limited liability companies (“LLCs”) that sponsor community development projects utilizing the New Market Tax Credit (“NMTC”) pursuant to Section 45 of the Internal Revenue Code. 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 LLCs are considered VIEs as FTNMC, 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. 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.
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 June 30, 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, since 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 underlying trust meets the definition of a VIE as the holders of the equity investment at risk do not have the


FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 54

Table of Contents

Note 13 – Variable Interest Entities (Continued)

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, since 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. 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 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, FHN acquired junior subordinated debt underlying multiple issuances of trust preferred debt by institutions previously acquired by CBF. 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, 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 considered “at risk”. Consequently, none of the trusts are consolidated by FHN.


FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 55

Table of Contents

Note 13 – Variable Interest Entities (Continued)

The following table summarizes FHN’s nonconsolidated VIEs as of June 30, 2020:
(Dollars in thousands) 
 
Maximum
Loss Exposure
 
Liability
Recognized
 
Classification
Type 
 
 
 
 
 
 
Low income housing partnerships
 
$
248,712

 
$
124,318

 
(a)
Other tax credit investments (b)
 
5,959

 
—

 
Other assets
Small issuer trust preferred holdings (c)
 
209,177

 
—

 
Loans, net of unearned income
On-balance sheet trust preferred securitization
 
32,144

 
82,030

 
(d)
Proprietary residential mortgage securitizations
 
628

 
—

 
Trading securities
Holdings of agency mortgage-backed securities (c)
 
4,561,144

 
—

 
(e)
Commercial loan troubled debt restructurings (f)
 
43,432

 
—

 
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 $124.4 million of current investments and $124.3 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)
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 $82.0 million classified as Term borrowings.
(e)
Includes $.7 billion classified as Trading securities and $3.9 billion classified as Securities available-for-sale.
(f)
Maximum loss exposure represents $43.4 million of current receivables and contractual funding commitments on loans related to commercial borrowers involved in a troubled debt restructuring were non-material.
(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.
The following table summarizes FHN’s nonconsolidated VIEs as of December 31, 2019:
(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)
Maximum 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.
(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. 2Q20 FORM 10-Q REPORT 56



Note 14 – 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’ 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”) 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. Treatment of daily margin as a settlement has no effect on hedge accounting or gains/losses for the applicable derivative contracts. On June 30, 2020 and December 31, 2019, respectively, FHN had $230.2 million and $136.6 million of cash receivables and $130.6 million and $53.0 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 customer transactions and as a risk management tool. Where contracts have been created for customers, 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 segment 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. When these securities settle on a delayed basis, they are considered forward contracts. Fixed income also enters into interest rate contracts, including caps, swaps, and floors, for its customers. In addition, fixed income 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 recognized currently in fixed income noninterest income. Related assets and liabilities are recorded on the Consolidated Condensed Statements of Condition as Derivative assets and Derivative liabilities. The FHN Financial 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 $100.3 million and $54.5 million for the three months ended


FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 57

Table of Contents

Note 14 – Derivatives (Continued)

June 30, 2020 and 2019, and $178.6 million and $99.0 million for the six months ended June 30, 2020 and 2019, 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 income trading activities as of June 30, 2020 and December 31, 2019:
 
 
 
June 30, 2020
(Dollars in thousands)
 
Notional
 
Assets
 
Liabilities
Customer interest rate contracts
 
$
3,667,914

 
$
254,246

 
$
1,827

Offsetting upstream interest rate contracts
 
3,667,914

 
7,454

 
17,667

Forwards and futures purchased
 
7,351,632

 
31,853

 
787

Forwards and futures sold
 
7,744,323

 
3,555

 
29,696

 
 
 
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 customers 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 designated a derivative transaction in a hedging strategy to manage interest rate risk on $400.0 million of senior debt issued by First Horizon Bank prior to its maturity in December 2019. This 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 million senior debt on 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.

 



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Table of Contents

Note 14 – Derivatives (Continued)

The following tables summarize FHN’s derivatives associated with interest rate risk management activities as of June 30, 2020 and December 31, 2019:
 
 
 
June 30, 2020
(Dollars in thousands)
 
Notional
 
Assets
 
Liabilities
Customer Interest Rate Contracts Hedging 
 
 
 
 
 
 
Hedging Instruments and Hedged Items: 
 
 
 
 
 
 
Customer interest rate contracts
 
$
3,679,991

 
$
297,233

 
$
258

Offsetting upstream interest rate contracts
 
3,679,991

 
4,877

 
24,922

Debt Hedging
 
 
 
 
 
 
Hedging Instruments:
 
 
 
 
 
 
Interest rate swaps
 
$
500,000

 
$
27

 
N/A

Hedged Items:
 
 
 
 
 
 
Term borrowings:
 
 
 
 
 
 
Par
 
N/A

 
N/A

 
$
500,000

Cumulative fair value hedging adjustments
 
N/A

 
N/A

 
2,142

Unamortized premium/(discount) and issuance costs
 
N/A

 
N/A

 
(296
)
Total carrying value
 
N/A

 
N/A

 
$
501,846


 
 
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













FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 59

Table of Contents

Note 14 – Derivatives (Continued)

The following table summarizes gains/(losses) on FHN’s derivatives associated with interest rate risk management activities for the three and six months ended June 30, 2020 and 2019:
 
 
Three Months Ended
June 30
 
Six Months Ended
June 30
 
 
2020
 
2019
 
2020
 
2019
(Dollars in thousands)
 
Gains/(Losses)
 
Gains/(Losses)
 
Gains/(Losses)
 
Gains/(Losses)
Customer Interest Rate Contracts Hedging
 
 
 
 
 
 
Hedging Instruments and Hedged Items:
 
 
 
 
 
 
 
 
Customer interest rate contracts (a)
 
$
15,844

 
$
50,706

 
$
211,396

 
$
79,818

Offsetting upstream interest rate contracts (a)
 
(15,844
)
 
(50,706
)
 
(211,396
)
 
(79,818
)
Debt Hedging
 
 
 
 
 
 
 
 
Hedging Instruments:
 
 
 
 
 
 
 
 
Interest rate swaps (b)
 
$
(737
)
 
$
6,697

 
$
4,197

 
$
10,976

Hedged Items:
 
 
 
 
 
 
 
 
Term borrowings (a) (c)
 
720

 
(6,605
)
 
(3,745
)
 
(10,871
)
(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, FHN entered into a pay floating, receive fixed interest rate swap in a hedging strategy 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 consist of held-to-maturity trust preferred loans that have variable interest payments based on 3-month LIBOR. In first quarter 2017, FHN initiated cash flow hedges of $650 million notional amount that had initial durations between three years and seven years. 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 cash flow hedges under ASC 815-20. All changes in the fair value of these derivatives are recorded as a component of AOCI. Amounts are reclassified from AOCI to earnings as the hedged cash flows affect earnings. Interest paid or received for these swaps is recognized as an adjustment to interest income of the assets whose cash flows are being hedged.
The following tables summarize FHN’s derivative activities associated with cash flow hedges as of June 30, 2020 and December 31, 2019:
 
 
June 30, 2020
(Dollars in thousands)
 
Notional
 
Assets
 
Liabilities
Cash Flow Hedges 
 
 
 
 
 
 
Hedging Instruments: 
 
 
 
 
 
 
Interest rate swaps
 
$
700,000

 
$
29

 
$
48

Hedged Items:
 
 
 
 
 
 
Variability in cash flows related to debt instruments (primarily loans)
 
N/A

 
$
700,000

 
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




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Note 14 – Derivatives (Continued)

The following table summarizes gains/(losses) on FHN’s derivatives associated with cash flow hedges for the three and six months ended June 30, 2020 and 2019:
 
 
Three Months Ended
June 30
 
Six Months Ended
June 30
 
 
2020
 
2019
 
2020
 
2019
(Dollars in thousands)
 
Gains/(Losses)
 
Gains/(Losses)
 
Gains/(Losses)
 
Gains/(Losses)
Cash Flow Hedges
 
 
 
 
 
 
Hedging Instruments:
 
 
 
 
 
 
 
 
Interest rate swaps (a)
 
$
69

 
$
11,896

 
$
17,443

 
$
19,114

       Gain/(loss) recognized in Other comprehensive income/(loss)
 
1,640

 
7,575

 
14,795

 
11,511

       Gain/(loss) reclassified from AOCI into Interest income
 
(1,623
)
 
1,334

 
(1,717
)
 
2,785

(a)
Approximately $9.6 million of pre-tax gains are expected to be reclassified into earnings in the next twelve months.

Other Derivatives

In conjunction with the sales of a portion 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 June 30, 2020 and December 31, 2019, the derivative liabilities associated with the sales of Visa Class B shares were $18.0 million and $22.8 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 June 30, 2020 and December 31, 2019, these loans were valued at $13.8
 
million and $18.4 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 June 30, 2020 the notional values of FHN’s risk participations were $93.8 million of derivative assets and $246.1 million of derivative liabilities. The notional value for risk participation/syndication agreements is consistent with the percentage of participation in the lending arrangement. FHN’s maximum exposure or benefit in the risk participation agreements is contingent 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 associated with the borrowers to which the risk participations relate through 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 of fair value for the risk participations. As of June 30, 2020, FHN had recognized $170 thousand of derivative assets and $830 thousand of derivative liabilities associated with risk participation agreements.
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


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Note 14 – Derivatives (Continued)

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”). 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. 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.
Interest rate derivatives with customers 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. 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 interest rate derivative instruments with adjustable collateral posting thresholds was $253.7 million of assets and $3.8 million of liabilities on June 30, 2020, and $63.1 million of assets and $6.4 million of liabilities on December 31, 2019. As of June 30, 2020 and December 31, 2019, FHN had received collateral of $340.0 million and $148.5 million and posted collateral of $43.5 million and $18.4 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 $253.6 million of assets and $25.5 million of liabilities on June 30, 2020, and $63.1 million of assets and $10.3 million of liabilities on December 31, 2019. As of June 30, 2020 and December 31, 2019, FHN had received collateral of $340.0 million and $148.5 million and posted collateral of $65.1 million and $22.7 million, respectively, in the normal course of business related to these contracts.
FHN’s fixed income segment buys and sells various types of securities for its customers. 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. 2Q20 FORM 10-Q REPORT 62

Table of Contents

Note 14 – Derivatives (Continued)

The following table provides details of derivative assets and collateral received as presented on the Consolidated Condensed Statements of Condition as of June 30, 2020 and December 31, 2019:
 
 
 
 
 
 
 
 
 
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:
 
 
 
 
 
 
 
 
 
 
 
 
June 30, 2020
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate derivative contracts
 
$
564,037

 
$
—

 
$
564,037

 
$
(2,253
)
 
$
(348,497
)
 
$
213,287

Forward contracts
 
35,408

 
—

 
35,408

 
(6,927
)
 
(12,590
)
 
15,891

 
 
$
599,445

 
$
—

 
$
599,445

 
$
(9,180
)
 
$
(361,087
)
 
$
229,178

 
 
 
 
 
 
 
 
 
 
 
 
 
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 June 30, 2020 and December 31, 2019, $.3 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.
The following table provides details of derivative liabilities and collateral pledged as presented on the Consolidated Condensed Statements of Condition as of June 30, 2020 and December 31, 2019:
 
 
 
 
 
 
 
 
 
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:
 
 
 
 
 
 
 
 
 
 
 
 
June 30, 2020
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate derivative contracts
 
$
44,743

 
$
—

 
$
44,743

 
$
(2,253
)
 
$
(38,832
)
 
$
3,658

Forward contracts
 
30,483

 
—

 
30,483

 
(6,927
)
 
(23,556
)
 
—

 
 
$
75,226

 
$
—

 
$
75,226

 
$
(9,180
)
 
$
(62,388
)
 
$
3,658

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 Derivative liabilities on the Consolidated Condensed Statements of Condition. As of June 30, 2020 and December 31, 2019, $19.2 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.


FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 63



Note 15 – 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 purchased under agreements to resell and Securities 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 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. 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.
The following table provides details of Securities purchased under agreements to resell as presented on the Consolidated Condensed Statements of Condition and collateral pledged by counterparties as of June 30, 2020 and December 31, 2019:
 
 
 
 
 
 
 
 
 
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:
 
 
 
 
 
 
 
 
 
 
 
 
June 30, 2020
 
$
302,267

 
$
—

 
$
302,267

 
$
(23,207
)
 
$
(277,660
)
 
$
1,400

December 31, 2019
 
586,629

 
—

 
586,629

 
(21,004
)
 
(562,702
)
 
2,923


The following table provides details of Securities sold under agreements to repurchase as presented on the Consolidated Condensed Statements of Condition and collateral pledged by FHN as of June 30, 2020 and December 31, 2019:
 
 
 
 
 
 
 
 
 
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:
 
 
 
 
 
 
 
 
 
 
 
 
June 30, 2020
 
$
1,482,585

 
$
—

 
$
1,482,585

 
$
(23,207
)
 
$
(1,459,297
)
 
$
81

December 31, 2019
 
716,925

 
—

 
716,925

 
(21,004
)
 
(695,879
)
 
42


Due to the short duration of Securities sold under agreements to repurchase and the nature of collateral involved, the risks associated with these transactions are considered minimal.





FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 64

Table of Contents

Note 15 – 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 Securities sold under agreements to repurchase as of June 30, 2020 and December 31, 2019:
 
 
 
June 30, 2020
(Dollars in thousands)
 
Overnight and
Continuous
 
Up to 30 Days
 
Total
Securities sold under agreements to repurchase:
 
 
 
 
 
 
U.S. treasuries
 
$
539,974

 
$
—

 
$
539,974

Government agency issued MBS
 
512,170

 
14,442

 
526,612

Government agency issued CMO
 
—

 
6,052

 
6,052

Other U.S. government agencies
 
139,756

 
—

 
139,756

Government guaranteed loans (SBA and USDA)
 
270,191

 
—

 
270,191

Total Securities sold under agreements to repurchase
 
$
1,462,091

 
$
20,494

 
$
1,482,585

 
 
 
 
 
 
 
 
 
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 NATIONAL CORP. 2Q20 FORM 10-Q REPORT 65



Note 16 – Fair Value of Assets & 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. 2Q20 FORM 10-Q REPORT 66

Table of Contents

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

Recurring Fair Value Measurements
The following table presents the balance of assets and liabilities measured at fair value on a recurring basis as of June 30, 2020: 
 
 
June 30, 2020
(Dollars in thousands)
 
Level 1
 
Level 2
 
Level 3
 
Total
Trading securities—fixed income:
 
 
 
 
 
 
 
 
U.S. treasuries
 
$
—

 
$
119,121

 
$
—

 
$
119,121

Government agency issued MBS
 
—

 
431,765

 
—

 
431,765

Government agency issued CMO
 
—

 
226,732

 
—

 
226,732

Other U.S. government agencies
 
—

 
91,203

 
—

 
91,203

States and municipalities
 
—

 
17,467

 
—

 
17,467

Corporate and other debt
 
—

 
229,556

 
—

 
229,556

Equity, mutual funds, and other
 
—

 
(22
)
 
—

 
(22
)
Total trading securities—fixed income
 
—

 
1,115,822

 
—

 
1,115,822

Trading securities—mortgage banking
 
—

 
—

 
628

 
628

Loans held-for-sale (elected fair value)
 
—

 
—

 
13,263

 
13,263

Securities available-for-sale:
 
 
 
 
 
 
 
 
U.S. treasuries
 
—

 
999,975

 
—

 
999,975

Government agency issued MBS
 
—

 
2,487,382

 
—

 
2,487,382

Government agency issued CMO
 
—

 
1,415,265

 
—

 
1,415,265

Other U.S. government agencies
 
—

 
417,292

 
—

 
417,292

States and municipalities
 
—

 
90,383

 
—

 
90,383

Corporate and other debt
 
—

 
40,413

 
—

 
40,413

Interest-Only Strip (elected fair value)
 
—

 
—

 
25,446

 
25,446

Total securities available-for-sale
 
—

 
5,450,710

 
25,446

 
5,476,156

Other assets:
 
 
 
 
 
 
 
 
Deferred compensation mutual funds
 
48,572

 
—

 
—

 
48,572

Equity, mutual funds, and other
 
22,692

 
—

 
—

 
22,692

Derivatives, forwards and futures
 
35,408

 
—

 
—

 
35,408

Derivatives, interest rate contracts
 
—

 
563,866

 
—

 
563,866

Derivatives, other
 
—

 
260

 
170

 
430

Total other assets
 
106,672

 
564,126

 
170

 
670,968

Total assets
 
$
106,672

 
$
7,130,658

 
$
39,507

 
$
7,276,837

Trading liabilities—fixed income:
 
 
 
 
 
 
 
 
U.S. treasuries
 
$
—

 
$
195,753

 
$
—

 
$
195,753

Other U.S.government agencies
 
—

 
578

 
—

 
578

States and municipalities
 
—

 
756

 
—

 
756

Corporate and other debt
 
—

 
35,655

 
—

 
35,655

Total trading liabilities—fixed income
 
—

 
232,742

 
—

 
232,742

Other liabilities:
 
 
 
 
 
 
 
 
Derivatives, forwards and futures
 
30,483

 
—

 
—

 
30,483

Derivatives, interest rate contracts
 
—

 
44,722

 
—

 
44,722

Derivatives, other
 
—

 
369

 
18,815

 
19,184

Total other liabilities
 
30,483

 
45,091

 
18,815

 
94,389

Total liabilities
 
$
30,483

 
$
277,833

 
$
18,815

 
$
327,131




FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 67

Table of Contents

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

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. 2Q20 FORM 10-Q REPORT 68

Table of Contents

Note 16 – Fair Value of Assets & 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 June 30, 2020 and 2019, on a recurring basis are summarized as follows: 
 
 
Three Months Ended June 30, 2020
 
 
(Dollars in thousands)
 
Trading
securities
 
 
 
Interest- only strips- AFS
 
 
 
Loans held-
for-sale
 
 
 
Net  derivative
liabilities
 
 
Balance on April 1, 2020
 
$
785

 
 
 
$
23,104

 
 
 
$
13,584

 
 
 
$
(20,890
)
 
 
Total net gains/(losses) included in:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 
(157
)
 
 
 
(1,233
)
 
 
 
422

 
 
 
(201
)
 
 
Purchases
 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
 
Sales
 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
 
Settlements
 
—

 
 
 
—

 
 
 
(743
)
 
 
 
2,446

 
 
Net transfers into/(out of) Level 3
 
—

 
 
 
3,575

 
(b)
 
—

 
 
 
—

 
 
Balance on June 30, 2020
 
$
628

 
 
 
$
25,446

 
 
 
$
13,263

 
 
 
$
(18,645
)
 
 
Net unrealized gains/(losses) included in net income
 
$
—

 
(a)
 
$
(959
)
 
(c)
 
$
422

 
(a)
 
$
(201
)
 
(d) 
 
 
 
Three Months Ended June 30, 2019
 
 
(Dollars in thousands)
 
Trading
securities
 
 
 
Interest-only-strips-AFS
 
 
 
Loans held-for-sale
 
 
 
Net  derivative
liabilities
 
 
Balance on April 1, 2019
 
$
1,397

 
 
 
$
13,195

 
 
 
$
15,751

 
 
 
$
(28,970
)
 
 
Total net gains/(losses) included in:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 
8

 
 
 
(141
)
 
 
 
321

 
 
 
(19
)
 
 
Purchases
 
—

 
 
 
—

 
 
 
10

 
 
 
—

 

Sales
 
—

 
 
 
(14,199
)
 
 
 
—

 
 
 
—

 
 
Settlements
 
(150
)
 
 
 
—

 
 
 
(990
)
 
 
 
2,444

 
 
Net transfers into/(out of) Level 3
 
—

 
 
 
18,937

 
(b) 
 
—

 
 
 
—

 
 
Balance on June 30, 2019
 
$
1,255

 
 
 
$
17,792

 
 
 
$
15,092

 
 
 
$
(26,545
)
 
 
Net unrealized gains/(losses) included in net income
 
$
(36
)
 
(a) 
 
$
(543
)
 
(c) 
 
$
321

 
(a)
 
$
(19
)
 
(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.











FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 69

Table of Contents

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

The changes in Level 3 assets and liabilities measured at fair value for the six months ended June 30, 2020 and 2019, on a recurring basis are summarized as follows: 
 
 
Six Months Ended June 30, 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
 
(313
)
 
 
 
(2,528
)
 
 
 
751

 
 
 
(712
)
 
 
Purchases
 
—

 
 
 
5,481

 
 
 
—

 
 
 
—

 
 
Sales
 
—

 
 
 
(8,703
)
 
 
 
—

 
 
 
—

 
 
Settlements
 
—

 
 
 
—

 
 
 
(1,521
)
 
 
 
4,862

 
 
Net transfers into/(out of) Level 3
 
—

 
 
 
12,060

 
(b)
 
—

 

 
—

 
 
Balance on June 30, 2020
 
$
628

 
 
 
$
25,446

 
 
 
$
13,263

 
 
 
$
(18,645
)
 
 
Net unrealized gains/(losses) included in net income
 
$
—

 
(a)
 
$
(1,813
)
 
(c)
 
$
751

 
(a)
 
$
(712
)
 
(d) 
 
 
 
Six Months Ended June 30, 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
 
29

 
 
 
(1,399
)
 
 
 
816

 
 
 
116

 
 
Purchases
 
—

 
 
 
86

 
 
 
10

 
 
 
—

 

Sales
 
—

 
 
 
(27,211
)
 
 
 
—

 
 
 
—

 
 
Settlements
 
(298
)
 
 
 
—

 
 
 
(2,007
)
 
 
 
4,879

 
 
Net transfers into/(out of) Level 3
 
—

 
 
 
36,414

 
(b) 
 
—

 

 
—

 
 
Balance on June 30, 2019
 
$
1,255

 
 
 
$
17,792

 
 
 
$
15,092

 
 
 
$
(26,545
)
 
 
Net unrealized gains/(losses) included in net income
 
$
(66
)
 
(a) 
 
$
(1,435
)
 
(c)
 
$
816

 
(a)
 
$
116

 
(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.
There were no net unrealized gains/(losses) for Level 3 assets and liabilities included in other comprehensive income as of June 30, 2020 and 2019.






 





FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 70

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Note 16 – Fair Value of Assets & 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”) 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 Condition at June 30, 2020, and December 31, 2019, respectively, the following tables provide the level of valuation assumptions used to determine each adjustment and the related carrying value.
 
 
Carrying value at June 30, 2020
(Dollars in thousands)
 
Level 1
 
Level 2
 
Level 3
 
Total
Loans held-for-sale—SBAs and USDA
 
$
—

 
$
643,445

 
$
774

 
$
644,219

Loans held-for-sale—first mortgages
 
—

 
—

 
504

 
504

Loans, net of unearned income (a)
 
—

 
—

 
66,062

 
66,062

OREO (b)
 
—

 
—

 
13,177

 
13,177

Other assets (c)
 
—

 
—

 
9,835

 
9,835

 
 
 
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 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.
For assets measured on a nonrecurring basis which were still held on the Consolidated Condensed Statements of Condition at period end, the following table provides information about the fair value adjustments recorded during the three and six months ended June 30, 2020 and 2019:
 
 
 
Net gains/(losses)
Three Months Ended June 30
 
Net gains/(losses)
Six Months Ended June 30
(Dollars in thousands)
 
2020
 
2019
 
2020
 
2019
Loans held-for-sale—SBAs and USDA
 
$
(1,247
)
 
$
(1,074
)
 
$
(2,208
)
 
$
(1,293
)
Loans held-for-sale—first mortgages
 
(4
)
 
10

 
1

 
25

Loans, net of unearned income (a)
 
(1,274
)
 
(4,639
)
 
(6,113
)
 
(4,436
)
OREO (b)
 
(142
)
 
(9
)
 
(169
)
 
26

Other assets (c)
 
(426
)
 
(267
)
 
(772
)
 
(942
)
 
 
$
(3,093
)
 
$
(5,979
)
 
$
(9,261
)
 
$
(6,620
)
(a)
Write-downs on these loans are recognized as part of provision for loan losses.
(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. 2Q20 FORM 10-Q REPORT 71

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

In 2019, FHN recognized $4.6 million of impairments and $.7 million of impairment reversals, respectively, related to dispositions of acquired properties and $1.5 million of impairments for lease assets 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 recognized in the Corporate segment.
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. 2Q20 FORM 10-Q REPORT 72

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Note 16 – Fair Value of Assets & 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 June 30, 2020 and December 31, 2019: 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
 
Values Utilized
Level 3 Class
 
Fair Value at
June 30, 2020
 
Valuation Techniques
 
Unobservable Input
 
Range
 
Weighted Average (d)
Available-for-sale- securities SBA-interest only strips
 
$
25,446

 
Discounted cash flow
 
Constant prepayment rate
 
12%
 
12%
 
 
 
 
 
 
Bond equivalent yield
 
14% - 15%
 
15%
Loans held-for-sale - residential real estate
 
13,767

 
Discounted cash flow
 
Prepayment speeds - First mortgage
 
5% - 15%
 
5.8%
 
 
 
 
 
 
Foreclosure losses
 
50% - 65%
 
63%
 
 
 
 
 
 
Loss severity trends - First mortgage
 
4% - 21% of UPB
 
13.6%
Loans held-for-sale- unguaranteed interest in SBA loans
 
774

 
Discounted cash flow
 
Constant prepayment rate
 
8% - 12%
 
10%
 
 
 
 
 
 
Bond equivalent yield
 
8%
 
8%
Derivative liabilities, other
 
18,645

 
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
 
9 - 33 months
 
24 months
Loans, net of unearned
income (a)
 
66,062

 
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)
 
13,177

 
Appraisals from comparable properties
 
Adjustment for value changes since appraisal
 
0% - 10% of appraisal
 
NM
Other assets (c)
 
9,835

 
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.
(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 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. 2Q20 FORM 10-Q REPORT 73

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

(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.
(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 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. 2Q20 FORM 10-Q REPORT 74

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Note 16 – Fair Value of Assets & 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. 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. 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-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.

Derivative liabilities. In conjunction with the sales 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 income 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 almost 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 are recognized within loans held-for-sale at fair value at 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.


FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 75

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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-sale measured at fair value in accordance with management’s election and the aggregate unpaid principal amount FHN is contractually entitled to receive at maturity.
 
 
June 30, 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
 
$
13,263

 
$
17,857

 
$
(4,594
)
Nonaccrual loans
 
2,740

 
5,774

 
(3,034
)
Loans 90 days or more past due and still accruing
 
186

 
322

 
(136
)
 
 
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
June 30
 
Six Months Ended
June 30
(Dollars in thousands)
2020
 
2019
 
2020
 
2019
Changes in fair value included in net income:
 
 
 
 
 
 
 
Mortgage banking noninterest income
 
 
 
 
 
 
 
Loans held-for-sale
$
422

 
$
321

 
$
751

 
$
816



For the three and six months ended June 30, 2020 and 2019, the amount for residential real estate loans held-for-sale included an insignificant amount of gain in pretax earnings that is attributable to changes in instrument-specific credit risk. 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-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.
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, fair 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 Condition and for estimating the fair value of financial instruments for which fair value is disclosed under ASC 825-10-50.
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. 2Q20 FORM 10-Q REPORT 76

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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, 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. 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, consensus prepayment estimates, and credit spreads. When available, 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 Company 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. Residential real estate loans held-for-sale are valued 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 value of residential real estate loans held-for-sale using a discounted cash flow model which incorporates both observable and unobservable inputs. Inputs 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.
Non-mortgage consumer loans held-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 Company utilizes quoted market prices of similar instruments or broker and dealer quotations to value the SBA and USDA guaranteed loans. The Company values SBA-unguaranteed interests in loans held-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-sale is approximated by their carrying values based on current transaction values.
Collateral-Dependent loans. 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) are based on inputs observed in active markets for similar instruments. Typical inputs include the LIBOR curve, Overnight Indexed Swap (“OIS”) curve, option volatility, and option skew. 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


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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 customer 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 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 Condition 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, loans held-for-sale, and term borrowings as of June 30, 2020 and December 31, 2019, 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, 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, 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. 2Q20 FORM 10-Q REPORT 78

Table of Contents

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

The following table summarizes the book value and estimated fair value of financial instruments recorded in the Consolidated Condensed Statements of Condition as of June 30, 2020:
 
 
June 30, 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
 
$
21,075,171

 
$
—

 
$
—

 
$
21,216,054

 
$
21,216,054

Commercial real estate
 
4,756,056

 
—

 
—

 
4,768,706

 
4,768,706

Consumer:
 
 
 
 
 
 
 
 
 
 
Consumer real estate (a)
 
5,908,636

 
—

 
—

 
6,085,159

 
6,085,159

Credit card & other
 
431,193

 
—

 
—

 
438,644

 
438,644

Total loans, net of unearned income and allowance for loan losses
 
32,171,056

 
—

 
—

 
32,508,563

 
32,508,563

Short-term financial assets:
 
 
 
 
 
 
 
 
 
 
Interest-bearing cash
 
3,135,844

 
3,135,844

 
—

 
—

 
3,135,844

Federal funds sold
 
113,000

 
—

 
113,000

 
—

 
113,000

Securities purchased under agreements to resell
 
302,267

 
—

 
302,267

 
—

 
302,267

Total short-term financial assets
 
3,551,111

 
3,135,844

 
415,267

 
—

 
3,551,111

Trading securities (b)
 
1,116,450

 
—

 
1,115,822

 
628

 
1,116,450

Loans held-for-sale
 
 
 
 
 
 
 
 
 
 
Mortgage loans (elected fair value) (b)
 
13,263

 
—

 
—

 
13,263

 
13,263

USDA & SBA loans- LOCOM
 
644,219

 
—

 
648,383

 
792

 
649,175

Other consumer loans- LOCOM
 
4,758

 
—

 
4,758

 
—

 
4,758

Mortgage loans- LOCOM
 
83,415

 
—

 
—

 
83,415

 
83,415

Total loans held-for-sale
 
745,655

 
—

 
653,141

 
97,470

 
750,611

Securities available-for-sale (b)
 
5,476,156

 
—

 
5,450,710

 
25,446

 
5,476,156

Securities held-to-maturity
 
10,000

 
—

 
—

 
9,881

 
9,881

Derivative assets (b)
 
599,704

 
35,408

 
564,126

 
170

 
599,704

Other assets:
 
 
 
 
 
 
 
 
 
 
Tax credit investments
 
257,547

 
—

 
—

 
257,705

 
257,705

Deferred compensation mutual funds
 
48,572

 
48,572

 
—

 
—

 
48,572

Equity, mutual funds, and other (c)
 
343,825

 
22,692

 
—

 
321,133

 
343,825

Total other assets
 
649,944

 
71,264

 
—

 
578,838

 
650,102

Total assets
 
$
44,320,076

 
$
3,242,516

 
$
8,199,066

 
$
33,220,996

 
$
44,662,578

Liabilities:
 
 
 
 
 
 
 
 
 
 
Defined maturity deposits
 
$
2,655,702

 
$
—

 
$
2,695,759

 
$
—

 
$
2,695,759

Trading liabilities (b)
 
232,742

 
—

 
232,742

 
—

 
232,742

Short-term financial liabilities:
 
 
 
 
 
 
 
 
 
 
Federal funds purchased
 
778,529

 
—

 
778,529

 
—

 
778,529

Securities sold under agreements to repurchase
 
1,482,585

 
—

 
1,482,585

 
—

 
1,482,585

Other short-term borrowings
 
130,583

 
—

 
130,583

 
—

 
130,583

Total short-term financial liabilities
 
2,391,697

 
—

 
2,391,697

 
—

 
2,391,697

Term borrowings:
 
 
 
 
 
 
 
 
 
 
Real estate investment trust-preferred
 
46,270

 
—

 
—

 
47,000

 
47,000

Secured borrowings
 
15,370

 
—

 
—

 
15,370

 
15,370

Junior subordinated debentures
 
145,262

 
—

 
—

 
138,950

 
138,950

Other long term borrowings
 
1,825,574

 
—

 
1,877,080

 
—

 
1,877,080

Total term borrowings
 
2,032,476

 
—

 
1,877,080

 
201,320

 
2,078,400

Derivative liabilities (b)
 
94,389

 
30,483

 
45,091

 
18,815

 
94,389

Total liabilities
 
$
7,407,006

 
$
30,483

 
$
7,242,369

 
$
220,135

 
$
7,492,987

 
(a)
In first quarter 2020, the Permanent Mortgage portfolio was combined into Consumer Real Estate portfolio, all prior periods were revised for comparability.
(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 $190.4 million and FRB stock of $130.7 million.


FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 79

Table of Contents

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

The following table summarizes the book value and estimated fair value of financial instruments recorded in the Consolidated Statements of Condition as of December 31, 2019: 
 
 
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)
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 $76.0 million and FRB stock of $130.7 million.



FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 80

Table of Contents

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

The following table presents the contractual amount and fair value of unfunded loan commitments and standby and other commitments as of June 30, 2020 and December 31, 2019:
 
 
Contractual Amount
 
Fair Value
(Dollars in thousands)
 
June 30, 2020
 
December 31, 2019
 
June 30, 2020
 
December 31, 2019
Unfunded Commitments:
 
 
 
 
 
 
 
 
Loan commitments
 
$
12,945,839

 
$
12,355,220

 
$
2,492

 
$
3,656

Standby and other commitments
 
469,567

 
459,268

 
6,112

 
5,513




FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 81


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 the first half 2020 and were $30.8 million in the first half 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.
•
Expense related to costs associated with asset impairments which is reflected in Other expense.
Settlement of the obligations arising from current initiatives will be funded from operating cash flows.


Total expense recognized for the three and six months ended June 30, 2020 and 2019 is presented in the table below:

 
 
Three Months Ended
June 30
 
Six Months Ended
June 30
Dollars in thousands
 
2020
 
2019
 
2020
 
2019
Employee compensation, incentives and benefits
 
$
32

 
$
2,557

 
$
89

 
$
9,062

Professional fees
 
7

 
4,242

 
14

 
8,537

Occupancy
 
—

 
72

 
2

 
889

Other
 
1

 
11,797

 
(102
)
 
12,332

Total restructuring, repositioning, and efficiency charges
 
$
40

 
$
18,668

 
$
3

 
$
30,820




FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 82



---------------------------
ITEM 2. MANAGEMENT’S DISCUSSION AND
ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
---------------------------

TABLE OF ITEM 2 TOPICS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 83



General Information
 
 
 
 
 
First Horizon National Corporation (“FHN”) began as a community bank chartered 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.
FHN is the parent company of First Horizon Bank. First Horizon Bank's principal divisions and subsidiaries operate under the brands of First Horizon Bank, First Horizon Advisors, and FHN Financial. FHN offers regional banking, 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 270 banking offices in seven southeastern U.S. states, and FHN Financial has 29 offices in 18 states across the U.S.
Segments
FHN is composed of the following operating segments:
•
Regional banking segment offers financial products and 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 Recent Transactions
On July 1, 2020, FHN and IBERIABANK Corporation ("IBKC") closed their merger-of-equals transaction. FHN issued approximately 242 million shares of FHN common stock, plus three new series of preferred stock (Series B, Series C, and Series D) in a transaction valued at $2.5 billion. At the time of closing, IBKC operated 319 offices in 12 states, mostly in the southern and southeastern U.S. In the merger: FHN acquired approximately $34.7 billion in assets, including approximately $26.1 billion in loans, and $3.5 billion in AFS securities; and, FHN assumed approximately $28.3 billion of IBKC deposits. Due to the timing of the merger closing in relation to quarter end and the uncertainty of valuations in the current economic environment, FHN's assessment of the fair value of IBKC's assets and liabilities is incomplete. However, FHN currently expects to recognize a purchase accounting gain of approximately $500 million.
On July 17, 2020, First Horizon Bank completed its purchase of 30 branches from Truist Bank. As part of the transaction, FHN assumed approximately $2.2 billion of branch deposits for a 3.40 percent deposit premium and purchased approximately $423.7 million of branch loans. The acquired branches are in communities in North Carolina (20 branches), Virginia (8 branches), and Georgia (2 branches).
In relation to all acquisitions, FHN's operating results include the operating results of the acquired assets and 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.

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. The notes qualify as Tier 2 capital for the Bank as well as FHN, up to certain regulatory limits for minority capital instruments.



FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 84



In May 2020, FHN issued $450 million of 3.550% Senior Notes due May 26, 2023 and $350 million of 4.000% Senior Notes due May 26, 2025. Interest payments are due semi-annually on May 26 and November 26, commencing November 26, 2020. The sale of these notes resulted in net proceeds to the Company of approximately $795 million.

In May 2020, FHN issued 1,500 shares having an aggregate liquidation preference of $150 million of Series E Non-Cumulative Perpetual Preferred Stock for net proceeds of approximately $145 million. Dividends on the Series E Preferred Stock, if declared, accrue and are payable quarterly, in arrears, at a rate of 6.500% 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. The Series E Preferred Stock qualifies as Tier 1 Capital for FHN.
For the purpose of this management’s discussion and analysis (“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 should be read with the accompanying unaudited Consolidated Condensed Financial Statements and Notes in this report. Additional information including the 2019 financial statements, notes, and MD&A is provided in Item 7 and 8 to FHN’s Annual Report on Form 10-K for the year ended December 31, 2019.
ADOPTION OF ACCOUNTING UPDATES
Effective January 1, 2020 FHN adopted ASU 2016-13, "Measurement of Credit Losses on Financial Instruments," (CECL); which resulted in a $106.4 million increase to the allowance for loan losses ("ALLL") and a $24.0 million increase to 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 tables in this MD&A that are “non-GAAP”, meaning (under U.S. financial reporting rules) they are not presented in accordance with generally accepted accounting principles (“GAAP”) in the U.S. 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 capital position or financial results 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 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 (“RWA”), which is a measure of total on- and off-balance sheet assets adjusted for credit and market risk, used to determine regulatory capital ratios.
The non-GAAP measures presented in this filing are pre-provision net revenue ("PPNR"), return on average tangible common equity (“ROTCE”), tangible common equity to tangible assets ("TCE/TA"), and tangible book value per common share. Refer to table 23 for a reconciliation of the non-GAAP to GAAP measures and presentation of the most comparable GAAP items.
Forward-Looking Statements
 
 
 
 
 
This MD&A contains certain "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 21 E of the Securities Exchange Act of 1934, as amended, (the "Exchange Act") with respect 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. 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.
Forward-looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, operational, economic and


FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 85



competitive uncertainties and contingencies, many of which are beyond the control of FHN, and many of which, with respect to future business decisions and actions, are subject to change and which could cause actual results to differ materially from those contemplated or implied by forward-looking statements or historical performance. Examples of uncertainties and contingencies include factors previously disclosed in FHN's recent annual, quarterly, and current reports filed with the U.S. Securities and Exchange Commission (the "SEC"), as well as the following factors, among others: the possibility that the anticipated benefits of FHN’s 2020 merger with IBERIABANK Corporation (the “2020 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 2020 merger may be more expensive to integrate than anticipated, including as a result of unexpected factors or events; diversion of management's attention from ongoing business operations and opportunities; potential adverse reactions or changes to
 
business or employee relationships resulting from the 2020 merger; FHN’s success in executing its business plans and strategies following the 2020 merger, and managing the risks involved in the foregoing; the potential impacts on FHN’s businesses of the coronavirus COVID-19 pandemic, including negative impacts from quarantines, market declines, and volatility, and changes in customer behavior related to the COVID-19 pandemic; and other factors that may affect future results of FHN.
FHN cautions that the foregoing list of important factors that may affect future results is not exhaustive. Additional factors that could cause results to differ materially from those contemplated by forward-looking statements can be found in FHN's annual report on Form 10-K for the year ended December 31, 2019, and its quarterly report on Form 10-Q for the period ended March 31, 2020, both filed with the SEC and available on the SEC’s website, http://www.sec.gov, and also available in the "Investor Relations" section of FHN's website, http://www.FirstHorizon.com, under the heading "SEC Filings," and in other documents FHN files with the SEC.
Financial Summary
 
 
 
 
 
As previously mentioned, effective January 1, 2020, FHN adopted ASU 2016-13, (Current Expected Credit Loss methodology or "CECL"). The application of CECL can result in greater volatility of estimated credit loss estimates particularly in periods of rapid changes in macroeconomic projections when compared to the prior incurred loss estimation methodology. FHN's operating results for the three and six months ended June 30, 2020 were negatively impacted by further deterioration in the overall macroeconomic forecast largely tied to the Coronavirus Disease 2019 (“COVID-19”) pandemic resulting in a significant increase in provision for loan losses and the reserve for unfunded commitments.
Second quarter 2020 net income available to common shareholders was $52.3 million, or $.17 per diluted share, compared to net income available to common of $109.3 million, or $.35 per diluted share in second quarter 2019. For the six months ended June 30, 2020, net income available to common shareholders was $64.3 million, or $0.21 per diluted share, compared to net income available to common of $208.4 million, or $.66 per diluted share, for the six months ended June 30, 2019.
Total revenue increased 11 percent and 10 percent to $511.6 million and $989.2 million for the three and six months ended June 30, 2020 from $461.6 million and $897.2 million for the three and six months ended June 30, 2019.
NII increased a modest 1 percent to $305.3 million in second quarter 2020 as strong loan growth in loans to mortgage companies and PPP lending and deposit pricing
 
discipline more than offset the negative impact of interest rates on loans.
Noninterest income increased 31 percent, or $48.3 million, in second quarter 2020 driven by strong fixed income revenue and higher deferred compensation income, somewhat offset by the negative impacts of the COVID-19 pandemic on fee income.
For the six months ended June 30, 2020 NII increased 2 percent to $608.1 million and was driven by the same trends impacting the second quarter increase in NII.
Noninterest income increased 27 percent, or $82.0 million, to $381.0 million in the first six months of 2020. The increase in fee income for the year-to-date period was also driven by strong fixed income revenue. Deferred compensation income decreased in the first half of 2020 driven by the timing of and extreme variability in equity market valuations in both 2020 and 2019, offsetting a portion of this increase.
Noninterest expense increased 11 percent and 8 percent to $332.2 million and $643.5 million for the three and six months ended June 30, 2020 from $300.4 million and $596.5 million for the three and six months ended June 30, 2019. The expense increase for 2020 was due in large part to higher fixed income variable compensation, an increase in credit expense on unfunded commitments associated with declines and deterioration in economic forecasts attributable to the COVID-19 pandemic, and a net increase in litigation charges driven by a favorable expense reversal in second quarter 2019, somewhat offset by lower


FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 86



restructuring and rebranding related expenses. For second quarter 2020, higher deferred compensation expense also contributed to the increase in noninterest expense.
Asset quality trends were relatively stable in second quarter 2020 reflecting continued underwriting discipline, ongoing portfolio management, and continued prudent credit risk management. The allowance for loan losses increased to $537.9 million on June 30, 2020 from $200.3 million on December 31, 2019, reflecting further deterioration in the overall macro-economic outlook under CECL, as well as the adoption impact of $106.4 million. Net charge-offs as a percentage of loans was .20 percent for second quarter 2020 and 30+ day delinquencies declined to .13 percent from .19 percent at December 31, 2019.
Common Equity Tier 1, Tier 1, Total Capital, and Leverage ratios were 9.25 percent, 10.69 percent, 12.47 percent, and
 
8.55 percent, respectively, in second quarter 2020 compared to 9.25 percent, 10.24 percent, 11.34 percent, and 9.04 percent, respectively, in second quarter 2019. Average assets increased to $47.9 billion and $45.7 billion for the three and six months ended June 30, 2020 from $41.2 billion and $41.1 billion for the three and six months ended June 30, 2019. Average loans and deposits increased to $34.0 billion and $37.5 billion, respectively, in second quarter 2020, up 18 percent and 17 percent from second quarter 2019. For the six months ended June 30, 2020, Average loans and deposits increased 15 percent and 9 percent, respectively to $32.2 billion and $35.2 billion. Average Shareholders’ equity increased to $5.1 billion for the three and six months ended June 30, 2020 from $4.9 billion and $4.8 billion, respectively, for the three and six months ended June 30, 2019. Period-end Shareholders’ equity increased to $5.2 billion on June 30, 2020 from $4.9 billion on June 30, 2019.
Key Performance Indicators
 
As of or for the three months ended June 30,
 
As of or for the six months ended June 30,
 
(Dollars in thousands, except per share data)
2020
 
2019
 
2020
 
2019
 
Pre-Provision Net Revenue ("PPNR") (a)
$
179,445

 
$
161,209

 
$
354,684

 
$
300,672

 
Diluted earnings per common share
$
0.17

 
$
0.35

 
$
0.21

 
$
0.66

 
Return on average assets (annualized) (b)
0.48
%
 
1.11
%
 
0.32
%
 
1.07
%
 
Return on average common equity (“ROCE”) (annualized) (c)
4.50
%
 
9.79
%
 
2.79
%
 
9.45
%
 
Return on average tangible common equity (“ROTCE”) (annualized) (a) (d)
6.74
%
 
15.20
%
 
4.19
%
 
19.63
%
 
Net interest margin (e)
2.90
%
 
3.34
%
 
3.02
%
 
3.32
%
 
Fee income to total revenue (f)
40.49
%
 
34.22
%
 
38.61
%
 
33.33
%
 
Efficiency ratio (g)
64.74
%
 
65.08
%
 
64.96
%
 
66.49
%
 
Allowance for loan losses to loans
1.64
%
 
0.65
%
 
1.64
%
 
0.65
%
 
Net charge-offs to average loans (annualized)
0.20
%
 
0.07
%
 
0.15
%
 
0.07
%
 
Total period-end equity to period-end assets
10.71
%
 
11.68
%
 
10.71
%
 
11.68
%
 
Tangible common equity to tangible assets ("TCE/TA") (a)
6.63
%
 
7.29
%
 
6.63
%
 
7.29
%
 
Cash dividends declared per common share
$
0.15

 
$
0.14

 
$
0.30

 
$
0.28

 
Book value per common share
$
14.96

 
$
14.51

 
$
14.96

 
$
14.51

 
Tangible book value per common share (a)
$
9.99

 
$
9.47

 
$
9.99

 
$
9.47

 
Common equity Tier 1
9.25
%
 
9.25
%
 
9.25
%
 
9.25
%
 
Market capitalization (millions)
$
3,111.10

 
$
4,665.30

 
$
3,111.10

 
$
4,665.30

 
(a)    Represents a non-GAAP measure which is reconciled in the non-GAAP to GAAP reconciliation in table 23.
(b)    Calculated using net income divided by average assets.
(c)    Calculated using net income available to common shareholders divided by average common equity.
(d)    Calculated using 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 percent and, where applicable, state income taxes.
(f)
Ratio is fee income excluding securities gains/(losses) to total revenue excluding securities gains/(losses).
(g)
Ratio is noninterest expense to total revenue excluding securities gains/(losses).

Key financial ratios were negatively impacted during the three and six months ended June 30, 2020 by the large increase in loan loss provision expense due to the deterioration in the economic forecast related to the effects of the COVID-19 pandemic.




FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 87



Business Line Review
 
 
 
 
 
Regional Banking
Second quarter 2020 regional banking pre-tax income was $118.5 million, down from $168.9 million in second quarter 2019. For the six months ended June 30, 2020, regional banking pre-tax income was $144.1 million compared to $316.0 million for the six months ended June 30, 2019. The decrease in pre-tax income in 2020 largely reflected an increase in the provision for loan losses and higher credit expense on unfunded commitments somewhat offset by an increase in revenue.
Total revenue increased 13 percent, or $50 million, to $429.1 million in second quarter 2020 from $379.1 million in second quarter 2019, primarily driven by an increase in NII. The increase in NII was primarily due to strong loan growth tied to loans to mortgage companies and PPP lending, deposit pricing discipline, and wider loan spreads (with offset in the corporate segment) compared to second quarter 2019. Noninterest income decreased 3 percent or $2.3 million to $79.3 million in second quarter 2020 from $81.6 million in the prior year. Fee income was negatively impacted by the COVID-19 pandemic in second quarter 2020, resulting in lower NSF fee income as a result of a decline in transaction volume and fee waivers, other service charges, and brokerage fees. Noninterest income was positively impacted by a $4.6 million debit card incentive payment recognized in second quarter 2020, as well as increases in fees from mortgage banking activities and derivative sales relative to second quarter 2019.
Provision expense increased to $108.3 million in second quarter 2020 from $17.8 million in second quarter 2019, primarily driven by deterioration in the economic forecast attributable to the effects of the COVID-19 pandemic.
Noninterest expense was $202.3 million in second quarter 2020, up from $192.4 million in second quarter 2019. The increase in expense was primarily driven by an $11.7 million increase in the credit expense on unfunded commitments due to the 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 second quarter 2020 compared to the prior year. These increases were somewhat offset by lower personnel-related expenses driven by a head-count reduction compared to second quarter 2019.
Total revenue increased 10 percent, or $72.9 million, to $811.1 million in the first half of 2020 from $738.3 million in the first half of 2019, driven by increases in NII and noninterest income. The increase in NII for the year-to-date period of 2020 was driven by the same factors impacting the quarterly trend. Noninterest income increased 4 percent
 
or $6.6 million to $161.2 million in the first half of 2020 from $154.6 million in the prior year. The increase was primarily driven by higher fees from derivative sales and the $4.6 million debit card incentive payment previously mentioned. To a lesser extent an increase in brokerage, management fees and commissions driven by higher advisory revenue and annuity income as a result of increased transaction volume, and higher income associated mortgage banking activities also contributed to the increase in noninterest income for the six months ended June 30, 2020. A decline in NSF fee income, primarily in second quarter 2020, partially offset a portion of the overall increase relative to the first half of 2019.
Provision expense increased to $253.8 million for the six months ended June 30, 2020 from $31.2 million for the six months ended June 30, 2019, driven by deterioration in the economic forecast attributable to the effects of the COVID-19 pandemic.
Noninterest expense was $413.3 million for the six months ended June 30, 2020, up from $391.0 million for the six months ended June 30, 2019. The increase in expense was primarily driven by a $20.5 million increase in the credit expense on unfunded commitments due to the economic forecast attributable to the COVID-19 pandemic. An increase in FDIC premium expense and $2.0 million of additional credit risk adjustments also contributed to the expense increase in the first half of 2020 compared to the prior year. A reduction in personnel expense, largely attributable to a reduction in headcount partially mitigated the increase in noninterest expense for the six months ended June 30, 2020.
Fixed Income
Fixed income pre-tax income increased to $43.7 million in second quarter 2020 from $16.3 million in second quarter 2019. For the six months ended June 30, 2020 fixed income pre-tax income increased to $69.3 million from $26.9 million for the six months ended June 30, 2019. Results reflect higher revenue, partially offset by an increase in expenses.
Noninterest income increased 73 percent, or $47.6 million, to $113.2 million in second quarter 2020 from $65.6 million in second quarter 2019. Average daily revenue (“ADR”) increased to $1.6 million in second quarter 2020 from $866 thousand in second quarter 2019, due to favorable market conditions including low rates, market volatility and increased depository liquidity. Other product revenue was $13.0 million in second quarter 2020, up from $11.1 million in the prior year, primarily driven by increases in fees from derivative sales. NII was $13.5 million in second quarter 2020, up from $6.2 million in second quarter 2019, primarily due to higher spreads on inventory positions compared to prior year.


FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 88



Noninterest expense increased 50 percent, or $27.5 million, to $83.0 million in second quarter 2020 from $55.5 million in second quarter 2019, primarily driven by higher variable compensation due to higher fixed income sales revenues.
Noninterest income increased 75 percent, or $89.6 million, to $209.0 million in the first half of 2020 from $119.4 million in the first half of 2019. Fixed income product revenue increased to $178.6 million for the six months ended June 30, 2020 from $99.0 million for the six months ended June 30, 2019, largely driven by the same factors impacting the quarterly period, partially offset by elevated levels of trading losses driven by extreme market volatility in first quarter 2020 compared to the prior year. Other product revenue was $30.3 million in the first half of 2020, up 48 percent from $20.4 million in the prior year, primarily driven by increases in fees from derivative sales. NII was $24.5 million and $13.5 million, respectively, for the six months ended June 30, 2020 and 2019. The increase was due in large part to higher spreads on inventory positions in addition to higher inventory balances compared to prior year.
Noninterest expense was $164.1 million for the six months ended June 30, 2020 compared to $106.1 million for the six months ended June 30, 2019, primarily driven by higher variable compensation due to increased commissionable revenues.
Corporate
The pre-tax loss for the corporate segment was $93.8 million in second quarter 2020 compared to $54.6 million in second quarter 2019. For the six months ended June 30, 2020 the pre-tax loss for the corporate segment was $126.3 million compared to $91.0 million in the prior year.
Net interest expense was $63.5 million and $7.1 million in second quarter 2020 and 2019, respectively. Net interest expense was negatively impacted by funds transfer pricing ("FTP") methodology (with offset in regional banking segment). Noninterest income/(loss)(including securities gain/losses) in second quarter 2020 was $12.9 million, up from $9.4 million in second quarter 2019, primarily due to an increase in deferred compensation income driven by equity market valuations relative to the prior year.
Noninterest expense decreased 24 percent or $13.7 million to $43.2 million in second quarter 2020 from $56.9 million in second quarter 2019. The decrease in expense for second quarter 2020 was primarily driven by decreases in restructuring costs associated with efficiency initiatives and rebranding expenses relative to second quarter 2019. This expense decrease was somewhat offset by increases in deferred compensation expense, acquisition related charges, and pension expense.
Net interest expense was $76.9 million and $15.1 million for the six months ended June 30, 2020 and 2019, respectively, as net interest expense for the six months
 
ended June 30, 2020 was also negatively impacted by FTP. Noninterest income/(loss)(including securities gain/losses) in the first half of 2020 was $9.2 million compared to $22.8 million in the first half of 2019, the decrease in noninterest income for the year-to-date period of 2020 was primarily due to a decrease in deferred compensation income driven by the timing of and extreme variability in equity market valuations in both 2020 and 2019.
Noninterest expense decreased 41 percent or $40.0 million to $58.7 million for the six months ended June 30, 2020 from $98.7 million for the six months ended June 30, 2019. The decrease in expense for the six months ended June 30, 2020 was primarily driven by decreases in restructuring costs associated with efficiency initiatives, deferred compensation expense, and rebranding expenses, somewhat offset by higher acquisition related charges and an increase in pension expense.
Non-Strategic
The non-strategic segment had pre-tax income of $1.0 million in second quarter 2020 compared to $17.7 million in second quarter 2019. For the six months ended June 30, 2020 the non-strategic segment had pre-tax income of $3.6 million compared to $26.8 million for the six months ended June 30, 2019. The decrease in results for both periods was largely driven by an increase in loan loss provision expense and an increase in noninterest expense, coupled with a decline in NII relative to the prior year.
Total revenue was $6.3 million in second quarter 2020 down from $8.5 million in second quarter 2019. NII decreased to $5.5 million in second quarter 2020 from $7.1 million in second quarter 2019, primarily due to continued run-off of the loan portfolios. Noninterest income was $.8 million and $1.4 million in second quarter 2020 and 2019, respectively.
The provision for loan losses within the non-strategic segment was an expense of $1.7 million in second quarter 2020 compared to a provision credit of $4.8 million in second quarter 2019. The increase in provision expense in second quarter 2020 was due to additional consumer reserves driven by deterioration in the economic forecast attributable to the effects of the COVID-19 pandemic.
Noninterest expense increased $8.0 million to $3.6 million in second quarter 2020. Noninterest expense in second quarter 2019 was a net credit driven by an $8.3 million expense reversal related to the favorable resolution of a legal matter.
For the six months ended June 30, 2020, total revenue was $12.2 million down from $18.3 million for the six months ended June 30, 2019. NII decreased to $10.6 million in the first half of 2020 from $16.0 million in the first half of 2019, driven by the continued run-off of the loan portfolios. Noninterest income was $1.6 million and $2.2


FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 89



million, respectively, for the six months ended June 30, 2020 and 2019.
The provision for loan losses within the non-strategic segment was an expense of $1.2 million for the six months ended June 30, 2020 compared to a provision credit of $9.2 million in the prior year. The same factors impacting the quarterly change in loan loss provisioning levels also drove the change for the year-to-date period.
 
Noninterest expense was $7.4 million and $.7 million, respectively, for the six months ended June 30, 2020 and 2019. The increase in noninterest expense in the first half of 2020 was the result of the favorable impact of the litigation expense reversal previously mentioned on expenses during the first half of 2019.
Income Statement Review
 
 
 
 
 
Total consolidated revenue was $511.6 million in second quarter 2020, up 11 percent from $461.6 million in second quarter 2019, driven by increases in noninterest income and NII. Provision expense increased significantly from $13.0 million in second quarter 2019 to $110.0 million in second quarter 2020 primarily driven by deterioration in the economic forecast attributable to the effects of the COVID-19 pandemic. Total consolidated expenses increased 11 percent to $332.2 million in second quarter 2020 from $300.4 million in second quarter 2019, driven by an increase in personnel-related expense, higher credit expense on unfunded commitments, and an increase in acquisition-related charges somewhat offset by lower restructuring and rebranding related expenses.

For the six months ended June 30, 2020 total consolidated revenue was $989.2 million, up 10 percent from $897.2 million for the six months ended June 30, 2019, driven by a 27 percent increase in noninterest income and a 2 percent increase in NII. Provision expense increased from $22.0 million in the first half of 2019 to $255.0 million in the first half of 2020 driven by deterioration in the economic forecast attributable to the effects of the COVID-19 pandemic. Total consolidated expenses increased 8 percent to $643.5 million for the six months ended June 30, 2020 from $596.5 million for the six months ended June 30, 2019, and were driven by the same factors that impacted the quarterly increase in total consolidated noninterest expense.
Net Interest Income
Net interest income was $305.3 million in second quarter 2020, up from $303.6 million in second quarter 2019. The increase in NII was primarily attributable to strong loan growth tied to loans to mortgage companies and PPP lending and deposit pricing discipline, somewhat offset by the negative impact of interest rates on loans (including
 
LIBOR and Prime) compared to second quarter 2019. For the six months ended June 30, 2020 NII was $608.1 million, up from $598.1 million for the six months ended June 30, 2019. The same factors that contributed to the second quarter 2020 increase in NII also drove the increase in NII for the year-to-date period of 2020 relative to the prior year. Average earning assets were increased to $42.7 billion and $40.7 billion for the three and six months ended June 30, 2020 from $36.7 billion and $36.5 billion for the three and six months ended June 30, 2019. The increase in average earning assets for both second quarter and year-to-date 2020 was primarily driven by loan growth. For the six months ended June 30, 2020 an increase in interest-bearing cash also contributed to the increase in average earning assets relative to the prior year.
For purposes of computing yields and the net interest margin, FHN adjusts net interest income to reflect tax-exempt income on an equivalent pre-tax basis, which provides comparability of net interest income arising from both taxable and tax-exempt sources.

The consolidated net interest margin was 2.90 percent in second quarter 2020, down 44 basis points from 3.34 percent in second quarter 2019. The net interest spread was 2.75 percent in second quarter 2020, down 19 basis points from 2.94 percent in second quarter 2019. For the six months ended June 30, 2020, the net interest margin was 3.02 percent, down 30 basis points from 3.32 percent for the six months ended June 30, 2019. The decline in NIM for the three and six months ended June 30, 2020 was primarily the result of the negative impact of interest rates (including LIBOR and Prime) relative to 2019, somewhat mitigated by deposit pricing discipline and the impact of PPP accretion. For second quarter 2020 an increase in average excess cash at the Fed also negatively impacted NIM relative to the prior year.


FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 90



Table 1—Net Interest Margin
 
 
Three Months Ended
June 30
 
Six Months Ended
June 30
 
2020
 
2019
 
2020
 
2019
Assets:
 
 
 
 
 
 
 
Earning assets:
 
 
 
 
 
 
 
Loans, net of unearned income:
 
 
 
 
 
 
 
Commercial loans
3.56
%
 
5.05
%
 
3.92
%
 
5.06
%
Consumer loans
4.00

 
4.65

 
4.17

 
4.62

Total loans, net of unearned income
3.65

 
4.95

 
3.97

 
4.95

Loans held-for-sale
3.61

 
5.36

 
4.08

 
5.64

Investment securities:
 
 
 
 
 
 
 
U.S. government agencies
2.05

 
2.61

 
2.19

 
2.64

States and municipalities
3.48

 
3.31

 
3.43

 
3.76

Corporates and other debt
4.71

 
4.41

 
4.69

 
4.39

U.S. treasuries
0.12

 
NM

 
0.12

 
NM

Other
33.42

 
34.73

 
33.67

 
34.64

Total investment securities
2.23

 
2.74

 
2.37

 
2.76

Trading securities
2.48

 
3.41

 
2.73

 
3.60

Other earning assets:
 
 
 
 
 
 
 
Federal funds sold
0.22

 
2.74

 
0.44

 
2.66

Securities purchased under agreements to resell (a)
(0.08
)
 
2.23

 
0.74

 
2.22

Interest-bearing cash
0.09

 
2.28

 
0.35

 
2.37

Total other earning assets
0.06

 
2.27

 
0.49

 
2.34

Interest income / total earning assets
3.29
%
 
4.52
%
 
3.60
%
 
4.51
%
Liabilities:
 
 
 
 
 
 
 
Interest-bearing liabilities:
 
 
 
 
 
 
 
Interest-bearing deposits:
 
 
 
 
 
 
 
Savings
0.36
%
 
1.29
%
 
0.60
%
 
1.32
%
Other interest-bearing deposits
0.13

 
0.98

 
0.38

 
1.02

Time deposits
1.31

 
2.01

 
1.51

 
1.96

Total interest-bearing deposits
0.38

 
1.32

 
0.63

 
1.33

Federal funds purchased
0.12

 
2.43

 
0.57

 
2.46

Securities sold under agreements to repurchase
0.36

 
2.08

 
0.79

 
2.07

Fixed income trading liabilities
1.11

 
2.75

 
1.56

 
2.87

Other short-term borrowings
0.17

 
2.66

 
0.94

 
2.77

Term borrowings
3.96

 
4.96

 
3.97

 
4.93

Interest expense / total interest-bearing liabilities
0.54

 
1.58

 
0.79

 
1.57

Net interest spread
2.75
%
 
2.94
%
 
2.81
%
 
2.94
%
Effect of interest-free sources used to fund earning assets
0.15

 
0.40

 
0.21

 
0.38

Net interest margin (b)
2.90
%
 
3.34
%
 
3.02
%
 
3.32
%
NM – Not meaningful
(a)
Second quarter 2020 yield 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 percent and, where applicable, state income taxes.


FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 91



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 the remainder of 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
The provision for loan losses is the charge to earnings that management determines to be necessary to maintain the ALLL at a sufficient level to reflect management’s estimate of expected credit losses in the loan portfolio. Provision expense was $110.0 million and $255.0 million for the three and six months ended June 30, 2020, calculated under the CECL methodology adopted January 1, 2020, compared to $13.0 million and $22.0 million for the three and six months ended June 30, 2019 calculated under the “incurred loss” methodology. The increase in provision expense was due to the economic forecast attributable to the COVID-19 pandemic, and to a much lesser 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. 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 $206.3 million in second quarter 2020 and represented 40 percent of total revenue compared to $158.0 million in second quarter 2019 and 34 percent. The increase in noninterest income in second quarter 2020 was primarily
 
driven by higher fixed income revenue and an increase in deferred compensation income relative to second quarter 2019, somewhat offset by the negative impact of the COVID-19 pandemic on fee income.
For the six months ended June 30, 2020, noninterest income (including securities gains/(losses)) was $381.0 million and represented 39 percent of total revenue compared to $299.0 million for the six months ended June 30, 2019 and 33 percent. The increase in noninterest income for the year-to-date period of 2020 was primarily driven by higher fixed income revenue, somewhat offset by a decrease in deferred compensation income relative to the first half of 2019.
Fixed Income Noninterest Income
Fixed income noninterest income was $112.4 million in second quarter 2020, a 69 percent increase from $66.4 million in second quarter 2019. The increase in second quarter 2020 was largely driven by favorable market conditions including low rates, market volatility and increased depository liquidity. Revenue from other products was $12.1 million and $11.9 million in second quarter 2020 and 2019, respectively. The modest increase was primarily driven by increases in derivative sales.
For the six months ended June 30, 2020, fixed income noninterest income was $208.1 million, up 73 percent from $120.2 million for the six months ended June 30, 2019. The increase in the first half of 2020 was largely driven by the same factors impacting the quarterly period, partially offset by elevated levels of trading losses driven by extreme market volatility in first quarter 2020 compared to the prior year. Revenue from other products increased 39 percent to $29.4 million for the year-to-date period of 2020 from $21.2 million in 2019, driven by increases in derivative sales.
The following table summarizes FHN’s fixed income noninterest income for the three and six months ended June 30, 2020 and 2019.
Table 2—Fixed Income Noninterest Income
 
 
Three Months Ended
June 30
 
Percent Change
 
Six Months Ended
June 30
 
Percent Change
(Dollars in thousands)
2020
 
2019
 
 
2020
 
2019
 
Noninterest income:
 
 
 
 
 
 
 
 
 
 
 
Fixed income
$
100,272

 
$
54,533

 
84
%
 
$
178,626

 
$
99,005

 
80
%
Other product revenue
12,149

 
11,881

 
2
%
 
29,430

 
21,158

 
39
%
Total fixed income noninterest income
$
112,421

 
$
66,414

 
69
%
 
$
208,056

 
$
120,163

 
73
%



FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 92



Deposit Transactions and Cash Management
Fees from deposit transactions and cash management activities were $30.8 million and $61.1 million for the three and six months ended June 30, 2020 down 5 percent from $32.4 million and $64.0 million for the three and six months ended June 30, 2019. In 2020, NSF fees decreased from pandemic-related impacts such as a decline in transaction volume and fee waivers.These decreases were somewhat off set by a $4.6 million debit card incentive payment recognized in second quarter 2020 and increased fees from cash management activities.
Brokerage, Management Fees and Commissions
Noninterest income from brokerage, management fees and commissions was $13.8 million and $29.2 million for the three and six months ended June 30, 2020 compared to $14.2 million and $26.8 million for the three and six months ended June 30, 2019. The increase for the six months ended June 30, 2020 was primarily driven by higher advisory revenue and annuity income as a result of increased transaction volume in first quarter 2020.
Other Noninterest Income
Other income includes revenues related to deferred compensation plans (which are mirrored by changes in noninterest expense), other service charges, mortgage banking (primarily within the non-strategic and regional banking segments), ATM and interchange fees, letters of credit fees, electronic banking fees, dividend income, insurance commissions, gain/(loss) on the extinguishment of debt and various other fees.
 
Revenue from all other income and commissions increased $4.3 million to $30.0 million in second quarter 2020 from $25.7 million in second quarter 2019. The increase in all other income and commissions in second quarter 2020 was largely due to a $6.2 million increase in deferred compensation income driven by equity market valuations relative to the prior year. 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. Additionally, increases in mortgage banking income and higher fees from derivative sales also contributed to the increase in all other income and commissions in second quarter 2020, but were partially offset by decreases in other service charges and dividend income relative to second quarter 2019.
For the six months ended June 30, 2020 revenue from all other income and commissions decreased $5.9 million to $44.4 million from $50.3 million for the six months ended June 30, 2019. The decrease in all other income and commissions in second quarter 2020 was largely due to a $8.7 million decrease in deferred compensation income and lower dividend income. The decline in deferred compensation income was driven by the timing of and extreme variability in equity market valuations in both 2020 and 2019. Higher fees from derivative sales relative to first quarter 2019 and an increase related to mortgage banking activities offset a portion of the overall decline in other noninterest income.
The following table provides detail regarding FHN’s other income.


FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 93



Table 3—Other Income
 
 
 
Three Months Ended
June 30
 
Percent
Change
 
Six Months Ended
June 30
 
Percent
Change
(Dollars in thousands)
 
2020
 
2019
 
 
2020
 
2019
 
Other income:
 
 
 
 
 
 
 
 
 
 
 
 
Deferred compensation (a)
 
$
8,171

 
$
1,938

 
NM

 
$
(1,336
)
 
$
7,412

 
NM

Other service charges
 
4,582

 
5,624

 
(19
)%
 
9,801

 
9,493

 
3
 %
Mortgage banking
 
4,138

 
2,572

 
61
 %
 
6,569

 
4,458

 
47
 %
ATM and interchange fees
 
4,009

 
4,262

 
(6
)%
 
8,221

 
7,503

 
10
 %
Letter of credit fees
 
1,559

 
1,253

 
24
 %
 
3,021

 
2,621

 
15
 %
Electronic banking fees
 
1,182

 
1,267

 
(7
)%
 
2,212

 
2,538

 
(13
)%
Dividend income (b)
 
1,057

 
1,809

 
(42
)%
 
2,187

 
4,122

 
(47
)%
Insurance commissions
 
401

 
566

 
(29
)%
 
1,190

 
1,190

 
*

Gain/(loss) on extinguishment of debt
 
—

 
—

 
NM

 
—

 
(1
)
 
NM

Other
 
4,890

 
6,376

 
(23
)%
 
12,488

 
10,962

 
14
 %
Total
 
$
29,989

 
$
25,667

 
17
 %
 
$
44,353

 
$
50,298

 
(12
)%
NM – Not meaningful
* Amount is less than one percent.
(a)
Amounts are driven by market conditions and are mirrored by changes in deferred compensation expense which is included in employee compensation expense; six months ended June 30, 2020 decrease driven by variability in equity market valuations.
(b)
Represents dividend income from Federal Reserve Bank ("FRB") and Federal Home Loan Bank ("FHLB") holdings. Variability largely driven by dividend rate.

NONINTEREST EXPENSE
Total noninterest expense increased 11 percent to $332.2 million in second quarter 2020 from $300.4 million in second quarter 2019. For the six months ended June 30, 2020 noninterest expense increased 8 percent to $643.5 million from $596.5 million for the six months ended June 30, 2019. The increase in noninterest expense for the quarter and year-to-date periods of 2020 was primarily driven by an increase in personnel-related expense, higher credit expense on unfunded commitments associated with the economic forecast attributable to the COVID-19 pandemic, and an increase in acquisition-related charges.
Expenses in second quarter 2019 were favorably impacted by an $8.3 million expense reversal related to the resolution of legal matters which also contributed to the year-over-year increase in noninterest expense for both the three and six months ended June 30, 2020. These increases were somewhat offset by restructuring costs associated with the identification of efficiency opportunities within the organization, asset impairments, and rebranding expenses recognized in the three and six months ended June 30, 2019.
Employee Compensation, Incentives, and Benefits
Employee compensation, incentives, and benefits (personnel expense), the largest component of noninterest expense, increased $28.6 million in second quarter 2020 to $200.3 million from $171.6 million in second quarter 2019. The increase in personnel expense in second quarter 2020 was primarily driven by higher variable compensation due to higher fixed income sales revenue, as
 
well as increases in deferred compensation expense driven by equity market valuations and acquisition-related costs. A reduction in headcount and lower restructuring costs associated with the identification of efficiency opportunities within the organization favorably impacted personnel expense in second quarter 2020 relative to the second quarter 2019, offsetting a portion of the overall increase in personnel expenses.
For the six months ended June 30, 2020 personnel expense was $383.7 million, up $34.2 million from $349.6 million for the six months ended June 30, 2019. The increase in personnel expense for the year-to-date period was also driven by higher variable compensation due to increased commissionable revenues within Fixed Income. For the year-to-date period of 2020 deferred compensation expense decreased $9.4 million driven by the timing of and extreme variability in equity market valuations in both 2020 and 2019. Additionally, a decrease in restructuring costs associated with the identification of efficiency opportunities within the organization and a reduction in headcount also offset a portion of the overall increase in personnel expenses for the first half of 2020.
Professional Fees
Professional fees were $10.3 million in second quarter 2020, down from $11.3 million in second quarter 2019. The decrease in professional fees was primarily driven by lower restructuring costs associated with the identification of efficiency opportunities within the organization, largely offset by an increase in merger and acquisition related expenses.


FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 94



Professional fees were $17.3 million in the first half of 2020 compared to $23.6 million in the first half of 2019. The decrease in professional fees for the first half of 2020 was also primarily driven by lower restructuring costs, somewhat offset by higher merger and acquisition related expenses. 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 51 percent to $6.4 million in second quarter 2020 from $4.3 million in second quarter 2019. For the six months ended June 30, 2020, FDIC premium expense increased 55 percent to $13.2 million from $8.5 million for the six months ended June 30, 2019. The increase for both periods was driven by balance sheet growth and expected loss severity ratios.
Legal Fees
Legal fees were $2.5 million in second quarter 2020, down from $6.5 million in second quarter 2019. Legal fees were $4.3 million in the first half of 2020, down from $9.3 million in the first half of 2019. The decrease in legal fees was driven by lower acquisition related expenses in 2020 relative to the prior year.
Other Noninterest Expense
Other expense includes expenses associated with unfunded commitments, expenses associated with the non-service components of net periodic pension and post-retirement cost, other insurance and tax expenses, miscellaneous loan costs, supplies, costs associated with employee training and dues, customer relation expenses, travel and entertainment, expenses associated with OREO, tax credit investments expenses, losses from litigation and regulatory matters, and various other expenses.
 
All other expenses increased 25 percent to $35.8 million in second quarter 2020 from $28.7 million in second quarter 2019. The increase was primarily driven by an $11.6 million increase in credit expense on unfunded commitments driven by deterioration in the economic forecast attributable to the effects of the COVID-19 pandemic and an $8.3 million expense reversal recognized in second quarter 2019 associated with the resolution of a legal matter which favorably impacted all other expenses in the prior year. Additionally, a $2.4 million increase in pension-related costs also contributed to the overall increase in all other expenses in second quarter 2020 related to prior year. These increases were partially offset by costs associated with asset impairments and technology related costs associated with restructuring and rebranding initiatives recognized in second quarter 2019 and a decrease in travel and entertainment expenses.
All other expenses increased 44 percent to $69.0 million for the six months ended June 30, 2020 from $48.0 million for the six months ended June 30, 2019. The increase was largely the result of a $21.2 million increase in credit expense on unfunded commitments related to the COVID-19 pandemic and the $8.3 million litigation expense reversal recognized in 2019 previously mentioned. Additionally, a $4.5 million increase in pension-related costs contributed to the increase in all other expenses for the first half of 2020. These increases were somewhat offset by costs associated with asset impairments and technology related costs associated with restructuring and rebranding initiatives recognized in second quarter 2019 and a decrease in travel and entertainment expenses.
The following table provides detail regarding FHN’s other expense.


FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 95



Table 4—Other Expense
 
 
Three Months Ended
June 30
 
Percent
Change
 
Six Months Ended
June 30
 
Percent
Change
(Dollars in thousands)
2020
 
2019
 
 
2020
 
2019
 
Other expense:
 
 
 
 
 
 
 
 
 
 
 
Credit expense on unfunded commitments (a)
$
11,158

 
$
(489
)
 
NM

 
$
20,388

 
$
(93
)
 
NM

Non-service components of net periodic pension and post-retirement cost
2,961

 
559

 
NM

 
5,469

 
991

 
NM

Other insurance and taxes
2,599

 
2,495

 
4
 %
 
5,278

 
5,189

 
2
 %
Miscellaneous loan costs
2,356

 
857

 
NM

 
3,450

 
1,884

 
83
 %
Supplies
1,933

 
1,342

 
44
 %
 
4,344

 
3,146

 
38
 %
Employee training and dues
654

 
1,251

 
(48
)%
 
1,995

 
2,708

 
(26
)%
Customer relations
632

 
1,540

 
(59
)%
 
2,636

 
3,139

 
(16
)%
Travel and entertainment
474

 
2,906

 
(84
)%
 
3,183

 
5,618

 
(43
)%
OREO
437

 
25

 
NM

 
253

 
(341
)
 
NM

Tax credit investments
426

 
267

 
60
 %
 
772

 
942

 
(18
)%
Litigation and regulatory matters (b)
3

 
(8,230
)
 
NM

 
16

 
(8,217
)
 
NM

Other
12,118

 
26,158

 
(54
)%
 
21,193

 
33,046

 
(36
)%
Total
$
35,751

 
$
28,681

 
25
 %
 
$
68,977

 
$
48,012

 
44
 %
Certain previously reported amounts have been reclassified to agree with current presentation.
NM – Not meaningful
(a)
Three and six months ended June 30, 2020 increases largely driven by the economic forecast attributable to the COVID-19 pandemic.
(b)
Litigation and regulatory matters for the three and six months ended June 30, 2019 includes an $8.3 million expense reversal related to the settlement of litigation matters within the Non-Strategic segment.

INCOME TAXES
FHN recorded an income tax provision of $12.8 million in second quarter 2020, compared to $34.5 million in second quarter 2019. For the six months ended June 30, 2020 and 2019, FHN recorded an income tax provision of $17.5 million and $61.5 million, respectively. The effective tax rate for the three and six months ended June 30, 2020 was approximately 18 percent and 19 percent compared to 23 percent and 22 percent for the three and six months ended June 30, 2019.
The Company’s effective tax rate is favorably affected by recurring items such as bank-owned life insurance, tax-exempt income, and credits and other tax benefits from affordable housing investments. The effective rate is unfavorably affected by the non-deductibility of a portion of the Company's FDIC premium and executive compensation expenses. The Company’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 June 30, 2020, FHN’s gross DTA (net of a valuation allowance) and gross DTL were $310.1 million and $205.4 million, respectively, resulting in a net DTA of $104.7 million at June 30, 2020, compared with a net DTA of $69.0 million at December 31, 2019.
As of June 30, 2020, FHN had deferred tax asset balances related to federal and state income tax carryforwards of $37.5 million and $1.2 million, respectively, which will expire at various 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 not significant in the first half of 2020 and were $30.8 million in the first half of 2019. These expenses are primarily associated with severance and other employee costs, professional fees, and


FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 96



costs associated with asset impairments. 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.
Statement of Condition Review
 
 
 
 
 
Total period-end assets were $48.6 billion on June 30, 2020, up 12 percent from $43.3 billion on December 31, 2019. The increase in period-end assets was primarily driven by higher levels of interest-bearing cash, strong loan growth, and increases in available-for-sale ("AFS") securities and derivative assets. These increases were somewhat offset by an increase in the allowance for loan losses due to the Adoption of ASU 2016-13, “Measurement of Credit Losses on Financial Instruments,” or (“CECL”) and all related ASUs on January 1, 2020 and additional reserves recognized in first and second quarter 2020 due to the economic forecast attributable to the COVID-19 pandemic.
Average assets increased 12 percent to $47.9 billion in second quarter 2020 from $42.9 billion in fourth quarter 2019. The increase in average assets was largely driven by loan growth and higher levels of interest-bearing cash. Increases in FHLB stock and derivative assets also contributed to the increase in average assets during second quarter 2020, somewhat offset by lower average balances of securities purchased under agreements to resell ("asset repos") and an increase in the ALLL due to the adoption of CECL and additional loan loss reserves due to the COVID-19 pandemic.
Total period-end liabilities were $43.4 billion on June 30, 2020, a 14 percent increase from $38.2 billion on December 31, 2019. The net increase in period-end liabilities was primarily due to an influx of deposits. Additionally, increases in term borrowings, securities sold
 
under agreements to repurchase, and federal funds purchased ("FFP") also contributed to the increase in period-end liabilities, but were somewhat offset by a decrease in short-term borrowings. In second quarter 2020, average liabilities increased to $42.8 billion from $37.8 billion in fourth quarter 2019. The increase in average liabilities was also driven by strong deposit growth and an increase in term borrowings.
EARNING ASSETS
Earning assets consist of loans, investment securities, loans HFS, and other earning assets such as trading securities and interest-bearing cash. Average earning assets increased 12 percent and 16 percent to $42.7 billion in second quarter 2020 from $38.2 billion and $36.7 billion, respectively, in fourth quarter 2019 and second quarter 2019. A more detailed discussion of the major line items follows.
Loans
Period-end loans increased 5 percent and 10 percent to $32.7 billion as of June 30, 2020 from $31.1 billion on December 31, 2019 and $29.7 billion as of June 30, 2019. The increase in period-end loan balances compared to December 31, 2019 was primarily driven by PPP lending. Average loans increased to $34.0 billion in second quarter 2020 compared to $30.7 billion in fourth quarter 2019 and $28.7 billion in second quarter 2019.
The following table summarizes FHN's average loans for quarters-ended June 30, 2020 and December 31, 2019.
Table 5—Average Loans
 
 
 
Quarter Ended
June 30, 2020
 
Quarter Ended
December 31, 2019
 
 
(Dollars in thousands)
 
Amount
 
Percent of total
 
Amount
 
Percent of total
 
Growth Rate
Commercial:
 
 
 
 
 
 
 
 
 
 
Commercial, financial, and industrial
 
$
22,694,432

 
67
%
 
$
19,739,937

 
64
%
 
15
 %
Commercial real estate
 
4,709,676

 
14

 
4,263,597

 
14

 
10

Total commercial
 
27,404,108

 
81

 
24,003,534

 
78

 
14

Consumer:
 
 
 
 
 
 
 
 
 
 
Consumer real estate (a) (b)
 
6,087,485

 
18

 
6,194,134

 
20

 
(2
)
Credit card, OTC and other
 
476,088

 
1

 
508,651

 
2

 
(6
)
Total consumer
 
6,563,573

 
19

 
6,702,785

 
22

 
(2
)
Total loans, net of unearned income
 
$
33,967,681

 
100
%
 
$
30,706,319

 
100
%
 
11
 %
* Amount is less than one percent.
(a)
Balance as December 31, 2019 includes $7.1 million of restricted and secured real estate loans.


FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 97



(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 67 percent of total loans in second quarter 2020 and 64 percent fourth quarter 2019. C&I loans increased 15 percent from fourth quarter 2019, largely driven by PPP lending and higher balances within mortgage warehouse lending. Commercial real estate loans experienced a net increase of 10 percent to $4.7 billion in second quarter 2020.
Average consumer loans declined 2 percent from fourth quarter 2019 to $6.6 billion in second 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.
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. FHN utilizes the securities portfolio as a source of income, liquidity and collateral for repurchase agreements, for public funds, and as a tool for managing risk of interest rate movements. Period-end investment securities were $5.5 billion on June 30, 2020 up from $4.5 billion on December 31, 2019.
Average investment securities were $4.5 billion in second quarter 2020 and $4.4 billion in fourth quarter 2019, representing 11 percent of average earning assets in second quarter 2020 and 12 percent in fourth quarter 2019. The increase in period-end and average investment securities was driven by FHN's reinvestment strategy in 2020 coupled with excess levels of cash from strong customer liquidity. FHN manages the size and mix of the investment portfolio to assist in asset liability management, provide liquidity, and optimize risk adjusted returns.
 
Loans Held-for-Sale
Loans HFS consists of small business, other consumer loans, the mortgage warehouse, USDA, student, and home equity loans. On June 30, 2020, and December 31, 2019, loans HFS were $745.7 million and $593.8 million, respectively. The average balance of loans HFS increased to $731.3 million in second quarter 2020 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 (fixed income trading inventory), 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 $3.5 billion in second quarter 2020, a 38 percent increase from $2.5 billion in fourth quarter 2019. The increase in average other earning assets was primarily driven by strong customer liquidity that led to higher balances of interest-bearing cash and, to a lesser extent, an increase in fixed income trading inventory relative to fourth quarter 2019. Fixed income's trading inventory fluctuates daily based on customer demand. These increases were somewhat offset by a decline in asset repos, which are used in fixed income trading activities 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 $4.7 billion on June 30, 2020, up from $2.5 billion on December 31, 2019, primarily driven by an increase in interest-bearing cash, partially offset by decreases in asset repos and trading securities.
The following table summarizes FHN's average other earning assets for quarters-ended June 30, 2020 and December 31, 2019.
Table 6—Average Other Earning Assets
 
 
Quarter Ended
June 30, 2020
 
Quarter Ended
December 31, 2019
 
 
(Dollars in thousands)
 
Amount
 
Percent of total
 
Amount
 
Percent of total
 
Growth Rate
Other earning assets
 
 
 
 
 
 
 
 
 
 
Interest-bearing cash
 
$
1,619,686

 
47
%
 
$
586,495

 
23
%
 
NM

Trading securities
 
1,419,868

 
41

 
1,263,633

 
50

 
12
 %
Securities purchased under agreements to resell
 
393,539

 
11

 
645,979

 
26

 
(39
)
Federal funds sold
 
28,208

 
1

 
9,700

 
1

 
NM

Total other earning assets
 
$
3,461,301

 
100
%
 
$
2,505,807

 
100
%
 
38
 %



FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 98



Non-earning assets
Period-end non-earning assets were $5.0 billion and $4.7 billion on June 30, 2020 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. Derivative assets and fixed income receivable balances were higher as a result of market volatility during the first half of 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 and second quarter 2020 due to the deterioration in the economic forecast related to the effects of the COVID-19 pandemic.
Deposits
Average deposits increased $4.7 billion and $5.6 billion to $37.5 billion in second quarter 2020, from $32.8 billion in
 
fourth quarter 2019 and $32.0 billion in second quarter 2019. Period-end deposits increased 16 percent and 17 percent, respectively, to $37.8 billion on June 30, 2020, from $32.4 billion on December 31, 2019 and $32.3 billion on June 30, 2019. The increase in both average and period-end balances from December 31, 2019 and June 30, 2019 was largely the result of significant customer deposit inflows beginning in March 2020 as brokerage customers exited equity markets to move in cash positions given the market volatility associated with the COVID-19 pandemic, as well as management’s decision in first quarter 2020 to increase market-indexed deposits (given the favorable benefits of this funding source in lower interest-rate environments). The influx in noninterest-bearing deposits during the first half of 2020 resulted in an increase in the percentage of average noninterest-bearing deposits from 26 percent of total deposits in fourth quarter 2019 to 30 percent of total deposits in second quarter 2020.
The following table summarizes FHN's average deposits for quarters-ended June 30, 2020 and December 31, 2019.
Table 7—Average Deposits
 
 
 
Quarter Ended
June 30, 2020
 
Quarter Ended
December 31, 2019
 
 
(Dollars in thousands)
 
Amount
 
Percent of total
 
Amount
 
Percent of total
 
Growth Rate
Interest-bearing deposits:
 
 
 
 
 
 
 
 
 
 
Consumer
 
$
14,153,186

 
38
%
 
$
13,718,820

 
42
%
 
3
 %
Commercial
 
6,002,315

 
16

 
6,145,681

 
19

 
(2
)
Market-indexed (a)
 
6,055,468

 
16

 
4,370,025

 
13

 
39

Total interest-bearing deposits
 
26,210,969

 
70

 
24,234,526

 
74

 
8

Noninterest-bearing deposits
 
11,315,526

 
30

 
8,542,521

 
26

 
32

Total deposits
 
$
37,526,495

 
100
%
 
$
32,777,047

 
100
%
 
14
 %
(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 $3.0 billion in second quarter 2020, down 10 percent from $3.3 billion in fourth quarter 2019. As noted in the table below, the decrease in short-term borrowings between second quarter 2020 and fourth quarter 2019 was primarily driven by decreases in other short-term borrowings, trading liabilities, and FFP, partially offset by an increase in securities sold under agreements to repurchase. 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. FFP fluctuates depending on the amount of excess funding of FHN’s correspondent bank customers. Period-end short-term borrowings decreased 35 percent to $2.6 billion on June 30, 2020 from $4.0 billion on December 31, 2019, primarily driven by a decrease in other short-term borrowings, as FHN was able to use an influx of customer deposits to support balance sheet funding. To a lesser extent trading liabilities also decreased on a period-end basis, somewhat offset by increases in securities purchased under agreements to resell and FFP.


FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 99



Table 8—Average Short-Term Borrowings
 
 
 
Quarter Ended
June 30, 2020
 
Quarter Ended
December 31, 2019
 
 
(Dollars in thousands)
 
Amount
 
Percent of total
 
Amount
 
Percent of total
 
Growth Rate
Short-term borrowings:
 
 
 
 
 
 
 
 
 
 
Federal funds purchased
 
$
1,037,107

 
35
%
 
$
1,163,701

 
35
%
 
(11
)%
Securities sold under agreements to repurchase
 
1,011,339

 
34

 
701,213

 
21

 
44

Other short-term borrowings
 
555,032

 
19

 
844,558

 
26

 
(34
)
Trading liabilities
 
352,433

 
12

 
585,889

 
18

 
(40
)
Total short-term borrowings
 
$
2,955,911

 
100
%
 
$
3,295,361

 
100
%
 
(10
)%

Term Borrowings
Term borrowings include senior and subordinated borrowings with original maturities greater than one year. Average term borrowings were $1.4 billion in second quarter 2020 and $.9 billion in fourth quarter 2019. Period-end term borrowings were $2.0 billion on June 30, 2020, up from $.8 billion on December 31, 2019. The increase in term borrowings on both an average and period-end basis
 
was the result of the issuance of $450 million of subordinated notes by First Horizon Bank in April 2020, and the issuance of $800 million of senior notes by FHN in May 2020.
Other Liabilities
Period-end other liabilities were $1.0 billion on June 30, 2020 and December 31, 2019.
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. Period-end equity increased to $5.2 billion on June 30, 2020 from $5.1 billion on December 31, 2019. Average equity increased to $5.1 billion in second quarter 2020 from $5.0 billion in fourth quarter 2019. The increase in period-end and average equity was primarily due to the issuance of 1,500 shares of Series E Non-Cumulative Perpetual Preferred Stock in
 
May 2020 and a decrease in accumulated other comprehensive income ("AOCI"), largely the result of an increase in unrealized gains associated with AFS debt securities. These increases were partially offset by the adoption impact of ASU 2016-13 (CECL) which resulted 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.


FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 100



The following tables provide a reconciliation of Shareholders’ equity from the Consolidated Condensed Statements of Condition to Common Equity Tier 1, Tier 1 and Total Regulatory Capital as well as certain selected capital ratios:
Table 9—Regulatory Capital and Ratios
(Dollars in thousands)
 
June 30, 2020
 
December 31, 2019
Shareholders’ equity
 
$
4,912,954

 
$
4,780,577

Modified CECL transitional amount (a)
 
158,948

 
—

FHN non-cumulative perpetual preferred
 
(240,289
)
 
(95,624
)
Common equity
 
$
4,831,613

 
$
4,684,953

Regulatory adjustments:
 
 
 
 
Disallowed goodwill and other intangibles
 
(1,496,625
)
 
(1,505,971
)
Net unrealized (gains)/losses on securities available-for-sale
 
(118,327
)
 
(31,079
)
Net unrealized (gains)/losses on pension and other postretirement plans
 
269,430

 
273,914

Net unrealized (gains)/losses on cash flow hedges
 
(16,305
)
 
(3,227
)
Disallowed deferred tax assets
 
(11,491
)
 
(8,610
)
Other deductions from common equity tier 1
 
(849
)
 
(1,044
)
Common equity tier 1
 
$
3,457,446

 
$
3,408,936

FHN non-cumulative perpetual preferred
 
240,289

 
95,624

Qualifying noncontrolling interest—First Horizon Bank preferred stock
 
294,816

 
255,890

Tier 1 capital
 
$
3,992,551

 
$
3,760,450

Tier 2 capital
 
667,100

 
394,435

Total regulatory capital
 
$
4,659,651

 
$
4,154,885

Risk-Weighted Assets
 
 
 
 
First Horizon National Corporation
 
$
37,360,843

 
$
37,045,782

First Horizon Bank
 
37,037,629

 
36,626,993

Average Assets for Leverage
 
 
 
 
First Horizon National Corporation
 
46,683,933

 
41,583,446

First Horizon Bank
 
46,111,262

 
40,867,365


 
 
June 30, 2020
 
December 31, 2019
 
 
Ratio
 
Amount
 
Ratio
 
Amount
Common Equity Tier 1
 
 
 
 
 
 
 
 
First Horizon National Corporation
 
9.25
%
 
$
3,457,446

 
9.20
%
 
$
3,408,936

First Horizon Bank
 
9.84

 
3,644,724

 
9.38

 
3,433,867

Tier 1
 
 
 
 
 
 
 
 
First Horizon National Corporation
 
10.69

 
3,992,551

 
10.15

 
3,760,450

First Horizon Bank
 
10.64

 
3,939,540

 
10.18

 
3,728,683

Total
 
 
 
 
 
 
 
 
First Horizon National Corporation
 
12.47

 
4,659,651

 
11.22

 
4,154,885

First Horizon Bank
 
13.05

 
4,835,218

 
10.77

 
3,944,613

Tier 1 Leverage
 
 
 
 
 
 
 
 
First Horizon National Corporation
 
8.55

 
3,992,551

 
9.04

 
3,760,450

First Horizon Bank
 
8.54

 
3,939,540

 
9.12

 
3,728,683

(a)
The 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 June 30, 2020.

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, and 5 percent, respectively. Furthermore, beginning January 1, 2019, a capital conservation buffer of 50 basis points above these levels must be maintained on the Common Equity Tier 1, Tier 1


FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 101



Capital and Total Capital ratios to avoid restrictions on dividends, share repurchases and certain discretionary bonuses.
As of June 30, 2020, each of FHN and First Horizon Bank had sufficient capital to qualify as well-capitalized institutions and to meet the capital conservation buffer requirement. The second 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 increased in second quarter 2020 relative to fourth quarter 2019 primarily due to the impact of net income less dividends during the first half of 2020 and, for the Bank only, a reduction of $100 million in its equity investment in its financial subsidiary, FHN Financial Securities Corp.  In addition, the Tier 1 Capital ratio for FHN benefited from the issuance of $150 million of Non-Cumulative Perpetual Preferred Stock, Series E, and the Total Capital ratios for both FHN and First Horizon Bank benefited from the Bank’s issuance of $450 million of Tier 2 qualifying subordinated notes. The Tier 1 leverage ratio declined for both FHNC and First Horizon Bank as average assets for leverage in the second quarter 2020 increased relative to fourth quarter 2019.  During 2020, capital ratios are expected to remain above well-capitalized standards plus the required capital conservation buffer.
 
Common Stock Purchase Programs
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. 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 date to January 31, 2021. Purchases may be made in the 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. As of June 30, 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 2020.
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
 
 
 
 
 
 
 
 
April 1 to April 30
 
—

 
NA
 
—

 
$
270,654

May 1 to May 31
 
—

 
NA
 
—

 
270,654

June 1 to June 30
 
—

 
NA
 
—

 
270,654

Total
 
—

 
N/A
 
—

 
 
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 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 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


FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 102



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. As of June 30, 2020, the maximum
 
number of shares that may be purchased under the program was 24.1 million shares. Management currently does not anticipate purchasing a material number of shares under this authority during 2020.

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
 
 
 
 
 
 
 
 
April 1 to April 30
 
1

 
$
7.18

 
1

 
$
24,315

May 1 to May 31
 
182

 
8.03

 
182

 
24,134

June 1 to June 30
 
*

 
12.09

 
*

 
24,133

Total
 
183

 
$
8.04

 
183

 
 
* - amount less than 500 shares.
Asset Quality
 
 
 
 
 

Loan 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 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 Item 7 of 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
 
beginning on page 67 and continuing to page 87. FHN’s credit underwriting guidelines and loan product offerings as of June 30, 2020, are generally consistent with those reported and disclosed in the Company’s Form 10-K for the year ended December 31, 2019.
COMMERCIAL LOAN PORTFOLIOS
C&I
The C&I portfolio was $21.4 billion on June 30, 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 June 30, 2020, are in Tennessee (32 percent), North Carolina (11 percent), California (7 percent), Florida (7 percent), Texas (6 percent), Georgia (4 percent), and South Carolina (3 percent), with no other state representing more than 3 percent of the portfolio.
The following table provides the composition of the C&I portfolio by industry as of June 30, 2020, and December 31, 2019. 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.


FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 103



Table 11—C&I Loan Portfolio by Industry
 
 
 
June 30, 2020
 
December 31, 2019
(Dollars in thousands) 
 
Amount
 
Percent
 
Amount
 
Percent
Industry: 
 
 
 
 
 
 
 
 
Loans to mortgage companies
 
$
4,020,591

 
19
%
 
$
4,410,883

 
22
%
Finance & insurance
 
2,530,808

 
12

 
2,778,411

 
14

Health care & social assistance
 
1,850,006

 
9

 
1,499,178

 
8

Accommodation & food service
 
1,741,834

 
8

 
1,364,833

 
7

Real estate rental & leasing (a)
 
1,547,227

 
7

 
1,454,336

 
7

Wholesale trade
 
1,413,665

 
6

 
1,372,147

 
7

Manufacturing
 
1,303,421

 
6

 
1,150,701

 
6

Other (education, arts, entertainment, etc) (b)
 
6,986,341

 
33

 
6,020,602

 
29

Total C&I loan portfolio
 
$
21,393,893

 
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. 31 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 June 30, 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 loans to mortgage companies was 19 percent of the C&I portfolio as of June 30, 2020, 22 percent as of December 31, 2019 and 20 percent as of June 30, 2019, and includes balances related to both home purchase and refinance activity. This portfolio class, which generally fluctuates with mortgage rates and seasonal factors, 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, lending 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 second quarter 2020, 35 percent of the loans funded were home purchases and 65 percent were refinance transactions.
Finance and Insurance
The finance and insurance component represents 12 percent of the C&I portfolio as of June 30, 2020, compared to 14 percent as of December 31, 2019, 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 June 30, 2020, asset-based lending to consumer finance companies represents approximately $1.1 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 June 30, 2020, no TRUP relationship was on interest deferral. As of June 30, 2020, the unpaid principal balance (“UPB”) of trust preferred loans totaled $227.6 million ($172.6 million of bank TRUPS and $55.0 million of insurance TRUPS) with the UPB of other bank-related loans totaling $305.0 million. Inclusive of an amortizing discount on TRUPS of $18.4 million, total reserves (ALLL plus the amortizing discount) for TRUPS and other bank-related loans were $30.4 million, or 6 percent of outstanding UPB.
C&I Asset Quality Trends
The C&I portfolio trends have been negatively impacted in the second quarter 2020 by economic uncertainty attributable to the COVID-19 pandemic and could continue to be negatively impacted in future periods. The C&I ALLL increased $196.2 million from December 31, 2019, to $318.7 million as of June 30, 2020, primarily due to the steep decline in the economic forecast attributable to the COVID-19 pandemic and the adoption of ASU 2016-13.


FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 104



The allowance as a percentage of period-end loans increased 88 basis points to 1.49 percent as of June 30, 2020, compared to .61 percent as of year-end 2019. Nonperforming C&I loans increased $53.0 million from December 31, 2019, to $127.3 million on June 30, 2020. The nonperforming loan (“NPL”) ratio increased to .60 percent of C&I loans as of June 30, 2020, from .37 percent as of December 31, 2019. The increase in NPLs was primarily driven by two credits.
 
The 30+ delinquency ratio decreased 2 basis points as of June 30, 2020. Second quarter 2020 experienced net charge-offs of $17.1 million compared to $3.3 million and $6.1 million of net charge-offs in fourth quarter 2019 and second quarter 2019, respectively. Second quarter 2020 net charge-offs were primarily driven by two credits.
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 April 1
 
$
244,662

 
$
9,854

 
$
254,516

Charge-offs
 
(18,201
)
 
—

 
(18,201
)
Recoveries
 
1,070

 
3

 
1,073

Provision/(provision credit) for loan losses
 
80,930

 
404

 
81,334

Allowance for loan losses as of June 30
 
$
308,461

 
$
10,261

 
$
318,722

Net charge-offs % (qtr. annualized)
 
0.31
%
 
NM

 
0.30
%
Allowance / net charge-offs
 
4.48
x
 
NM

 
4.63
x
 
 
 
 
 
 
 
 
 
As of June 30
Period-end loans
 
$
21,074,103

 
$
319,790

 
$
21,393,893

Nonperforming loans
 
127,345

 
—

 
127,345

Troubled debt restructurings
 
42,292

 
—

 
42,292

30+ Delinq. % (a)
 
0.03
%
 
—
%
 
0.03
%
NPL %
 
0.60

 
—

 
0.60

Allowance / loans %
 
1.46

 
3.21

 
1.49

 
 
 
 
 
 
 
 
 
2019
 
 
Three months ended
(Dollars in thousands)
 
Regional Bank
 
Non-Strategic
 
Consolidated
Allowance for loan losses as of April 1
 
$
102,393

 
$
1,320

 
$
103,713

Charge-offs
 
(6,562
)
 
(28
)
 
(6,590
)
Recoveries
 
513

 
6

 
519

Provision/(provision credit) for loan losses
 
18,466

 
(12
)
 
18,454

Allowance for loan losses as of June 30
 
$
114,810

 
$
1,286

 
$
116,096

Net charge-offs % (qtr. annualized)
 
0.14
%
 
0.03
%
 
0.14
%
Allowance / net charge-offs
 
4.73
x
 
14.47
x
 
4.77
x
 
 
 
 
 
 
 
 
 
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. 2Q20 FORM 10-Q REPORT 105



Commercial Real Estate
The CRE portfolio was $4.8 billion on June 30, 2020. The CRE portfolio includes both financings for commercial construction and nonconstruction loans. The largest geographical concentrations of balances as of June 30, 2020 are in North Carolina (28 percent), Tennessee (19 percent), Florida (15 percent), Texas (8 percent), South Carolina (7 percent), and Georgia (6 percent), with no other state representing more than 3 percent of the portfolio. This portfolio 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, and the residential CRE class. Subcategories of income CRE consist of office (29 percent), multi-family (22 percent), retail (19 percent), industrial (12 percent), hospitality (11 percent), land/land development (2 percent), and other (5 percent).
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 asset quality trends as of June 30, 2020 were not significantly affected by the global COVID-19 pandemic, with nonperforming loans up $.2 million from December 31, 2019. However, economic uncertainty attributable to COVID-19 could impact future CRE portfolio trends. The allowance increased to $57.3 million as of June 30, 2020, from $36.1 million as of December 31, 2019 primarily due to COVID-19. Allowance as a percentage of loans increased 36 basis points from .83 percent as of December 31, 2019, to 1.19 percent as of June 30, 2020. Nonperforming loans as a percentage of total CRE loans remained the same at .04 percent as of June 30, 2020 and December 31, 2019.
Accruing delinquencies as a percentage of period-end loans decreased to .2 basis points as of June 30, 2020, from 2.0 basis point as of December 31, 2019. Net recoveries were $95 thousand in second quarter 2020 compared to net charge-offs of $209 thousand in second quarter 2019.
The following table shows commercial real estate asset quality trends by segment.



FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 106



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 April 1
 
$
46,929

 
$
696

 
$
47,625

Charge-offs
 
(61
)
 
—

 
(61
)
Recoveries
 
156

 
—

 
156

Provision/(provision credit) for loan losses
 
9,699

 
(134
)
 
9,565

Allowance for loan losses as of June 30
 
$
56,723

 
$
562

 
$
57,285

Net charge-offs % (qtr. annualized)
 
NM

 
—

 
NM

Allowance / net charge-offs
 
NM

 
NM

 
NM

 
 
 
 
 
 
 
 
 
As of June 30
Period-end loans
 
$
4,793,816

 
$
19,525

 
$
4,813,341

Nonperforming loans
 
2,067

 
—

 
2,067

Troubled debt restructurings
 
1,120

 
—

 
1,120

30+ Delinq. % (a)
 
—
%
 
—
%
 
—
%
NPL %
 
0.04

 
—

 
0.04

Allowance / loans %
 
1.18

 
2.88

 
1.19

 
 
 
 
 
 
 
 
 
2019
 
 
Three months ended
(Dollars in thousands)
 
Regional Bank
 
Non-Strategic
 
Consolidated
Allowance for loan losses as of April 1
 
$
30,801

 
$
3,581

 
$
34,382

Charge-offs
 
(121
)
 
—

 
(121
)
Recoveries
 
(88
)
 
—

 
(88
)
Provision/(provision credit) for loan losses
 
(1,377
)
 
157

 
(1,220
)
Allowance for loan losses as of June 30
 
$
29,215

 
$
3,738

 
$
32,953

Net charge-offs % (qtr. annualized)
 
0.02
%
 
NM

 
0.02
%
Allowance / net charge-offs
 
34.79
x
 
             NM

 
39.25
x
 
 
 
 
 
 
 
 
 
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)
30+ Delinquency % includes all accounts delinquent more than one month and still accruing interest.




FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 107



CONSUMER LOAN PORTFOLIOS
Consumer Real Estate
The consumer real estate portfolio was $6.1 billion on June 30, 2020, and is primarily composed of home equity lines and installment loans including restricted balances (loans consolidated under ASC 810). The largest geographical concentrations of balances as of June 30, 2020, are in Tennessee (54 percent), North Carolina (15 percent), Florida (14 percent), and California (3 percent), with no other state representing more than 3 percent of the portfolio. As of June 30, 2020, approximately 86 percent of the consumer real estate portfolio was in a first lien position. At origination, weighted average FICO score of this portfolio was 755 and refreshed FICO scores averaged 756 on June 30, 2020. Generally, performance of this portfolio is affected by life events that affect borrowers’ finances, the level of unemployment, and home prices.
Home equity lines of credit (“HELOCs”) comprise $1.2 billion of the consumer real estate portfolio as of June 30, 2020. 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, 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 June 30, 2020, approximately 78 percent of FHN's HELOCs are 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, it is expected that $295.7 million, or 32 percent of HELOCs currently in the draw period, will enter the repayment period during the next 60 months. Delinquencies and charge-off rates 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, performance of these loans usually begins to stabilize. The home equity lines of the consumer real estate portfolio 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.
The following table shows the HELOCs currently in the draw period and expected timing of conversion to the repayment period.
Table 14—HELOC Draw To Repayment Schedule
 
 
 
June 30, 2020
 
December 31, 2019
(Dollars in thousands)
 
Repayment
Amount
 
Percent
 
Repayment
Amount
 
Percent
Months remaining in draw period:
 
 
 
 
 
 
 
 
0-12
 
$
46,112

 
5
%
 
$
47,455

 
5
%
13-24
 
58,195

 
6

 
58,843

 
6

25-36
 
58,924

 
6

 
65,833

 
7

37-48
 
56,256

 
6

 
67,692

 
7

49-60
 
76,207

 
8

 
75,246

 
7

>60
 
642,628

 
69

 
666,001

 
68

Total
 
$
938,322

 
100
%
 
$
981,070

 
100
%

Consumer Real Estate Asset Quality Trends
Overall, performance of the consumer real estate portfolio remained stable in second quarter 2020. Economic uncertainty attributable to the COVID-19 pandemic 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 stronger
 
borrowers are better able than weaker ones to payoff or refinance elsewhere. NPLs as a percentage of loans increased 20 basis points from year-end to 1.59 percent as of June 30, 2020. The ALLL increased $115.3 million from December 31, 2019, to $143.8 million as of June 30, 2020, primarily due to the COVID-19 pandemic and the adoption of ASU 2016-13. The allowance as a percentage of loans increased 192 basis points to 2.38 percent as of June 30, 2020, compared to year-end. The balance of nonperforming loans increased $10.6 million to $96.3 million as of June 30, 2020. Loans delinquent 30 or more days and still accruing declined from $42.9 million as of


FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 108



December 31, 2019, to $32.3 million as of June 30, 2020. The portfolio realized net recoveries of $2.0 million in second quarter 2020 compared to net recoveries of $3.3
 
million in fourth quarter 2019 and net recoveries of $3.8 million in second 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 April 1
 
$
102,958

 
N/A

 
$
20,064

 
$
123,022

Charge-offs
 
(763
)
 
N/A

 
(1,205
)
 
(1,968
)
Recoveries
 
1,410

 
N/A

 
2,577

 
3,987

Provision/(provision credit) for loan losses
 
17,280

 
N/A

 
1,436

 
18,716

Allowance for loan losses as of June 30
 
$
120,885

 
N/A

 
$
22,872

 
$
143,757

Net charge-offs % (qtr. annualized)
 
NM

 
N/A

 
             NM

 
             NM

Allowance / net charge-offs
 
NM

 
N/A

 
             NM

 
             NM

 
 
 
 
 
 
 
 
 
 
 
As of June 30
Period-end loans
 
$
5,692,309

 
$
27,887

 
$
332,197

 
$
6,052,393

Nonperforming loans
 
45,678

 
1,209

 
49,437

 
96,324

Troubled debt restructurings
 
49,630

 
2,908

 
96,005

 
148,543

30+ Delinq. % (a)
 
0.42
%
 
4.90
%
 
2.11
%
 
0.53
%
NPL %
 
0.80

 
4.34

 
14.88

 
1.59

Allowance / loans %
 
2.12

 
N/A

 
6.89

 
2.38

 
 
 
 
 
 
 
 
 
 
 
2019
 
 
Three months ended (a)
(Dollars in thousands)
 
Regional Bank
 
Corporate
 
Non-Strategic
 
Consolidated
Allowance for loan losses as of April 1
 
$
15,203

 
N/A

 
$
18,951

 
$
34,154

Charge-offs
 
(826
)
 
N/A

 
(888
)
 
(1,714
)
Recoveries
 
1,240

 
N/A

 
4,285

 
5,525

Provision/(provision credit) for loan losses
 
(912
)
 
N/A

 
(5,521
)
 
(6,433
)
Allowance for loan losses as of June 30
 
$
14,705

 
N/A

 
$
16,827

 
$
31,532

Net charge-offs % (qtr. annualized)
 
NM

 
N/A

 
             NM

 
             NM

Allowance / net charge-offs
 
NM

 
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. 2Q20 FORM 10-Q REPORT 109



Credit Card and Other
The credit card and other portfolio, which is primarily within the regional banking segment, was $.4 billion as of June 30, 2020, and primarily includes credit card receivables, other consumer-related credits, and automobile loans. The allowance increased to $18.1 million as of June 30, 2020, from $13.3 million as December 31, 2019,
 
primarily driven by economic uncertainty 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 decreased 16 basis points from December 31, 2019, to .77 percent as of June 30, 2020. Net charge-offs were $1.6 million in second quarter 2020 compared to $2.7 million in second 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 April 1
 
$
19,003

 
$
324

 
$
19,327

Charge-offs
 
(2,471
)
 
(206
)
 
(2,677
)
Recoveries
 
871

 
211

 
1,082

Provision/(provision credit) for loan losses
 
404

 
(19
)
 
385

Allowance for loan losses as of June 30
 
$
17,807

 
$
310

 
$
18,117

Net charge-offs % (qtr. annualized)
 
1.42
%
 
NM

 
1.35
%
Allowance / net charge-offs
 
2.77
x
 
NM

 
2.82
x
 
 
 
 
 
 
 
 
 
As of June 30
Period-end loans
 
$
429,610

 
$
19,700

 
$
449,310

Nonperforming loans
 
98

 
157

 
255

Troubled debt restructurings
 
661

 
27

 
688

30+ Delinq. % (a)
 
0.74
%
 
1.42
%
 
0.77
%
NPL %
 
0.02

 
0.79

 
0.06

Allowance / loans %
 
4.14

 
1.57

 
4.03

 
 
 
 
 
 
 
 
 
2019
 
 
Three months ended
(Dollars in thousands)
 
Regional Bank
 
Non-Strategic
 
Consolidated
Allowance for loan losses as of April 1
 
$
12,517

 
$
145

 
$
12,662

Charge-offs
 
(2,884
)
 
(914
)
 
(3,798
)
Recoveries
 
887

 
218

 
1,105

Provision/(provision credit) for loan losses
 
1,599

 
600

 
2,199

Allowance for loan losses as of June 30
 
$
12,119

 
$
49

 
$
12,168

Net charge-offs % (qtr. annualized)
 
1.84
%
 
4.41
%
 
2.17
%
Allowance / net charge-offs
 
1.51
x
 
0.02
x
 
1.13
x
 
 
 
 
 
 
 
 
 
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. 2Q20 FORM 10-Q REPORT 110



The following table provides additional asset quality data by loan portfolio:
Table 17—Asset Quality by Portfolio
 
 
 
June 30
 
December 31
 
 
2020
 
2019
Key Portfolio Details
 
 
 
 
C&I
 
 
 
 
Period-end loans ($ millions)
 
$
21,394

 
$
20,051

30+ Delinq. % (a)
 
0.03
%
 
0.05
%
NPL %
 
0.60

 
0.37

Charge-offs % (qtr. annualized)
 
0.30

 
0.07

Allowance / loans %
 
1.49
%
 
0.61
%
Allowance / net charge-offs
 
4.63
x
 
9.25
x
Commercial Real Estate
 
 
 
 
Period-end loans ($ millions)
 
$
4,813

 
$
4,337

30+ Delinq. % (a)
 
—
%
 
0.02
%
NPL %
 
0.04

 
0.04

Charge-offs % (qtr. annualized)
 
NM

 
NM
Allowance / loans %
 
1.19
%
 
0.83
%
Allowance / net charge-offs
 
NM

 
NM

Consumer Real Estate (b)
 
 
 
 
Period-end loans ($ millions)
 
$
6,053

 
$
6,177

30+ Delinq. % (a)
 
0.53
%
 
0.70
%
NPL %
 
1.59

 
1.39

Charge-offs % (qtr. annualized)
 
           NM

 
             NM

Allowance / loans %
 
2.38
%
 
0.46
%
Allowance / net charge-offs
 
           NM

 
             NM

Credit Card and Other
 
 
 
 
Period-end loans ($ millions)
 
$
449

 
$
496

30+ Delinq. % (a)
 
0.77
%
 
0.93
%
NPL %
 
0.06

 
0.07

Charge-offs % (qtr. annualized)
 
1.35

 
2.29

Allowance / loans %
 
4.03
%
 
2.68
%
Allowance / net charge-offs
 
2.82
x
 
1.14
x
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. 2Q20 FORM 10-Q REPORT 111



Allowance for Loan 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 portfolio. The total allowance for loan losses increased to $537.9 million on June 30, 2020, from $200.3 million on December 31, 2019. The ALLL as of June 30, 2020, reflects the adoption of ASU 2016-13 on January 1, 2020 and the steep decline in the economic forecast attributable to the COVID-19 pandemic. The ratio of allowance for credit losses to total loans, net of unearned income, increased 100 basis points to 1.64 percent on June 30, 2020, compared to .64 percent on December 31, 2019.
The provision for loan 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 portfolio. Provision expense was $110.0 million in second quarter 2020, compared to $13.0 million provision expense in second quarter 2019. The increase is primarily attributable to the declining economic forecast attributable to the COVID-19 pandemic.
FHN expects asset quality trends 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 June 30, 2020 includes $2.1 billion of loans made under the Paycheck Protection Program ("PPP Loans") of the Small Business Administration ("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 could be impacted by the COVID-19 pandemic due to travel and occupancy restrictions set by state and local governments affecting CRE- Hospitality and CRE-Retail. The consumer portfolio could be impacted by the COVID-19 pandemic if consumer unemployment continues to rise and customers 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 second quarter 2020, FHN experienced net charge-offs of $16.6 million compared to $5.2 million of net charge-offs in second quarter 2019.
 
The commercial portfolio experienced $17.0 million of net charge-offs in second quarter 2020 compared to $6.3 million in net charge-offs in second quarter 2019. In addition, the consumer real estate portfolio experienced net recoveries of $2.0 million in second quarter 2020 compared to $3.8 million in net recoveries in second quarter 2019. Credit card and other consumer experienced net charge-offs of $1.6 million in second quarter 2020 compared to $2.7 million a year ago.
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 in which FHN continues to receive payments, including residential real estate loans where the borrower has been discharged of personal obligation through bankruptcy. These, along with OREO, excluding OREO from government insured mortgages, represent nonperforming assets (“NPAs”).
Total nonperforming assets (including NPLs HFS) increased to $245.4 million on June 30, 2020, from $181.9 million on December 31, 2019. The nonperforming assets ratio (nonperforming assets excluding NPLs HFS to total period-end loans plus OREO and other assets) increased to .73 percent as of June 30, 2020, from .57 percent as of December 31, 2019. Portfolio nonperforming loans increased to $226.0 million as of June 30, 2020, from $162.2 million as of December 31, 2019. The increase in nonperforming loans was driven by the C&I portfolio.
The ratio of the ALLL to NPLs in the loan portfolio was 2.38 times as of June 30, 2020, compared to 1.24 times as of December 31, 2019. 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 loss content has been recognized through a partial charge-off, typically reserves are not recorded.
Table 19 provides an activity rollforward of OREO balances for June 30, 2020 and 2019. The balance of OREO, exclusive of inventory from government insured mortgages, decreased to $13.2 million as of June 30, 2020, from $16.6 million as of June 30, 2019, driven by the sale of OREO. Moreover, property values have stabilized which also affects the balance of OREO.


FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 112



Table 18—Rollforward of OREO
 
 
Three Months Ended
June 30
 
Six Months Ended
June 30
(Dollars in thousands)
 
2020
 
2019
 
2020
 
2019
Beginning balance
 
$
13,881

 
$
20,676

 
$
15,660

 
$
22,387

Valuation adjustments
 
(142
)
 
(9
)
 
(169
)
 
26

New foreclosed property
 
757

 
1,394

 
1,685

 
3,001

Disposal
 
(1,319
)
 
(5,468
)
 
(3,999
)
 
(8,821
)
Ending balance, March 31 (a)
 
$
13,177

 
$
16,593

 
$
13,177

 
$
16,593

 
(a)
Excludes OREO and receivables related to government insured mortgages of $6.4 million and $3.4 million as of June 30, 2020 and 2019, respectively.
The following table provides consolidated asset quality information for the three months ended June 30, 2020 and 2019, and as of June 30, 2020, and December 31, 2019:
Table 19—Asset Quality Information
 
 
Three Months Ended
June 30
(Dollars in thousands)
 
2020
 
2019
Allowance for loan losses:
 
 
 
 
Beginning balance on April 1
 
$
444,490

 
$
184,911

Provision/(provision credit) for loan losses
 
110,000

 
13,000

Charge-offs
 
(22,907
)
 
(12,223
)
Recoveries
 
6,298

 
7,061

Ending balance on June 30
 
$
537,881

 
$
192,749

Reserve for remaining unfunded commitments
 
50,461

 
7,524

Total allowance for loan losses and reserve for unfunded commitments
 
$
588,342

 
$
200,273

Key ratios
 
 
 
 
Allowance / net charge-offs (a)
 
8.05
x
 
9.31
x
Net charge-offs % (b)
 
0.20
%
 
0.07
%
 
 
 
 
 
 
 
As of June 30
 
As of December 31
Nonperforming Assets by Segment 
 
2020
 
2019
Regional Banking: 
 
 
 
 
Nonperforming loans (c)
 
$
175,188

 
$
113,187

OREO (e)
 
9,210

 
12,347

Total Regional Banking
 
184,398

 
125,534

Non-Strategic:
 
 
 
 
Nonperforming loans (c)
 
49,594

 
47,651

Nonperforming loans held-for-sale net of fair value adjustment (c)
 
6,219

 
4,047

OREO (e)
 
3,967

 
3,313

Total Non-Strategic
 
59,780

 
55,011

Corporate:
 
 
 
 
Nonperforming loans (c)
 
1,209

 
1,327

Total Corporate
 
1,209

 
1,327

Total nonperforming assets (c) (d)
 
$
245,387

 
$
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.
(c)
Excludes loans that are 90 or more days past due and still accruing interest.
(d)
Excludes OREO from government-insured mortgages.


FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 113



Table 19—Asset Quality Information (continued)
 
 
As of June 30
 
As of December 31
 
 
2020
 
2019
Loans and commitments:
 
 
 
 
Total period-end loans, net of unearned income
 
$
32,708,937

 
$
31,061,111

Potential problem assets (a)
 
401,049

 
346,896

Loans 30 to 89 days past due
 
27,156

 
36,052

Loans 90 days past due (b) (c)
 
14,498

 
21,859

Loans held-for-sale 30 to 89 days past due (c)
 
4,979

 
3,732

Loans held-for-sale 30 to 89 days past due—guaranteed portion (c) (d)
 
4,755

 
3,424

Loans held-for-sale 90 days past due (c)
 
6,336

 
6,484

Loans held-for-sale 90 days past due—guaranteed portion (c) (d)
 
6,233

 
6,417

Remaining unfunded commitments
 
$
12,945,839

 
$
12,355,220

Key ratios
 
 
 
 
Allowance / loans %
 
1.64
%
 
0.64
%
Allowance / NPL
 
2.38
x
 
1.24
x
NPA % (e)
 
0.73
%
 
0.57
%
NPL %
 
0.69
%
 
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.

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 $14.5 million on June 30, 2020, compared to $21.9 million on December 31, 2019. The decrease was primarily driven by R/E installment loans. Loans 30 to 89 days past due were $27.2 million on June 30, 2020, compared to $36.1 million on December 31, 2019. The decrease was primarily driven by the HELOC and General C&I portfolios.
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 $401.0 million on June 30, 2020, $346.9 million on December 31, 2019, and $279.7 million on June 30, 2019. The increase in potential problem assets compared to December 31, 2019 was due to a net increase in classified commercial loans within the C&I portfolio. 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 losses.
Troubled Debt Restructuring 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 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”). See Note 4 – Loans for further discussion regarding TDRs and loan modifications.
On June 30, 2020 and December 31, 2019, FHN had $192.6 million and $206.3 million portfolio loans classified as TDRs, respectively. For TDRs in the loan portfolio, FHN had loan loss reserves of $13.6 million and $19.7 million, or 7 percent and 10 percent of TDR balances, as of June 30, 2020 and December 31, 2019, respectively. Additionally, FHN had $45.1 million and $51.1 million of HFS loans classified as TDRs as of June 30, 2020 and December 31, 2019, respectively.


FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 114



The following table provides a summary of TDRs for the periods ended June 30, 2020 and December 31, 2019:
Table 20—Troubled Debt Restructurings
 
(Dollars in thousands)
 
As of
June 30, 2020
 
As of
December 31, 2019
Held-to-maturity:
 
 
 
 
Consumer real estate (a):
 
 
 
 
Current
 
92,229

 
105,525

Delinquent
 
2,624

 
4,634

Non-accrual (b)
 
53,690

 
52,087

Total consumer real estate
 
148,543

 
162,246

Credit card and other:
 
 
 
 
Current
 
663

 
615

Delinquent
 
25

 
38

Non-accrual
 
—

 
—

Total credit card and other
 
688

 
653

Commercial loans:
 
 
 
 
Current
 
18,751

 
10,558

Delinquent
 
—

 
—

Non-accrual
 
24,661

 
32,841

Total commercial loans
 
43,412

 
43,399

Total held-to-maturity
 
$
192,643

 
$
206,298

Held-for-sale:
 
 
 
 
Current
 
$
36,371

 
$
39,014

Delinquent
 
6,758

 
8,008

Non-accrual
 
1,923

 
4,106

Total held-for-sale
 
45,052

 
51,128

Total troubled debt restructurings
 
$
237,695

 
$
257,426

 
(a)
In first quarter 2020, the Permanent Mortgage portfolio was combined into Consumer Real Estate portfolio, all prior periods were revised for comparability.
(b)
Balances as of June 30, 2020 and December 31, 2019, include $11.6 million and $12.6 million, respectively, of discharged bankruptcies.
Risk Management
 
 
 
 
 
There have been no significant changes to FHN’s risk management practices as described under “Risk Management” beginning on page 88 of Item 7 to FHN’s Annual Report on Form 10-K for the year ended December 31, 2019.
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 percent 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.



FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 115



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

 
 
Three Months Ended
June 30, 2020
 
Six Months Ended
June 30, 2020
 
As of
June 30, 2020
(Dollars in thousands)
 
Mean
 
High
 
Low
 
Mean
 
High
 
Low
 
 
1-day
 
 
 
 
 
 
 
 
 
 
 
 
 
 
VaR
 
$
3,038

 
$
5,058

 
$
1,717

 
$
2,668

 
$
6,783

 
$
1,023

 
$
2,927

SVaR
 
3,933

 
6,194

 
2,726

 
6,212

 
17,727

 
2,726

 
3,246

10-day
 
 
 
 
 
 
 
 
 
 
 
 
 
 
VaR
 
13,261

 
19,214

 
7,603

 
10,126

 
24,880

 
1,807

 
12,929

SVaR
 
13,680

 
19,214

 
9,316

 
20,043

 
43,221

 
9,316

 
12,929

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
June 30, 2019
 
Six Months Ended
June 30, 2019
 
As of
June 30, 2019
(Dollars in thousands)
 
Mean
 
High
 
Low
 
Mean
 
High
 
Low
 
 
1-day
 
 
 
 
 
 
 
 
 
 
 
 
 
 
VaR
 
$
1,015

 
$
1,246

 
$
748

 
$
1,221

 
$
1,907

 
$
748

 
$
901

SVaR
 
6,266

 
9,595

 
4,700

 
7,239

 
9,629

 
4,700

 
5,356

10-day
 
 
 
 
 
 
 
 
 
 
 
 
 
 
VaR
 
2,643

 
4,518

 
2,025

 
3,010

 
4,518

 
2,025

 
3,164

SVaR
 
16,859

 
22,333

 
13,588

 
19,268

 
28,086

 
13,588

 
13,932

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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

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—Schedule of Risks Included in VaR
 
 
As of June 30, 2020
 
As of June 30, 2019
 
As of December 31, 2019
(Dollars in thousands)
 
1-day
 
10-day
 
1-day
 
10-day
 
1-day
 
10-day
Interest rate risk
 
$
1,166

 
$
3,858

 
$
722

 
$
2,495

 
$
693

 
$
3,929

Credit spread risk
 
1,770

 
7,725

 
204

 
450

 
417

 
828

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 division procures fixed income securities for purposes of distribution to customers, its trading securities inventory turns over regularly. Additionally, Fixed Income 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 Income to incur a negative revenue day in its fixed income activities of the level indicated by its VaR measurements.


FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 116



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 information regarding FHN's capital adequacy refer to the "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 Income 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 internal 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.

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 June 30, 2020, NII exposures 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 2.3 percent, 4.5 percent, 8.1 percent, and 13.0 percent, 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 1.6 percent. 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 1.8 percent. Rate shocks of minus 25 basis points and 50 basis points result in unfavorable NII variances of 3.3 percent and 4.2 percent. 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.
FHN’s net interest income has been, and likely will continue to be, impacted by the disruption from the


FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 117



COVID-19 pandemic. The increase in the unemployment rate, customer loan deferral requests, the impact of government assistance programs, and other developments have influenced net interest income results. FHN is monitoring current economic trends 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 focuses on 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. 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 Funds markets, incremental borrowing capacity at the FHLB ($5.8 billion was available at June 30, 2020), 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, excluding loans HFS and restricted real estate loans, to core deposits was 102 percent on June 30, 2020 compared to 98 percent on December 31, 2019.
FHN also may use unsecured short-term borrowings as a source of liquidity. Currently, the largest concentration of unsecured borrowings is federal funds purchased from correspondent bank customers. These funds 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 is securities sold under agreements to repurchase transactions accounted for as secured borrowings with Regional Banking’s business customers 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 May 2020, FHN issued $800 million of senior capital notes. 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.
Both FHN and First Horizon Bank have the ability to generate liquidity by issuing 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 million of Non-Cumulative Perpetual Preferred Stock, Series A, and in May 2020, FHN issued $150 million of Non-Cumulative Perpetual Preferred Stock, Series E. As of


FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 118



June 30, 2020, First Horizon Bank and subsidiaries had outstanding preferred shares of $295.4 million, which are reflected as noncontrolling interest on the Consolidated Condensed Statements of Condition.
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 $363.4 million as of July 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. First Horizon Bank declared and paid common dividends to the parent company in the amounts of $65 million and $115 million in first and third quarter 2020 and $345.0 million in 2019. First Horizon Bank declared and paid preferred dividends in first and second quarter 2020 and each quarter of 2019. Additionally, First Horizon Bank declared preferred dividends in third quarter 2020, payable in October 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 per common share on July 1, 2020. FHN paid cash dividends of $1,550.00 per Series A preferred share on July 10, 2020, as
 
well as $331.25 per Series B preferred share and $165.00 per Series C preferred share on August 3, 2020. In addition, in July 2020 the Board approved cash dividends per share in the following amounts:
 
Dividend/share
 
Record Date
 
Payment Date
 
Common Stock
$
0.15

 
09/11/2020
 
10/01/2020
 
Preferred Stock
 
 
 
 
 
 
Series A
$
1,550.00

 
09/28/2020
 
10/13/2020
 
Series C
$
165.00

 
10/16/2020
 
11/02/2020
 
Series D
$
305.00

 
10/16/2020
 
11/02/2020
 
Series E
$
2,383.33

 
09/28/2020
 
10/13/2020
 
CASH FLOWS
The Consolidated Condensed Statements of Cash Flows provide information on cash flows from operating, investing, and financing activities for the six months ended June 30, 2020 and 2019. The level of cash and cash equivalents decreased $247.3 million during the first half of 2020 and $155.6 million during the first half of 2019
Net cash used by investing activities was $5.2 billion in the first half of 2020, driven by an increase in interest-bearing cash, strong loan growth and a net increase in the AFS securities portfolio as purchases outpaced proceeds from maturities and sales. Net cash used by operating activities was $.5 billion in the first half of 2020 primarily due to net cash outflows of $767.8 million related to loans held-for-sale as purchases and originations outpaced proceeds from sales and settlements and $368.6 million related to an increase in derivatives, partially offset by cash inflows of$430.5 million related to fixed income trading activities. Net cash provided in financing activities was $5.5 billion in the first half of 2020, largely driven by an inflow of deposits, proceeds from the issuance of $800 million of senior notes, $450 million of subordinated notes, and $150 million of preferred stock, somewhat offset by a decrease in short-term borrowings (primarily FHLB stock).
Net cash used by investing activities was $1.1 billion in the first half of 2019, largely driven by an increase 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 financing activities was $595.7 million in the first half of 2019, primarily driven by an increase in other short-term borrowings somewhat offset by a decrease in deposits, share repurchases and cash dividends paid during the first half of 2019. The increase in short-term borrowings was primarily the result of an increase in FHLB borrowings, which fluctuate largely based on loan demand, deposit levels and balance sheet funding strategies. Net cash provided by operating activities was $347.3 million in the first half of 2019 due in large part to net cash inflows of $752.2 million related to fixed income trading activities and favorably driven cash-related net income items. Cash outflows of $605.3 million related to loans HFS negatively


FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 119



impacted operating cash flows during the first half of 2019, as purchases of government guaranteed loans outpaced
 
sales, including the sale of approximately $25 million UPB of subprime consumer loans.
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 10 - 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
The repurchase and foreclosure liability 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


FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 120



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 $12.9 million on June 30, 2020 from $14.5 million on December 31, 2019.
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, availability and the administration of stimulus relief for the economy. Additional impacts include how the pandemic affects FHN’s customers, as well as political uncertainty, potential changes in federal policies and the potential impact to our customers, and FHN’s strategic initiatives.
FHN's performance, 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 clients and their businesses. The 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, and could 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, is 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 impact FHN’s net interest margin. In the near term, amortization of net processing fees related to government relief programs, including the Paycheck Protection Program ("PPP"), may offset a portion of the net interest margin decline.
The economic effects of the COVID-19 pandemic have significantly altered business in the U.S. and globally leading to partial or full business closures, individuals being furloughed or laid off, significant increases in unemployment, and workers being partially or wholly ordered to work from home. Disruption to FHN’s customers due to governmental and societal responses to COVID-19 are likely to adversely affect FHN’s loan and deposit fee income and could create downward loan migration 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 the COVID-19 pandemic continues for an extended period of time. 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.
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.
In 2017, the Chief Executive of the United Kingdom Financial Conduct Authority, which regulates the London InterBank Offered Rate (“LIBOR”), announced that it intends to halt persuading or compelling banks to submit rates for the calculation of LIBOR after 2021. As a result, LIBOR as currently operated may not continue after 2021. FHN is not currently able to predict the impact that the transition from LIBOR will have on the Company; 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 draft modifications as needed to address loans outstanding at the time of LIBOR retirement, 3) obtain an understanding of the potential effects for applicable securities and derivatives and 4) assess revisions to product pricing structures based on alternative reference rates. 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. Refer to the Accounting Changes Issued but Not Currently Effective section of Note 1 - Financial Information for additional information. Additionally, the IRS has released a proposal that is intended to facilitate the


FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 121



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 that must be met in order to qualify for the beneficial transition approach and FHN is considering this guidance in its transition plans.
FHN has prioritized expense discipline to include reducing or controlling certain expenses including realization of merger efficiencies, enabling the investment into 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.
Under applicable accounting guidance, FHN is required to record IBKC's loans at estimated fair value as of the closing date, July 1, 2020. In addition, FHN is required to assess the current expected credit losses associated with IBKC loans. That credit loss assessment will be separate from the fair value estimation, and will result in a charge to FHN's income for certain loans during third quarter 2020. FHN has not yet completed those estimations and assessments, but currently expects that the associated charge to third-quarter income will be substantial.
Lastly, while FHN has resolved most matters from the pre-2009 mortgage business, some remain unresolved. The timing 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.
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, encouraged contactless banking or in-person branch
 
activities to be handled by appointment, as well as additional sick time and child care assistance for employees.
Loans
FHN is actively monitoring the COVID-19 pandemic and its impact on customers and FHN’s credit quality. FHN continues to reach out to customers to discuss challenges and solutions, provide line draws and new extensions to existing customers, provide support for small businesses through the PPP (discussed in more detail below) and other stimulus programs, as well as provide lending and deposit assistance through deferrals and waived fees. Additionally, in certain sectors, FHN has reduced or stopped new lending.
Paycheck Protection Program
In 2020 Congress created the foundation for a 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 still is paid from the program. Congress has revised the PPP this year, and may make further revisions to PPP in the future.
Lenders making PPP loans are paid a fee by the Small Business Administration. Gross lender fees range from 1% to 5% of the loan amount. A borrower can use an agent to assist in the preparation of their PPP applications, with the costs of the agent potentially being paid from the gross lender fee. Additionally, originating banks have certain internal costs of originating PPP loans.

FHN originated 15,512 of PPP loans with an aggregate principal of $2.1 billion through June 30, 2020. For these loans, FHN anticipates recognizing net lender fees of approximately $60 million. PPP lending has continued in third quarter, but at lower volumes. FHN has decided to hold its PPP loans for investment. Therefore, the amount of SBA fees net of 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 current 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 by second quarter 2021 as these loans are forgiven. These estimated prepayments result in


FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 122



a similar amount of the net fees being recognized in interest income.
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. FHN has assigned a risk weight of zero to PPP loans for regulatory capital purposes.
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 June 30, 2020.
(Dollars in thousands)
 
As of June 30, 2020
Commercial:
 
 
General C&I
 
$
1,828,501

Loans to mortgage companies
 
—

TRUPS
 
—

Income CRE
 
1,328,907

Residential CRE
 
1,977

Total Commercial
 
$
3,159,385

Consumer:
 
 
HELOC
 
$
71,529

R/E installment loans
 
497,058

Credit Card & Other
 
5,808

Total Consumer
 
574,395

Total
 
$
3,733,780

 

Commercial deferrals processed are comprised primarily of general commercial (43 percent or $1.4 billion), commercial real estate (27 percent or $862.9 million - primarily within our Mid-Atlantic, Southeast Tennessee, and Middle Tennessee markets), franchise finance (11 percent or $356.4 million), business banking (8 percent or $256.7 million), and private client (5 percent or $173.7 million).




Critical Accounting Policies
 
 
 
 
 
Except for the changes to the following Allowance for Loan Losses section, there have been no significant changes to FHN’s critical accounting policies as described in “Critical Accounting Policies” beginning on page 99 of Item 7 to FHN’s Annual Report on Form 10-K for the year ended December 31, 2019.
ALLOWANCE FOR LOAN LOSSES
Management’s policy is to maintain the ALLL at a level sufficient to absorb expected credit losses in the loan portfolio. Management performs periodic 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 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.


FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 123



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 for a detail of accounting standards that have been issued but are not currently effective, which section is incorporated into MD&A by this reference.



FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 124



Non-GAAP Information
 
 
 
 
 
The following table provides a reconciliation of non-GAAP items presented in this MD&A to the most comparable GAAP presentation:
Table 23—Non-GAAP to GAAP Reconciliation
 
 
Three Months Ended
June 30
 
Six Months Ended
June 30
(Dollars in thousands)
 
2020
 
2019
 
2020
 
2019
Pre-provision Net Revenue ("PPNR")
 
 
 
 
 
 
 
 
Net interest income (GAAP)
 
$
305,344

 
$
303,610

 
$
608,146

 
$
598,118

Plus: Noninterest income (GAAP)
 
206,269

 
157,993

 
381,025

 
299,038

Total revenues (GAAP)
 
511,613

 
461,603

 
989,171

 
897,156

Less: Noninterest expense (GAAP)
 
332,168

 
300,394

 
643,487

 
596,484

PPNR (Non-GAAP)

179,445

 
161,209

 
345,684

 
300,672

Provision/(provision credit) for loan losses (GAAP)
 
110,000

 
13,000

 
255,000

 
22,000

Income before income taxes (pre-tax income ("PTI")) (GAAP)
 
$
69,445

 
$
148,209

 
$
90,684

 
$
278,672

 
 
 
 
 
 
 
 
 
Average Tangible Common Equity (Non-GAAP)
 
 
 
 
 
 
 
 
Average total equity (GAAP)
 
$
5,117,613

 
$
4,869,161

 
$
5,060,003

 
$
4,839,363

Less: Average noncontrolling interest (a)
 
295,431

 
295,431

 
295,431

 
295,431

Less: Average preferred stock (a)
 
149,675

 
95,624

 
122,650

 
95,624

(A) Total average common equity
 
$
4,672,507

 
$
4,478,106

 
$
4,641,922

 
$
4,448,308

Less: Average intangible assets (GAAP) (b)
 
1,555,049

 
1,578,505

 
1,557,695

 
1,581,582

(B) Average Tangible Common Equity (Non-GAAP)
 
$
3,117,458

 
$
2,899,601

 
$
3,084,227

 
$
2,866,726

Net Income Available to Common Shareholders
 
 
 
 
 
 
 
 
(C) Net income available to common shareholders (annualized) (GAAP)
 
$
210,205

 
$
438,562

 
$
129,375

 
$
420,204

 
 
 
 
 
 
 
 
 
Tangible Common Equity (Non-GAAP)
 
 
 
 
 
 
 
 
(D) Total equity (GAAP)
 
$
5,208,385

 
$
4,926,081

 
$
5,208,385

 
$
4,926,081

Less: Noncontrolling interest (a)
 
295,431

 
295,431

 
295,431

 
295,431

Less: Preferred stock (a)
 
240,289

 
95,624

 
240,289

 
95,624

(E) Total common equity
 
$
4,672,665

 
$
4,535,026

 
$
4,672,665

 
$
4,535,026

Less: Intangible assets (GAAP) (b)
 
1,552,395

 
1,575,399

 
1,552,395

 
1,575,399

(F) Tangible common equity (Non-GAAP)
 
$
3,120,270

 
$
2,959,627

 
$
3,120,270

 
$
2,959,627

 
 
 
 
 
 
 
 
 
Tangible Assets (Non-GAAP)
 
 
 
 
 
 
 
 
(G) Total assets (GAAP)
 
$
48,644,659

 
$
42,171,770

 
$
48,644,659

 
$
42,171,770

Less: Intangible assets (GAAP) (b)
 
1,552,395

 
1,575,399

 
1,552,395

 
1,575,399

(H) Tangible assets (Non-GAAP)
 
$
47,092,264

 
$
40,596,371

 
$
47,092,264

 
$
40,596,371

 
 
 
 
 
 
 
 
 
Period-end Shares Outstanding
 
 
 
 
 
 
 
 
(I) Period-end shares outstanding
 
312,359

 
312,478

 
312,359

 
312,478

 
 
 
 
 
 
 
 
 
Ratios
 
 
 
 
 
 
 
 
(C)/(A) Return on average common equity (“ROCE”) (GAAP) (c)
 
4.50
%
 
9.79
%
 
2.79
%
 
9.45
%
(C)/(B) Return on average tangible common equity (“ROTCE”) (Non-GAAP) (d)
 
6.74

 
15.12

 
4.19

 
14.66

(D)/(G) Total equity to total assets (GAAP)
 
10.71

 
11.68

 
10.71

 
11.68

(F)/(H) Tangible common equity to tangible assets (“TCE/TA”) (Non-GAAP)
 
6.63

 
7.29

 
6.63

 
7.29

(E)/(I) Book value per common share (GAAP)
 
$
14.96

 
$
14.51

 
$
14.96

 
$
14.51

(F)/(I) Tangible book value per common share (Non-GAAP)
 
$
9.99

 
$
9.47

 
$
9.99

 
$
9.47

 
(a)Included in Total equity on the Consolidated Condensed Statements of Condition.
(b)Includes Goodwill and other intangible assets, net of amortization.
(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.


FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 125



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 115 of this report and the subsections entitled “Market Risk Management” beginning on page 115 and “Interest Rate Risk Management” beginning on page 117 of this report, and
(b)
Note 14 to the Consolidated Condensed Financial Statements appearing on pages 57-63 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 in Item 7 to FHN’s Annual Report on Form 10-K for the year ended December 31, 2019, including in particular the section entitled “Risk Management” beginning on page 88 of that Report and the subsections entitled “Market Risk Management” beginning on page 89 and “Interest Rate Risk Management” beginning on page 90 of that Report; and Note 22 to the Consolidated Financial Statements appearing on pages 194-200 of Item 8 to FHN’s Annual Report on Form 10-K for the year ended December 31, 2019.

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. 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. 2Q20 FORM 10-Q REPORT 126



---------------------------
Part II. OTHER INFORMATION
---------------------------

Item 1.    Legal Proceedings
The “Contingencies” section of Note 10 to the Consolidated Condensed Financial Statements beginning on page 45 of this Report is incorporated into this Item by reference.

Item 1A.    Risk Factors

Material changes from risk factor disclosures in FHN’s Annual Report on Form 10-K for the year ended December 31, 2019 and from supplemental risk factor disclosures in its Quarterly Report on Form 10-Q for the period ended March 31, 2020:

Not Applicable


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

 
 
(a) & (b)
Not Applicable
 
 
 
 
(c)
The "Common Stock Purchase Programs” section including tables 10(a) and 10(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 102 of this report, is incorporated herein by reference.
 
 

Items 3, 4, and 5

Not applicable


FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 127



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.
Exh No
Description of Exhibit to this Report
Filed Here
Mngt Exh
Furn-ished
Incorporated by Reference to
Form
Exh No
Filing Date
3.1
Articles of Amendment of the Restated Charter of First Horizon National Corporation, related to Series E Preferred Stock
 
 
 
8-K
3.1
5/28/2020
3.2
Articles of Amendment of First Horizon National Corporation [corporate charter] - Authorized Common Stock [increase to 700 million shares]
 
 
 
8-K
3.1
7/2/2020
3.3
Articles of Amendment of First Horizon National Corporation [corporate charter] - Preferred Stock [Series B, C, & D]
 
 
 
8-K
3.2
7/2/2020
3.4
Bylaws of First Horizon National Corporation, as amended and restated effective July 1, 2020
 
 
 
8-K
3.3
7/2/2020
4.1
Deposit Agreement, dated as of May 28, 2020, by and among First Horizon National Corporation, Equiniti Trust Company, as depositary, and the holders from time to time of the depositary receipts described therein [Series E]
 
 
 
8-K
4.1
5/28/2020
4.2
Form of certificate representing Series E Preferred Stock
 
 
 
8-K
4.2
5/28/2020
4.3
Form of Depositary Receipt representing the Series E Depositary Shares (included in Exhibit 4.1 to this report)
 
 
 
8-K
4.3
5/28/2020
4.4
Deposit Agreement, dated as of July 1, 2020, by and among First Horizon National Corporation, Equiniti Trust Company, as depositary, and the holders from time to time of the depositary receipts described therein [Series B]
 
 
 
8-K
4.1
7/2/2020
4.5
Deposit Agreement, dated as of July 1, 2020, by and among First Horizon National Corporation, Equiniti Trust Company, as depositary, and the holders from time to time of the depositary receipts described therein [Series C]
 
 
 
8-K
4.2
7/2/2020
4.6
Deposit Agreement, dated as of July 1, 2020, by and among First Horizon National Corporation, Equiniti Trust Company, as depositary, and the holders from time to time of the depositary receipts described therein [Series D]
 
 
 
8-K
4.3
7/2/2020
4.7
Form of Depositary Receipt-Series B (included as part of Exhibit 4.4 to this report)
 
 
 
8-K
4.4
7/2/2020
4.8
Form of Depositary Receipt-Series C (included as part of Exhibit 4.5 to this report)
 
 
 
8-K
4.5
7/2/2020
4.9
Form of Depositary Receipt-Series D (included as part of Exhibit 4.6 to this report)
 
 
 
8-K
4.6
7/2/2020
4.10
FHN 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
Retention Agreement of Anthony J. Restel, dated November 3, 2019
 
 
 
8-K
10.1
7/2/2020
31(a)
X
 
 
 
 
 
31(b)
X
 
 
 
 
 
32(a)
X
 
X
 
 
 


FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 128



Exh No
Description of Exhibit to this Report
Filed Here
Mngt Exh
Furn-ished
Incorporated by Reference to
Form
Exh No
Filing Date
32(b)
X
 
X
 
 
 
 
XBRL Exhibits
 
 
 
 
 
 
101
The following financial information from First Horizon National Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, formatted in Inline XBRL: (i) Consolidated Condensed Statements of Condition at June 30, 2020 and December 31, 2019; (ii) Consolidated Condensed Statements of Income for the Three and Six Months Ended June 30, 2020 and 2019; (iii) Consolidated Condensed Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2020 and 2019; (iv) Consolidated Condensed Statements of Equity for the Three and Six Months Ended June 30, 2020 and 2019; (v) Consolidated Condensed Statements of Cash Flows for the Three and Six Months Ended June 30, 2020 and 2019; (vi) Notes to Consolidated Condensed Financial Statements.
 
 
 
 
 
 
101. INS
XBRL 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. SCH
Inline XBRL Taxonomy Extension Schema
X
 
 
 
 
 
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase
X
 
 
 
 
 
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase
X
 
 
 
 
 
101. PRE
Inline XBRL Taxonomy Extension Presentation Linkbase
X
 
 
 
 
 
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase
X
 
 
 
 
 
104
Cover Page Interactive Data File, formatted in Inline XBRL (included in Exhibit 101)
X
 
 
 
 
 


FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 129



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: August 5, 2020
 
By:
 
/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)


FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 130

 Exhibit


Exhibit 31(a)
FIRST HORIZON NATIONAL CORPORATION
RULE 13a – 14(a) CERTIFICATIONS OF CEO
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
(QUARTERLY REPORT)
CERTIFICATIONS
I, D. Bryan Jordan, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of First Horizon National Corporation;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 

 
Date: August 5, 2020
 
/s/ D. Bryan Jordan
D. Bryan Jordan
President and Chief Executive Officer



Exhibit


Exhibit 31(b)
FIRST HORIZON NATIONAL CORPORATION
RULE 13a – 14(a) CERTIFICATIONS OF CFO
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
(QUARTERLY REPORT)
CERTIFICATIONS
I, William C. Losch III, certify that:
 
1.
I have reviewed this quarterly report on Form 10-Q of First Horizon National Corporation;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 
Date: August 5, 2020
 
/s/ William C. Losch III
William C. Losch III
Senior Executive Vice President and Chief Financial Officer



Exhibit


Exhibit 32(a)
CERTIFICATION OF PERIODIC REPORT
18 USC 1350 CERTIFICATIONS OF CEO
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
As Codified at 18 U.S.C. Section 1350
I, the undersigned D. Bryan Jordan, President and Chief Executive Officer of First Horizon National Corporation (“Corporation”), hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, as follows:
1.
The Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934.
2.
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.
 

 
 
Date: August 5, 2020
 
/s/ D. Bryan Jordan
D. Bryan Jordan
President and Chief Executive Officer



Exhibit


Exhibit 32(b)
CERTIFICATION OF PERIODIC REPORT
18 USC 1350 CERTIFICATIONS OF CFO
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
As Codified at 18 U.S.C. Section 1350
I, the undersigned William C. Losch III, Senior Executive Vice President and Chief Financial Officer of First Horizon National Corporation (“Corporation”), hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, as follows:
 
1.
The Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934.
2.
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.
 
 
Date: August 5, 2020
 
/s/ William C. Losch III
William C. Losch III
Senior Executive Vice President and Chief Financial Officer



v3.20.2
Cover
 6 Months Ended
Jun. 30, 2020
shares
Entity Information [Line Items]  
Document Type 10-Q
Document Quarterly Report true
Document Period End Date Jun. 30, 2020
Document Transition Report false
Entity File Number 001-15185
Entity Registrant Name First Horizon National Corporation
Entity Incorporation, State or Country Code TN
Entity Tax Identification Number 62-0803242
Entity Address, Address Line One 165 Madison Avenue
Entity Address, City or Town Memphis,
Entity Address, State or Province TN
Entity Address, Postal Zip Code 38103
City Area Code 901
Local Phone Number 523-4444
Entity Current Reporting Status Yes
Entity Interactive Data Current Yes
Entity Filer Category Large Accelerated Filer
Entity Small Business false
Entity Emerging Growth Company false
Entity Shell Company false
Entity Common Stock, Shares Outstanding (in shares) 312,358,668
Current Fiscal Year End Date --12-31
Entity Central Index Key 0000036966
Document Fiscal Year Focus 2020
Document Fiscal Period Focus Q2
Amendment Flag false
Common Capital Stock  
Entity Information [Line Items]  
Title of 12(b) Security $.625 Par Value Common Capital Stock
Trading Symbol  FHN
Security Exchange Name NYSE
Series A Preferred Stock  
Entity Information [Line Items]  
Title of 12(b) Security Depositary Shares, each representing a 1/4,000th interest ina share of Non-Cumulative Perpetual Preferred Stock, Series A
Trading Symbol FHN PR A
Security Exchange Name NYSE
Series B Preferred Stock  
Entity Information [Line Items]  
Title of 12(b) Security Depositary Shares, each representing a 1/400th interest ina share of Non-Cumulative Perpetual Preferred Stock, Series B*
Trading Symbol FHN PR B
Security Exchange Name NYSE
Series C Preferred Stock  
Entity Information [Line Items]  
Title of 12(b) Security Depositary Shares, each representing a 1/400th interest ina share of Non-Cumulative Perpetual Preferred Stock, Series C*
Trading Symbol FHN PR C
Security Exchange Name NYSE
Series D Preferred Stock  
Entity Information [Line Items]  
Title of 12(b) Security Depositary Shares, each representing a 1/400th interest ina share of Non-Cumulative Perpetual Preferred Stock, Series D*
Trading Symbol FHN PR D
Security Exchange Name NYSE
Series E Preferred Stock  
Entity Information [Line Items]  
Title of 12(b) Security Depositary Shares, each representing a 1/4,000th interest ina share of Non-Cumulative Perpetual Preferred Stock, Series E
Trading Symbol FHN PR E
Security Exchange Name NYSE
v3.20.2
CONSOLIDATED CONDENSED STATEMENTS OF CONDITION - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Assets:    
Cash and due from banks $ 604,280 $ 633,728
Federal funds sold 113,000 46,536
Securities purchased under agreements to resell (Note 15) 302,267 586,629
Total cash and cash equivalents 1,019,547 1,266,893
Interest-bearing cash 3,135,844 482,405
Trading securities 1,116,450 1,346,207
Loans held-for-sale [1] 745,655 593,790
Securities available-for-sale 5,476,156 4,445,403
Securities held-to-maturity (Note 3) 10,000 10,000
Loans, net of unearned income [2] 32,708,937 31,061,111
Less: Allowance for loan losses (Note 5) 537,881 200,307
Total net loans 32,171,056 30,860,804
Goodwill (Note 6) 1,432,787 1,432,787
Other intangible assets, net (Note 6) 119,608 130,200
Fixed income receivables 145,455 40,114
Premises and equipment, net (June 30, 2020 and December 31, 2019 include $7.0 million and $9.7 million, respectively, classified as held-for-sale) 448,028 455,006
Other real estate owned (OREO) [3] 15,134 17,838
Derivative assets (Note 14) 599,704 183,115
Other assets 2,209,235 2,046,338
Total assets 48,644,659 43,310,900
Deposits:    
Savings 13,532,127 11,664,906
Time deposits, net 2,655,702 3,618,337
Other interest-bearing deposits 9,783,704 8,717,341
Interest-bearing 25,971,533 24,000,584
Noninterest-bearing 11,787,818 8,428,951
Total deposits 37,759,351 32,429,535
Federal funds purchased 778,529 548,344
Securities sold under agreements to repurchase (Note 15) 1,482,585 716,925
Trading liabilities 232,742 505,581
Other short-term borrowings 130,583 2,253,045
Term borrowings 2,032,476 791,368
Fixed income payables 24,735 49,535
Derivative liabilities (Note 14) 94,389 67,480
Other liabilities 900,884 873,079
Total liabilities 43,436,274 38,234,892
First Horizon National Corporation Shareholders’ Equity:    
Preferred stock - Non-cumulative perpetual, no par value, liquidation preference of $100,000 per share - (Series A shares authorized - 1,000; shares issued - 1,000 on June 30, 2020 and December 31, 2019. Series E shares authorized - 1,725; shares issued - 1,500 on June 30, 2020) 240,289 95,624
Common stock - $.625 par value (shares authorized - 400,000,000; shares issued - 312,358,668 on June 30, 2020 and 311,469,056 on December 31, 2019) 195,224 194,668
Capital surplus 2,940,610 2,931,451
Undivided profits 1,671,629 1,798,442
Accumulated other comprehensive loss, net (Note 8) (134,798) (239,608)
Total First Horizon National Corporation Shareholders’ Equity 4,912,954 4,780,577
Noncontrolling interest 295,431 295,431
Total equity 5,208,385 5,076,008
Total liabilities and equity $ 48,644,659 $ 43,310,900
[1]
June 30, 2020 and December 31, 2019 include $2.5 million and $6.8 million, respectively, of held-for-sale consumer mortgage loans secured by residential real estate in process of foreclosure.
[2]
June 30, 2020 and December 31, 2019 include $16.9 million and $18.8 million, respectively, of held-to-maturity consumer mortgage loans secured by residential real estate in process of foreclosure.
[3]
June 30, 2020 and December 31, 2019 include $7.8 million and $9.2 million, respectively, of foreclosed residential real estate.
v3.20.2
CONSOLIDATED CONDENSED STATEMENTS OF CONDITION (Parenthetical) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Premises and equipment, net, held-for-sale) $ 7,000 $ 9,700
Preferred stock liquidation preference value (in dollars per share) $ 100,000 $ 100,000
Common stock, par value (in dollars per share) $ 0.625 $ 0.625
Common stock, shares authorized (in shares) 400,000,000 400,000,000
Common stock, shares issued (in shares) 312,358,668 311,469,056
OREO [1] $ 15,134 $ 17,838
Residential Real Estate    
Consumer mortgage loans secured by residential real estate in process of foreclosure 16,900 18,800
OREO 7,800 9,200
Residential Real Estate | Loans Held For Sale, Residential Real Estate    
Consumer mortgage loans secured by residential real estate in process of foreclosure $ 2,500 $ 6,800
Series A Preferred Stock    
Preferred stock, Series A shares authorized (in shares) 1,000 1,000
Preferred stock, Series A shares issued (in shares) 1,000 1,000
Series E Preferred Stock    
Preferred stock, Series A shares authorized (in shares) 1,725  
Preferred stock, Series A shares issued (in shares) 1,500  
[1]
June 30, 2020 and December 31, 2019 include $7.8 million and $9.2 million, respectively, of foreclosed residential real estate.
v3.20.2
CONSOLIDATED CONDENSED STATEMENTS OF INCOME - USD ($)
shares in Thousands, $ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Interest income:        
Interest and fees on loans $ 305,913 $ 352,112 $ 632,512 $ 684,050
Interest on investment securities available-for-sale 24,977 31,247 52,733 63,090
Interest on investment securities held-to-maturity 132 132 263 263
Interest on loans held-for-sale 6,596 8,128 13,495 18,005
Interest on trading securities 8,723 13,154 21,840 26,702
Interest on other earning assets 283 7,316 4,149 20,594
Total interest income 346,624 412,089 724,992 812,704
Interest on deposits:        
Savings 12,520 36,806 38,853 76,720
Time deposits 9,259 22,439 23,202 42,693
Other interest-bearing deposits 2,966 19,757 17,179 41,799
Interest on trading liabilities 974 3,756 4,266 6,572
Interest on short-term borrowings 1,455 11,038 11,319 17,782
Interest on term borrowings 14,106 14,683 22,027 29,020
Total interest expense 41,280 108,479 116,846 214,586
Net interest income 305,344 303,610 608,146 598,118
Provision/(provision credit) for loan losses 110,000 13,000 255,000 22,000
Net interest income after provision/(provision credit) for loan losses 195,344 290,610 353,146 576,118
Noninterest income:        
Fixed income 112,421 66,414 208,056 120,163
Deposit transactions and cash management 30,787 32,374 61,077 63,995
Brokerage, management fees and commissions 13,800 14,120 29,205 26,753
Trust services and investment management 7,733 7,888 14,928 14,914
Bankcard income 6,652 6,355 13,905 13,307
Bank-owned life insurance (BOLI) 6,380 5,126 10,969 9,528
Debt securities gains/(losses), net (Note 3 and Note 8) 0 (267) 0 (267)
Equity securities gains/(losses), net (Note 3) (1,493) 316 (1,468) 347
All other income and commissions (Note 7) 29,989 25,667 44,353 50,298
Total noninterest income 206,269 157,993 381,025 299,038
Adjusted gross income after provision/(provision credit) for loan losses 401,613 448,603 734,171 875,156
Noninterest expense:        
Employee compensation, incentives, and benefits 200,259 171,643 383,729 349,568
Occupancy 21,445 20,719 41,008 41,412
Computer software 16,522 15,001 32,549 30,140
Operations services 11,654 11,713 23,346 23,201
Professional fees 10,310 11,291 17,306 23,590
Equipment rentals, depreciation, and maintenance 8,384 8,375 16,936 17,204
FDIC premium expense 6,432 4,247 13,174 8,520
Communications and courier 5,868 7,380 11,396 13,833
Amortization of intangible assets 5,284 6,206 10,592 12,422
Contract employment and outsourcing 5,236 3,078 10,172 6,449
Advertising and public relations 2,525 5,574 9,981 12,816
Legal fees 2,498 6,486 4,321 9,317
All other expense (Note 7) 35,751 28,681 68,977 48,012
Total noninterest expense 332,168 300,394 643,487 596,484
Income/(loss) before income taxes 69,445 148,209 90,684 278,672
Provision/(benefit) for income taxes 12,780 34,467 17,547 61,525
Net income/(loss) 56,665 113,742 73,137 217,147
Net income attributable to noncontrolling interest 2,851 2,852 5,703 5,672
Net income/(loss) attributable to controlling interest 53,814 110,890 67,434 211,475
Preferred stock dividends 1,550 1,550 3,100 3,100
Net income/(loss) available to common shareholders $ 52,264 $ 109,340 $ 64,334 $ 208,375
Basic earnings/(loss) per share (Note 9) (in dollars per share) $ 0.17 $ 0.35 $ 0.21 $ 0.66
Diluted earnings/(loss) per share (Note 9) (in dollars per share) $ 0.17 $ 0.35 $ 0.21 $ 0.66
Weighted average common shares (Note 9) (in shares) 312,090 314,063 311,843 315,740
Diluted average common shares (Note 9) (in shares) 312,936 315,786 312,792 317,720
v3.20.2
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Statements of Comprehensive Income/(loss)        
Net income/(loss) $ 56,665 $ 113,742 $ 73,137 $ 217,147
Other comprehensive income/(loss), net of tax:        
Net unrealized gains/(losses) on securities available-for-sale (1,030) 48,192 87,248 96,807
Net unrealized gains/(losses) on cash flow hedges 17 8,909 13,078 14,296
Net unrealized gains/(losses) on pension and other postretirement plans 2,379 1,561 4,484 3,024
Other comprehensive income/(loss) 1,366 58,662 104,810 114,127
Comprehensive income/(loss) 58,031 172,404 177,947 331,274
Comprehensive income attributable to noncontrolling interest 2,851 2,852 5,703 5,672
Comprehensive income attributable to controlling interest 55,180 169,552 172,244 325,602
Income tax expense/(benefit) of items included in Other comprehensive income:        
Net unrealized gains/(losses) on securities available-for-sale (336) 15,819 28,451 31,777
Net unrealized gains/(losses) on cash flow hedges 5 2,924 4,265 4,692
Net unrealized gains/(losses) on pension and other postretirement plans $ 776 $ 513 $ 1,462 $ 993
v3.20.2
CONSOLIDATED CONDENSED STATEMENTS OF EQUITY - USD ($)
shares in Thousands, $ in Thousands
Total
Preferred Stock
Common Stock
Capital Surplus
Undivided Profits
Accumulated Other Comprehensive Income/(Loss)
Noncontrolling Interest
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Adjustment to reflect adoption of ASU | Accounting Standards Update 2016-02 $ (1,011)       $ (1,011)    
Balance, beginning of period (in shares) at Dec. 31, 2018   1,000 318,573        
Balance, beginning of period at Dec. 31, 2018 4,785,380 $ 95,624 $ 199,108 $ 3,029,425 1,542,408 $ (376,616) [1] $ 295,431
Beginning balance, as adjusted at Dec. 31, 2018 4,784,369 $ 95,624 $ 199,108 3,029,425 1,541,397 (376,616) [1] 295,431
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Net income/(loss) 103,405       100,585   2,820
Other comprehensive income/(loss) 55,465         55,465 [1]  
Comprehensive income/(loss) 158,870       100,585 55,465 [1] 2,820
Cash dividends declared:              
Preferred stock (1,550)       (1,550)    
Common stock (44,864)       (44,864)    
Common stock repurchased (in shares)     (3,594)        
Common stock repurchased (53,436)   $ (2,246) [2] (51,190) [2]      
Common stock issued for:              
Stock options and restricted stock - equity awards (in shares)     382        
Stock options and restricted stock - equity awards 520   $ 239 281      
Stock-based compensation expense 5,432     5,432      
Dividends declared - noncontrolling interest of subsidiary preferred stock (2,820)           (2,820)
Balance, ending of period (in shares) at Mar. 31, 2019   1,000 315,361        
Balance, end of period at Mar. 31, 2019 4,846,521 $ 95,624 $ 197,101 2,983,948 1,595,568 (321,151) [1] 295,431
Balance, beginning of period (in shares) at Dec. 31, 2018   1,000 318,573        
Balance, beginning of period at Dec. 31, 2018 4,785,380 $ 95,624 $ 199,108 3,029,425 1,542,408 (376,616) [1] 295,431
Beginning balance, as adjusted at Dec. 31, 2018 4,784,369 $ 95,624 $ 199,108 3,029,425 1,541,397 (376,616) [1] 295,431
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Net income/(loss) 217,147            
Other comprehensive income/(loss) 114,127            
Comprehensive income/(loss) 331,274            
Cash dividends declared:              
Preferred stock (3,100)            
Balance, ending of period (in shares) at Jun. 30, 2019   1,000 312,478        
Balance, end of period at Jun. 30, 2019 4,926,081 $ 95,624 $ 195,299 2,941,696 1,660,520 (262,489) [1] 295,431
Balance, beginning of period (in shares) at Mar. 31, 2019   1,000 315,361        
Balance, beginning of period at Mar. 31, 2019 4,846,521 $ 95,624 $ 197,101 2,983,948 1,595,568 (321,151) [1] 295,431
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Net income/(loss) 113,742       110,890   2,852
Other comprehensive income/(loss) 58,662         58,662 [3]  
Comprehensive income/(loss) 172,404       110,890 58,662 [3] 2,852
Cash dividends declared:              
Preferred stock (1,550)       (1,550)    
Common stock (44,388)       (44,388)    
Common stock repurchased (in shares)     (3,654)        
Common stock repurchased (52,222)   $ (2,284) [2] (49,938) [2]      
Common stock issued for:              
Stock options and restricted stock - equity awards (in shares)     771        
Stock options and restricted stock - equity awards 2,944   $ 482 2,462      
Stock-based compensation expense 5,224     5,224      
Dividends declared - noncontrolling interest of subsidiary preferred stock (2,852)           (2,852)
Balance, ending of period (in shares) at Jun. 30, 2019   1,000 312,478        
Balance, end of period at Jun. 30, 2019 4,926,081 $ 95,624 $ 195,299 2,941,696 1,660,520 (262,489) [1] 295,431
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Adjustment to reflect adoption of ASU | Accounting Standards Update 2016-13 (96,057)       (96,057)    
Balance, beginning of period (in shares) at Dec. 31, 2019   1,000 311,469        
Balance, beginning of period at Dec. 31, 2019 5,076,008 $ 95,624 $ 194,668 2,931,451 1,798,442 (239,608) [3] 295,431
Beginning balance, as adjusted at Dec. 31, 2019 4,979,951 $ 95,624 $ 194,668 2,931,451 1,702,385 (239,608) [3] 295,431
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Net income/(loss) 16,472       13,620   2,852
Other comprehensive income/(loss) 103,444         103,444 [3]  
Comprehensive income/(loss) 119,916       13,620 103,444 [3] 2,852
Cash dividends declared:              
Preferred stock (1,550)       (1,550)    
Common stock (47,350)       (47,350)    
Common stock repurchased (in shares)     (141)        
Common stock repurchased (2,064)   $ (88) (1,976)      
Common stock issued for:              
Stock options and restricted stock - equity awards (in shares)     652        
Stock options and restricted stock - equity awards 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 (in shares) [4]     (117)        
Other [4] (1,892)   $ (73) (1,819)      
Balance, ending of period (in shares) at Mar. 31, 2020   1,000 311,863        
Balance, end of period at Mar. 31, 2020 5,055,580 $ 95,624 $ 194,914 2,938,670 1,667,105 (136,164) [3] 295,431
Balance, beginning of period (in shares) at Dec. 31, 2019   1,000 311,469        
Balance, beginning of period at Dec. 31, 2019 5,076,008 $ 95,624 $ 194,668 2,931,451 1,798,442 (239,608) [3] 295,431
Beginning balance, as adjusted at Dec. 31, 2019 4,979,951 $ 95,624 $ 194,668 2,931,451 1,702,385 (239,608) [3] 295,431
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Net income/(loss) 73,137            
Other comprehensive income/(loss) 104,810            
Comprehensive income/(loss) 177,947            
Cash dividends declared:              
Preferred stock (3,100)            
Balance, ending of period (in shares) at Jun. 30, 2020   2,500 312,359        
Balance, end of period at Jun. 30, 2020 5,208,385 $ 240,289 $ 195,224 2,940,610 1,671,629 (134,798) [3] 295,431
Balance, beginning of period (in shares) at Mar. 31, 2020   1,000 311,863        
Balance, beginning of period at Mar. 31, 2020 5,055,580 $ 95,624 $ 194,914 2,938,670 1,667,105 (136,164) [3] 295,431
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Net income/(loss) 56,665       53,814   2,851
Other comprehensive income/(loss) 1,366         1,366 [3]  
Comprehensive income/(loss) 58,031       53,814 1,366 [3] 2,851
Cash dividends declared:              
Preferred stock (1,550)       (1,550)    
Common stock (47,740)       (47,740)    
Preferred stock issuance (in shares) (1,500 shares issued at $100,000 per share net of offering costs)   1,500          
Preferred stock issuance (1,500 shares issued at $100,000 per share net of offering costs) 144,665 $ 144,665          
Common stock repurchased (in shares)     (183)        
Common stock repurchased (1,468)   $ (114) (1,354)      
Common stock issued for:              
Stock options and restricted stock - equity awards (in shares)     679        
Stock options and restricted stock - equity awards     $ 424 (424)      
Stock-based compensation expense 3,718     3,718      
Dividends declared - noncontrolling interest of subsidiary preferred stock (2,851)           (2,851)
Balance, ending of period (in shares) at Jun. 30, 2020   2,500 312,359        
Balance, end of period at Jun. 30, 2020 $ 5,208,385 $ 240,289 $ 195,224 $ 2,940,610 $ 1,671,629 $ (134,798) [3] $ 295,431
[1]
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.
[2]
Includes $51.5 million and $50.2 million repurchased under share repurchase programs in first and second quarter 2019, respectively.
[3]
Due to the nature of the preferred stock issued by FHN and its subsidiaries, all components of Other comprehensive income/(loss) have been attributed solely to FHN as the controlling interest holder.
[4]
Represents shares canceled in connection with the resolution of remaining Capital Bank Financial Corporation ("CBF") dissenters' appraisal process.
v3.20.2
CONSOLIDATED CONDENSED STATEMENTS OF EQUITY (Parenthetical) - USD ($)
$ in Millions
 3 Months Ended
Jun. 30, 2020
Mar. 31, 2020
Jun. 30, 2019
Mar. 31, 2019
Preferred stock - cash dividends declared per share (in dollars per share) $ 1,550 $ 1,550 $ 1,550 $ 1,550
Common stock - cash dividends declared per share (in dollars per share) 0.15 $ 0.15 $ 0.14 $ 0.14
First Horizon Share Repurchase Program        
Common stock repurchased under share repurchase program     $ 50.2 $ 51.5
Preferred Stock        
Preferred stock issuance, net of offering cost (in dollars per share) $ 100,000,000      
Number of shares issued in transaction (in shares) 1,500,000      
v3.20.2
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS - USD ($)
$ in Thousands
 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Operating Activities    
Net income/(loss) $ 73,137 $ 217,147
Adjustments to reconcile net income/(loss) to net cash provided/(used) by operating activities:    
Provision/(provision credit) for loan losses 255,000 22,000
Provision/(benefit) for deferred income taxes (38,528) 60,943
Depreciation and amortization of premises and equipment 21,040 22,564
Amortization of intangible assets 10,592 12,422
Net other amortization and accretion 7,838 (2,542)
Net (increase)/decrease in derivatives (368,592) (119,415)
Fair value adjustment on interest-only strips 2,528 1,399
(Gains)/losses and write-downs on OREO, net 117 (304)
Litigation and regulatory matters 0 (8,330)
Stock-based compensation expense 10,999 10,656
Gain on sale and pay down of held-to-maturity loans 0 (1,105)
Equity securities (gains)/losses, net 1,468 (347)
Debt securities (gains)/losses, net 0 267
Net (gains)/losses on sale/disposal of fixed assets 1,816 19,182
(Gain)/loss on BOLI (3,880) (2,578)
Loans held-for-sale:    
Purchases and originations (1,096,917) (1,003,375)
Gross proceeds from settlements and sales 322,517 361,895
(Gain)/loss due to fair value adjustments and other 6,619 36,138
Net (increase)/decrease in:    
Trading securities 833,483 581,187
Fixed income receivables (105,341) (108,713)
Interest receivable (6,917) (6,120)
Other assets (131,628) 7,394
Net increase/(decrease) in:    
Trading liabilities (272,839) 222,967
Fixed income payables (24,800) 56,797
Interest payable (9,850) 12,435
Other liabilities 9,183 (45,278)
Total adjustments (576,092) 130,139
Net cash provided/(used) by operating activities (502,955) 347,286
Available-for-sale securities:    
Sales 8,703 171,423
Maturities 571,676 339,315
Purchases (1,498,312) (144,534)
Premises and equipment:    
Sales 2,382 8,157
Purchases (20,851) (12,487)
Proceeds from sales of OREO 4,475 9,651
Proceeds from sale and pay down of loans classified as held-to-maturity 0 20,100
Proceeds from BOLI 7,826 8,945
Net (increase)/decrease in:    
Loans (1,648,847) (2,183,862)
Interests retained from securitizations classified as trading securities 130 298
Interest-bearing cash (2,653,439) 684,431
Net cash provided/(used) by investing activities (5,226,257) (1,098,563)
Common stock:    
Stock options exercised 4,145 3,464
Cash dividends paid (91,925) (83,711)
Repurchase of shares [1] (3,543) (105,658)
Cancellation of common shares [2] (1,892) 0
Preferred stock issuance 144,665 0
Cash dividends paid - preferred stock - noncontrolling interest (5,734) (5,703)
Cash dividends paid - Series A preferred stock (3,100) (3,100)
Term borrowings:    
Issuance (c) 1,241,534 [3] 0
Payments/maturities 0 (1,180)
Increases/(decreases) in restricted and secured term borrowings (5,483) 4,481
Net increase/(decrease) in:    
Deposits 5,329,816 (374,675)
Short-term borrowings (1,126,617) 1,161,739
Net cash provided/(used) by financing activities 5,481,866 595,657
Net increase/(decrease) in cash and cash equivalents (247,346) (155,620)
Cash and cash equivalents at beginning of period 1,266,893 1,405,325
Cash and cash equivalents at end of period 1,019,547 1,249,705
Supplemental Disclosures    
Total interest paid 125,368 200,625
Total taxes paid 6,486 14,842
Total taxes refunded 541 27,742
Transfer from loans to OREO 1,888 3,343
Transfer from loans HFS to trading securities $ 603,856 $ 802,259
[1] 2019 includes $101.7 million repurchased under share repurchase programs.
[2] Represents shares canceled in connection with the resolution of remaining CBF dissenters' appraisal process.
[3] In second quarter 2020, FHN issued $800 million of senior notes and First Horizon Bank issued $450 million of subordinated notes.
v3.20.2
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Repurchase of shares [1]   $ 105,658
Proceeds from issuance of senior long-term debt $ 800,000  
First Horizon Share Repurchase Program    
Repurchase of shares   $ 101,700
First Horizon Bank    
Proceeds from issuance of subordinated long-term debt $ 450,000  
[1] 2019 includes $101.7 million repurchased under share repurchase programs.
v3.20.2
Financial Information
 6 Months Ended
Jun. 30, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Financial Information Financial Information

Basis of Accounting. The unaudited interim consolidated condensed financial statements of First Horizon National Corporation (“FHN”), including its subsidiaries, have been prepared in conformity with accounting principles generally accepted in the United States of America 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 the 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 the opinion of management, all necessary adjustments have been made for a fair presentation of financial position and results of operations for the periods presented. These adjustments are of a normal recurring nature unless otherwise disclosed in this Quarterly Report on Form 10-Q. The operating results for the interim 2020 period are not necessarily indicative of the results that may be expected going forward. For further information, refer to the audited consolidated financial statements in Item 8 to FHN’s Annual Report on Form 10-K for the year ended December 31, 2019.

Revenues. Revenue is recognized when the performance obligations under the terms 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 period 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 June 30, 2020, accounts receivable related to products and services on non-interest income were $8.9 million. For the three months ended June 30, 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 June 30, 2020. Credit risk is assessed on these accounts receivable each reporting period and the amount of estimated uncollectible receivables is not material.

Transaction Price Allocated to Remaining Performance Obligations. For the three and six months ended June 30, 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
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.
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.

FHN has continued to accrue interest on loans for which payment deferrals have been extended to borrowers affected by the COVID-19 pandemic ("COVID-19 Deferrals"). Deferrals are made for durations up to six months, which is beyond FHN's normal write-off practices for accrued interest. Therefore, these interest deferrals do not qualify for FHN's election to not recognize a credit loss allowance for accrued interest. Accordingly, FHN has estimated credit losses for COVID-19 interest deferrals which is included within AIR in 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 losses included in the loan valuation.
Purchased Credit-Impaired Loans. Prior to 2020, ASC 310-30 “Accounting 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.
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.
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.
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 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 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 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.

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 Effective

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 will utilize the optional expedients and exceptions provided by ASU 2020-04 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.
v3.20.2
Acquisitions and Divestitures
 6 Months Ended
Jun. 30, 2020
Business Combinations [Abstract]  
Acquisitions and Divestitures Acquisitions and Divestitures

On July 1, 2020, FHN and IBERIABANK Corporation ("IBKC") closed their merger-of-equals transaction. FHN issued approximately 242 million shares of FHN common stock, plus three new series of preferred stock (Series B, Series C, and Series D) in a transaction valued at $2.5 billion. At the time of closing, IBKC operated 319 offices in 12 states, mostly in the southern and southeastern U.S. In the merger: FHN acquired approximately $34.7 billion
in assets, including approximately $26.1 billion in loans and $3.5 billion in AFS securities; and, FHN assumed approximately $28.3 billion of IBKC deposits. Due to the timing of the merger closing in relation to quarter end and the uncertainty of valuations in the current economic environment, FHN's assessment of the fair value of IBKC's assets and liabilities is incomplete. However, FHN currently expects to recognize a purchase accounting gain.
Total merger expenses for the IBKC merger recognized for the three and six months ended June 30, 2020 are presented in the table below:
 
 
June 30, 2020
(Dollars in thousands)
 
Three Months Ended
 
Six Months Ended
Professional fees (a)
 
$
3,748

 
$
4,410

Employee compensation, incentives and benefits (b)
 
4,705

 
5,394

Miscellaneous expense (c)
 
1,003

 
1,257

Total IBKC acquisition expense
 
$
9,456

 
$
11,061

(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 July 17, 2020, First Horizon Bank completed its purchase of 30 branches from Truist Bank. As part of the transaction, FHN assumed approximately $2.2 billion of branch deposits for a 3.40 percent deposit premium and purchased approximately $423.7 million of branch loans. The branches are in communities in North Carolina (20 branches), Virginia (8 branches), and Georgia (2 branches). This transaction qualifies as a business combination. Due to the timing of the merger closing in relation to quarter end and the uncertainty of valuations in the current economic environment, FHN's assessment of the fair value of the acquired assets and liabilities is incomplete.
See Note 2- Acquisitions and Divestitures in the Notes to Consolidated Financial Statements on Form 10-K for the year ended December 31, 2019, for additional information about FHN's other acquisitions.
Expenses related to FHN's merger and integration activities are recorded in FHN's Corporate segment.
Total other merger and integration expense recognized for the three and six months ended June 30, 2020 and 2019 are presented in the table below:
 
 
Three Months Ended
June 30
 
Six Months Ended
June 30
(Dollars in thousands)
 
2020
 
2019
 
2020
 
2019
Professional fees (a)
 
$
1,327

 
$
4,478

 
$
2,126

 
$
6,345

Employee compensation, incentives and benefits (b)
 
87

 
1,472

 
483

 
2,989

Contract employment and outsourcing (c)
 
420

 
17

 
726

 
17

Occupancy (d)
 
(82
)
 
1,505

 
(107
)
 
1,623

Miscellaneous expense (e)
 
503

 
79

 
1,325

 
1,148

All other expense (f)
 
2,610

 
1,096

 
4,484

 
2,185

Total
 
$
4,865

 
$
8,647

 
$
9,037

 
$
14,307

Certain previously reported amounts have been reclassified to agree with current presentation.
(a)
Primarily comprised of fees for legal, accounting, and merger consultants.
(b)
Primarily comprised of fees for severance and retention.
(c)
Primarily relates to fees for temporary assistance for merger and integration activities.
(d)
Primarily relates to expenses associated with lease exits.
(e)
Consists of fees for operations services, communications and courier, equipment rentals, depreciation and maintenance, supplies, travel and entertainment, computer software, and advertising and public relations.
(f)
Primarily relates to contract termination charges, internal technology development costs, costs of shareholder matters and asset impairments, as well as other miscellaneous expenses.

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.
v3.20.2
Investment Securities
 6 Months Ended
Jun. 30, 2020
Marketable Securities [Abstract]  
Investment Securities Investment Securities
The following tables summarize FHN’s investment securities on June 30, 2020 and December 31, 2019:
 
 
June 30, 2020
(Dollars in thousands)
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
Securities available-for-sale:
 
 
 
 
 
 
 
 
U.S. treasuries
 
$
999,974

 
$
5

 
$
(4
)
 
$
999,975

Government agency issued mortgage-backed securities (“MBS”)
 
2,383,956

 
103,506

 
(80
)
 
2,487,382

Government agency issued collateralized mortgage obligations (“CMO”)
 
1,383,703

 
31,570

 
(8
)
 
1,415,265

Other U.S. government agencies
 
403,008

 
14,284

 
—

 
417,292

Corporates and other debt
 
39,950

 
463

 
—

 
40,413

States and municipalities
 
83,155

 
7,228

 
—

 
90,383

 
 
$
5,293,746

 
$
157,056

 
$
(92
)
 
5,450,710

AFS debt securities recorded at fair value through earnings:
 
 
 
 
 
 
 
 
SBA-interest only strips (a)
 
 
 
 
 
 
 
25,446

Total securities available-for-sale (b)
 
 
 
 
 
 
 
$
5,476,156

Securities held-to-maturity:
 
 
 
 
 
 
 
 
Corporates and other debt
 
$
10,000

 
$
—

 
$
(119
)
 
$
9,881

Total securities held-to-maturity
 
$
10,000

 
$
—

 
$
(119
)
 
$
9,881

 
(a)
SBA-interest only strips are recorded at elected fair value. See Note 16 - Fair Value for additional information.
(b)
Includes $4.7 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.


The amortized cost and fair value by contractual maturity for the available-for-sale and held-to-maturity debt securities portfolios on June 30, 2020 are provided below:
 
 
 
Held-to-Maturity
 
Available-for-Sale
(Dollars in thousands)
 
Amortized
Cost
 
Fair
Value
 
Amortized
Cost
 
Fair
Value
Within 1 year
 
$
—

 
$
—

 
$
1,106,238

 
$
1,108,000

After 1 year; within 5 years
 
—

 
—

 
137,571

 
142,491

After 5 years; within 10 years
 
10,000

 
9,881

 
3,573

 
9,623

After 10 years
 
—

 
—

 
278,705

 
313,395

Subtotal
 
10,000

 
9,881

 
1,526,087

 
1,573,509

Government agency issued MBS and CMO (a)
 
—

 
—

 
3,767,659

 
3,902,647

Total
 
$
10,000

 
$
9,881

 
$
5,293,746

 
$
5,476,156

 
(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 gains and gross losses from debt investment securities for the three and six months ended June 30, 2020 and 2019.
 
 
Three Months Ended
June 30
 
Six Months Ended
June 30
(Dollars in thousands)
2020
 
2019
 
2020
 
2019
Gross gains on sales of securities
$
—

 
$
—

 
$
—

 
$
—

Gross (losses) on sales of securities
—

 
(267
)
 
—

 
(267
)
Net gain/(loss) on sales of securities (a)
$
—

 
$
(267
)
 
$
—

 
$
(267
)
 
(a)
Cash proceeds for the three and six months ended June 30, 2020 were not material. Cash proceeds for the three and six months ended June 30, 2019 were $171.4 million.

The following tables provide information on investments within the available-for-sale portfolio that had unrealized losses as of June 30, 2020 and December 31, 2019:

 
 
As of June 30, 2020
 
 
Less than 12 months
 
12 months or longer
 
Total
(Dollars in thousands)
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
U.S. treasuries
 
$
499,895

 
$
(4
)
 
$
—

 
$
—

 
$
499,895

 
$
(4
)
Government agency issued MBS
 
40,798

 
(80
)
 
—

 
—

 
40,798

 
(80
)
Government agency issued CMO
 
15,982

 
(8
)
 
—

 
—

 
15,982

 
(8
)
Total temporarily impaired securities
 
$
556,675

 
$
(92
)
 
$
—

 
$
—

 
$
556,675

 
$
(92
)
 
 
 
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
U.S. treasuries
 
$
—

 
$
—

 
$
100

 
$
—

 
$
100

 
$
—

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
)

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 $12.4 million as of June 30, 2020. Consistent with its 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 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 $24.7 million and $25.6 million at June 30, 2020 and December 31, 2019, respectively. The year-to-date 2020 and 2019 gross amounts of upward and downward valuation adjustments were not significant.
Unrealized gains of $4.8 million and $1.2 million were recognized in the three months ended June 30, 2020 and 2019, respectively, and unrealized losses of $0.9 million and unrealized gains of $4.6 million were recognized in the six months ended June 30, 2020 and 2019, respectively, for equity investments with readily determinable fair values.
v3.20.2
Loans
 6 Months Ended
Jun. 30, 2020
Receivables [Abstract]  
Loans Loans
The following table provides the balance (amortized cost basis) of loans, net of unearned income, by portfolio segment as of June 30, 2020 and December 31, 2019:
 
 
June 30
 
December 31
(Dollars in thousands)
 
2020
 
2019
Commercial:
 
 
 
 
Commercial, financial, and industrial
 
$
21,393,893

 
$
20,051,091

Commercial real estate
 
4,813,341

 
4,337,017

Consumer:
 
 
 
 
Consumer real estate (a)
 
6,052,393

 
6,177,139

Credit card & other
 
449,310

 
495,864

Loans, net of unearned income
 
$
32,708,937

 
$
31,061,111

Allowance for loan losses
 
537,881

 
200,307

Total net loans
 
$
32,171,056

 
$
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.

COMPONENTS OF THE LOAN PORTFOLIO
The loan portfolio is disaggregated into 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 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. Commercial loan portfolio segments include commercial, financial and industrial (“C&I”) and commercial real estate ("CRE"). Commercial classes within C&I include general C&I, 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 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 include consumer real estate, 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 credit card and other.
Credit Risk Characteristics Inherent in the Loan Portfolio
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 amount of credit risk depends on 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, particularly in the specialty lending 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 comprised 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.
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 95 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.
Paycheck Protection Program Loans
Included in commercial loans are $2.1 billion of C&I loans made under the Paycheck Protection Program ("PPP Loans") of the Small Business Administration ("SBA"). PPP Loans have been extended to businesses in response to the economic effects of the COVID-19 pandemic. PPP Loans are fully government guaranteed with the SBA making prepayments through a provision whereby partial or complete forgiveness is granted based on the nature and extent of each borrower's expenditures in relation to program requirements for payroll-related and other types of expenses. PPP Loans have maximum terms ranging from two to five years, with SBA prepayments expected to occur in the latter half of 2020 and the first half of 2021. Amounts not forgiven by the SBA will amortize over the applicable remaining loan term. Due to the government guarantee and forgiveness provisions, PPP Loans are considered to have no credit risk and receive no risk weighting for capital calculations.
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.
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 $2.5 billion (12 percent of the C&I portfolio, or 8 percent of the total loans). FHN had loans to mortgage companies totaling $4.0 billion (19 percent of the C&I segment, or 12 percent of total loans) as of June 30, 2020. As a result, 31 percent of the C&I segment is sensitive to impacts on the financial services industry.
Asset 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 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 input to inform probability of default forecasts under certain macroeconomic scenarios. Each PD grade corresponds to an estimated one-year default probability percentage; a PD 1 has the lowest expected default 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).
Pass loan grades are required to be reassessed annually or earlier whenever there has been a material change in the financial condition 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 discipline is regularly reviewed internally by Credit 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 June 30, 2020:

 
 
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 (d)
 
$
2,078,712

 
$
99,978

 
$
121,167

 
$
75,521

 
$
106,700

 
$
108,574

 
$
—

 
$
83,309

 
$
56

 
$
2,674,017

2
 
56,810

 
223,191

 
100,816

 
79,318

 
168,838

 
90,484

 
—

 
95,035

 
126

 
814,618

3
 
42,983

 
153,671

 
49,176

 
89,945

 
30,381

 
97,338

 
741,382

 
125,470

 
3,490

 
1,333,836

4
 
261,626

 
335,130

 
145,047

 
122,185

 
129,859

 
142,129

 
685,876

 
259,379

 
10,653

 
2,091,884

5
 
304,710

 
496,565

 
220,632

 
145,650

 
96,325

 
163,676

 
700,944

 
384,874

 
12,654

 
2,526,030

6
 
360,649

 
714,704

 
246,607

 
195,634

 
53,597

 
155,755

 
1,198,775

 
667,570

 
558

 
3,593,849

7
 
309,088

 
723,728

 
339,953

 
145,385

 
100,069

 
171,016

 
552,192

 
598,772

 
48,291

 
2,988,494

8
 
343,391

 
593,106

 
194,030

 
175,289

 
36,044

 
96,204

 
93,900

 
379,261

 
7,110

 
1,918,335

9
 
171,524

 
293,768

 
89,519

 
66,927

 
65,539

 
75,753

 
25,198

 
283,883

 
10,670

 
1,082,781

10
 
96,735

 
171,901

 
85,644

 
60,721

 
50,429

 
54,729

 
15,325

 
227,301

 
5,082

 
767,867

11
 
53,872

 
82,677

 
74,977

 
58,964

 
70,190

 
38,059

 
—

 
148,656

 
3,233

 
530,628

12
 
51,861

 
33,083

 
52,013

 
47,162

 
20,214

 
29,674

 
6,999

 
95,943

 
477

 
337,426

13
 
39,047

 
57,585

 
10,231

 
15,916

 
51,816

 
45,984

 
—

 
114,971

 
498

 
336,048

14,15,16
 
10,898

 
23,808

 
39,008

 
29,306

 
40,627

 
13,194

 
—

 
98,165

 
2,548

 
257,554

Collectively evaluated for impairment
 
4,181,906

 
4,002,895

 
1,768,820

 
1,307,923

 
1,020,628

 
1,282,569

 
4,020,591

 
3,562,589

 
105,446

 
21,253,367

Individually evaluated for impairment
 
21,146

 
6,613

 
12,454

 
21,995

 
1,909

 
22,114

 
—

 
50,319

 
3,976

 
140,526

Total C&I loans
 
$
4,203,052

 
$
4,009,508

 
$
1,781,274

 
$
1,329,918

 
$
1,022,537

 
$
1,304,683

 
$
4,020,591

 
$
3,612,908

 
$
109,422

 
$
21,393,893

(a)
TRUPS loans were originated prior to 2016. Total balance of TRUPS as of June 30, 2020 is $209.2 million, with $3.3 million in PD 3, $60.9 million in PD 4, $47.9 million in PD 5, $38.6 million in PD 6, $13.4 million in PD 7, $20.7 million in PD 9, $18.6 million in PD 10, and $5.8 million in PD 13.
(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)
$22.7 million of C&I loans were converted from revolving to term in 2020.
(d)
2020 balance includes PPP loans.
 
 
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
 
$
21,886

 
$
—

 
$
392

 
$
106

 
$
158

 
$
1,190

 
$
—

 
$
—

 
$
23,732

2
 
7,798

 
30,919

 
405

 
216

 
617

 
3,145

 
—

 
—

 
43,100

3
 
97,338

 
212,413

 
75,483

 
34,863

 
42,468

 
25,511

 
78,004

 
181

 
566,261

4
 
90,915

 
292,657

 
100,058

 
130,549

 
94,836

 
45,975

 
839

 
238

 
756,067

5
 
320,904

 
279,229

 
138,520

 
152,573

 
112,018

 
45,048

 
37,306

 
6,224

 
1,091,822

6
 
264,892

 
215,714

 
125,075

 
107,697

 
33,716

 
119,742

 
37,800

 
7,930

 
912,566

7
 
164,896

 
293,784

 
121,601

 
64,796

 
20,076

 
24,648

 
40,187

 
1,224

 
731,212

8
 
23,028

 
93,700

 
55,579

 
11,850

 
28,382

 
50,403

 
6,845

 
128

 
269,915

9
 
35,357

 
36,942

 
25,157

 
22,936

 
2,219

 
19,126

 
280

 
—

 
142,017

10
 
23,623

 
8,323

 
7,323

 
2,803

 
9,125

 
17,320

 
—

 
—

 
68,517

11
 
6,936

 
21,414

 
6,890

 
7,347

 
3,862

 
19,638

 
—

 
1,330

 
67,417

12
 
2,962

 
14,437

 
2,383

 
905

 
652

 
13,476

 
64

 
228

 
35,107

13
 
525

 
455

 
771

 
16,185

 
—

 
570

 
328

 
—

 
18,834

14,15,16
 
515

 
10,808

 
45

 
19,065

 
128

 
3,882

 
7,553

 
—

 
41,996

Collectively evaluated for impairment
 
1,061,575

 
1,510,795

 
659,682

 
571,891

 
348,257

 
389,674

 
209,206

 
17,483

 
4,768,563

Individually evaluated for impairment
 
—

 
—

 
—

 
—

 
—

 
160

 
—

 
—

 
160

Total CRE-IP
 
$
1,061,575

 
$
1,510,795

 
$
659,682

 
$
571,891

 
$
348,257

 
$
389,834

 
$
209,206

 
$
17,483

 
$
4,768,723


 
 
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
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
20

 
$
—

 
$
—

 
$
20

2
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

3
 
—

 
151

 
268

 
482

 
—

 
95

 
—

 
—

 
996

4
 
—

 
722

 
—

 
—

 
—

 
106

 
—

 
—

 
828

5
 
93

 
—

 
—

 
—

 
76

 
12

 
—

 
—

 
181

6
 
14,512

 
106

 
43

 
333

 
30

 
234

 
—

 
—

 
15,258

7
 
348

 
470

 
2,904

 
1,776

 
—

 
241

 
13

 
—

 
5,752

8
 
467

 
24

 
443

 
—

 
6

 
89

 
100

 
—

 
1,129

9
 
325

 
520

 
262

 
—

 
490

 
76

 
—

 
—

 
1,673

10
 
179

 
960

 
277

 
—

 
—

 
6

 
—

 
—

 
1,422

11
 
4,093

 
8,660

 
218

 
156

 
—

 
50

 
—

 
—

 
13,177

12
 
154

 
1,530

 
44

 
—

 
—

 
538

 
—

 
—

 
2,266

13
 
1,310

 
—

 
—

 
—

 
—

 
132

 
—

 
—

 
1,442

14,15,16
 
171

 
264

 
—

 
—

 
—

 
39

 
—

 
—

 
474

Collectively evaluated for impairment
 
21,652

 
13,407

 
4,459

 
2,747

 
602

 
1,638

 
113

 
—

 
44,618

Individually evaluated for impairment
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Total CRE-RES
 
$
21,652

 
$
13,407

 
$
4,459

 
$
2,747

 
$
602

 
$
1,638

 
$
113

 
$
—

 
$
44,618


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”) 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 as of June 30, 2020. Within consumer real estate, classes include home equity line of credit ("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 table 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. All loans in the following table classified in a vintage year are real estate installment loans.
 
 
Consumer Real Estate
(Dollars in thousands)
 
2020
 
2019
 
2018
 
2017
 
2016
 
Prior to 2016
 
Revolving
Loans
 
Revolving
Loans converted
to term loans (a)
 
Total
FICO score 740 or greater
 
$
394,137

 
$
576,132

 
$
410,188

 
$
420,822

 
$
527,019

 
$
1,255,357

 
$
626,844

 
$
135,436

 
$
4,345,935

FICO score 720-739
 
43,808

 
67,904

 
26,383

 
37,259

 
48,677

 
132,407

 
76,045

 
28,913

 
461,396

FICO score 700-719
 
31,459

 
66,155

 
28,201

 
26,164

 
45,038

 
110,244

 
54,941

 
29,613

 
391,815

FICO score 660-699
 
41,314

 
51,096

 
33,382

 
32,745

 
36,625

 
153,335

 
76,593

 
44,067

 
469,157

FICO score 620-659
 
12,524

 
17,140

 
10,922

 
12,789

 
13,178

 
70,067

 
24,185

 
29,940

 
190,745

FICO score less than 620
 
2,180

 
11,168

 
5,832

 
9,227

 
14,456

 
79,599

 
25,526

 
45,357

 
193,345

Total
 
$
525,422

 
$
789,595

 
$
514,908

 
$
539,006

 
$
684,993

 
$
1,801,009

 
$
884,134

 
$
313,326

 
$
6,052,393

(a) $10.8 million of HELOC loans were converted from revolving to term in 2020.

The following table reflects the amortized cost basis by year of origination and refreshed FICO scores for other consumer loans as of June 30, 2020.
 
 
Other Consumer
(Dollars in thousands)
 
2020
 
2019
 
2018
 
2017
 
2016
 
Prior to 2016
 
Revolving
Loans
 
Revolving
Loans converted
to term loans (a)
 
Total
FICO score 740 or greater
 
$
16,160

 
$
36,450

 
$
21,476

 
$
10,499

 
$
3,988

 
$
14,774

 
$
173,832

 
$
4,401

 
$
281,580

FICO score 720-739
 
3,238

 
5,226

 
2,784

 
1,615

 
747

 
1,844

 
27,603

 
1,319

 
44,376

FICO score 700-719
 
2,168

 
4,246

 
2,542

 
1,521

 
706

 
1,980

 
19,983

 
1,052

 
34,198

FICO score 660-699
 
3,654

 
6,546

 
3,149

 
2,172

 
1,423

 
2,737

 
27,534

 
1,581

 
48,796

FICO score 620-659
 
1,269

 
2,386

 
1,576

 
891

 
836

 
1,813

 
10,759

 
963

 
20,493

FICO score less than 620
 
333

 
1,059

 
1,044

 
522

 
2,311

 
3,167

 
10,037

 
1,394

 
19,867

Total
 
$
26,822

 
$
55,913

 
$
32,571

 
$
17,220

 
$
10,011

 
$
26,315

 
$
269,748

 
$
10,710

 
$
449,310

(a) $3.9 million of other consumer loans were converted from revolving to term in 2020.

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 loans 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.
Nonaccrual and Past Due Loans
Nonperforming loans 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 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, and second liens, regardless of delinquency status, behind first liens that are 90 or more days past due, are bankruptcies, or are TDRs. Past due loans are loans contractually past due as to interest or principal payments, but which have not yet been put on nonaccrual status.
The following table reflects accruing and non-accruing loans by class on June 30, 2020:
 
 
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)
 
$
17,031,822

 
$
4,671

 
$
287

 
$
17,036,780

 
$
79,022

 
$
254

 
$
48,069

 
$
127,345

 
$
17,164,125

Loans to mortgage companies
 
4,019,766

 
825

 
—

 
4,020,591

 
—

 
—

 
—

 
—

 
4,020,591

TRUPS (b)
 
209,177

 
—

 
—

 
209,177

 
—

 
—

 
—

 
—

 
209,177

Total commercial (C&I)
 
21,260,765

 
5,496

 
287

 
21,266,548

 
79,022

 
254

 
48,069

 
127,345

 
21,393,893

Commercial real estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income CRE
 
4,766,561

 
95

 
—

 
4,766,656

 
797

 
—

 
1,270

 
2,067

 
4,768,723

Residential CRE
 
44,618

 
—

 
—

 
44,618

 
—

 
—

 
—

 
—

 
44,618

Total commercial real estate
 
4,811,179

 
95

 
—

 
4,811,274

 
797

 
—

 
1,270

 
2,067

 
4,813,341

Consumer real estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
HELOC
 
1,136,288

 
5,736

 
6,800

 
1,148,824

 
41,608

 
1,720

 
5,308

 
48,636

 
1,197,460

R/E installment loans
 
4,787,467

 
13,778

 
6,000

 
4,807,245

 
31,786

 
2,077

 
13,825

 
47,688

 
4,854,933

Total consumer real estate
 
5,923,755

 
19,514

 
12,800

 
5,956,069

 
73,394

 
3,797

 
19,133

 
96,324

 
6,052,393

Credit card & other:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Credit card
 
164,527

 
1,520

 
1,297

 
167,344

 
—

 
—

 
—

 
—

 
167,344

Other
 
281,066

 
531

 
114

 
281,711

 
86

 
77

 
92

 
255

 
281,966

Total credit card & other
 
445,593

 
2,051

 
1,411

 
449,055

 
86

 
77

 
92

 
255

 
449,310

Total loans, net of unearned income
 
$
32,441,292

 
$
27,156

 
$
14,498

 
$
32,482,946

 
$
153,299

 
$
4,128

 
$
68,564

 
$
225,991

 
$
32,708,937


(a) $65.3 million of general C&I loans are nonaccrual loans with no related allowance.
(b) TRUPS is presented net of an amortizing discount of $18.4 million.
The following table reflects accruing and non-accruing loans by class on December 31, 2019:
 
 
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 agree 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.

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.
For all classes within the commercial portfolio segment, 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 consumer loans are generally structured using parameters of U.S. government-sponsored programs such as the former Home Affordable Modification Program (“HAMP”). Within the HELOC 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
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.
On June 30, 2020 and December 31, 2019, FHN had $192.6 million and $206.3 million of portfolio loans classified as TDRs, respectively. For TDRs in the loan portfolio, FHN had loan loss reserves of $13.6 million, or 7 percent as of June 30, 2020, and $19.7 million, or 10 percent as of December 31, 2019. Additionally, $45.1 million and $51.1 million of loans held-for-sale as of June 30, 2020 and December 31, 2019, respectively, were classified as TDRs.
The following tables reflect portfolio loans that were classified as TDRs during the three and six months ended June 30, 2020 and 2019:
 
 
Three Months Ended June 30, 2020
 
Six Months Ended June 30, 2020
(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
 
1

 
$
4,649

 
$
4,699

 
4

 
$
10,576

 
$
9,132

   Total commercial (C&I)
 
1

 
4,649

 
4,699

 
4

 
10,576

 
9,132

Consumer real estate:
 
 
 
 
 
 
 
 
 
 
 
 
HELOC
 
4

 
152

 
151

 
12

 
1,064

 
1,042

R/E installment loans
 
40

 
7,793

 
7,741

 
50

 
9,304

 
9,238

   Total consumer real estate
 
44

 
7,945

 
7,892

 
62

 
10,368

 
10,280

Credit card & other
 
16

 
96

 
91

 
40

 
254

 
237

Total troubled debt restructurings
 
61

 
$
12,690

 
$
12,682

 
106

 
$
21,198

 
$
19,649


 
 
Three Months Ended June 30, 2019
 
Six Months Ended June 30, 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
 
1

 
$
222

 
$
222

 
3

 
$
14,117

 
$
14,042

   Total commercial (C&I)
 
1

 
222

 
222

 
3

 
14,117

 
14,042

Consumer real estate:
 
 
 
 
 
 
 
 
 
 
 
 
HELOC
 
25

 
3,271

 
3,235

 
44

 
5,375

 
5,319

R/E installment loans
 
19

 
1,534

 
1,523

 
66

 
8,959

 
8,936

   Total consumer real estate
 
44

 
4,805

 
4,758

 
110

 
14,334

 
14,255

Credit card & other
 
18

 
109

 
103

 
33

 
183

 
174

Total troubled debt restructurings
 
63

 
$
5,136

 
$
5,083

 
146

 
$
28,634

 
$
28,471



The following tables present TDRs which re-defaulted during the three and six months ended June 30, 2020 and 2019, and 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 June 30, 2020
 
Six Months Ended June 30, 2020
(Dollars in thousands)
 
Number
 
Recorded
Investment
 
Number
 
Recorded
Investment
Commercial (C&I):
 
 
 
 
 
 
 
 
General C&I
 
—

 
$
—

 
—

 
$
—

Total commercial (C&I)
 
—

 
—

 
—

 
—

Consumer real estate:
 
 
 
 
 
 
 
 
HELOC
 
3

 
882

 
7

 
1,842

R/E installment loans
 
5

 
1,351

 
10

 
1,695

Total consumer real estate
 
8

 
2,233

 
17

 
3,537

Credit card & other
 
7

 
29

 
14

 
60

Total troubled debt restructurings
 
15

 
$
2,262

 
31

 
$
3,597



 
 
Three Months Ended June 30, 2019
 
Six Months Ended June 30, 2019
(Dollars in thousands)
 
Number
 
Recorded
Investment
 
Number
 
Recorded
Investment
Commercial (C&I):
 
 
 
 
 
 
 
 
General C&I
 
—

 
$
—

 
—

 
$
—

Total commercial (C&I)
 
—

 
—

 
—

 
—

Consumer real estate:
 
 
 
 
 
 
 
 
HELOC
 
1

 
66

 
2

 
99

R/E installment loans
 
1

 
38

 
1

 
38

Total consumer real estate
 
2

 
104

 
3

 
137

Credit card & other
 
7

 
14

 
15

 
32

Total troubled debt restructurings
 
9

 
$
118

 
18

 
$
169



Accrued Interest

In accordance with its accounting policy elections, FHN has excluded AIR from the amortized cost basis of Loans, net of unearned income. AIR is included within Other assets in the Consolidated Condensed Statements of Condition and the amounts by portfolio segment are presented in the following table.
 
 
June 30
(Dollars in thousands)
 
2020
Commercial:
 
 
Commercial, financial, and industrial
 
$
56,828

Commercial real estate
 
16,528

Consumer:
 
 
Consumer real estate
 
18,020

Credit card & other
 
1,546

Allowance for Credit Losses on COVID-19 Deferrals
 
(860
)
Total accrued interest
 
$
92,062




Purchased Credit-Impaired Loans

The following table presents a rollforward of the accretable yield for the year ended December 31, 2019:
 
 
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.

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.

The following table reflects the outstanding principal balance and carrying amounts of the acquired PCI loans as of December 31, 2019:
 
 
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 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.

 
Three Months Ended June 30
 
Six Months Ended June 30
 
 
2019
 
2019
(Dollars in thousands)
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
Average
Recorded
Investment
 
Interest
Income
Recognized
Impaired loans with no related allowance recorded:
 
 
 
 
 
 
 
 
Commercial:
 
 
 
 
 
 
 
 
   General C&I
 
$
67,337

 
$
178

 
$
61,552

 
$
357

Loans to mortgage companies
 
18,628

 
—

 
9,314

 
—

   Income CRE
 
1,481

 
13

 
1,518

 
27

   Residential CRE
 
—

 
—

 
—

 
—

   Total
 
$
87,446

 
$
191

 
$
72,384

 
$
384

Consumer:
 
 
 
 
 
 
 
 
   HELOC (a)
 
$
6,462

 
$
—

 
$
7,030

 
$
—

   R/E installment loans (a)
 
8,910

 
—

 
8,773

 
—

   Total
 
$
15,372

 
$
—

 
$
15,803

 
$
—

Impaired loans with related allowance recorded:
 
 
 
 
 
 
 
 
Commercial:
 
 
 
 
 
 
 
 
   General C&I
 
$
10,760

 
$
—

 
$
9,026

 
$
—

   TRUPS
 
2,806

 
—

 
2,835

 
—

   Income CRE
 
347

 
—

 
357

 
9

   Residential CRE
 
—

 
—

 
—

 
—

   Total
 
$
13,913

 
$
—

 
$
12,218

 
$
9

Consumer:
 
 
 
 
 
 
 
 
   HELOC
 
$
62,623

 
$
504

 
$
63,819

 
$
1,026

   R/E installment loans
 
107,892

 
815

 
107,975

 
1,637

   Credit card & other
 
692

 
4

 
691

 
9

   Total
 
$
171,207

 
$
1,323

 
$
172,485

 
$
2,672

Total commercial
 
$
101,359

 
$
191

 
$
84,602

 
$
393

Total consumer
 
$
186,579

 
$
1,323

 
$
188,288

 
$
2,672

Total impaired loans
 
$
287,938

 
$
1,514

 
$
272,890

 
$
3,065

(a)
All discharged bankruptcy loans are charged down to an estimate of net realizable value and do not carry any allowance.
v3.20.2
Allowance for Loan Losses
 6 Months Ended
Jun. 30, 2020
Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract]  
Allowance for Loan Losses 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 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.
Periods after 2019
The ALLL has been determined in accordance with ASC 326-20, which requires a recognition of current expected credit losses on the amortized cost basis of loans. During the first half of 2020, expected credit loss estimates were adversely affected across all portfolio segments due to the 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.
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. FHN selected Moody’s baseline forecast as the primary source for its macroeconomic inputs which are inclusive of the following assumptions related to the economic effects of the COVID-19 pandemic:
•
1.6mm confirmed COVID-19 cases, begin to abate by early July. Assumes no second wave.
•
Unemployment peak at 20mm in 2Q20
•
Annualized GDP growth rate of -33% in 2Q20, 16% in 3Q20, & 0.6% in 4Q20
•
Quicker recovery than Great Recession
•
V-shaped recovery for housing including residential construction and sales
•
Manufacturing should have a stronger initial bounce
•
More caution due to COVID-19 drives a slower and longer recovery for the service sector; may depend on vaccine.
Where macroeconomic forecast variables used in the models do 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 inputs qualitatively to account for this assistance.
FHN also utilized targeted reviews of higher stressed loan portfolio (industries) that are most exposed to the effects of the COVID-19 pandemic, including Franchise Finance, Energy, Non-Profit, Arts & Entertainment, Restaurants outside of Franchise Finance, Nursing/Assisted Living and Hospitality within the C&I segment and CRE-Hospitality and CRE-Retail within the Commercial Real Estate segment. This analysis reviewed the level of impact from COVID-19 and the likelihood of additional financial assistance needed beyond 180 days. This analysis was utilized in developing qualitative adjustments to increase the recorded ALLL attributable to these components beyond the modeled results. FHN reviewed consumer deferrals and forbearance payment rates to analyze the likelihood customers will have difficulty making payments after the deferral or forbearance period ends. The analysis was utilized to develop an additional qualitative adjustment to increase the recorded ALLL for consumer real estate loans. 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 loans in C&I and CRE have shorter expected lives, based on the contractual term of loan agreements, prepayment estimates and a limited amount of renewal or extension options that are not unconditionally cancellable by FHN. Estimated weighted average lives are normally under 3 years. TRUPs loans are an exception due to longer contractual lives, beneficial borrower terms and balloon payoff structure. Consumer HELOC and installment 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.
As of June 30, 2020, FHN had General C&I loans with amortized cost of approximately $65 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 and six months ended June 30, 2020, respectively, FHN recognized charge-offs of approximately $1.5 million and $13.0 million on these loans related to reductions in estimated collateral values.
Consumer HELOC and installment loans with amortized cost based on the value of underlying real estate collateral were approximately $10 million and $26 million, respectively, as of June 30, 2020. At a minimum, the estimated value of the collateral for each loan equals the current book value. Charge offs during the three and six months ended June 30, 2020 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 the first half of 2020 resulted in higher credit expense for unfunded commitments. However, in Q1 2020 this effect of higher loss forecasts was offset somewhat because many borrowers drew on available lines prior to the end of the 1st quarter which resulted in higher loan balances (and ALLL). During the second quarter, borrowers paid down on available lines which combined with higher loss rates caused credit loss expense to increase. Total credit loss expense for unfunded commitments was $11.2 million and $20.4 million, respectively, for the three and six months ended June 30, 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-dependent and were charged down to net realizable value (collateral value less estimated costs to sell).

The following table provides a rollforward of the allowance for loan losses by portfolio segment for the three and six months ended June 30, 2020 and 2019:
(Dollars in thousands)
 
C&I
 
Commercial
Real Estate
 
Consumer
Real Estate (a)
 
Credit Card
and Other
 
Total
Balance as of April 1, 2020
 
$
254,516

 
$
47,625

 
$
123,022

 
$
19,327

 
$
444,490

Charge-offs
 
(18,201
)
 
(61
)
 
(1,968
)
 
(2,677
)
 
(22,907
)
Recoveries
 
1,073

 
156

 
3,987

 
1,082

 
6,298

Provision/(provision credit) for loan losses
 
81,334

 
9,565

 
18,716

 
385

 
110,000

Balance as of June 30, 2020
 
318,722

 
57,285

 
143,757

 
18,117

 
537,881

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
 
(24,952
)
 
(642
)
 
(4,278
)
 
(6,488
)
 
(36,360
)
Recoveries
 
2,008

 
729

 
7,542

 
2,261

 
12,540

Provision/(provision credit) for loan loses
 
200,398

 
28,434

 
19,058

 
7,110

 
255,000

Balance as of June 30, 2020
 
318,722

 
57,285

 
143,757

 
18,117

 
537,881

Allowance - individually evaluated for impairment
 
16,577

 
—

 
13,275

 
352

 
30,204

Allowance - collectively evaluated for impairment
 
302,145

 
57,285

 
130,482

 
17,765

 
507,677

Loans, net of unearned as of June 30, 2020:
 
 
 
 
 
 
 
 
 
 
  Individually evaluated for impairment
 
140,526

 
160

 
148,543

 
688

 
289,917

  Collectively evaluated for impairment
 
21,253,367

 
4,813,181

 
5,903,850

 
448,622

 
32,419,020

Total loans, net of unearned income (b)
 
$
21,393,893

 
$
4,813,341

 
$
6,052,393

 
$
449,310

 
$
32,708,937

Balance as of April 1, 2019
 
$
103,713

 
$
34,382

 
$
34,154

 
$
12,662

 
$
184,911

Charge-offs
 
(6,590
)
 
(121
)
 
(1,714
)
 
(3,798
)
 
(12,223
)
Recoveries 
 
519

 
(88
)
 
5,525

 
1,105

 
7,061

Provision/(provision credit) for loan losses 
 
18,454

 
(1,220
)
 
(6,433
)
 
2,199

 
13,000

Balance as of June 30, 2019
 
116,096

 
32,953

 
31,532

 
12,168

 
192,749

Balance as of January 1, 2019
 
98,947

 
31,311

 
37,439

 
12,727

 
180,424

Charge-offs
 
(9,691
)
 
(555
)
 
(4,518
)
 
(7,986
)
 
(22,750
)
Recoveries
 
1,348

 
(31
)
 
9,566

 
2,192

 
13,075

Provision/(provision credit) for loan losses
 
25,492

 
2,228

 
(10,955
)
 
5,235

 
22,000

Balance as of June 30, 2019
 
116,096

 
32,953

 
31,532

 
12,168

 
192,749

Allowance - individually evaluated for impairment 
 
8,484

 
—

 
22,255

 
442

 
31,181

Allowance - collectively evaluated for impairment 
 
106,758

 
32,953

 
8,199

 
11,669

 
159,579

Allowance - purchased credit-impaired loans
 
854

 
—

 
1,078

 
57

 
1,989

Loans, net of unearned as of June 30, 2019:
 
 
 
 
 
 
 
 
 
 
  Individually evaluated for impairment 
 
115,808

 
1,777

 
182,442

 
699

 
300,726

  Collectively evaluated for impairment
 
18,904,621

 
3,852,027

 
6,093,863

 
492,774

 
29,343,285

  Purchased credit-impaired loans
 
33,840

 
7,227

 
26,829

 
903

 
68,799

Total loans, net of unearned income
 
$
19,054,269

 
$
3,861,031

 
$
6,303,134

 
$
494,376

 
$
29,712,810



a) In first quarter 2020, the Permanent Mortgage portfolio was combined into Consumer Real Estate portfolio, all prior periods were revised for comparability.
b) C&I loans as of June 30, 2020 include $2.1 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 losses.

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. As of June 30, 2020, FHN recognized approximately $860 thousand in allowance for expected credit losses on COVID-19 deferrals that do not qualify for the election.
The total amount of interest reversals from loans placed on nonaccrual status during the three and six months ended June 30, 2020 was not material. In addition, the amount of income recognized on nonaccrual loans for the three and six months ended in June 30, 2020 was not material.
v3.20.2
Intangible Assets
 6 Months Ended
Jun. 30, 2020
Goodwill and Intangible Assets Disclosure [Abstract]  
Intangible Assets Intangible Assets
The following is a summary of other intangible assets included in the Consolidated Condensed Statements of Condition:
 
 
 
June 30, 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

 
$
(56,561
)
 
$
100,589

 
$
157,150

 
$
(47,372
)
 
$
109,778

Customer relationships (a)
 
23,000

 
(6,158
)
 
16,842

 
77,865

 
(60,150
)
 
17,715

Other (b)
 
5,622

 
(3,445
)
 
2,177

 
5,622

 
(2,915
)
 
2,707

Total
 
$
185,772

 
$
(66,164
)
 
$
119,608

 
$
240,637

 
$
(110,437
)
 
$
130,200


(a)
2020 decrease in gross carrying amounts and accumulated amortization associated with $54.9 million of customer relationships fully amortized at December 31, 2019.
(b)
Balance primarily includes noncompete covenants, as well as $.3 million related to state banking licenses not subject to amortization.
Amortization expense was $5.3 million and $6.2 million for the three months ended June 30, 2020 and 2019, respectively and
$10.6 million and $12.4 million for six months ended June 30, 2020 and 2019, respectively. As of June 30, 2020 the estimated aggregated amortization expense is expected to be:
 
(Dollars in thousands)
 
 
Year
 
Amortization
Remainder of 2020
 
$
10,568

2021
 
19,547

2022
 
17,412

2023
 
16,117

2024
 
14,679

2025
 
12,580


Gross goodwill, accumulated impairments, and accumulated divestiture related write-offs were determined beginning January 1, 2002, when a change 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 to the non-strategic segment, resulting in $0 net goodwill allocated to the non-strategic segment as of June 30, 2020 and December 31, 2019. The regional banking and fixed income segments do not have any accumulated impairments or divestiture related write-offs. The following is a summary of goodwill by reportable segment included in the Consolidated Condensed Statements of Condition as of June 30, 2020 and December 31, 2019.
 
(Dollars in thousands)
 
Regional
Banking
 
Fixed
Income
 
Total
December 31, 2018
 
$
1,289,819

 
$
142,968

 
$
1,432,787

Additions
 
—

 
—

 
—

June 30, 2019
 
$
1,289,819

 
$
142,968

 
$
1,432,787

 
 
 
 
 
 
 
December 31, 2019
 
$
1,289,819

 
$
142,968

 
$
1,432,787

Additions
 
—

 
—

 
—

June 30, 2020
 
$
1,289,819

 
$
142,968

 
$
1,432,787
v3.20.2
Other Income And Other Expense
 6 Months Ended
Jun. 30, 2020
Other Nonoperating Income (Expense) [Abstract]  
Other Income And Other Expense Other Income and Other Expense
Following is detail of All other income and commissions and All other expense as presented in the Consolidated Condensed Statements of Income:
 
 
Three Months Ended
June 30
 
Six Months Ended
June 30
(Dollars in thousands)
2020
 
2019
 
2020
 
2019
All other income and commissions:
 
 
 
 
 
 
 
Deferred compensation (a)
$
8,171

 
$
1,938

 
$
(1,336
)
 
$
7,412

Other service charges
4,582

 
5,624

 
9,801

 
9,493

Mortgage banking
4,138

 
2,572

 
6,569

 
4,458

ATM and interchange fees
4,009

 
4,262

 
8,221

 
7,503

Letter of credit fees
1,559

 
1,253

 
3,021

 
2,621

Electronic banking fees
1,182

 
1,267

 
2,212

 
2,538

Dividend income
1,057

 
1,809

 
2,187

 
4,122

Insurance commissions
401

 
566

 
1,190

 
1,190

Gain/(loss) on extinguishment of debt
—

 
—

 
—

 
(1
)
Other
4,890

 
6,376

 
12,488

 
10,962

Total
$
29,989

 
$
25,667

 
$
44,353

 
$
50,298

All other expense:
 
 
 
 
 
 
 
Credit expense on unfunded commitments (b)
$
11,158

 
$
(489
)
 
$
20,388

 
$
(93
)
Non-service components of net periodic pension and post-retirement cost
2,961

 
559

 
5,469

 
991

Other insurance and taxes
2,599

 
2,495

 
5,278

 
5,189

Miscellaneous loan costs
2,356

 
857

 
3,450

 
1,884

Supplies
1,933

 
1,342

 
4,344

 
3,146

Employee training and dues
654

 
1,251

 
1,995

 
2,708

Customer relations
632

 
1,540

 
2,636

 
3,139

Travel and entertainment
474

 
2,906

 
3,183

 
5,618

OREO
437

 
25

 
253

 
(341
)
Tax credit investments
426

 
267

 
772

 
942

Litigation and regulatory matters (c)
3

 
(8,230
)
 
16

 
(8,217
)
Other
12,118

 
26,158

 
21,193

 
33,046

Total
$
35,751

 
$
28,681

 
$
68,977

 
$
48,012


Certain previously reported amounts have been reclassified to agree with current presentation.
(a)
Amounts driven by market conditions and are mirrored by changes in deferred compensation expense which is included in employee compensation expense; Six months ended June 30, 2020 decrease driven by equity market valuations.
(b)
Three and six months ended June 30, 2020 increases largely driven by the economic forecast attributable to the COVID-19 pandemic.
(c)
Litigation and regulatory matters for the three and six months ended June 30, 2019 includes an $8.3 million expense reversal related to the settlement of litigation matters within the Non-Strategic segment.
v3.20.2
Components of Other Comprehensive Income/(loss)
 6 Months Ended
Jun. 30, 2020
Other Comprehensive Income (Loss), Net of Tax [Abstract]  
Components of Other Comprehensive Income/(loss) Components of Other Comprehensive Income/(loss)
The following table provides the changes in accumulated other comprehensive income/(loss) by component, net of tax, for the three and six months ended June 30, 2020 and 2019:
 
(Dollars in thousands)
 
Securities AFS
 
Cash Flow
Hedges
 
Pension and
Post-retirement
Plans
 
Total
Balance as of April 1, 2020
 
$
119,357

 
$
16,288

 
$
(271,809
)
 
$
(136,164
)
Net unrealized gains/(losses)
 
(1,030
)
 
1,640

 
—

 
610

Amounts reclassified from AOCI
 
—

 
(1,623
)
 
2,379

 
756

Other comprehensive income/(loss)
 
(1,030
)
 
17

 
2,379

 
1,366

Balance as of June 30, 2020
 
$
118,327

 
$
16,305

 
$
(269,430
)
 
$
(134,798
)
 
 
 
 
 
 
 
 
 
Balance as of January 1, 2020
 
$
31,079

 
$
3,227

 
$
(273,914
)
 
$
(239,608
)
Net unrealized gains/(losses)
 
87,248

 
14,795

 
—

 
102,043

Amounts reclassified from AOCI
 
—

 
(1,717
)
 
4,484

 
2,767

Other comprehensive income/(loss)
 
87,248

 
13,078

 
4,484

 
104,810

Balance as of June 30, 2020
 
$
118,327

 
$
16,305

 
$
(269,430
)
 
$
(134,798
)


(Dollars in thousands)
 
Securities AFS
 
Cash Flow
Hedges
 
Pension and
Post-retirement
Plans
 
Total
Balance as of April 1, 2019
 
$
(27,121
)
 
$
(6,725
)
 
$
(287,305
)
 
$
(321,151
)
Net unrealized gains/(losses)
 
47,991

 
7,575

 
—

 
55,566

Amounts reclassified from AOCI
 
201

 
1,334

 
1,561

 
3,096

Other comprehensive income/(loss)
 
48,192

 
8,909

 
1,561

 
58,662

Balance as of June 30, 2019
 
$
21,071

 
$
2,184

 
$
(285,744
)
 
$
(262,489
)
 
 
 
 
 
 
 
 
 
Balance as of January 1, 2019
 
$
(75,736
)
 
$
(12,112
)
 
$
(288,768
)
 
$
(376,616
)
Net unrealized gains/(losses)
 
96,606

 
11,511

 
—

 
108,117

Amounts reclassified from AOCI
 
201

 
2,785

 
3,024

 
6,010

Other comprehensive income/(loss)
 
96,807

 
14,296

 
3,024

 
114,127

Balance as of June 30, 2019
 
$
21,071

 
$
2,184

 
$
(285,744
)
 
$
(262,489
)




















Reclassifications from AOCI, and related tax effects, were as follows:
(Dollars in thousands)
 
Three Months Ended
June 30
 
Six Months Ended
June 30
 
 
Details about AOCI
 
2020
 
2019
 
2020
 
2019
 
Affected line item in the statement where net income is presented
Securities AFS:
 
 
 
 
 
 
 
 
 
 
Realized (gains)/losses on securities AFS
 
$
—

 
$
267

 
$
—

 
$
267

 
Debt securities gains/(losses), net
Tax expense/(benefit)
 
—

 
(66
)
 
—

 
(66
)
 
Provision/(benefit) for income taxes
 
 
—

 
201

 
—

 
201

 
 
Cash flow hedges:
 
 
 
 
 
 
 
 
 
 
Realized (gains)/losses on cash flow hedges
 
(2,153
)
 
1,772

 
(2,277
)
 
3,699

 
Interest and fees on loans
Tax expense/(benefit)
 
530

 
(438
)
 
560

 
(914
)
 
Provision/(benefit) for income taxes
 
 
(1,623
)
 
1,334

 
(1,717
)
 
2,785

 
 
Pension and Postretirement Plans:
 
 
 
 
 
 
 
 
 
 
Amortization of prior service cost and net actuarial gain/(loss)
 
3,155

 
2,074

 
5,946

 
4,017

 
All other expense
Tax expense/(benefit)
 
(776
)
 
(513
)
 
(1,462
)
 
(993
)
 
Provision/(benefit) for income taxes
 
 
2,379

 
1,561

 
4,484

 
3,024

 
 
Total reclassification from AOCI
 
$
756

 
$
3,096

 
$
2,767

 
$
6,010

 
 
v3.20.2
Earnings Per Share
 6 Months Ended
Jun. 30, 2020
Earnings Per Share [Abstract]  
Earnings Per Share Earnings Per Share
The following table provides reconciliations of net income to net income available to common shareholders and the difference between average basic common shares outstanding and average diluted common shares outstanding:
 
 
Three Months Ended
June 30
 
Six Months Ended
June 30
(Dollars and shares in thousands, except per share data)
2020
 
2019
 
2020
 
2019
Net income/(loss)
$
56,665

 
$
113,742

 
$
73,137

 
$
217,147

Net income attributable to noncontrolling interest
2,851

 
2,852

 
5,703

 
5,672

Net income/(loss) attributable to controlling interest
53,814

 
110,890

 
67,434

 
211,475

Preferred stock dividends
1,550

 
1,550

 
3,100

 
3,100

Net income/(loss) available to common shareholders
$
52,264

 
$
109,340

 
$
64,334

 
$
208,375

 
 
 
 
 
 
 
 
Weighted average common shares outstanding—basic
312,090

 
314,063

 
311,843

 
315,740

Effect of dilutive securities
846

 
1,723

 
949

 
1,980

Weighted average common shares outstanding—diluted
312,936

 
315,786

 
312,792

 
317,720

 
 
 
 
 
 
 
 
Net income/(loss) per share available to common shareholders
$
0.17

 
$
0.35

 
$
0.21

 
$
0.66

Diluted income/(loss) per share available to common shareholders
$
0.17

 
$
0.35

 
$
0.21

 
$
0.66


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
June 30
 
Six Months Ended
June 30
(Shares in thousands)
 
2020
 
2019
 
2020
 
2019
Stock options excluded from the calculation of diluted EPS
 
5,134

 
2,773

 
3,291

 
2,692

Weighted average exercise price of stock options excluded from the calculation of diluted EPS
 
$
15.80

 
$
21.03

 
$
18.26

 
$
21.39

Other equity awards excluded from the calculation of diluted EPS
 
4,389

 
2,403

 
3,934

 
1,985
v3.20.2
Contingencies And Other Disclosures
 6 Months Ended
Jun. 30, 2020
Commitments and Contingencies Disclosure [Abstract]  
Contingencies and Other Disclosures 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 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, and FHN is cooperating in those matters. Pending and threatened litigation matters sometimes are settled by the parties, and sometimes pending matters are resolved in court or before an arbitrator. 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 are disclosures for certain pending or threatened litigation matters, including all matters mentioned in (i) or (ii) and certain matters mentioned in (iii). In addition, certain other types of matters are discussed relating to FHN’s pre-2009 mortgage origination and servicing businesses. In all litigation matters discussed, 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 June 30, 2020, the aggregate amount of liabilities established for all such loss contingency matters was $.3 million. These liabilities are separate from those discussed under the heading “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 June 30, 2020, FHN is unable to estimate any material reasonably possible loss ("RPL") for contingency matters in future periods in excess of currently established liabilities.
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
In the first quarter of 2020, a former shareholder of Capital Bank Financial Corp. ("CBF") 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 of applicable insurance; and the outcome of discovery, which has not yet begun.
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 with 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 until April 2020, 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.
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 $12.9 million and $14.5 million as of June 30, 2020 and December 31, 2019, respectively. Accrued liabilities for FHN’s estimate of these obligations are reflected in Other liabilities on the Consolidated Condensed Statements of Condition. Charges/expense reversals to increase/decrease the liability are included within Repurchase and foreclosure provision/(provision credit) 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 these factors could significantly impact the estimate of FHN’s liability.
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.
v3.20.2
Pension, Savings, And Other Employee Benefits
 6 Months Ended
Jun. 30, 2020
Retirement Benefits, Description [Abstract]  
Pension, Savings, and Other Employee Benefits Pension, Savings, and Other Employee Benefits

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. Management does not currently anticipate that FHN will make a contribution to the qualified pension plan for the remainder of 2020.
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 million for 2019. FHN anticipates making benefit payments under the non-qualified plans of $5.2 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.
Service cost is included in Employee compensation, incentives, and benefits in the Consolidated Condensed Statements of Income. All other components of net periodic benefit cost are included in All other expense.
The components of net periodic benefit cost for the three months ended June 30 are as follows:

 
 
Pension Benefits
 
Other Benefits
(Dollars in thousands)
 
2020
 
2019
 
2020
 
2019
Components of net periodic benefit cost
 
 
 
 
 
 
 
 
Service cost
 
$
8

 
$
8

 
$
24

 
$
24

Interest cost
 
5,910

 
7,575

 
307

 
351

Expected return on plan assets
 
(6,169
)
 
(9,173
)
 
(311
)
 
(269
)
Amortization of unrecognized:
 
 
 
 
 
 
 
 
Prior service cost/(credit)
 
—

 
—

 
8

 
—

Actuarial (gain)/loss
 
3,224

 
2,435

 
(79
)
 
(117
)
Net periodic benefit cost/(credit)
 
$
2,973

 
$
845

 
$
(51
)
 
$
(11
)








The components of net periodic benefit cost for the six months ended June 30 are as follows:

 
 
Pension Benefits
 
Other Benefits
(Dollars in thousands)
 
2020
 
2019
 
2020
 
2019
Components of net periodic benefit cost
 
 
 
 
 
 
 
 
Service cost
 
$
16

 
$
16

 
$
49

 
$
48

Interest cost
 
11,819

 
15,150

 
611

 
702

Expected return on plan assets
 
(12,337
)
 
(18,346
)
 
(622
)
 
(538
)
Amortization of unrecognized:
 
 
 
 
 
 
 
 
Prior service cost/(credit)
 
—

 
—

 
16

 
—

Actuarial (gain)/loss
 
6,448

 
4,870

 
(154
)
 
(234
)
Net periodic benefit cost/(credit)
 
$
5,946

 
$
1,690

 
$
(100
)
 
$
(22
)
v3.20.2
Business Segment Information
 6 Months Ended
Jun. 30, 2020
Segment Reporting, Measurement Disclosures [Abstract]  
Business Segment Information Business Segment Information

FHN has four business segments: regional banking, fixed income, corporate, and non-strategic. The regional banking segment offers financial products and services, including traditional lending and deposit taking, to consumer and commercial customers 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. The 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. The 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. The 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.
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.

The following table reflects the amounts of consolidated revenue, expense, tax, and average assets for each segment for the three and six months ended June 30:
 
 
Three Months Ended
June 30
 
Six Months Ended
June 30
(Dollars in thousands)
 
2020
 
2019
 
2020
 
2019
Consolidated
 
 
 
 
 
 
 
 
Net interest income
 
$
305,344

 
$
303,610

 
$
608,146

 
$
598,118

Provision/(provision credit) for loan losses (a)
 
110,000

 
13,000

 
255,000

 
22,000

Noninterest income
 
206,269

 
157,993

 
381,025

 
299,038

Noninterest expense
 
332,168

 
300,394

 
643,487

 
596,484

Income/(loss) before income taxes
 
69,445

 
148,209

 
90,684

 
278,672

Provision/(benefit) for income taxes
 
12,780

 
34,467

 
17,547

 
61,525

Net income/(loss)
 
$
56,665

 
$
113,742

 
$
73,137

 
$
217,147

Average assets
 
$
47,934,074

 
$
41,243,007

 
$
45,742,993

 
$
41,064,093

(a)
Increase in provision expense for the three and six months ended June 30, 2020 is primarily due to the economic forecast attributable to the COVID-19 pandemic.

















 
 
Three Months Ended
June 30
 
Six Months Ended
June 30
(Dollars in thousands)
 
2020
 
2019
 
2020
 
2019
Regional Banking
 
 
 
 
 
 
 
 
Net interest income
 
$
349,749

 
$
297,534

 
$
649,936

 
$
583,636

Provision/(provision credit) for loan losses (a)
 
108,311

 
17,776

 
253,752

 
31,218

Noninterest income
 
79,312

 
81,565

 
161,208

 
154,626

Noninterest expense
 
202,297

 
192,413

 
413,331

 
391,043

Income/(loss) before income taxes
 
118,453

 
168,910

 
144,061

 
316,001

Provision/(benefit) for income taxes
 
26,948

 
39,788

 
31,349

 
73,909

Net income/(loss)
 
$
91,505

 
$
129,122

 
$
112,712

 
$
242,092

Average assets
 
$
35,732,966

 
$
30,210,728

 
$
33,952,986

 
$
29,515,773

Fixed Income
 
 
 
 
 
 
 
 
Net interest income
 
$
13,545

 
$
6,171

 
$
24,459

 
$
13,503

Noninterest income
 
113,235

 
65,622

 
208,958

 
119,429

Noninterest expense
 
83,039

 
55,534

 
164,102

 
106,067

Income/(loss) before income taxes
 
43,741

 
16,259

 
69,315

 
26,865

Provision/(benefit) for income taxes
 
10,679

 
3,840

 
16,778

 
6,297

Net income/(loss)
 
$
33,062

 
$
12,419

 
$
52,537

 
$
20,568

Average assets
 
$
3,260,362

 
$
3,127,305

 
$
3,512,277

 
$
2,988,548

Corporate
 
 
 
 
 
 
 
 
Net interest income/(expense)
 
$
(63,493
)
 
$
(7,146
)
 
$
(76,852
)
 
$
(15,060
)
Noninterest income (b)
 
12,943

 
9,401

 
9,225

 
22,754

Noninterest expense (b) (c) (d)
 
43,218

 
56,873

 
58,667

 
98,652

Income/(loss) before income taxes
 
(93,768
)
 
(54,618
)
 
(126,294
)
 
(90,958
)
Provision/(benefit) for income taxes
 
(25,097
)
 
(13,525
)
 
(31,469
)
 
(25,296
)
Net income/(loss)
 
$
(68,671
)
 
$
(41,093
)
 
$
(94,825
)
 
$
(65,662
)
Average assets
 
$
8,168,307

 
$
6,827,937

 
$
7,476,249

 
$
7,439,591

Non-Strategic
 
 
 
 
 
 
 
 
Net interest income
 
$
5,543

 
$
7,051

 
$
10,603

 
$
16,039

Provision/(provision credit) for loan losses (a)
 
1,689

 
(4,776
)
 
1,248

 
(9,218
)
Noninterest income
 
779

 
1,405

 
1,634

 
2,229

Noninterest expense
 
3,614

 
(4,426
)
 
7,387

 
722

Income/(loss) before income taxes
 
1,019

 
17,658

 
3,602

 
26,764

Provision/(benefit) for income taxes
 
250

 
4,364

 
889

 
6,615

Net income/(loss)
 
$
769

 
$
13,294

 
$
2,713

 
$
20,149

Average assets
 
$
772,439

 
$
1,077,037

 
$
801,481

 
$
1,120,181

Certain previously reported amounts have been reclassified to agree with current presentation.
(a)
Increase in provision expense for the three and six months ended June 30, 2020 is primarily due to the economic forecast attributable to the COVID-19 pandemic.
(b)
Balance for the six months ended June 30, 2020 includes a 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 acquisition-related expenses and restructuring-related costs associated with efficiency initiatives; refer to Note 2 - Acquisitions and Divestitures and Note 17 - Restructuring, Repositioning, and Efficiency for additional information.
(d)
Three and six months ended June 30, 2019 includes $9.1 million of asset impairments, professional fees, and other customer-contact and technology-related expenses associated with rebranding initiatives.






The following tables reflect a disaggregation of FHN’s noninterest income by major product line and reportable segment for the three months ended June 30, 2020 and 2019:
 
Three months ended June 30, 2020
(Dollars in thousands)
Regional Banking
 
Fixed Income
 
Corporate
 
Non-Strategic
 
Consolidated
Noninterest income:
 
 
 
 
 
 
 
 
 
Fixed income (a)
$
81

 
$
112,340

 
$
—

 
$
—

 
$
112,421

Deposit transactions and cash management
29,541

 
—

 
1,204

 
42

 
30,787

Brokerage, management fees and commissions
13,800

 
—

 
—

 
—

 
13,800

Trust services and investment management
7,750

 
—

 
(17
)
 
—

 
7,733

Bankcard income
6,551

 
—

 
74

 
27

 
6,652

BOLI (b)
—

 
—

 
6,380

 
—

 
6,380

Debt securities gains/(losses), net (b)
—

 
—

 
—

 
—

 
—

Equity securities gains/(losses), net (b)
—

 
—

 
(1,493
)
 
—

 
(1,493
)
All other income and commissions (c)
21,589

 
895

 
6,795

 
710

 
29,989

     Total noninterest income
$
79,312

 
$
113,235

 
$
12,943

 
$
779

 
$
206,269

(a)
Includes $8.8 million of underwriting, portfolio advisory, and other noninterest income in scope of Accounting Standards Codification ("ASC") 606, "Revenue From Contracts With Customers."
(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.

 
Three months ended June 30, 2019
(Dollars in thousands)
Regional Banking
 
Fixed Income
 
Corporate
 
Non- Strategic
 
Consolidated
Noninterest income:
 
 
 
 
 
 
 
 
 
Fixed income (a)
$
46

 
$
65,262

 
$
—

 
$
1,106

 
$
66,414

Deposit transactions and cash management
30,632

 
1

 
1,707

 
34

 
32,374

Brokerage, management fees and commissions
14,120

 
—

 
—

 
—

 
14,120

Trust services and investment management
7,902

 
—

 
(14
)
 
—

 
7,888

Bankcard income
6,597

 
—

 
60

 
(302
)
 
6,355

BOLI (b)
—

 
—

 
5,126

 
—

 
5,126

Debt securities gains/(losses), net (b)
—

 
—

 
(267
)
 
—

 
(267
)
Equity securities gains/(losses), net (b)
—

 
—

 
316

 
—

 
316

All other income and commissions (c)
22,268

 
359

 
2,473

 
567

 
25,667

     Total noninterest income
$
81,565

 
$
65,622

 
$
9,401

 
$
1,405

 
$
157,993

Certain previously reported amounts have been reclassified to agree with current presentation.
(a)
Includes $7.1 million of underwriting, portfolio advisory, and other noninterest income in scope of Accounting Standards
Codification ("ASC") 606, "Revenue From Contracts With Customers."
(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.









The following tables reflect a disaggregation of FHN’s noninterest income by major product line and reportable segment for the six months ended June 30, 2020 and 2019:
 
Six Months Ended June 30, 2020
(Dollars in thousands)
Regional Banking
 
Fixed Income
 
Corporate
 
Non-Strategic
 
Consolidated
Noninterest income:
 
 
 
 
 
 
 
 
 
Fixed income (a)
$
202

 
$
207,854

 
$
—

 
$
—

 
$
208,056

Deposit transactions and cash management
58,368

 
—

 
2,640

 
69

 
61,077

Brokerage, management fees and commissions
29,205

 
—

 
—

 
—

 
29,205

Trust services and investment management
14,963

 
—

 
(35
)
 
—

 
14,928

Bankcard income
13,703

 
—

 
143

 
59

 
13,905

BOLI (b)
—

 
—

 
10,969

 
—

 
10,969

Debt securities gains/(losses), net (b)
—

 
—

 
—

 
—

 
—

Equity securities gains/(losses), net (b)
—

 
—

 
(1,468
)
 
—

 
(1,468
)
All other income and commissions (c) (d)
44,767

 
1,104

 
(3,024
)
 
1,506

 
44,353

     Total noninterest income
$
161,208

 
$
208,958

 
$
9,225

 
$
1,634

 
$
381,025

(a)
Includes $18.1 million of underwriting, portfolio advisory, and other noninterest income in scope of Accounting Standards Codification ("ASC") 606, "Revenue From Contracts With Customers."
(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)
Corporate balance includes negative deferred compensation income driven by equity market valuations.

 
Six Months Ended June 30, 2019
(Dollars in thousands)
Regional Banking
 
Fixed Income
 
Corporate
 
Non- Strategic
 
Consolidated
Noninterest income:
 
 
 
 
 
 
 
 
 
Fixed income (a)
$
63

 
$
118,994

 
$
—

 
$
1,106

 
$
120,163

Deposit transactions and cash management
60,658

 
4

 
3,270

 
63

 
63,995

Brokerage, management fees and commissions
26,753

 
—

 
—

 
—

 
26,753

Trust services and investment management
14,958

 
—

 
(44
)
 
—

 
14,914

Bankcard income
13,640

 
—

 
122

 
(455
)
 
13,307

BOLI (b)
—

 
—

 
9,528

 
—

 
9,528

Debt securities gains/(losses), net (b)
—

 
—

 
(267
)
 
—

 
(267
)
Equity securities gains/(losses), net (b)
—

 
—

 
347

 
—

 
347

All other income and commissions (c)
38,554

 
431

 
9,798

 
1,515

 
50,298

     Total noninterest income
$
154,626

 
$
119,429

 
$
22,754

 
$
2,229

 
$
299,038

Certain previously reported amounts have been reclassified to agree with current presentation.
(a)
Includes $14.4 million of underwriting, portfolio advisory, and other noninterest income in scope of Accounting Standards
Codification ("ASC") 606, "Revenue From Contracts With Customers."
(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.
v3.20.2
Variable Interest Entities
 6 Months Ended
Jun. 30, 2020
Variable Interest Entities [Abstract]  
Variable Interest Entities Variable Interest Entities
ASC 810 defines a VIE as a legal entity where (a) the equity investors, as a group, lack 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. A variable interest is a contractual ownership or other interest that fluctuates with changes in the fair value of the VIE’s net assets exclusive of variable interests. Under ASC 810, as amended, a primary beneficiary is required to consolidate a VIE when it has a 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 performance and the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant.
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 June 30, 2020 and December 31, 2019:
 
 
 
 
 
(Dollars in thousands)
 
June 30, 2020
 
December 31, 2019
Assets:
 
 
 
 
Other assets
 
$
93,212

 
$
91,873

Total assets
 
$
93,212

 
$
91,873

Liabilities:
 
 
 
 
Other liabilities
 
$
71,783

 
$
70,830

Total liabilities
 
$
71,783

 
$
70,830


Nonconsolidated Variable Interest Entities
Low Income Housing Partnerships. First Horizon Community Investment Group, Inc. ("FHCIG"), a wholly-owned subsidiary of 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. 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 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 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/
(benefit). LIHTC investments that do not qualify for the proportional amortization method are accounted for using the equity method. Expenses associated with these
investments were not material for the three or six months ended June 30, 2020 and 2019.
The following table summarizes the impact to the Provision/(benefit) for income taxes on the Consolidated Condensed Statements of Income for the three and six months ended June 30, 2020, and 2019 for LIHTC investments accounted for under the proportional amortization method.
 
 
Three Months Ended
June 30
 
Six Months Ended
June 30
(Dollars in thousands)
 
2020
 
2019
 
2020
 
2019
Provision/(benefit) for income taxes:
 
 
 
 
 
 
 
 
Amortization of qualifying LIHTC investments
 
$
5,752

 
$
4,287

 
$
11,313

 
$
8,285

Low income housing tax credits
 
(4,758
)
 
(3,522
)
 
(9,356
)
 
(7,151
)
Other tax benefits related to qualifying LIHTC investments
 
(2,583
)
 
(1,609
)
 
(5,138
)
 
(3,219
)


Other Tax Credit Investments. First Tennessee New Markets Corporation (“FTNMC”), a wholly-owned subsidiary of First Horizon Bank, periodically makes equity investments through wholly-owned subsidiaries as a non-managing member in various limited liability companies (“LLCs”) that sponsor community development projects utilizing the New Market Tax Credit (“NMTC”) pursuant to Section 45 of the Internal Revenue Code. 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 LLCs are considered VIEs as FTNMC, 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. 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.
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 June 30, 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, since 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 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, since 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. 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 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, FHN acquired junior subordinated debt underlying multiple issuances of trust preferred debt by institutions previously acquired by CBF. 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, 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 considered “at risk”. Consequently, none of the trusts are consolidated by FHN.
The following table summarizes FHN’s nonconsolidated VIEs as of June 30, 2020:
(Dollars in thousands) 
 
Maximum
Loss Exposure
 
Liability
Recognized
 
Classification
Type 
 
 
 
 
 
 
Low income housing partnerships
 
$
248,712

 
$
124,318

 
(a)
Other tax credit investments (b)
 
5,959

 
—

 
Other assets
Small issuer trust preferred holdings (c)
 
209,177

 
—

 
Loans, net of unearned income
On-balance sheet trust preferred securitization
 
32,144

 
82,030

 
(d)
Proprietary residential mortgage securitizations
 
628

 
—

 
Trading securities
Holdings of agency mortgage-backed securities (c)
 
4,561,144

 
—

 
(e)
Commercial loan troubled debt restructurings (f)
 
43,432

 
—

 
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 $124.4 million of current investments and $124.3 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)
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 $82.0 million classified as Term borrowings.
(e)
Includes $.7 billion classified as Trading securities and $3.9 billion classified as Securities available-for-sale.
(f)
Maximum loss exposure represents $43.4 million of current receivables and contractual funding commitments on loans related to commercial borrowers involved in a troubled debt restructuring were non-material.
(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.
The following table summarizes FHN’s nonconsolidated VIEs as of December 31, 2019:
(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)
Maximum 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.
(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.
v3.20.2
Derivatives
 6 Months Ended
Jun. 30, 2020
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives 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’ 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”) 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. Treatment of daily margin as a settlement has no effect on hedge accounting or gains/losses for the applicable derivative contracts. On June 30, 2020 and December 31, 2019, respectively, FHN had $230.2 million and $136.6 million of cash receivables and $130.6 million and $53.0 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 customer transactions and as a risk management tool. Where contracts have been created for customers, 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 segment 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. When these securities settle on a delayed basis, they are considered forward contracts. Fixed income also enters into interest rate contracts, including caps, swaps, and floors, for its customers. In addition, fixed income 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 recognized currently in fixed income noninterest income. Related assets and liabilities are recorded on the Consolidated Condensed Statements of Condition as Derivative assets and Derivative liabilities. The FHN Financial 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 $100.3 million and $54.5 million for the three months ended
June 30, 2020 and 2019, and $178.6 million and $99.0 million for the six months ended June 30, 2020 and 2019, 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 income trading activities as of June 30, 2020 and December 31, 2019:
 
 
 
June 30, 2020
(Dollars in thousands)
 
Notional
 
Assets
 
Liabilities
Customer interest rate contracts
 
$
3,667,914

 
$
254,246

 
$
1,827

Offsetting upstream interest rate contracts
 
3,667,914

 
7,454

 
17,667

Forwards and futures purchased
 
7,351,632

 
31,853

 
787

Forwards and futures sold
 
7,744,323

 
3,555

 
29,696

 
 
 
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 customers 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 designated a derivative transaction in a hedging strategy to manage interest rate risk on $400.0 million of senior debt issued by First Horizon Bank prior to its maturity in December 2019. This 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 million senior debt on 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.

 

The following tables summarize FHN’s derivatives associated with interest rate risk management activities as of June 30, 2020 and December 31, 2019:
 
 
 
June 30, 2020
(Dollars in thousands)
 
Notional
 
Assets
 
Liabilities
Customer Interest Rate Contracts Hedging 
 
 
 
 
 
 
Hedging Instruments and Hedged Items: 
 
 
 
 
 
 
Customer interest rate contracts
 
$
3,679,991

 
$
297,233

 
$
258

Offsetting upstream interest rate contracts
 
3,679,991

 
4,877

 
24,922

Debt Hedging
 
 
 
 
 
 
Hedging Instruments:
 
 
 
 
 
 
Interest rate swaps
 
$
500,000

 
$
27

 
N/A

Hedged Items:
 
 
 
 
 
 
Term borrowings:
 
 
 
 
 
 
Par
 
N/A

 
N/A

 
$
500,000

Cumulative fair value hedging adjustments
 
N/A

 
N/A

 
2,142

Unamortized premium/(discount) and issuance costs
 
N/A

 
N/A

 
(296
)
Total carrying value
 
N/A

 
N/A

 
$
501,846


 
 
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











The following table summarizes gains/(losses) on FHN’s derivatives associated with interest rate risk management activities for the three and six months ended June 30, 2020 and 2019:
 
 
Three Months Ended
June 30
 
Six Months Ended
June 30
 
 
2020
 
2019
 
2020
 
2019
(Dollars in thousands)
 
Gains/(Losses)
 
Gains/(Losses)
 
Gains/(Losses)
 
Gains/(Losses)
Customer Interest Rate Contracts Hedging
 
 
 
 
 
 
Hedging Instruments and Hedged Items:
 
 
 
 
 
 
 
 
Customer interest rate contracts (a)
 
$
15,844

 
$
50,706

 
$
211,396

 
$
79,818

Offsetting upstream interest rate contracts (a)
 
(15,844
)
 
(50,706
)
 
(211,396
)
 
(79,818
)
Debt Hedging
 
 
 
 
 
 
 
 
Hedging Instruments:
 
 
 
 
 
 
 
 
Interest rate swaps (b)
 
$
(737
)
 
$
6,697

 
$
4,197

 
$
10,976

Hedged Items:
 
 
 
 
 
 
 
 
Term borrowings (a) (c)
 
720

 
(6,605
)
 
(3,745
)
 
(10,871
)
(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, FHN entered into a pay floating, receive fixed interest rate swap in a hedging strategy 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 consist of held-to-maturity trust preferred loans that have variable interest payments based on 3-month LIBOR. In first quarter 2017, FHN initiated cash flow hedges of $650 million notional amount that had initial durations between three years and seven years. 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 cash flow hedges under ASC 815-20. All changes in the fair value of these derivatives are recorded as a component of AOCI. Amounts are reclassified from AOCI to earnings as the hedged cash flows affect earnings. Interest paid or received for these swaps is recognized as an adjustment to interest income of the assets whose cash flows are being hedged.
The following tables summarize FHN’s derivative activities associated with cash flow hedges as of June 30, 2020 and December 31, 2019:
 
 
June 30, 2020
(Dollars in thousands)
 
Notional
 
Assets
 
Liabilities
Cash Flow Hedges 
 
 
 
 
 
 
Hedging Instruments: 
 
 
 
 
 
 
Interest rate swaps
 
$
700,000

 
$
29

 
$
48

Hedged Items:
 
 
 
 
 
 
Variability in cash flows related to debt instruments (primarily loans)
 
N/A

 
$
700,000

 
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


The following table summarizes gains/(losses) on FHN’s derivatives associated with cash flow hedges for the three and six months ended June 30, 2020 and 2019:
 
 
Three Months Ended
June 30
 
Six Months Ended
June 30
 
 
2020
 
2019
 
2020
 
2019
(Dollars in thousands)
 
Gains/(Losses)
 
Gains/(Losses)
 
Gains/(Losses)
 
Gains/(Losses)
Cash Flow Hedges
 
 
 
 
 
 
Hedging Instruments:
 
 
 
 
 
 
 
 
Interest rate swaps (a)
 
$
69

 
$
11,896

 
$
17,443

 
$
19,114

       Gain/(loss) recognized in Other comprehensive income/(loss)
 
1,640

 
7,575

 
14,795

 
11,511

       Gain/(loss) reclassified from AOCI into Interest income
 
(1,623
)
 
1,334

 
(1,717
)
 
2,785

(a)
Approximately $9.6 million of pre-tax gains are expected to be reclassified into earnings in the next twelve months.

Other Derivatives

In conjunction with the sales of a portion 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 June 30, 2020 and December 31, 2019, the derivative liabilities associated with the sales of Visa Class B shares were $18.0 million and $22.8 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 June 30, 2020 and December 31, 2019, these loans were valued at $13.8
million and $18.4 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 June 30, 2020 the notional values of FHN’s risk participations were $93.8 million of derivative assets and $246.1 million of derivative liabilities. The notional value for risk participation/syndication agreements is consistent with the percentage of participation in the lending arrangement. FHN’s maximum exposure or benefit in the risk participation agreements is contingent 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 associated with the borrowers to which the risk participations relate through 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 of fair value for the risk participations. As of June 30, 2020, FHN had recognized $170 thousand of derivative assets and $830 thousand of derivative liabilities associated with risk participation agreements.
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”). 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. 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.
Interest rate derivatives with customers 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. 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 interest rate derivative instruments with adjustable collateral posting thresholds was $253.7 million of assets and $3.8 million of liabilities on June 30, 2020, and $63.1 million of assets and $6.4 million of liabilities on December 31, 2019. As of June 30, 2020 and December 31, 2019, FHN had received collateral of $340.0 million and $148.5 million and posted collateral of $43.5 million and $18.4 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 $253.6 million of assets and $25.5 million of liabilities on June 30, 2020, and $63.1 million of assets and $10.3 million of liabilities on December 31, 2019. As of June 30, 2020 and December 31, 2019, FHN had received collateral of $340.0 million and $148.5 million and posted collateral of $65.1 million and $22.7 million, respectively, in the normal course of business related to these contracts.
FHN’s fixed income segment buys and sells various types of securities for its customers. 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.
The following table provides details of derivative assets and collateral received as presented on the Consolidated Condensed Statements of Condition as of June 30, 2020 and December 31, 2019:
 
 
 
 
 
 
 
 
 
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:
 
 
 
 
 
 
 
 
 
 
 
 
June 30, 2020
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate derivative contracts
 
$
564,037

 
$
—

 
$
564,037

 
$
(2,253
)
 
$
(348,497
)
 
$
213,287

Forward contracts
 
35,408

 
—

 
35,408

 
(6,927
)
 
(12,590
)
 
15,891

 
 
$
599,445

 
$
—

 
$
599,445

 
$
(9,180
)
 
$
(361,087
)
 
$
229,178

 
 
 
 
 
 
 
 
 
 
 
 
 
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 June 30, 2020 and December 31, 2019, $.3 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.
The following table provides details of derivative liabilities and collateral pledged as presented on the Consolidated Condensed Statements of Condition as of June 30, 2020 and December 31, 2019:
 
 
 
 
 
 
 
 
 
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:
 
 
 
 
 
 
 
 
 
 
 
 
June 30, 2020
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate derivative contracts
 
$
44,743

 
$
—

 
$
44,743

 
$
(2,253
)
 
$
(38,832
)
 
$
3,658

Forward contracts
 
30,483

 
—

 
30,483

 
(6,927
)
 
(23,556
)
 
—

 
 
$
75,226

 
$
—

 
$
75,226

 
$
(9,180
)
 
$
(62,388
)
 
$
3,658

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 Derivative liabilities on the Consolidated Condensed Statements of Condition. As of June 30, 2020 and December 31, 2019, $19.2 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.
v3.20.2
Master Netting and Similar Agreements—Repurchase, Reverse Repurchase, and Securities Borrowing Transactions
 6 Months Ended
Jun. 30, 2020
Offsetting [Abstract]  
Master Netting and Similar Agreements—Repurchase, Reverse Repurchase, and Securities Borrowing Transactions 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 purchased under agreements to resell and Securities 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 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. 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.
The following table provides details of Securities purchased under agreements to resell as presented on the Consolidated Condensed Statements of Condition and collateral pledged by counterparties as of June 30, 2020 and December 31, 2019:
 
 
 
 
 
 
 
 
 
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:
 
 
 
 
 
 
 
 
 
 
 
 
June 30, 2020
 
$
302,267

 
$
—

 
$
302,267

 
$
(23,207
)
 
$
(277,660
)
 
$
1,400

December 31, 2019
 
586,629

 
—

 
586,629

 
(21,004
)
 
(562,702
)
 
2,923


The following table provides details of Securities sold under agreements to repurchase as presented on the Consolidated Condensed Statements of Condition and collateral pledged by FHN as of June 30, 2020 and December 31, 2019:
 
 
 
 
 
 
 
 
 
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:
 
 
 
 
 
 
 
 
 
 
 
 
June 30, 2020
 
$
1,482,585

 
$
—

 
$
1,482,585

 
$
(23,207
)
 
$
(1,459,297
)
 
$
81

December 31, 2019
 
716,925

 
—

 
716,925

 
(21,004
)
 
(695,879
)
 
42


Due to the short duration of Securities sold under agreements to repurchase and the nature of collateral involved, the risks associated with these transactions are considered minimal.



The following tables provide details, by collateral type, of the remaining contractual maturity of Securities sold under agreements to repurchase as of June 30, 2020 and December 31, 2019:
 
 
 
June 30, 2020
(Dollars in thousands)
 
Overnight and
Continuous
 
Up to 30 Days
 
Total
Securities sold under agreements to repurchase:
 
 
 
 
 
 
U.S. treasuries
 
$
539,974

 
$
—

 
$
539,974

Government agency issued MBS
 
512,170

 
14,442

 
526,612

Government agency issued CMO
 
—

 
6,052

 
6,052

Other U.S. government agencies
 
139,756

 
—

 
139,756

Government guaranteed loans (SBA and USDA)
 
270,191

 
—

 
270,191

Total Securities sold under agreements to repurchase
 
$
1,462,091

 
$
20,494

 
$
1,482,585

 
 
 
 
 
 
 
 
 
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
v3.20.2
Fair Value of Assets & Liabilities
 6 Months Ended
Jun. 30, 2020
Fair Value Disclosures [Abstract]  
Fair Value of Assets & Liabilities Fair Value of Assets & 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.
























Recurring Fair Value Measurements
The following table presents the balance of assets and liabilities measured at fair value on a recurring basis as of June 30, 2020: 
 
 
June 30, 2020
(Dollars in thousands)
 
Level 1
 
Level 2
 
Level 3
 
Total
Trading securities—fixed income:
 
 
 
 
 
 
 
 
U.S. treasuries
 
$
—

 
$
119,121

 
$
—

 
$
119,121

Government agency issued MBS
 
—

 
431,765

 
—

 
431,765

Government agency issued CMO
 
—

 
226,732

 
—

 
226,732

Other U.S. government agencies
 
—

 
91,203

 
—

 
91,203

States and municipalities
 
—

 
17,467

 
—

 
17,467

Corporate and other debt
 
—

 
229,556

 
—

 
229,556

Equity, mutual funds, and other
 
—

 
(22
)
 
—

 
(22
)
Total trading securities—fixed income
 
—

 
1,115,822

 
—

 
1,115,822

Trading securities—mortgage banking
 
—

 
—

 
628

 
628

Loans held-for-sale (elected fair value)
 
—

 
—

 
13,263

 
13,263

Securities available-for-sale:
 
 
 
 
 
 
 
 
U.S. treasuries
 
—

 
999,975

 
—

 
999,975

Government agency issued MBS
 
—

 
2,487,382

 
—

 
2,487,382

Government agency issued CMO
 
—

 
1,415,265

 
—

 
1,415,265

Other U.S. government agencies
 
—

 
417,292

 
—

 
417,292

States and municipalities
 
—

 
90,383

 
—

 
90,383

Corporate and other debt
 
—

 
40,413

 
—

 
40,413

Interest-Only Strip (elected fair value)
 
—

 
—

 
25,446

 
25,446

Total securities available-for-sale
 
—

 
5,450,710

 
25,446

 
5,476,156

Other assets:
 
 
 
 
 
 
 
 
Deferred compensation mutual funds
 
48,572

 
—

 
—

 
48,572

Equity, mutual funds, and other
 
22,692

 
—

 
—

 
22,692

Derivatives, forwards and futures
 
35,408

 
—

 
—

 
35,408

Derivatives, interest rate contracts
 
—

 
563,866

 
—

 
563,866

Derivatives, other
 
—

 
260

 
170

 
430

Total other assets
 
106,672

 
564,126

 
170

 
670,968

Total assets
 
$
106,672

 
$
7,130,658

 
$
39,507

 
$
7,276,837

Trading liabilities—fixed income:
 
 
 
 
 
 
 
 
U.S. treasuries
 
$
—

 
$
195,753

 
$
—

 
$
195,753

Other U.S.government agencies
 
—

 
578

 
—

 
578

States and municipalities
 
—

 
756

 
—

 
756

Corporate and other debt
 
—

 
35,655

 
—

 
35,655

Total trading liabilities—fixed income
 
—

 
232,742

 
—

 
232,742

Other liabilities:
 
 
 
 
 
 
 
 
Derivatives, forwards and futures
 
30,483

 
—

 
—

 
30,483

Derivatives, interest rate contracts
 
—

 
44,722

 
—

 
44,722

Derivatives, other
 
—

 
369

 
18,815

 
19,184

Total other liabilities
 
30,483

 
45,091

 
18,815

 
94,389

Total liabilities
 
$
30,483

 
$
277,833

 
$
18,815

 
$
327,131


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




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 June 30, 2020 and 2019, on a recurring basis are summarized as follows: 
 
 
Three Months Ended June 30, 2020
 
 
(Dollars in thousands)
 
Trading
securities
 
 
 
Interest- only strips- AFS
 
 
 
Loans held-
for-sale
 
 
 
Net  derivative
liabilities
 
 
Balance on April 1, 2020
 
$
785

 
 
 
$
23,104

 
 
 
$
13,584

 
 
 
$
(20,890
)
 
 
Total net gains/(losses) included in:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 
(157
)
 
 
 
(1,233
)
 
 
 
422

 
 
 
(201
)
 
 
Purchases
 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
 
Sales
 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
 
Settlements
 
—

 
 
 
—

 
 
 
(743
)
 
 
 
2,446

 
 
Net transfers into/(out of) Level 3
 
—

 
 
 
3,575

 
(b)
 
—

 
 
 
—

 
 
Balance on June 30, 2020
 
$
628

 
 
 
$
25,446

 
 
 
$
13,263

 
 
 
$
(18,645
)
 
 
Net unrealized gains/(losses) included in net income
 
$
—

 
(a)
 
$
(959
)
 
(c)
 
$
422

 
(a)
 
$
(201
)
 
(d) 
 
 
 
Three Months Ended June 30, 2019
 
 
(Dollars in thousands)
 
Trading
securities
 
 
 
Interest-only-strips-AFS
 
 
 
Loans held-for-sale
 
 
 
Net  derivative
liabilities
 
 
Balance on April 1, 2019
 
$
1,397

 
 
 
$
13,195

 
 
 
$
15,751

 
 
 
$
(28,970
)
 
 
Total net gains/(losses) included in:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 
8

 
 
 
(141
)
 
 
 
321

 
 
 
(19
)
 
 
Purchases
 
—

 
 
 
—

 
 
 
10

 
 
 
—

 

Sales
 
—

 
 
 
(14,199
)
 
 
 
—

 
 
 
—

 
 
Settlements
 
(150
)
 
 
 
—

 
 
 
(990
)
 
 
 
2,444

 
 
Net transfers into/(out of) Level 3
 
—

 
 
 
18,937

 
(b) 
 
—

 
 
 
—

 
 
Balance on June 30, 2019
 
$
1,255

 
 
 
$
17,792

 
 
 
$
15,092

 
 
 
$
(26,545
)
 
 
Net unrealized gains/(losses) included in net income
 
$
(36
)
 
(a) 
 
$
(543
)
 
(c) 
 
$
321

 
(a)
 
$
(19
)
 
(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.









The changes in Level 3 assets and liabilities measured at fair value for the six months ended June 30, 2020 and 2019, on a recurring basis are summarized as follows: 
 
 
Six Months Ended June 30, 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
 
(313
)
 
 
 
(2,528
)
 
 
 
751

 
 
 
(712
)
 
 
Purchases
 
—

 
 
 
5,481

 
 
 
—

 
 
 
—

 
 
Sales
 
—

 
 
 
(8,703
)
 
 
 
—

 
 
 
—

 
 
Settlements
 
—

 
 
 
—

 
 
 
(1,521
)
 
 
 
4,862

 
 
Net transfers into/(out of) Level 3
 
—

 
 
 
12,060

 
(b)
 
—

 

 
—

 
 
Balance on June 30, 2020
 
$
628

 
 
 
$
25,446

 
 
 
$
13,263

 
 
 
$
(18,645
)
 
 
Net unrealized gains/(losses) included in net income
 
$
—

 
(a)
 
$
(1,813
)
 
(c)
 
$
751

 
(a)
 
$
(712
)
 
(d) 
 
 
 
Six Months Ended June 30, 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
 
29

 
 
 
(1,399
)
 
 
 
816

 
 
 
116

 
 
Purchases
 
—

 
 
 
86

 
 
 
10

 
 
 
—

 

Sales
 
—

 
 
 
(27,211
)
 
 
 
—

 
 
 
—

 
 
Settlements
 
(298
)
 
 
 
—

 
 
 
(2,007
)
 
 
 
4,879

 
 
Net transfers into/(out of) Level 3
 
—

 
 
 
36,414

 
(b) 
 
—

 

 
—

 
 
Balance on June 30, 2019
 
$
1,255

 
 
 
$
17,792

 
 
 
$
15,092

 
 
 
$
(26,545
)
 
 
Net unrealized gains/(losses) included in net income
 
$
(66
)
 
(a) 
 
$
(1,435
)
 
(c)
 
$
816

 
(a)
 
$
116

 
(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.
There were no net unrealized gains/(losses) for Level 3 assets and liabilities included in other comprehensive income as of June 30, 2020 and 2019.









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”) 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 Condition at June 30, 2020, and December 31, 2019, respectively, the following tables provide the level of valuation assumptions used to determine each adjustment and the related carrying value.
 
 
Carrying value at June 30, 2020
(Dollars in thousands)
 
Level 1
 
Level 2
 
Level 3
 
Total
Loans held-for-sale—SBAs and USDA
 
$
—

 
$
643,445

 
$
774

 
$
644,219

Loans held-for-sale—first mortgages
 
—

 
—

 
504

 
504

Loans, net of unearned income (a)
 
—

 
—

 
66,062

 
66,062

OREO (b)
 
—

 
—

 
13,177

 
13,177

Other assets (c)
 
—

 
—

 
9,835

 
9,835

 
 
 
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 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.
For assets measured on a nonrecurring basis which were still held on the Consolidated Condensed Statements of Condition at period end, the following table provides information about the fair value adjustments recorded during the three and six months ended June 30, 2020 and 2019:
 
 
 
Net gains/(losses)
Three Months Ended June 30
 
Net gains/(losses)
Six Months Ended June 30
(Dollars in thousands)
 
2020
 
2019
 
2020
 
2019
Loans held-for-sale—SBAs and USDA
 
$
(1,247
)
 
$
(1,074
)
 
$
(2,208
)
 
$
(1,293
)
Loans held-for-sale—first mortgages
 
(4
)
 
10

 
1

 
25

Loans, net of unearned income (a)
 
(1,274
)
 
(4,639
)
 
(6,113
)
 
(4,436
)
OREO (b)
 
(142
)
 
(9
)
 
(169
)
 
26

Other assets (c)
 
(426
)
 
(267
)
 
(772
)
 
(942
)
 
 
$
(3,093
)
 
$
(5,979
)
 
$
(9,261
)
 
$
(6,620
)
(a)
Write-downs on these loans are recognized as part of provision for loan losses.
(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.








In 2019, FHN recognized $4.6 million of impairments and $.7 million of impairment reversals, respectively, related to dispositions of acquired properties and $1.5 million of impairments for lease assets 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 recognized in the Corporate segment.
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.
































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 June 30, 2020 and December 31, 2019: 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
 
Values Utilized
Level 3 Class
 
Fair Value at
June 30, 2020
 
Valuation Techniques
 
Unobservable Input
 
Range
 
Weighted Average (d)
Available-for-sale- securities SBA-interest only strips
 
$
25,446

 
Discounted cash flow
 
Constant prepayment rate
 
12%
 
12%
 
 
 
 
 
 
Bond equivalent yield
 
14% - 15%
 
15%
Loans held-for-sale - residential real estate
 
13,767

 
Discounted cash flow
 
Prepayment speeds - First mortgage
 
5% - 15%
 
5.8%
 
 
 
 
 
 
Foreclosure losses
 
50% - 65%
 
63%
 
 
 
 
 
 
Loss severity trends - First mortgage
 
4% - 21% of UPB
 
13.6%
Loans held-for-sale- unguaranteed interest in SBA loans
 
774

 
Discounted cash flow
 
Constant prepayment rate
 
8% - 12%
 
10%
 
 
 
 
 
 
Bond equivalent yield
 
8%
 
8%
Derivative liabilities, other
 
18,645

 
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
 
9 - 33 months
 
24 months
Loans, net of unearned
income (a)
 
66,062

 
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)
 
13,177

 
Appraisals from comparable properties
 
Adjustment for value changes since appraisal
 
0% - 10% of appraisal
 
NM
Other assets (c)
 
9,835

 
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.
(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 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.




(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.
(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 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.








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. 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. 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-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.

Derivative liabilities. In conjunction with the sales 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 income 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 almost 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 are recognized within loans held-for-sale at fair value at 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.
The following tables reflect the differences between the fair value carrying amount of residential real estate loans held-for-sale measured at fair value in accordance with management’s election and the aggregate unpaid principal amount FHN is contractually entitled to receive at maturity.
 
 
June 30, 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
 
$
13,263

 
$
17,857

 
$
(4,594
)
Nonaccrual loans
 
2,740

 
5,774

 
(3,034
)
Loans 90 days or more past due and still accruing
 
186

 
322

 
(136
)
 
 
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
June 30
 
Six Months Ended
June 30
(Dollars in thousands)
2020
 
2019
 
2020
 
2019
Changes in fair value included in net income:
 
 
 
 
 
 
 
Mortgage banking noninterest income
 
 
 
 
 
 
 
Loans held-for-sale
$
422

 
$
321

 
$
751

 
$
816



For the three and six months ended June 30, 2020 and 2019, the amount for residential real estate loans held-for-sale included an insignificant amount of gain in pretax earnings that is attributable to changes in instrument-specific credit risk. 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-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.
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, fair 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 Condition and for estimating the fair value of financial instruments for which fair value is disclosed under ASC 825-10-50.
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.
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, 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. 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, consensus prepayment estimates, and credit spreads. When available, 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 Company 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. Residential real estate loans held-for-sale are valued 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 value of residential real estate loans held-for-sale using a discounted cash flow model which incorporates both observable and unobservable inputs. Inputs 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.
Non-mortgage consumer loans held-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 Company utilizes quoted market prices of similar instruments or broker and dealer quotations to value the SBA and USDA guaranteed loans. The Company values SBA-unguaranteed interests in loans held-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-sale is approximated by their carrying values based on current transaction values.
Collateral-Dependent loans. 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) are based on inputs observed in active markets for similar instruments. Typical inputs include the LIBOR curve, Overnight Indexed Swap (“OIS”) curve, option volatility, and option skew. 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
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 customer 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 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 Condition 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, loans held-for-sale, and term borrowings as of June 30, 2020 and December 31, 2019, 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, 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, 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.



The following table summarizes the book value and estimated fair value of financial instruments recorded in the Consolidated Condensed Statements of Condition as of June 30, 2020:
 
 
June 30, 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
 
$
21,075,171

 
$
—

 
$
—

 
$
21,216,054

 
$
21,216,054

Commercial real estate
 
4,756,056

 
—

 
—

 
4,768,706

 
4,768,706

Consumer:
 
 
 
 
 
 
 
 
 
 
Consumer real estate (a)
 
5,908,636

 
—

 
—

 
6,085,159

 
6,085,159

Credit card & other
 
431,193

 
—

 
—

 
438,644

 
438,644

Total loans, net of unearned income and allowance for loan losses
 
32,171,056

 
—

 
—

 
32,508,563

 
32,508,563

Short-term financial assets:
 
 
 
 
 
 
 
 
 
 
Interest-bearing cash
 
3,135,844

 
3,135,844

 
—

 
—

 
3,135,844

Federal funds sold
 
113,000

 
—

 
113,000

 
—

 
113,000

Securities purchased under agreements to resell
 
302,267

 
—

 
302,267

 
—

 
302,267

Total short-term financial assets
 
3,551,111

 
3,135,844

 
415,267

 
—

 
3,551,111

Trading securities (b)
 
1,116,450

 
—

 
1,115,822

 
628

 
1,116,450

Loans held-for-sale
 
 
 
 
 
 
 
 
 
 
Mortgage loans (elected fair value) (b)
 
13,263

 
—

 
—

 
13,263

 
13,263

USDA & SBA loans- LOCOM
 
644,219

 
—

 
648,383

 
792

 
649,175

Other consumer loans- LOCOM
 
4,758

 
—

 
4,758

 
—

 
4,758

Mortgage loans- LOCOM
 
83,415

 
—

 
—

 
83,415

 
83,415

Total loans held-for-sale
 
745,655

 
—

 
653,141

 
97,470

 
750,611

Securities available-for-sale (b)
 
5,476,156

 
—

 
5,450,710

 
25,446

 
5,476,156

Securities held-to-maturity
 
10,000

 
—

 
—

 
9,881

 
9,881

Derivative assets (b)
 
599,704

 
35,408

 
564,126

 
170

 
599,704

Other assets:
 
 
 
 
 
 
 
 
 
 
Tax credit investments
 
257,547

 
—

 
—

 
257,705

 
257,705

Deferred compensation mutual funds
 
48,572

 
48,572

 
—

 
—

 
48,572

Equity, mutual funds, and other (c)
 
343,825

 
22,692

 
—

 
321,133

 
343,825

Total other assets
 
649,944

 
71,264

 
—

 
578,838

 
650,102

Total assets
 
$
44,320,076

 
$
3,242,516

 
$
8,199,066

 
$
33,220,996

 
$
44,662,578

Liabilities:
 
 
 
 
 
 
 
 
 
 
Defined maturity deposits
 
$
2,655,702

 
$
—

 
$
2,695,759

 
$
—

 
$
2,695,759

Trading liabilities (b)
 
232,742

 
—

 
232,742

 
—

 
232,742

Short-term financial liabilities:
 
 
 
 
 
 
 
 
 
 
Federal funds purchased
 
778,529

 
—

 
778,529

 
—

 
778,529

Securities sold under agreements to repurchase
 
1,482,585

 
—

 
1,482,585

 
—

 
1,482,585

Other short-term borrowings
 
130,583

 
—

 
130,583

 
—

 
130,583

Total short-term financial liabilities
 
2,391,697

 
—

 
2,391,697

 
—

 
2,391,697

Term borrowings:
 
 
 
 
 
 
 
 
 
 
Real estate investment trust-preferred
 
46,270

 
—

 
—

 
47,000

 
47,000

Secured borrowings
 
15,370

 
—

 
—

 
15,370

 
15,370

Junior subordinated debentures
 
145,262

 
—

 
—

 
138,950

 
138,950

Other long term borrowings
 
1,825,574

 
—

 
1,877,080

 
—

 
1,877,080

Total term borrowings
 
2,032,476

 
—

 
1,877,080

 
201,320

 
2,078,400

Derivative liabilities (b)
 
94,389

 
30,483

 
45,091

 
18,815

 
94,389

Total liabilities
 
$
7,407,006

 
$
30,483

 
$
7,242,369

 
$
220,135

 
$
7,492,987

 
(a)
In first quarter 2020, the Permanent Mortgage portfolio was combined into Consumer Real Estate portfolio, all prior periods were revised for comparability.
(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 $190.4 million and FRB stock of $130.7 million.
The following table summarizes the book value and estimated fair value of financial instruments recorded in the Consolidated Statements of Condition as of December 31, 2019: 
 
 
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)
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 $76.0 million and FRB stock of $130.7 million.

The following table presents the contractual amount and fair value of unfunded loan commitments and standby and other commitments as of June 30, 2020 and December 31, 2019:
 
 
Contractual Amount
 
Fair Value
(Dollars in thousands)
 
June 30, 2020
 
December 31, 2019
 
June 30, 2020
 
December 31, 2019
Unfunded Commitments:
 
 
 
 
 
 
 
 
Loan commitments
 
$
12,945,839

 
$
12,355,220

 
$
2,492

 
$
3,656

Standby and other commitments
 
469,567

 
459,268

 
6,112

 
5,513
v3.20.2
Restructuring, Repositioning, and Efficiency
 6 Months Ended
Jun. 30, 2020
Restructuring and Related Activities [Abstract]  
Restructuring, Repositioning, and Efficiency 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 the first half 2020 and were $30.8 million in the first half 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.
•
Expense related to costs associated with asset impairments which is reflected in Other expense.
Settlement of the obligations arising from current initiatives will be funded from operating cash flows.


Total expense recognized for the three and six months ended June 30, 2020 and 2019 is presented in the table below:

 
 
Three Months Ended
June 30
 
Six Months Ended
June 30
Dollars in thousands
 
2020
 
2019
 
2020
 
2019
Employee compensation, incentives and benefits
 
$
32

 
$
2,557

 
$
89

 
$
9,062

Professional fees
 
7

 
4,242

 
14

 
8,537

Occupancy
 
—

 
72

 
2

 
889

Other
 
1

 
11,797

 
(102
)
 
12,332

Total restructuring, repositioning, and efficiency charges
 
$
40

 
$
18,668

 
$
3

 
$
30,820
v3.20.2
Financial Information (Policies)
 6 Months Ended
Jun. 30, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Basis Of Accounting

Basis of Accounting. The unaudited interim consolidated condensed financial statements of First Horizon National Corporation (“FHN”), including its subsidiaries, have been prepared in conformity with accounting principles generally accepted in the United States of America 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 the 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 the opinion of management, all necessary adjustments have been made for a fair presentation of financial position and results of operations for the periods presented. These adjustments are of a normal recurring nature unless otherwise disclosed in this Quarterly Report on Form 10-Q. The operating results for the interim 2020 period are not necessarily indicative of the results that may be expected going forward. For further information, refer to the audited consolidated financial statements in Item 8 to FHN’s Annual Report on Form 10-K for the year ended December 31, 2019.
Revenues, Contract Balances, Transaction Price Allocated to Remaining Performance Obligation
Revenues. Revenue is recognized when the performance obligations under the terms 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 period 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 June 30, 2020, accounts receivable related to products and services on non-interest income were $8.9 million. For the three months ended June 30, 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 June 30, 2020. Credit risk is assessed on these accounts receivable each reporting period and the amount of estimated uncollectible receivables is not material.

Transaction Price Allocated to Remaining Performance Obligations. For the three and six months ended June 30, 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 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
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. 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
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, Purchased Credit-Deteriorated Loans, Purchased Credit-Impaired Loans, and Allowance for Loan Losses
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.
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.

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.
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.

FHN has continued to accrue interest on loans for which payment deferrals have been extended to borrowers affected by the COVID-19 pandemic ("COVID-19 Deferrals"). Deferrals are made for durations up to six months, which is beyond FHN's normal write-off practices for accrued interest. Therefore, these interest deferrals do not qualify for FHN's election to not recognize a credit loss allowance for accrued interest. Accordingly, FHN has estimated credit losses for COVID-19 interest deferrals which is included within AIR in 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 losses included in the loan valuation.
Purchased Credit-Impaired Loans. Prior to 2020, ASC 310-30 “Accounting 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.
Allowance for Loan Losses
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.
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.
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 and Accounting Changes Issued But Not Currently Effective
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 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 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 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.

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 Effective

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 will utilize the optional expedients and exceptions provided by ASU 2020-04 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.
v3.20.2
Financial Information (Tables)
 6 Months Ended
Jun. 30, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Schedule of Adoption Adjustments 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.
v3.20.2
Acquisitions and Divestitures (Tables)
 6 Months Ended
Jun. 30, 2020
Business Combinations [Abstract]  
Merger And Integration Expense
Total other merger and integration expense recognized for the three and six months ended June 30, 2020 and 2019 are presented in the table below:
 
 
Three Months Ended
June 30
 
Six Months Ended
June 30
(Dollars in thousands)
 
2020
 
2019
 
2020
 
2019
Professional fees (a)
 
$
1,327

 
$
4,478

 
$
2,126

 
$
6,345

Employee compensation, incentives and benefits (b)
 
87

 
1,472

 
483

 
2,989

Contract employment and outsourcing (c)
 
420

 
17

 
726

 
17

Occupancy (d)
 
(82
)
 
1,505

 
(107
)
 
1,623

Miscellaneous expense (e)
 
503

 
79

 
1,325

 
1,148

All other expense (f)
 
2,610

 
1,096

 
4,484

 
2,185

Total
 
$
4,865

 
$
8,647

 
$
9,037

 
$
14,307

Certain previously reported amounts have been reclassified to agree with current presentation.
(a)
Primarily comprised of fees for legal, accounting, and merger consultants.
(b)
Primarily comprised of fees for severance and retention.
(c)
Primarily relates to fees for temporary assistance for merger and integration activities.
(d)
Primarily relates to expenses associated with lease exits.
(e)
Consists of fees for operations services, communications and courier, equipment rentals, depreciation and maintenance, supplies, travel and entertainment, computer software, and advertising and public relations.
(f)
Primarily relates to contract termination charges, internal technology development costs, costs of shareholder matters and asset impairments, as well as other miscellaneous expenses.

Total merger expenses for the IBKC merger recognized for the three and six months ended June 30, 2020 are presented in the table below:
 
 
June 30, 2020
(Dollars in thousands)
 
Three Months Ended
 
Six Months Ended
Professional fees (a)
 
$
3,748

 
$
4,410

Employee compensation, incentives and benefits (b)
 
4,705

 
5,394

Miscellaneous expense (c)
 
1,003

 
1,257

Total IBKC acquisition expense
 
$
9,456

 
$
11,061

(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.
v3.20.2
Investment Securities (Tables)
 6 Months Ended
Jun. 30, 2020
Marketable Securities [Abstract]  
Schedule of FHN's Investment Securities
The following tables summarize FHN’s investment securities on June 30, 2020 and December 31, 2019:
 
 
June 30, 2020
(Dollars in thousands)
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
Securities available-for-sale:
 
 
 
 
 
 
 
 
U.S. treasuries
 
$
999,974

 
$
5

 
$
(4
)
 
$
999,975

Government agency issued mortgage-backed securities (“MBS”)
 
2,383,956

 
103,506

 
(80
)
 
2,487,382

Government agency issued collateralized mortgage obligations (“CMO”)
 
1,383,703

 
31,570

 
(8
)
 
1,415,265

Other U.S. government agencies
 
403,008

 
14,284

 
—

 
417,292

Corporates and other debt
 
39,950

 
463

 
—

 
40,413

States and municipalities
 
83,155

 
7,228

 
—

 
90,383

 
 
$
5,293,746

 
$
157,056

 
$
(92
)
 
5,450,710

AFS debt securities recorded at fair value through earnings:
 
 
 
 
 
 
 
 
SBA-interest only strips (a)
 
 
 
 
 
 
 
25,446

Total securities available-for-sale (b)
 
 
 
 
 
 
 
$
5,476,156

Securities held-to-maturity:
 
 
 
 
 
 
 
 
Corporates and other debt
 
$
10,000

 
$
—

 
$
(119
)
 
$
9,881

Total securities held-to-maturity
 
$
10,000

 
$
—

 
$
(119
)
 
$
9,881

 
(a)
SBA-interest only strips are recorded at elected fair value. See Note 16 - Fair Value for additional information.
(b)
Includes $4.7 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.
Schedule of Amortized Cost And Fair Value By Contractual Maturity
The amortized cost and fair value by contractual maturity for the available-for-sale and held-to-maturity debt securities portfolios on June 30, 2020 are provided below:
 
 
 
Held-to-Maturity
 
Available-for-Sale
(Dollars in thousands)
 
Amortized
Cost
 
Fair
Value
 
Amortized
Cost
 
Fair
Value
Within 1 year
 
$
—

 
$
—

 
$
1,106,238

 
$
1,108,000

After 1 year; within 5 years
 
—

 
—

 
137,571

 
142,491

After 5 years; within 10 years
 
10,000

 
9,881

 
3,573

 
9,623

After 10 years
 
—

 
—

 
278,705

 
313,395

Subtotal
 
10,000

 
9,881

 
1,526,087

 
1,573,509

Government agency issued MBS and CMO (a)
 
—

 
—

 
3,767,659

 
3,902,647

Total
 
$
10,000

 
$
9,881

 
$
5,293,746

 
$
5,476,156

 
(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.
Schedule of Gross Gains And Losses On Sale From Available For Sale Portfolio
The table below provides information on gross gains and gross losses from debt investment securities for the three and six months ended June 30, 2020 and 2019.
 
 
Three Months Ended
June 30
 
Six Months Ended
June 30
(Dollars in thousands)
2020
 
2019
 
2020
 
2019
Gross gains on sales of securities
$
—

 
$
—

 
$
—

 
$
—

Gross (losses) on sales of securities
—

 
(267
)
 
—

 
(267
)
Net gain/(loss) on sales of securities (a)
$
—

 
$
(267
)
 
$
—

 
$
(267
)
 
(a)
Cash proceeds for the three and six months ended June 30, 2020 were not material. Cash proceeds for the three and six months ended June 30, 2019 were $171.4 million.

Schedule of Investments Within The Available For Sale Portfolio That Had Unrealized Losses
The following tables provide information on investments within the available-for-sale portfolio that had unrealized losses as of June 30, 2020 and December 31, 2019:

 
 
As of June 30, 2020
 
 
Less than 12 months
 
12 months or longer
 
Total
(Dollars in thousands)
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
U.S. treasuries
 
$
499,895

 
$
(4
)
 
$
—

 
$
—

 
$
499,895

 
$
(4
)
Government agency issued MBS
 
40,798

 
(80
)
 
—

 
—

 
40,798

 
(80
)
Government agency issued CMO
 
15,982

 
(8
)
 
—

 
—

 
15,982

 
(8
)
Total temporarily impaired securities
 
$
556,675

 
$
(92
)
 
$
—

 
$
—

 
$
556,675

 
$
(92
)
 
 
 
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
U.S. treasuries
 
$
—

 
$
—

 
$
100

 
$
—

 
$
100

 
$
—

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
)
v3.20.2
Loans (Tables)
 6 Months Ended
Jun. 30, 2020
Receivables [Abstract]  
Schedule Of Loans By Portfolio Segment
The following table provides the balance (amortized cost basis) of loans, net of unearned income, by portfolio segment as of June 30, 2020 and December 31, 2019:
 
 
June 30
 
December 31
(Dollars in thousands)
 
2020
 
2019
Commercial:
 
 
 
 
Commercial, financial, and industrial
 
$
21,393,893

 
$
20,051,091

Commercial real estate
 
4,813,341

 
4,337,017

Consumer:
 
 
 
 
Consumer real estate (a)
 
6,052,393

 
6,177,139

Credit card & other
 
449,310

 
495,864

Loans, net of unearned income
 
$
32,708,937

 
$
31,061,111

Allowance for loan losses
 
537,881

 
200,307

Total net loans
 
$
32,171,056

 
$
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.
Financing Receivable Credit Quality Indicators
The following tables provide the amortized cost basis of the commercial loan portfolio by year of origination and credit quality indicator as of June 30, 2020:

 
 
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 (d)
 
$
2,078,712

 
$
99,978

 
$
121,167

 
$
75,521

 
$
106,700

 
$
108,574

 
$
—

 
$
83,309

 
$
56

 
$
2,674,017

2
 
56,810

 
223,191

 
100,816

 
79,318

 
168,838

 
90,484

 
—

 
95,035

 
126

 
814,618

3
 
42,983

 
153,671

 
49,176

 
89,945

 
30,381

 
97,338

 
741,382

 
125,470

 
3,490

 
1,333,836

4
 
261,626

 
335,130

 
145,047

 
122,185

 
129,859

 
142,129

 
685,876

 
259,379

 
10,653

 
2,091,884

5
 
304,710

 
496,565

 
220,632

 
145,650

 
96,325

 
163,676

 
700,944

 
384,874

 
12,654

 
2,526,030

6
 
360,649

 
714,704

 
246,607

 
195,634

 
53,597

 
155,755

 
1,198,775

 
667,570

 
558

 
3,593,849

7
 
309,088

 
723,728

 
339,953

 
145,385

 
100,069

 
171,016

 
552,192

 
598,772

 
48,291

 
2,988,494

8
 
343,391

 
593,106

 
194,030

 
175,289

 
36,044

 
96,204

 
93,900

 
379,261

 
7,110

 
1,918,335

9
 
171,524

 
293,768

 
89,519

 
66,927

 
65,539

 
75,753

 
25,198

 
283,883

 
10,670

 
1,082,781

10
 
96,735

 
171,901

 
85,644

 
60,721

 
50,429

 
54,729

 
15,325

 
227,301

 
5,082

 
767,867

11
 
53,872

 
82,677

 
74,977

 
58,964

 
70,190

 
38,059

 
—

 
148,656

 
3,233

 
530,628

12
 
51,861

 
33,083

 
52,013

 
47,162

 
20,214

 
29,674

 
6,999

 
95,943

 
477

 
337,426

13
 
39,047

 
57,585

 
10,231

 
15,916

 
51,816

 
45,984

 
—

 
114,971

 
498

 
336,048

14,15,16
 
10,898

 
23,808

 
39,008

 
29,306

 
40,627

 
13,194

 
—

 
98,165

 
2,548

 
257,554

Collectively evaluated for impairment
 
4,181,906

 
4,002,895

 
1,768,820

 
1,307,923

 
1,020,628

 
1,282,569

 
4,020,591

 
3,562,589

 
105,446

 
21,253,367

Individually evaluated for impairment
 
21,146

 
6,613

 
12,454

 
21,995

 
1,909

 
22,114

 
—

 
50,319

 
3,976

 
140,526

Total C&I loans
 
$
4,203,052

 
$
4,009,508

 
$
1,781,274

 
$
1,329,918

 
$
1,022,537

 
$
1,304,683

 
$
4,020,591

 
$
3,612,908

 
$
109,422

 
$
21,393,893

(a)
TRUPS loans were originated prior to 2016. Total balance of TRUPS as of June 30, 2020 is $209.2 million, with $3.3 million in PD 3, $60.9 million in PD 4, $47.9 million in PD 5, $38.6 million in PD 6, $13.4 million in PD 7, $20.7 million in PD 9, $18.6 million in PD 10, and $5.8 million in PD 13.
(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)
$22.7 million of C&I loans were converted from revolving to term in 2020.
(d)
2020 balance includes PPP loans.
 
 
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
 
$
21,886

 
$
—

 
$
392

 
$
106

 
$
158

 
$
1,190

 
$
—

 
$
—

 
$
23,732

2
 
7,798

 
30,919

 
405

 
216

 
617

 
3,145

 
—

 
—

 
43,100

3
 
97,338

 
212,413

 
75,483

 
34,863

 
42,468

 
25,511

 
78,004

 
181

 
566,261

4
 
90,915

 
292,657

 
100,058

 
130,549

 
94,836

 
45,975

 
839

 
238

 
756,067

5
 
320,904

 
279,229

 
138,520

 
152,573

 
112,018

 
45,048

 
37,306

 
6,224

 
1,091,822

6
 
264,892

 
215,714

 
125,075

 
107,697

 
33,716

 
119,742

 
37,800

 
7,930

 
912,566

7
 
164,896

 
293,784

 
121,601

 
64,796

 
20,076

 
24,648

 
40,187

 
1,224

 
731,212

8
 
23,028

 
93,700

 
55,579

 
11,850

 
28,382

 
50,403

 
6,845

 
128

 
269,915

9
 
35,357

 
36,942

 
25,157

 
22,936

 
2,219

 
19,126

 
280

 
—

 
142,017

10
 
23,623

 
8,323

 
7,323

 
2,803

 
9,125

 
17,320

 
—

 
—

 
68,517

11
 
6,936

 
21,414

 
6,890

 
7,347

 
3,862

 
19,638

 
—

 
1,330

 
67,417

12
 
2,962

 
14,437

 
2,383

 
905

 
652

 
13,476

 
64

 
228

 
35,107

13
 
525

 
455

 
771

 
16,185

 
—

 
570

 
328

 
—

 
18,834

14,15,16
 
515

 
10,808

 
45

 
19,065

 
128

 
3,882

 
7,553

 
—

 
41,996

Collectively evaluated for impairment
 
1,061,575

 
1,510,795

 
659,682

 
571,891

 
348,257

 
389,674

 
209,206

 
17,483

 
4,768,563

Individually evaluated for impairment
 
—

 
—

 
—

 
—

 
—

 
160

 
—

 
—

 
160

Total CRE-IP
 
$
1,061,575

 
$
1,510,795

 
$
659,682

 
$
571,891

 
$
348,257

 
$
389,834

 
$
209,206

 
$
17,483

 
$
4,768,723


 
 
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
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
20

 
$
—

 
$
—

 
$
20

2
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

3
 
—

 
151

 
268

 
482

 
—

 
95

 
—

 
—

 
996

4
 
—

 
722

 
—

 
—

 
—

 
106

 
—

 
—

 
828

5
 
93

 
—

 
—

 
—

 
76

 
12

 
—

 
—

 
181

6
 
14,512

 
106

 
43

 
333

 
30

 
234

 
—

 
—

 
15,258

7
 
348

 
470

 
2,904

 
1,776

 
—

 
241

 
13

 
—

 
5,752

8
 
467

 
24

 
443

 
—

 
6

 
89

 
100

 
—

 
1,129

9
 
325

 
520

 
262

 
—

 
490

 
76

 
—

 
—

 
1,673

10
 
179

 
960

 
277

 
—

 
—

 
6

 
—

 
—

 
1,422

11
 
4,093

 
8,660

 
218

 
156

 
—

 
50

 
—

 
—

 
13,177

12
 
154

 
1,530

 
44

 
—

 
—

 
538

 
—

 
—

 
2,266

13
 
1,310

 
—

 
—

 
—

 
—

 
132

 
—

 
—

 
1,442

14,15,16
 
171

 
264

 
—

 
—

 
—

 
39

 
—

 
—

 
474

Collectively evaluated for impairment
 
21,652

 
13,407

 
4,459

 
2,747

 
602

 
1,638

 
113

 
—

 
44,618

Individually evaluated for impairment
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Total CRE-RES
 
$
21,652

 
$
13,407

 
$
4,459

 
$
2,747

 
$
602

 
$
1,638

 
$
113

 
$
—

 
$
44,618


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 following table reflects the amortized cost basis by year of origination and refreshed FICO scores for consumer real estate as of June 30, 2020. Within consumer real estate, classes include home equity line of credit ("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 table 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. All loans in the following table classified in a vintage year are real estate installment loans.
 
 
Consumer Real Estate
(Dollars in thousands)
 
2020
 
2019
 
2018
 
2017
 
2016
 
Prior to 2016
 
Revolving
Loans
 
Revolving
Loans converted
to term loans (a)
 
Total
FICO score 740 or greater
 
$
394,137

 
$
576,132

 
$
410,188

 
$
420,822

 
$
527,019

 
$
1,255,357

 
$
626,844

 
$
135,436

 
$
4,345,935

FICO score 720-739
 
43,808

 
67,904

 
26,383

 
37,259

 
48,677

 
132,407

 
76,045

 
28,913

 
461,396

FICO score 700-719
 
31,459

 
66,155

 
28,201

 
26,164

 
45,038

 
110,244

 
54,941

 
29,613

 
391,815

FICO score 660-699
 
41,314

 
51,096

 
33,382

 
32,745

 
36,625

 
153,335

 
76,593

 
44,067

 
469,157

FICO score 620-659
 
12,524

 
17,140

 
10,922

 
12,789

 
13,178

 
70,067

 
24,185

 
29,940

 
190,745

FICO score less than 620
 
2,180

 
11,168

 
5,832

 
9,227

 
14,456

 
79,599

 
25,526

 
45,357

 
193,345

Total
 
$
525,422

 
$
789,595

 
$
514,908

 
$
539,006

 
$
684,993

 
$
1,801,009

 
$
884,134

 
$
313,326

 
$
6,052,393

(a) $10.8 million of HELOC loans were converted from revolving to term in 2020.

The following table reflects the amortized cost basis by year of origination and refreshed FICO scores for other consumer loans as of June 30, 2020.
 
 
Other Consumer
(Dollars in thousands)
 
2020
 
2019
 
2018
 
2017
 
2016
 
Prior to 2016
 
Revolving
Loans
 
Revolving
Loans converted
to term loans (a)
 
Total
FICO score 740 or greater
 
$
16,160

 
$
36,450

 
$
21,476

 
$
10,499

 
$
3,988

 
$
14,774

 
$
173,832

 
$
4,401

 
$
281,580

FICO score 720-739
 
3,238

 
5,226

 
2,784

 
1,615

 
747

 
1,844

 
27,603

 
1,319

 
44,376

FICO score 700-719
 
2,168

 
4,246

 
2,542

 
1,521

 
706

 
1,980

 
19,983

 
1,052

 
34,198

FICO score 660-699
 
3,654

 
6,546

 
3,149

 
2,172

 
1,423

 
2,737

 
27,534

 
1,581

 
48,796

FICO score 620-659
 
1,269

 
2,386

 
1,576

 
891

 
836

 
1,813

 
10,759

 
963

 
20,493

FICO score less than 620
 
333

 
1,059

 
1,044

 
522

 
2,311

 
3,167

 
10,037

 
1,394

 
19,867

Total
 
$
26,822

 
$
55,913

 
$
32,571

 
$
17,220

 
$
10,011

 
$
26,315

 
$
269,748

 
$
10,710

 
$
449,310

(a) $3.9 million of other consumer loans were converted from revolving to term in 2020.

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 loans 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.
Accruing And Non-Accruing Loans By Class
The following table reflects accruing and non-accruing loans by class on June 30, 2020:
 
 
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)
 
$
17,031,822

 
$
4,671

 
$
287

 
$
17,036,780

 
$
79,022

 
$
254

 
$
48,069

 
$
127,345

 
$
17,164,125

Loans to mortgage companies
 
4,019,766

 
825

 
—

 
4,020,591

 
—

 
—

 
—

 
—

 
4,020,591

TRUPS (b)
 
209,177

 
—

 
—

 
209,177

 
—

 
—

 
—

 
—

 
209,177

Total commercial (C&I)
 
21,260,765

 
5,496

 
287

 
21,266,548

 
79,022

 
254

 
48,069

 
127,345

 
21,393,893

Commercial real estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income CRE
 
4,766,561

 
95

 
—

 
4,766,656

 
797

 
—

 
1,270

 
2,067

 
4,768,723

Residential CRE
 
44,618

 
—

 
—

 
44,618

 
—

 
—

 
—

 
—

 
44,618

Total commercial real estate
 
4,811,179

 
95

 
—

 
4,811,274

 
797

 
—

 
1,270

 
2,067

 
4,813,341

Consumer real estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
HELOC
 
1,136,288

 
5,736

 
6,800

 
1,148,824

 
41,608

 
1,720

 
5,308

 
48,636

 
1,197,460

R/E installment loans
 
4,787,467

 
13,778

 
6,000

 
4,807,245

 
31,786

 
2,077

 
13,825

 
47,688

 
4,854,933

Total consumer real estate
 
5,923,755

 
19,514

 
12,800

 
5,956,069

 
73,394

 
3,797

 
19,133

 
96,324

 
6,052,393

Credit card & other:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Credit card
 
164,527

 
1,520

 
1,297

 
167,344

 
—

 
—

 
—

 
—

 
167,344

Other
 
281,066

 
531

 
114

 
281,711

 
86

 
77

 
92

 
255

 
281,966

Total credit card & other
 
445,593

 
2,051

 
1,411

 
449,055

 
86

 
77

 
92

 
255

 
449,310

Total loans, net of unearned income
 
$
32,441,292

 
$
27,156

 
$
14,498

 
$
32,482,946

 
$
153,299

 
$
4,128

 
$
68,564

 
$
225,991

 
$
32,708,937


(a) $65.3 million of general C&I loans are nonaccrual loans with no related allowance.
(b) TRUPS is presented net of an amortizing discount of $18.4 million.
The following table reflects accruing and non-accruing loans by class on December 31, 2019:
 
 
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 agree 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.
Schedule Of Troubled Debt Restructurings Occurring During The Year
The following tables reflect portfolio loans that were classified as TDRs during the three and six months ended June 30, 2020 and 2019:
 
 
Three Months Ended June 30, 2020
 
Six Months Ended June 30, 2020
(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
 
1

 
$
4,649

 
$
4,699

 
4

 
$
10,576

 
$
9,132

   Total commercial (C&I)
 
1

 
4,649

 
4,699

 
4

 
10,576

 
9,132

Consumer real estate:
 
 
 
 
 
 
 
 
 
 
 
 
HELOC
 
4

 
152

 
151

 
12

 
1,064

 
1,042

R/E installment loans
 
40

 
7,793

 
7,741

 
50

 
9,304

 
9,238

   Total consumer real estate
 
44

 
7,945

 
7,892

 
62

 
10,368

 
10,280

Credit card & other
 
16

 
96

 
91

 
40

 
254

 
237

Total troubled debt restructurings
 
61

 
$
12,690

 
$
12,682

 
106

 
$
21,198

 
$
19,649


 
 
Three Months Ended June 30, 2019
 
Six Months Ended June 30, 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
 
1

 
$
222

 
$
222

 
3

 
$
14,117

 
$
14,042

   Total commercial (C&I)
 
1

 
222

 
222

 
3

 
14,117

 
14,042

Consumer real estate:
 
 
 
 
 
 
 
 
 
 
 
 
HELOC
 
25

 
3,271

 
3,235

 
44

 
5,375

 
5,319

R/E installment loans
 
19

 
1,534

 
1,523

 
66

 
8,959

 
8,936

   Total consumer real estate
 
44

 
4,805

 
4,758

 
110

 
14,334

 
14,255

Credit card & other
 
18

 
109

 
103

 
33

 
183

 
174

Total troubled debt restructurings
 
63

 
$
5,136

 
$
5,083

 
146

 
$
28,634

 
$
28,471
Schedule Of Troubled Debt Restructurings Within The Previous 12 Months
The following tables present TDRs which re-defaulted during the three and six months ended June 30, 2020 and 2019, and 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 June 30, 2020
 
Six Months Ended June 30, 2020
(Dollars in thousands)
 
Number
 
Recorded
Investment
 
Number
 
Recorded
Investment
Commercial (C&I):
 
 
 
 
 
 
 
 
General C&I
 
—

 
$
—

 
—

 
$
—

Total commercial (C&I)
 
—

 
—

 
—

 
—

Consumer real estate:
 
 
 
 
 
 
 
 
HELOC
 
3

 
882

 
7

 
1,842

R/E installment loans
 
5

 
1,351

 
10

 
1,695

Total consumer real estate
 
8

 
2,233

 
17

 
3,537

Credit card & other
 
7

 
29

 
14

 
60

Total troubled debt restructurings
 
15

 
$
2,262

 
31

 
$
3,597



 
 
Three Months Ended June 30, 2019
 
Six Months Ended June 30, 2019
(Dollars in thousands)
 
Number
 
Recorded
Investment
 
Number
 
Recorded
Investment
Commercial (C&I):
 
 
 
 
 
 
 
 
General C&I
 
—

 
$
—

 
—

 
$
—

Total commercial (C&I)
 
—

 
—

 
—

 
—

Consumer real estate:
 
 
 
 
 
 
 
 
HELOC
 
1

 
66

 
2

 
99

R/E installment loans
 
1

 
38

 
1

 
38

Total consumer real estate
 
2

 
104

 
3

 
137

Credit card & other
 
7

 
14

 
15

 
32

Total troubled debt restructurings
 
9

 
$
118

 
18

 
$
169
Accrued Interest AIR is included within Other assets in the Consolidated Condensed Statements of Condition and the amounts by portfolio segment are presented in the following table.
 
 
June 30
(Dollars in thousands)
 
2020
Commercial:
 
 
Commercial, financial, and industrial
 
$
56,828

Commercial real estate
 
16,528

Consumer:
 
 
Consumer real estate
 
18,020

Credit card & other
 
1,546

Allowance for Credit Losses on COVID-19 Deferrals
 
(860
)
Total accrued interest
 
$
92,062
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities Accretable Yield Movement Schedule Rollforward
The following table presents a rollforward of the accretable yield for the year ended December 31, 2019:
 
 
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.
Schedule of Acquired Purchase Credit Impaired Loans by Portfolio Segment
The following table reflects the outstanding principal balance and carrying amounts of the acquired PCI loans as of December 31, 2019:
 
 
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
Information By Class Related To Individually 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 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.

 
Three Months Ended June 30
 
Six Months Ended June 30
 
 
2019
 
2019
(Dollars in thousands)
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
Average
Recorded
Investment
 
Interest
Income
Recognized
Impaired loans with no related allowance recorded:
 
 
 
 
 
 
 
 
Commercial:
 
 
 
 
 
 
 
 
   General C&I
 
$
67,337

 
$
178

 
$
61,552

 
$
357

Loans to mortgage companies
 
18,628

 
—

 
9,314

 
—

   Income CRE
 
1,481

 
13

 
1,518

 
27

   Residential CRE
 
—

 
—

 
—

 
—

   Total
 
$
87,446

 
$
191

 
$
72,384

 
$
384

Consumer:
 
 
 
 
 
 
 
 
   HELOC (a)
 
$
6,462

 
$
—

 
$
7,030

 
$
—

   R/E installment loans (a)
 
8,910

 
—

 
8,773

 
—

   Total
 
$
15,372

 
$
—

 
$
15,803

 
$
—

Impaired loans with related allowance recorded:
 
 
 
 
 
 
 
 
Commercial:
 
 
 
 
 
 
 
 
   General C&I
 
$
10,760

 
$
—

 
$
9,026

 
$
—

   TRUPS
 
2,806

 
—

 
2,835

 
—

   Income CRE
 
347

 
—

 
357

 
9

   Residential CRE
 
—

 
—

 
—

 
—

   Total
 
$
13,913

 
$
—

 
$
12,218

 
$
9

Consumer:
 
 
 
 
 
 
 
 
   HELOC
 
$
62,623

 
$
504

 
$
63,819

 
$
1,026

   R/E installment loans
 
107,892

 
815

 
107,975

 
1,637

   Credit card & other
 
692

 
4

 
691

 
9

   Total
 
$
171,207

 
$
1,323

 
$
172,485

 
$
2,672

Total commercial
 
$
101,359

 
$
191

 
$
84,602

 
$
393

Total consumer
 
$
186,579

 
$
1,323

 
$
188,288

 
$
2,672

Total impaired loans
 
$
287,938

 
$
1,514

 
$
272,890

 
$
3,065

(a)
All discharged bankruptcy loans are charged down to an estimate of net realizable value and do not carry any allowance.
v3.20.2
Allowance for Loan Losses (Tables)
 6 Months Ended
Jun. 30, 2020
Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract]  
Rollforward Of The Allowance For Loan Losses By Portfolio Segment
The following table provides a rollforward of the allowance for loan losses by portfolio segment for the three and six months ended June 30, 2020 and 2019:
(Dollars in thousands)
 
C&I
 
Commercial
Real Estate
 
Consumer
Real Estate (a)
 
Credit Card
and Other
 
Total
Balance as of April 1, 2020
 
$
254,516

 
$
47,625

 
$
123,022

 
$
19,327

 
$
444,490

Charge-offs
 
(18,201
)
 
(61
)
 
(1,968
)
 
(2,677
)
 
(22,907
)
Recoveries
 
1,073

 
156

 
3,987

 
1,082

 
6,298

Provision/(provision credit) for loan losses
 
81,334

 
9,565

 
18,716

 
385

 
110,000

Balance as of June 30, 2020
 
318,722

 
57,285

 
143,757

 
18,117

 
537,881

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
 
(24,952
)
 
(642
)
 
(4,278
)
 
(6,488
)
 
(36,360
)
Recoveries
 
2,008

 
729

 
7,542

 
2,261

 
12,540

Provision/(provision credit) for loan loses
 
200,398

 
28,434

 
19,058

 
7,110

 
255,000

Balance as of June 30, 2020
 
318,722

 
57,285

 
143,757

 
18,117

 
537,881

Allowance - individually evaluated for impairment
 
16,577

 
—

 
13,275

 
352

 
30,204

Allowance - collectively evaluated for impairment
 
302,145

 
57,285

 
130,482

 
17,765

 
507,677

Loans, net of unearned as of June 30, 2020:
 
 
 
 
 
 
 
 
 
 
  Individually evaluated for impairment
 
140,526

 
160

 
148,543

 
688

 
289,917

  Collectively evaluated for impairment
 
21,253,367

 
4,813,181

 
5,903,850

 
448,622

 
32,419,020

Total loans, net of unearned income (b)
 
$
21,393,893

 
$
4,813,341

 
$
6,052,393

 
$
449,310

 
$
32,708,937

Balance as of April 1, 2019
 
$
103,713

 
$
34,382

 
$
34,154

 
$
12,662

 
$
184,911

Charge-offs
 
(6,590
)
 
(121
)
 
(1,714
)
 
(3,798
)
 
(12,223
)
Recoveries 
 
519

 
(88
)
 
5,525

 
1,105

 
7,061

Provision/(provision credit) for loan losses 
 
18,454

 
(1,220
)
 
(6,433
)
 
2,199

 
13,000

Balance as of June 30, 2019
 
116,096

 
32,953

 
31,532

 
12,168

 
192,749

Balance as of January 1, 2019
 
98,947

 
31,311

 
37,439

 
12,727

 
180,424

Charge-offs
 
(9,691
)
 
(555
)
 
(4,518
)
 
(7,986
)
 
(22,750
)
Recoveries
 
1,348

 
(31
)
 
9,566

 
2,192

 
13,075

Provision/(provision credit) for loan losses
 
25,492

 
2,228

 
(10,955
)
 
5,235

 
22,000

Balance as of June 30, 2019
 
116,096

 
32,953

 
31,532

 
12,168

 
192,749

Allowance - individually evaluated for impairment 
 
8,484

 
—

 
22,255

 
442

 
31,181

Allowance - collectively evaluated for impairment 
 
106,758

 
32,953

 
8,199

 
11,669

 
159,579

Allowance - purchased credit-impaired loans
 
854

 
—

 
1,078

 
57

 
1,989

Loans, net of unearned as of June 30, 2019:
 
 
 
 
 
 
 
 
 
 
  Individually evaluated for impairment 
 
115,808

 
1,777

 
182,442

 
699

 
300,726

  Collectively evaluated for impairment
 
18,904,621

 
3,852,027

 
6,093,863

 
492,774

 
29,343,285

  Purchased credit-impaired loans
 
33,840

 
7,227

 
26,829

 
903

 
68,799

Total loans, net of unearned income
 
$
19,054,269

 
$
3,861,031

 
$
6,303,134

 
$
494,376

 
$
29,712,810



a) In first quarter 2020, the Permanent Mortgage portfolio was combined into Consumer Real Estate portfolio, all prior periods were revised for comparability.
b) C&I loans as of June 30, 2020 include $2.1 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 losses.
v3.20.2
Intangible Assets (Tables)
 6 Months Ended
Jun. 30, 2020
Goodwill and Intangible Assets Disclosure [Abstract]  
Summary Of Intangible Assets and Accumulated Amortization Included In The Consolidated Statements of Condition
The following is a summary of other intangible assets included in the Consolidated Condensed Statements of Condition:
 
 
 
June 30, 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

 
$
(56,561
)
 
$
100,589

 
$
157,150

 
$
(47,372
)
 
$
109,778

Customer relationships (a)
 
23,000

 
(6,158
)
 
16,842

 
77,865

 
(60,150
)
 
17,715

Other (b)
 
5,622

 
(3,445
)
 
2,177

 
5,622

 
(2,915
)
 
2,707

Total
 
$
185,772

 
$
(66,164
)
 
$
119,608

 
$
240,637

 
$
(110,437
)
 
$
130,200


(a)
2020 decrease in gross carrying amounts and accumulated amortization associated with $54.9 million of customer relationships fully amortized at December 31, 2019.
(b)
Balance primarily includes noncompete covenants, as well as $.3 million related to state banking licenses not subject to amortization.
Schedule of Estimated Aggregate Amortization Expense for Intangible Assets As of June 30, 2020 the estimated aggregated amortization expense is expected to be:
 
(Dollars in thousands)
 
 
Year
 
Amortization
Remainder of 2020
 
$
10,568

2021
 
19,547

2022
 
17,412

2023
 
16,117

2024
 
14,679

2025
 
12,580
Summary Of Gross Goodwill And Accumulated Impairment Losses And Write-Offs Detailed By Reportable Segments The following is a summary of goodwill by reportable segment included in the Consolidated Condensed Statements of Condition as of June 30, 2020 and December 31, 2019.
 
(Dollars in thousands)
 
Regional
Banking
 
Fixed
Income
 
Total
December 31, 2018
 
$
1,289,819

 
$
142,968

 
$
1,432,787

Additions
 
—

 
—

 
—

June 30, 2019
 
$
1,289,819

 
$
142,968

 
$
1,432,787

 
 
 
 
 
 
 
December 31, 2019
 
$
1,289,819

 
$
142,968

 
$
1,432,787

Additions
 
—

 
—

 
—

June 30, 2020
 
$
1,289,819

 
$
142,968

 
$
1,432,787
v3.20.2
Other Income And Other Expense (Tables)
 6 Months Ended
Jun. 30, 2020
Other Nonoperating Income (Expense) [Abstract]  
Other Income And Other Expense
Following is detail of All other income and commissions and All other expense as presented in the Consolidated Condensed Statements of Income:
 
 
Three Months Ended
June 30
 
Six Months Ended
June 30
(Dollars in thousands)
2020
 
2019
 
2020
 
2019
All other income and commissions:
 
 
 
 
 
 
 
Deferred compensation (a)
$
8,171

 
$
1,938

 
$
(1,336
)
 
$
7,412

Other service charges
4,582

 
5,624

 
9,801

 
9,493

Mortgage banking
4,138

 
2,572

 
6,569

 
4,458

ATM and interchange fees
4,009

 
4,262

 
8,221

 
7,503

Letter of credit fees
1,559

 
1,253

 
3,021

 
2,621

Electronic banking fees
1,182

 
1,267

 
2,212

 
2,538

Dividend income
1,057

 
1,809

 
2,187

 
4,122

Insurance commissions
401

 
566

 
1,190

 
1,190

Gain/(loss) on extinguishment of debt
—

 
—

 
—

 
(1
)
Other
4,890

 
6,376

 
12,488

 
10,962

Total
$
29,989

 
$
25,667

 
$
44,353

 
$
50,298

All other expense:
 
 
 
 
 
 
 
Credit expense on unfunded commitments (b)
$
11,158

 
$
(489
)
 
$
20,388

 
$
(93
)
Non-service components of net periodic pension and post-retirement cost
2,961

 
559

 
5,469

 
991

Other insurance and taxes
2,599

 
2,495

 
5,278

 
5,189

Miscellaneous loan costs
2,356

 
857

 
3,450

 
1,884

Supplies
1,933

 
1,342

 
4,344

 
3,146

Employee training and dues
654

 
1,251

 
1,995

 
2,708

Customer relations
632

 
1,540

 
2,636

 
3,139

Travel and entertainment
474

 
2,906

 
3,183

 
5,618

OREO
437

 
25

 
253

 
(341
)
Tax credit investments
426

 
267

 
772

 
942

Litigation and regulatory matters (c)
3

 
(8,230
)
 
16

 
(8,217
)
Other
12,118

 
26,158

 
21,193

 
33,046

Total
$
35,751

 
$
28,681

 
$
68,977

 
$
48,012


Certain previously reported amounts have been reclassified to agree with current presentation.
(a)
Amounts driven by market conditions and are mirrored by changes in deferred compensation expense which is included in employee compensation expense; Six months ended June 30, 2020 decrease driven by equity market valuations.
(b)
Three and six months ended June 30, 2020 increases largely driven by the economic forecast attributable to the COVID-19 pandemic.
(c)
Litigation and regulatory matters for the three and six months ended June 30, 2019 includes an $8.3 million expense reversal related to the settlement of litigation matters within the Non-Strategic segment.
v3.20.2
Components of Other Comprehensive Income/(loss) (Tables)
 6 Months Ended
Jun. 30, 2020
Other Comprehensive Income (Loss), Net of Tax [Abstract]  
Accumulated Other Comprehensive Income/(Loss)
The following table provides the changes in accumulated other comprehensive income/(loss) by component, net of tax, for the three and six months ended June 30, 2020 and 2019:
 
(Dollars in thousands)
 
Securities AFS
 
Cash Flow
Hedges
 
Pension and
Post-retirement
Plans
 
Total
Balance as of April 1, 2020
 
$
119,357

 
$
16,288

 
$
(271,809
)
 
$
(136,164
)
Net unrealized gains/(losses)
 
(1,030
)
 
1,640

 
—

 
610

Amounts reclassified from AOCI
 
—

 
(1,623
)
 
2,379

 
756

Other comprehensive income/(loss)
 
(1,030
)
 
17

 
2,379

 
1,366

Balance as of June 30, 2020
 
$
118,327

 
$
16,305

 
$
(269,430
)
 
$
(134,798
)
 
 
 
 
 
 
 
 
 
Balance as of January 1, 2020
 
$
31,079

 
$
3,227

 
$
(273,914
)
 
$
(239,608
)
Net unrealized gains/(losses)
 
87,248

 
14,795

 
—

 
102,043

Amounts reclassified from AOCI
 
—

 
(1,717
)
 
4,484

 
2,767

Other comprehensive income/(loss)
 
87,248

 
13,078

 
4,484

 
104,810

Balance as of June 30, 2020
 
$
118,327

 
$
16,305

 
$
(269,430
)
 
$
(134,798
)


(Dollars in thousands)
 
Securities AFS
 
Cash Flow
Hedges
 
Pension and
Post-retirement
Plans
 
Total
Balance as of April 1, 2019
 
$
(27,121
)
 
$
(6,725
)
 
$
(287,305
)
 
$
(321,151
)
Net unrealized gains/(losses)
 
47,991

 
7,575

 
—

 
55,566

Amounts reclassified from AOCI
 
201

 
1,334

 
1,561

 
3,096

Other comprehensive income/(loss)
 
48,192

 
8,909

 
1,561

 
58,662

Balance as of June 30, 2019
 
$
21,071

 
$
2,184

 
$
(285,744
)
 
$
(262,489
)
 
 
 
 
 
 
 
 
 
Balance as of January 1, 2019
 
$
(75,736
)
 
$
(12,112
)
 
$
(288,768
)
 
$
(376,616
)
Net unrealized gains/(losses)
 
96,606

 
11,511

 
—

 
108,117

Amounts reclassified from AOCI
 
201

 
2,785

 
3,024

 
6,010

Other comprehensive income/(loss)
 
96,807

 
14,296

 
3,024

 
114,127

Balance as of June 30, 2019
 
$
21,071

 
$
2,184

 
$
(285,744
)
 
$
(262,489
)
Reclassification Out Of Accumulated Other Comprehensive Income
Reclassifications from AOCI, and related tax effects, were as follows:
(Dollars in thousands)
 
Three Months Ended
June 30
 
Six Months Ended
June 30
 
 
Details about AOCI
 
2020
 
2019
 
2020
 
2019
 
Affected line item in the statement where net income is presented
Securities AFS:
 
 
 
 
 
 
 
 
 
 
Realized (gains)/losses on securities AFS
 
$
—

 
$
267

 
$
—

 
$
267

 
Debt securities gains/(losses), net
Tax expense/(benefit)
 
—

 
(66
)
 
—

 
(66
)
 
Provision/(benefit) for income taxes
 
 
—

 
201

 
—

 
201

 
 
Cash flow hedges:
 
 
 
 
 
 
 
 
 
 
Realized (gains)/losses on cash flow hedges
 
(2,153
)
 
1,772

 
(2,277
)
 
3,699

 
Interest and fees on loans
Tax expense/(benefit)
 
530

 
(438
)
 
560

 
(914
)
 
Provision/(benefit) for income taxes
 
 
(1,623
)
 
1,334

 
(1,717
)
 
2,785

 
 
Pension and Postretirement Plans:
 
 
 
 
 
 
 
 
 
 
Amortization of prior service cost and net actuarial gain/(loss)
 
3,155

 
2,074

 
5,946

 
4,017

 
All other expense
Tax expense/(benefit)
 
(776
)
 
(513
)
 
(1,462
)
 
(993
)
 
Provision/(benefit) for income taxes
 
 
2,379

 
1,561

 
4,484

 
3,024

 
 
Total reclassification from AOCI
 
$
756

 
$
3,096

 
$
2,767

 
$
6,010

 
 
v3.20.2
Earnings Per Share (Tables)
 6 Months Ended
Jun. 30, 2020
Earnings Per Share [Abstract]  
Schedule of Reconciliation Of Earnings/(Loss) Per Common And Diluted Share
The following table provides reconciliations of net income to net income available to common shareholders and the difference between average basic common shares outstanding and average diluted common shares outstanding:
 
 
Three Months Ended
June 30
 
Six Months Ended
June 30
(Dollars and shares in thousands, except per share data)
2020
 
2019
 
2020
 
2019
Net income/(loss)
$
56,665

 
$
113,742

 
$
73,137

 
$
217,147

Net income attributable to noncontrolling interest
2,851

 
2,852

 
5,703

 
5,672

Net income/(loss) attributable to controlling interest
53,814

 
110,890

 
67,434

 
211,475

Preferred stock dividends
1,550

 
1,550

 
3,100

 
3,100

Net income/(loss) available to common shareholders
$
52,264

 
$
109,340

 
$
64,334

 
$
208,375

 
 
 
 
 
 
 
 
Weighted average common shares outstanding—basic
312,090

 
314,063

 
311,843

 
315,740

Effect of dilutive securities
846

 
1,723

 
949

 
1,980

Weighted average common shares outstanding—diluted
312,936

 
315,786

 
312,792

 
317,720

 
 
 
 
 
 
 
 
Net income/(loss) per share available to common shareholders
$
0.17

 
$
0.35

 
$
0.21

 
$
0.66

Diluted income/(loss) per share available to common shareholders
$
0.17

 
$
0.35

 
$
0.21

 
$
0.66
Schedule of Anti-Dilutive Options and Awards
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
June 30
 
Six Months Ended
June 30
(Shares in thousands)
 
2020
 
2019
 
2020
 
2019
Stock options excluded from the calculation of diluted EPS
 
5,134

 
2,773

 
3,291

 
2,692

Weighted average exercise price of stock options excluded from the calculation of diluted EPS
 
$
15.80

 
$
21.03

 
$
18.26

 
$
21.39

Other equity awards excluded from the calculation of diluted EPS
 
4,389

 
2,403

 
3,934

 
1,985
v3.20.2
Pension, Savings, And Other Employee Benefits (Tables)
 6 Months Ended
Jun. 30, 2020
Retirement Benefits, Description [Abstract]  
Schedule of Components of Net Periodic Benefit Cost
The components of net periodic benefit cost for the three months ended June 30 are as follows:

 
 
Pension Benefits
 
Other Benefits
(Dollars in thousands)
 
2020
 
2019
 
2020
 
2019
Components of net periodic benefit cost
 
 
 
 
 
 
 
 
Service cost
 
$
8

 
$
8

 
$
24

 
$
24

Interest cost
 
5,910

 
7,575

 
307

 
351

Expected return on plan assets
 
(6,169
)
 
(9,173
)
 
(311
)
 
(269
)
Amortization of unrecognized:
 
 
 
 
 
 
 
 
Prior service cost/(credit)
 
—

 
—

 
8

 
—

Actuarial (gain)/loss
 
3,224

 
2,435

 
(79
)
 
(117
)
Net periodic benefit cost/(credit)
 
$
2,973

 
$
845

 
$
(51
)
 
$
(11
)








The components of net periodic benefit cost for the six months ended June 30 are as follows:

 
 
Pension Benefits
 
Other Benefits
(Dollars in thousands)
 
2020
 
2019
 
2020
 
2019
Components of net periodic benefit cost
 
 
 
 
 
 
 
 
Service cost
 
$
16

 
$
16

 
$
49

 
$
48

Interest cost
 
11,819

 
15,150

 
611

 
702

Expected return on plan assets
 
(12,337
)
 
(18,346
)
 
(622
)
 
(538
)
Amortization of unrecognized:
 
 
 
 
 
 
 
 
Prior service cost/(credit)
 
—

 
—

 
16

 
—

Actuarial (gain)/loss
 
6,448

 
4,870

 
(154
)
 
(234
)
Net periodic benefit cost/(credit)
 
$
5,946

 
$
1,690

 
$
(100
)
 
$
(22
)
v3.20.2
Business Segment Information (Tables)
 6 Months Ended
Jun. 30, 2020
Segment Reporting, Measurement Disclosures [Abstract]  
Amounts Of Consolidated Revenue, Expense, Tax And Assets

The following table reflects the amounts of consolidated revenue, expense, tax, and average assets for each segment for the three and six months ended June 30:
 
 
Three Months Ended
June 30
 
Six Months Ended
June 30
(Dollars in thousands)
 
2020
 
2019
 
2020
 
2019
Consolidated
 
 
 
 
 
 
 
 
Net interest income
 
$
305,344

 
$
303,610

 
$
608,146

 
$
598,118

Provision/(provision credit) for loan losses (a)
 
110,000

 
13,000

 
255,000

 
22,000

Noninterest income
 
206,269

 
157,993

 
381,025

 
299,038

Noninterest expense
 
332,168

 
300,394

 
643,487

 
596,484

Income/(loss) before income taxes
 
69,445

 
148,209

 
90,684

 
278,672

Provision/(benefit) for income taxes
 
12,780

 
34,467

 
17,547

 
61,525

Net income/(loss)
 
$
56,665

 
$
113,742

 
$
73,137

 
$
217,147

Average assets
 
$
47,934,074

 
$
41,243,007

 
$
45,742,993

 
$
41,064,093

(a)
Increase in provision expense for the three and six months ended June 30, 2020 is primarily due to the economic forecast attributable to the COVID-19 pandemic.

















 
 
Three Months Ended
June 30
 
Six Months Ended
June 30
(Dollars in thousands)
 
2020
 
2019
 
2020
 
2019
Regional Banking
 
 
 
 
 
 
 
 
Net interest income
 
$
349,749

 
$
297,534

 
$
649,936

 
$
583,636

Provision/(provision credit) for loan losses (a)
 
108,311

 
17,776

 
253,752

 
31,218

Noninterest income
 
79,312

 
81,565

 
161,208

 
154,626

Noninterest expense
 
202,297

 
192,413

 
413,331

 
391,043

Income/(loss) before income taxes
 
118,453

 
168,910

 
144,061

 
316,001

Provision/(benefit) for income taxes
 
26,948

 
39,788

 
31,349

 
73,909

Net income/(loss)
 
$
91,505

 
$
129,122

 
$
112,712

 
$
242,092

Average assets
 
$
35,732,966

 
$
30,210,728

 
$
33,952,986

 
$
29,515,773

Fixed Income
 
 
 
 
 
 
 
 
Net interest income
 
$
13,545

 
$
6,171

 
$
24,459

 
$
13,503

Noninterest income
 
113,235

 
65,622

 
208,958

 
119,429

Noninterest expense
 
83,039

 
55,534

 
164,102

 
106,067

Income/(loss) before income taxes
 
43,741

 
16,259

 
69,315

 
26,865

Provision/(benefit) for income taxes
 
10,679

 
3,840

 
16,778

 
6,297

Net income/(loss)
 
$
33,062

 
$
12,419

 
$
52,537

 
$
20,568

Average assets
 
$
3,260,362

 
$
3,127,305

 
$
3,512,277

 
$
2,988,548

Corporate
 
 
 
 
 
 
 
 
Net interest income/(expense)
 
$
(63,493
)
 
$
(7,146
)
 
$
(76,852
)
 
$
(15,060
)
Noninterest income (b)
 
12,943

 
9,401

 
9,225

 
22,754

Noninterest expense (b) (c) (d)
 
43,218

 
56,873

 
58,667

 
98,652

Income/(loss) before income taxes
 
(93,768
)
 
(54,618
)
 
(126,294
)
 
(90,958
)
Provision/(benefit) for income taxes
 
(25,097
)
 
(13,525
)
 
(31,469
)
 
(25,296
)
Net income/(loss)
 
$
(68,671
)
 
$
(41,093
)
 
$
(94,825
)
 
$
(65,662
)
Average assets
 
$
8,168,307

 
$
6,827,937

 
$
7,476,249

 
$
7,439,591

Non-Strategic
 
 
 
 
 
 
 
 
Net interest income
 
$
5,543

 
$
7,051

 
$
10,603

 
$
16,039

Provision/(provision credit) for loan losses (a)
 
1,689

 
(4,776
)
 
1,248

 
(9,218
)
Noninterest income
 
779

 
1,405

 
1,634

 
2,229

Noninterest expense
 
3,614

 
(4,426
)
 
7,387

 
722

Income/(loss) before income taxes
 
1,019

 
17,658

 
3,602

 
26,764

Provision/(benefit) for income taxes
 
250

 
4,364

 
889

 
6,615

Net income/(loss)
 
$
769

 
$
13,294

 
$
2,713

 
$
20,149

Average assets
 
$
772,439

 
$
1,077,037

 
$
801,481

 
$
1,120,181

Certain previously reported amounts have been reclassified to agree with current presentation.
(a)
Increase in provision expense for the three and six months ended June 30, 2020 is primarily due to the economic forecast attributable to the COVID-19 pandemic.
(b)
Balance for the six months ended June 30, 2020 includes a 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 acquisition-related expenses and restructuring-related costs associated with efficiency initiatives; refer to Note 2 - Acquisitions and Divestitures and Note 17 - Restructuring, Repositioning, and Efficiency for additional information.
(d)
Three and six months ended June 30, 2019 includes $9.1 million of asset impairments, professional fees, and other customer-contact and technology-related expenses associated with rebranding initiatives.






The following tables reflect a disaggregation of FHN’s noninterest income by major product line and reportable segment for the three months ended June 30, 2020 and 2019:
 
Three months ended June 30, 2020
(Dollars in thousands)
Regional Banking
 
Fixed Income
 
Corporate
 
Non-Strategic
 
Consolidated
Noninterest income:
 
 
 
 
 
 
 
 
 
Fixed income (a)
$
81

 
$
112,340

 
$
—

 
$
—

 
$
112,421

Deposit transactions and cash management
29,541

 
—

 
1,204

 
42

 
30,787

Brokerage, management fees and commissions
13,800

 
—

 
—

 
—

 
13,800

Trust services and investment management
7,750

 
—

 
(17
)
 
—

 
7,733

Bankcard income
6,551

 
—

 
74

 
27

 
6,652

BOLI (b)
—

 
—

 
6,380

 
—

 
6,380

Debt securities gains/(losses), net (b)
—

 
—

 
—

 
—

 
—

Equity securities gains/(losses), net (b)
—

 
—

 
(1,493
)
 
—

 
(1,493
)
All other income and commissions (c)
21,589

 
895

 
6,795

 
710

 
29,989

     Total noninterest income
$
79,312

 
$
113,235

 
$
12,943

 
$
779

 
$
206,269

(a)
Includes $8.8 million of underwriting, portfolio advisory, and other noninterest income in scope of Accounting Standards Codification ("ASC") 606, "Revenue From Contracts With Customers."
(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.

 
Three months ended June 30, 2019
(Dollars in thousands)
Regional Banking
 
Fixed Income
 
Corporate
 
Non- Strategic
 
Consolidated
Noninterest income:
 
 
 
 
 
 
 
 
 
Fixed income (a)
$
46

 
$
65,262

 
$
—

 
$
1,106

 
$
66,414

Deposit transactions and cash management
30,632

 
1

 
1,707

 
34

 
32,374

Brokerage, management fees and commissions
14,120

 
—

 
—

 
—

 
14,120

Trust services and investment management
7,902

 
—

 
(14
)
 
—

 
7,888

Bankcard income
6,597

 
—

 
60

 
(302
)
 
6,355

BOLI (b)
—

 
—

 
5,126

 
—

 
5,126

Debt securities gains/(losses), net (b)
—

 
—

 
(267
)
 
—

 
(267
)
Equity securities gains/(losses), net (b)
—

 
—

 
316

 
—

 
316

All other income and commissions (c)
22,268

 
359

 
2,473

 
567

 
25,667

     Total noninterest income
$
81,565

 
$
65,622

 
$
9,401

 
$
1,405

 
$
157,993

Certain previously reported amounts have been reclassified to agree with current presentation.
(a)
Includes $7.1 million of underwriting, portfolio advisory, and other noninterest income in scope of Accounting Standards
Codification ("ASC") 606, "Revenue From Contracts With Customers."
(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.









The following tables reflect a disaggregation of FHN’s noninterest income by major product line and reportable segment for the six months ended June 30, 2020 and 2019:
 
Six Months Ended June 30, 2020
(Dollars in thousands)
Regional Banking
 
Fixed Income
 
Corporate
 
Non-Strategic
 
Consolidated
Noninterest income:
 
 
 
 
 
 
 
 
 
Fixed income (a)
$
202

 
$
207,854

 
$
—

 
$
—

 
$
208,056

Deposit transactions and cash management
58,368

 
—

 
2,640

 
69

 
61,077

Brokerage, management fees and commissions
29,205

 
—

 
—

 
—

 
29,205

Trust services and investment management
14,963

 
—

 
(35
)
 
—

 
14,928

Bankcard income
13,703

 
—

 
143

 
59

 
13,905

BOLI (b)
—

 
—

 
10,969

 
—

 
10,969

Debt securities gains/(losses), net (b)
—

 
—

 
—

 
—

 
—

Equity securities gains/(losses), net (b)
—

 
—

 
(1,468
)
 
—

 
(1,468
)
All other income and commissions (c) (d)
44,767

 
1,104

 
(3,024
)
 
1,506

 
44,353

     Total noninterest income
$
161,208

 
$
208,958

 
$
9,225

 
$
1,634

 
$
381,025

(a)
Includes $18.1 million of underwriting, portfolio advisory, and other noninterest income in scope of Accounting Standards Codification ("ASC") 606, "Revenue From Contracts With Customers."
(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)
Corporate balance includes negative deferred compensation income driven by equity market valuations.

 
Six Months Ended June 30, 2019
(Dollars in thousands)
Regional Banking
 
Fixed Income
 
Corporate
 
Non- Strategic
 
Consolidated
Noninterest income:
 
 
 
 
 
 
 
 
 
Fixed income (a)
$
63

 
$
118,994

 
$
—

 
$
1,106

 
$
120,163

Deposit transactions and cash management
60,658

 
4

 
3,270

 
63

 
63,995

Brokerage, management fees and commissions
26,753

 
—

 
—

 
—

 
26,753

Trust services and investment management
14,958

 
—

 
(44
)
 
—

 
14,914

Bankcard income
13,640

 
—

 
122

 
(455
)
 
13,307

BOLI (b)
—

 
—

 
9,528

 
—

 
9,528

Debt securities gains/(losses), net (b)
—

 
—

 
(267
)
 
—

 
(267
)
Equity securities gains/(losses), net (b)
—

 
—

 
347

 
—

 
347

All other income and commissions (c)
38,554

 
431

 
9,798

 
1,515

 
50,298

     Total noninterest income
$
154,626

 
$
119,429

 
$
22,754

 
$
2,229

 
$
299,038

Certain previously reported amounts have been reclassified to agree with current presentation.
(a)
Includes $14.4 million of underwriting, portfolio advisory, and other noninterest income in scope of Accounting Standards
Codification ("ASC") 606, "Revenue From Contracts With Customers."
(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.
v3.20.2
Variable Interest Entities (Tables)
 6 Months Ended
Jun. 30, 2020
Variable Interest Entities [Abstract]  
Summary Of VIEs Consolidated By FHN
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 June 30, 2020 and December 31, 2019:
 
 
 
 
 
(Dollars in thousands)
 
June 30, 2020
 
December 31, 2019
Assets:
 
 
 
 
Other assets
 
$
93,212

 
$
91,873

Total assets
 
$
93,212

 
$
91,873

Liabilities:
 
 
 
 
Other liabilities
 
$
71,783

 
$
70,830

Total liabilities
 
$
71,783

 
$
70,830
Summary of the Impact of Qualifying LIHTC Investments
The following table summarizes the impact to the Provision/(benefit) for income taxes on the Consolidated Condensed Statements of Income for the three and six months ended June 30, 2020, and 2019 for LIHTC investments accounted for under the proportional amortization method.
 
 
Three Months Ended
June 30
 
Six Months Ended
June 30
(Dollars in thousands)
 
2020
 
2019
 
2020
 
2019
Provision/(benefit) for income taxes:
 
 
 
 
 
 
 
 
Amortization of qualifying LIHTC investments
 
$
5,752

 
$
4,287

 
$
11,313

 
$
8,285

Low income housing tax credits
 
(4,758
)
 
(3,522
)
 
(9,356
)
 
(7,151
)
Other tax benefits related to qualifying LIHTC investments
 
(2,583
)
 
(1,609
)
 
(5,138
)
 
(3,219
)
Summary Of VIEs Not Consolidated By FHN
The following table summarizes FHN’s nonconsolidated VIEs as of June 30, 2020:
(Dollars in thousands) 
 
Maximum
Loss Exposure
 
Liability
Recognized
 
Classification
Type 
 
 
 
 
 
 
Low income housing partnerships
 
$
248,712

 
$
124,318

 
(a)
Other tax credit investments (b)
 
5,959

 
—

 
Other assets
Small issuer trust preferred holdings (c)
 
209,177

 
—

 
Loans, net of unearned income
On-balance sheet trust preferred securitization
 
32,144

 
82,030

 
(d)
Proprietary residential mortgage securitizations
 
628

 
—

 
Trading securities
Holdings of agency mortgage-backed securities (c)
 
4,561,144

 
—

 
(e)
Commercial loan troubled debt restructurings (f)
 
43,432

 
—

 
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 $124.4 million of current investments and $124.3 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)
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 $82.0 million classified as Term borrowings.
(e)
Includes $.7 billion classified as Trading securities and $3.9 billion classified as Securities available-for-sale.
(f)
Maximum loss exposure represents $43.4 million of current receivables and contractual funding commitments on loans related to commercial borrowers involved in a troubled debt restructuring were non-material.
(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.
The following table summarizes FHN’s nonconsolidated VIEs as of December 31, 2019:
(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)
Maximum 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.
(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.
v3.20.2
Derivatives (Tables)
 6 Months Ended
Jun. 30, 2020
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives Associated With Fixed Income Trading Activities
The following tables summarize FHN’s derivatives associated with fixed income trading activities as of June 30, 2020 and December 31, 2019:
 
 
 
June 30, 2020
(Dollars in thousands)
 
Notional
 
Assets
 
Liabilities
Customer interest rate contracts
 
$
3,667,914

 
$
254,246

 
$
1,827

Offsetting upstream interest rate contracts
 
3,667,914

 
7,454

 
17,667

Forwards and futures purchased
 
7,351,632

 
31,853

 
787

Forwards and futures sold
 
7,744,323

 
3,555

 
29,696

 
 
 
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
Derivatives Associated With Interest Rate Risk Management Activities
The following tables summarize FHN’s derivatives associated with interest rate risk management activities as of June 30, 2020 and December 31, 2019:
 
 
 
June 30, 2020
(Dollars in thousands)
 
Notional
 
Assets
 
Liabilities
Customer Interest Rate Contracts Hedging 
 
 
 
 
 
 
Hedging Instruments and Hedged Items: 
 
 
 
 
 
 
Customer interest rate contracts
 
$
3,679,991

 
$
297,233

 
$
258

Offsetting upstream interest rate contracts
 
3,679,991

 
4,877

 
24,922

Debt Hedging
 
 
 
 
 
 
Hedging Instruments:
 
 
 
 
 
 
Interest rate swaps
 
$
500,000

 
$
27

 
N/A

Hedged Items:
 
 
 
 
 
 
Term borrowings:
 
 
 
 
 
 
Par
 
N/A

 
N/A

 
$
500,000

Cumulative fair value hedging adjustments
 
N/A

 
N/A

 
2,142

Unamortized premium/(discount) and issuance costs
 
N/A

 
N/A

 
(296
)
Total carrying value
 
N/A

 
N/A

 
$
501,846


 
 
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
Gains/(Losses) on Derivatives Associated with Interest Rate Risk Management Activities
The following table summarizes gains/(losses) on FHN’s derivatives associated with interest rate risk management activities for the three and six months ended June 30, 2020 and 2019:
 
 
Three Months Ended
June 30
 
Six Months Ended
June 30
 
 
2020
 
2019
 
2020
 
2019
(Dollars in thousands)
 
Gains/(Losses)
 
Gains/(Losses)
 
Gains/(Losses)
 
Gains/(Losses)
Customer Interest Rate Contracts Hedging
 
 
 
 
 
 
Hedging Instruments and Hedged Items:
 
 
 
 
 
 
 
 
Customer interest rate contracts (a)
 
$
15,844

 
$
50,706

 
$
211,396

 
$
79,818

Offsetting upstream interest rate contracts (a)
 
(15,844
)
 
(50,706
)
 
(211,396
)
 
(79,818
)
Debt Hedging
 
 
 
 
 
 
 
 
Hedging Instruments:
 
 
 
 
 
 
 
 
Interest rate swaps (b)
 
$
(737
)
 
$
6,697

 
$
4,197

 
$
10,976

Hedged Items:
 
 
 
 
 
 
 
 
Term borrowings (a) (c)
 
720

 
(6,605
)
 
(3,745
)
 
(10,871
)
(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.
Derivative Associated With Cash Flow Hedges
The following tables summarize FHN’s derivative activities associated with cash flow hedges as of June 30, 2020 and December 31, 2019:
 
 
June 30, 2020
(Dollars in thousands)
 
Notional
 
Assets
 
Liabilities
Cash Flow Hedges 
 
 
 
 
 
 
Hedging Instruments: 
 
 
 
 
 
 
Interest rate swaps
 
$
700,000

 
$
29

 
$
48

Hedged Items:
 
 
 
 
 
 
Variability in cash flows related to debt instruments (primarily loans)
 
N/A

 
$
700,000

 
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
Gains/(Losses) on Derivatives Associated with Cash Flow Hedges
The following table summarizes gains/(losses) on FHN’s derivatives associated with cash flow hedges for the three and six months ended June 30, 2020 and 2019:
 
 
Three Months Ended
June 30
 
Six Months Ended
June 30
 
 
2020
 
2019
 
2020
 
2019
(Dollars in thousands)
 
Gains/(Losses)
 
Gains/(Losses)
 
Gains/(Losses)
 
Gains/(Losses)
Cash Flow Hedges
 
 
 
 
 
 
Hedging Instruments:
 
 
 
 
 
 
 
 
Interest rate swaps (a)
 
$
69

 
$
11,896

 
$
17,443

 
$
19,114

       Gain/(loss) recognized in Other comprehensive income/(loss)
 
1,640

 
7,575

 
14,795

 
11,511

       Gain/(loss) reclassified from AOCI into Interest income
 
(1,623
)
 
1,334

 
(1,717
)
 
2,785

(a)
Approximately $9.6 million of pre-tax gains are expected to be reclassified into earnings in the next twelve months.
Derivative Assets And Collateral Received
The following table provides details of derivative assets and collateral received as presented on the Consolidated Condensed Statements of Condition as of June 30, 2020 and December 31, 2019:
 
 
 
 
 
 
 
 
 
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:
 
 
 
 
 
 
 
 
 
 
 
 
June 30, 2020
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate derivative contracts
 
$
564,037

 
$
—

 
$
564,037

 
$
(2,253
)
 
$
(348,497
)
 
$
213,287

Forward contracts
 
35,408

 
—

 
35,408

 
(6,927
)
 
(12,590
)
 
15,891

 
 
$
599,445

 
$
—

 
$
599,445

 
$
(9,180
)
 
$
(361,087
)
 
$
229,178

 
 
 
 
 
 
 
 
 
 
 
 
 
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 June 30, 2020 and December 31, 2019, $.3 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.
Derivative Liabilities and Collateral Pledged
The following table provides details of derivative liabilities and collateral pledged as presented on the Consolidated Condensed Statements of Condition as of June 30, 2020 and December 31, 2019:
 
 
 
 
 
 
 
 
 
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:
 
 
 
 
 
 
 
 
 
 
 
 
June 30, 2020
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate derivative contracts
 
$
44,743

 
$
—

 
$
44,743

 
$
(2,253
)
 
$
(38,832
)
 
$
3,658

Forward contracts
 
30,483

 
—

 
30,483

 
(6,927
)
 
(23,556
)
 
—

 
 
$
75,226

 
$
—

 
$
75,226

 
$
(9,180
)
 
$
(62,388
)
 
$
3,658

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 Derivative liabilities on the Consolidated Condensed Statements of Condition. As of June 30, 2020 and December 31, 2019, $19.2 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.
v3.20.2
Master Netting and Similar Agreements—Repurchase, Reverse Repurchase, and Securities Borrowing Transactions (Tables)
 6 Months Ended
Jun. 30, 2020
Offsetting [Abstract]  
Securities Purchased Under Agreements To Resell And Collateral Pledged By Counterparties
The following table provides details of Securities purchased under agreements to resell as presented on the Consolidated Condensed Statements of Condition and collateral pledged by counterparties as of June 30, 2020 and December 31, 2019:
 
 
 
 
 
 
 
 
 
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:
 
 
 
 
 
 
 
 
 
 
 
 
June 30, 2020
 
$
302,267

 
$
—

 
$
302,267

 
$
(23,207
)
 
$
(277,660
)
 
$
1,400

December 31, 2019
 
586,629

 
—

 
586,629

 
(21,004
)
 
(562,702
)
 
2,923
Securities Sold Under Agreements To Repurchase And Collateral Pledged By Company
The following table provides details of Securities sold under agreements to repurchase as presented on the Consolidated Condensed Statements of Condition and collateral pledged by FHN as of June 30, 2020 and December 31, 2019:
 
 
 
 
 
 
 
 
 
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:
 
 
 
 
 
 
 
 
 
 
 
 
June 30, 2020
 
$
1,482,585

 
$
—

 
$
1,482,585

 
$
(23,207
)
 
$
(1,459,297
)
 
$
81

December 31, 2019
 
716,925

 
—

 
716,925

 
(21,004
)
 
(695,879
)
 
42
Schedule of the Remaining Contractual Maturity by Collateral Type of Securities Sold Under Agreements To Repurchase
The following tables provide details, by collateral type, of the remaining contractual maturity of Securities sold under agreements to repurchase as of June 30, 2020 and December 31, 2019:
 
 
 
June 30, 2020
(Dollars in thousands)
 
Overnight and
Continuous
 
Up to 30 Days
 
Total
Securities sold under agreements to repurchase:
 
 
 
 
 
 
U.S. treasuries
 
$
539,974

 
$
—

 
$
539,974

Government agency issued MBS
 
512,170

 
14,442

 
526,612

Government agency issued CMO
 
—

 
6,052

 
6,052

Other U.S. government agencies
 
139,756

 
—

 
139,756

Government guaranteed loans (SBA and USDA)
 
270,191

 
—

 
270,191

Total Securities sold under agreements to repurchase
 
$
1,462,091

 
$
20,494

 
$
1,482,585

 
 
 
 
 
 
 
 
 
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
v3.20.2
Fair Value of Assets & Liabilities (Tables)
 6 Months Ended
Jun. 30, 2020
Fair Value Disclosures [Abstract]  
Schedule Of Assets And Liabilities Measured At Fair Value On A Recurring Basis
The following table presents the balance of assets and liabilities measured at fair value on a recurring basis as of June 30, 2020: 
 
 
June 30, 2020
(Dollars in thousands)
 
Level 1
 
Level 2
 
Level 3
 
Total
Trading securities—fixed income:
 
 
 
 
 
 
 
 
U.S. treasuries
 
$
—

 
$
119,121

 
$
—

 
$
119,121

Government agency issued MBS
 
—

 
431,765

 
—

 
431,765

Government agency issued CMO
 
—

 
226,732

 
—

 
226,732

Other U.S. government agencies
 
—

 
91,203

 
—

 
91,203

States and municipalities
 
—

 
17,467

 
—

 
17,467

Corporate and other debt
 
—

 
229,556

 
—

 
229,556

Equity, mutual funds, and other
 
—

 
(22
)
 
—

 
(22
)
Total trading securities—fixed income
 
—

 
1,115,822

 
—

 
1,115,822

Trading securities—mortgage banking
 
—

 
—

 
628

 
628

Loans held-for-sale (elected fair value)
 
—

 
—

 
13,263

 
13,263

Securities available-for-sale:
 
 
 
 
 
 
 
 
U.S. treasuries
 
—

 
999,975

 
—

 
999,975

Government agency issued MBS
 
—

 
2,487,382

 
—

 
2,487,382

Government agency issued CMO
 
—

 
1,415,265

 
—

 
1,415,265

Other U.S. government agencies
 
—

 
417,292

 
—

 
417,292

States and municipalities
 
—

 
90,383

 
—

 
90,383

Corporate and other debt
 
—

 
40,413

 
—

 
40,413

Interest-Only Strip (elected fair value)
 
—

 
—

 
25,446

 
25,446

Total securities available-for-sale
 
—

 
5,450,710

 
25,446

 
5,476,156

Other assets:
 
 
 
 
 
 
 
 
Deferred compensation mutual funds
 
48,572

 
—

 
—

 
48,572

Equity, mutual funds, and other
 
22,692

 
—

 
—

 
22,692

Derivatives, forwards and futures
 
35,408

 
—

 
—

 
35,408

Derivatives, interest rate contracts
 
—

 
563,866

 
—

 
563,866

Derivatives, other
 
—

 
260

 
170

 
430

Total other assets
 
106,672

 
564,126

 
170

 
670,968

Total assets
 
$
106,672

 
$
7,130,658

 
$
39,507

 
$
7,276,837

Trading liabilities—fixed income:
 
 
 
 
 
 
 
 
U.S. treasuries
 
$
—

 
$
195,753

 
$
—

 
$
195,753

Other U.S.government agencies
 
—

 
578

 
—

 
578

States and municipalities
 
—

 
756

 
—

 
756

Corporate and other debt
 
—

 
35,655

 
—

 
35,655

Total trading liabilities—fixed income
 
—

 
232,742

 
—

 
232,742

Other liabilities:
 
 
 
 
 
 
 
 
Derivatives, forwards and futures
 
30,483

 
—

 
—

 
30,483

Derivatives, interest rate contracts
 
—

 
44,722

 
—

 
44,722

Derivatives, other
 
—

 
369

 
18,815

 
19,184

Total other liabilities
 
30,483

 
45,091

 
18,815

 
94,389

Total liabilities
 
$
30,483

 
$
277,833

 
$
18,815

 
$
327,131


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
Summary Of Changes In Level 3 Assets And Liabilities Measured At Fair Value
The changes in Level 3 assets and liabilities measured at fair value for the three months ended June 30, 2020 and 2019, on a recurring basis are summarized as follows: 
 
 
Three Months Ended June 30, 2020
 
 
(Dollars in thousands)
 
Trading
securities
 
 
 
Interest- only strips- AFS
 
 
 
Loans held-
for-sale
 
 
 
Net  derivative
liabilities
 
 
Balance on April 1, 2020
 
$
785

 
 
 
$
23,104

 
 
 
$
13,584

 
 
 
$
(20,890
)
 
 
Total net gains/(losses) included in:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 
(157
)
 
 
 
(1,233
)
 
 
 
422

 
 
 
(201
)
 
 
Purchases
 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
 
Sales
 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
 
Settlements
 
—

 
 
 
—

 
 
 
(743
)
 
 
 
2,446

 
 
Net transfers into/(out of) Level 3
 
—

 
 
 
3,575

 
(b)
 
—

 
 
 
—

 
 
Balance on June 30, 2020
 
$
628

 
 
 
$
25,446

 
 
 
$
13,263

 
 
 
$
(18,645
)
 
 
Net unrealized gains/(losses) included in net income
 
$
—

 
(a)
 
$
(959
)
 
(c)
 
$
422

 
(a)
 
$
(201
)
 
(d) 
 
 
 
Three Months Ended June 30, 2019
 
 
(Dollars in thousands)
 
Trading
securities
 
 
 
Interest-only-strips-AFS
 
 
 
Loans held-for-sale
 
 
 
Net  derivative
liabilities
 
 
Balance on April 1, 2019
 
$
1,397

 
 
 
$
13,195

 
 
 
$
15,751

 
 
 
$
(28,970
)
 
 
Total net gains/(losses) included in:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 
8

 
 
 
(141
)
 
 
 
321

 
 
 
(19
)
 
 
Purchases
 
—

 
 
 
—

 
 
 
10

 
 
 
—

 

Sales
 
—

 
 
 
(14,199
)
 
 
 
—

 
 
 
—

 
 
Settlements
 
(150
)
 
 
 
—

 
 
 
(990
)
 
 
 
2,444

 
 
Net transfers into/(out of) Level 3
 
—

 
 
 
18,937

 
(b) 
 
—

 
 
 
—

 
 
Balance on June 30, 2019
 
$
1,255

 
 
 
$
17,792

 
 
 
$
15,092

 
 
 
$
(26,545
)
 
 
Net unrealized gains/(losses) included in net income
 
$
(36
)
 
(a) 
 
$
(543
)
 
(c) 
 
$
321

 
(a)
 
$
(19
)
 
(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.









The changes in Level 3 assets and liabilities measured at fair value for the six months ended June 30, 2020 and 2019, on a recurring basis are summarized as follows: 
 
 
Six Months Ended June 30, 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
 
(313
)
 
 
 
(2,528
)
 
 
 
751

 
 
 
(712
)
 
 
Purchases
 
—

 
 
 
5,481

 
 
 
—

 
 
 
—

 
 
Sales
 
—

 
 
 
(8,703
)
 
 
 
—

 
 
 
—

 
 
Settlements
 
—

 
 
 
—

 
 
 
(1,521
)
 
 
 
4,862

 
 
Net transfers into/(out of) Level 3
 
—

 
 
 
12,060

 
(b)
 
—

 

 
—

 
 
Balance on June 30, 2020
 
$
628

 
 
 
$
25,446

 
 
 
$
13,263

 
 
 
$
(18,645
)
 
 
Net unrealized gains/(losses) included in net income
 
$
—

 
(a)
 
$
(1,813
)
 
(c)
 
$
751

 
(a)
 
$
(712
)
 
(d) 
 
 
 
Six Months Ended June 30, 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
 
29

 
 
 
(1,399
)
 
 
 
816

 
 
 
116

 
 
Purchases
 
—

 
 
 
86

 
 
 
10

 
 
 
—

 

Sales
 
—

 
 
 
(27,211
)
 
 
 
—

 
 
 
—

 
 
Settlements
 
(298
)
 
 
 
—

 
 
 
(2,007
)
 
 
 
4,879

 
 
Net transfers into/(out of) Level 3
 
—

 
 
 
36,414

 
(b) 
 
—

 

 
—

 
 
Balance on June 30, 2019
 
$
1,255

 
 
 
$
17,792

 
 
 
$
15,092

 
 
 
$
(26,545
)
 
 
Net unrealized gains/(losses) included in net income
 
$
(66
)
 
(a) 
 
$
(1,435
)
 
(c)
 
$
816

 
(a)
 
$
116

 
(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.
Nonrecurring Fair Value Measurements For assets measured at fair value on a

nonrecurring basis which were still held on the Consolidated Condensed Statements of Condition at June 30, 2020, and December 31, 2019, respectively, the following tables provide the level of valuation assumptions used to determine each adjustment and the related carrying value.
 
 
Carrying value at June 30, 2020
(Dollars in thousands)
 
Level 1
 
Level 2
 
Level 3
 
Total
Loans held-for-sale—SBAs and USDA
 
$
—

 
$
643,445

 
$
774

 
$
644,219

Loans held-for-sale—first mortgages
 
—

 
—

 
504

 
504

Loans, net of unearned income (a)
 
—

 
—

 
66,062

 
66,062

OREO (b)
 
—

 
—

 
13,177

 
13,177

Other assets (c)
 
—

 
—

 
9,835

 
9,835

 
 
 
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 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
Gains/(losses) on Nonrecurring Fair Value Measurements
For assets measured on a nonrecurring basis which were still held on the Consolidated Condensed Statements of Condition at period end, the following table provides information about the fair value adjustments recorded during the three and six months ended June 30, 2020 and 2019:
 
 
 
Net gains/(losses)
Three Months Ended June 30
 
Net gains/(losses)
Six Months Ended June 30
(Dollars in thousands)
 
2020
 
2019
 
2020
 
2019
Loans held-for-sale—SBAs and USDA
 
$
(1,247
)
 
$
(1,074
)
 
$
(2,208
)
 
$
(1,293
)
Loans held-for-sale—first mortgages
 
(4
)
 
10

 
1

 
25

Loans, net of unearned income (a)
 
(1,274
)
 
(4,639
)
 
(6,113
)
 
(4,436
)
OREO (b)
 
(142
)
 
(9
)
 
(169
)
 
26

Other assets (c)
 
(426
)
 
(267
)
 
(772
)
 
(942
)
 
 
$
(3,093
)
 
$
(5,979
)
 
$
(9,261
)
 
$
(6,620
)
(a)
Write-downs on these loans are recognized as part of provision for loan losses.
(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.
Schedule Of Unobservable Inputs Utilized In Determining The Fair Value Of Level 3 Recurring And Non-Recurring 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 June 30, 2020 and December 31, 2019: 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
 
Values Utilized
Level 3 Class
 
Fair Value at
June 30, 2020
 
Valuation Techniques
 
Unobservable Input
 
Range
 
Weighted Average (d)
Available-for-sale- securities SBA-interest only strips
 
$
25,446

 
Discounted cash flow
 
Constant prepayment rate
 
12%
 
12%
 
 
 
 
 
 
Bond equivalent yield
 
14% - 15%
 
15%
Loans held-for-sale - residential real estate
 
13,767

 
Discounted cash flow
 
Prepayment speeds - First mortgage
 
5% - 15%
 
5.8%
 
 
 
 
 
 
Foreclosure losses
 
50% - 65%
 
63%
 
 
 
 
 
 
Loss severity trends - First mortgage
 
4% - 21% of UPB
 
13.6%
Loans held-for-sale- unguaranteed interest in SBA loans
 
774

 
Discounted cash flow
 
Constant prepayment rate
 
8% - 12%
 
10%
 
 
 
 
 
 
Bond equivalent yield
 
8%
 
8%
Derivative liabilities, other
 
18,645

 
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
 
9 - 33 months
 
24 months
Loans, net of unearned
income (a)
 
66,062

 
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)
 
13,177

 
Appraisals from comparable properties
 
Adjustment for value changes since appraisal
 
0% - 10% of appraisal
 
NM
Other assets (c)
 
9,835

 
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.
(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 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.




(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.
(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 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.
Summary Of Differences Between The Fair Value Carrying Amount Of Mortgages Held-For-Sale And Aggregate Unpaid Principal Amount
The following tables reflect the differences between the fair value carrying amount of residential real estate loans held-for-sale measured at fair value in accordance with management’s election and the aggregate unpaid principal amount FHN is contractually entitled to receive at maturity.
 
 
June 30, 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
 
$
13,263

 
$
17,857

 
$
(4,594
)
Nonaccrual loans
 
2,740

 
5,774

 
(3,034
)
Loans 90 days or more past due and still accruing
 
186

 
322

 
(136
)
 
 
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
)
Changes In Fair Value Of Assets And Liabilities Which Fair Value Option Included In Current Period Earnings
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
June 30
 
Six Months Ended
June 30
(Dollars in thousands)
2020
 
2019
 
2020
 
2019
Changes in fair value included in net income:
 
 
 
 
 
 
 
Mortgage banking noninterest income
 
 
 
 
 
 
 
Loans held-for-sale
$
422

 
$
321

 
$
751

 
$
816
Summary Of Book Value And Estimated Fair Value Of Financial Instruments
The following table summarizes the book value and estimated fair value of financial instruments recorded in the Consolidated Condensed Statements of Condition as of June 30, 2020:
 
 
June 30, 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
 
$
21,075,171

 
$
—

 
$
—

 
$
21,216,054

 
$
21,216,054

Commercial real estate
 
4,756,056

 
—

 
—

 
4,768,706

 
4,768,706

Consumer:
 
 
 
 
 
 
 
 
 
 
Consumer real estate (a)
 
5,908,636

 
—

 
—

 
6,085,159

 
6,085,159

Credit card & other
 
431,193

 
—

 
—

 
438,644

 
438,644

Total loans, net of unearned income and allowance for loan losses
 
32,171,056

 
—

 
—

 
32,508,563

 
32,508,563

Short-term financial assets:
 
 
 
 
 
 
 
 
 
 
Interest-bearing cash
 
3,135,844

 
3,135,844

 
—

 
—

 
3,135,844

Federal funds sold
 
113,000

 
—

 
113,000

 
—

 
113,000

Securities purchased under agreements to resell
 
302,267

 
—

 
302,267

 
—

 
302,267

Total short-term financial assets
 
3,551,111

 
3,135,844

 
415,267

 
—

 
3,551,111

Trading securities (b)
 
1,116,450

 
—

 
1,115,822

 
628

 
1,116,450

Loans held-for-sale
 
 
 
 
 
 
 
 
 
 
Mortgage loans (elected fair value) (b)
 
13,263

 
—

 
—

 
13,263

 
13,263

USDA & SBA loans- LOCOM
 
644,219

 
—

 
648,383

 
792

 
649,175

Other consumer loans- LOCOM
 
4,758

 
—

 
4,758

 
—

 
4,758

Mortgage loans- LOCOM
 
83,415

 
—

 
—

 
83,415

 
83,415

Total loans held-for-sale
 
745,655

 
—

 
653,141

 
97,470

 
750,611

Securities available-for-sale (b)
 
5,476,156

 
—

 
5,450,710

 
25,446

 
5,476,156

Securities held-to-maturity
 
10,000

 
—

 
—

 
9,881

 
9,881

Derivative assets (b)
 
599,704

 
35,408

 
564,126

 
170

 
599,704

Other assets:
 
 
 
 
 
 
 
 
 
 
Tax credit investments
 
257,547

 
—

 
—

 
257,705

 
257,705

Deferred compensation mutual funds
 
48,572

 
48,572

 
—

 
—

 
48,572

Equity, mutual funds, and other (c)
 
343,825

 
22,692

 
—

 
321,133

 
343,825

Total other assets
 
649,944

 
71,264

 
—

 
578,838

 
650,102

Total assets
 
$
44,320,076

 
$
3,242,516

 
$
8,199,066

 
$
33,220,996

 
$
44,662,578

Liabilities:
 
 
 
 
 
 
 
 
 
 
Defined maturity deposits
 
$
2,655,702

 
$
—

 
$
2,695,759

 
$
—

 
$
2,695,759

Trading liabilities (b)
 
232,742

 
—

 
232,742

 
—

 
232,742

Short-term financial liabilities:
 
 
 
 
 
 
 
 
 
 
Federal funds purchased
 
778,529

 
—

 
778,529

 
—

 
778,529

Securities sold under agreements to repurchase
 
1,482,585

 
—

 
1,482,585

 
—

 
1,482,585

Other short-term borrowings
 
130,583

 
—

 
130,583

 
—

 
130,583

Total short-term financial liabilities
 
2,391,697

 
—

 
2,391,697

 
—

 
2,391,697

Term borrowings:
 
 
 
 
 
 
 
 
 
 
Real estate investment trust-preferred
 
46,270

 
—

 
—

 
47,000

 
47,000

Secured borrowings
 
15,370

 
—

 
—

 
15,370

 
15,370

Junior subordinated debentures
 
145,262

 
—

 
—

 
138,950

 
138,950

Other long term borrowings
 
1,825,574

 
—

 
1,877,080

 
—

 
1,877,080

Total term borrowings
 
2,032,476

 
—

 
1,877,080

 
201,320

 
2,078,400

Derivative liabilities (b)
 
94,389

 
30,483

 
45,091

 
18,815

 
94,389

Total liabilities
 
$
7,407,006

 
$
30,483

 
$
7,242,369

 
$
220,135

 
$
7,492,987

 
(a)
In first quarter 2020, the Permanent Mortgage portfolio was combined into Consumer Real Estate portfolio, all prior periods were revised for comparability.
(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 $190.4 million and FRB stock of $130.7 million.
The following table summarizes the book value and estimated fair value of financial instruments recorded in the Consolidated Statements of Condition as of December 31, 2019: 
 
 
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)
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 $76.0 million and FRB stock of $130.7 million.

The following table presents the contractual amount and fair value of unfunded loan commitments and standby and other commitments as of June 30, 2020 and December 31, 2019:
 
 
Contractual Amount
 
Fair Value
(Dollars in thousands)
 
June 30, 2020
 
December 31, 2019
 
June 30, 2020
 
December 31, 2019
Unfunded Commitments:
 
 
 
 
 
 
 
 
Loan commitments
 
$
12,945,839

 
$
12,355,220

 
$
2,492

 
$
3,656

Standby and other commitments
 
469,567

 
459,268

 
6,112

 
5,513
v3.20.2
Restructuring, Repositioning, and Efficiency (Tables)
 6 Months Ended
Jun. 30, 2020
Restructuring and Related Activities [Abstract]  
Restructuring Expense Recognized


Total expense recognized for the three and six months ended June 30, 2020 and 2019 is presented in the table below:

 
 
Three Months Ended
June 30
 
Six Months Ended
June 30
Dollars in thousands
 
2020
 
2019
 
2020
 
2019
Employee compensation, incentives and benefits
 
$
32

 
$
2,557

 
$
89

 
$
9,062

Professional fees
 
7

 
4,242

 
14

 
8,537

Occupancy
 
—

 
72

 
2

 
889

Other
 
1

 
11,797

 
(102
)
 
12,332

Total restructuring, repositioning, and efficiency charges
 
$
40

 
$
18,668

 
$
3

 
$
30,820
v3.20.2
Financial Information - Narrative (Details)
$ in Millions
 6 Months Ended
Jun. 30, 2020
USD ($)
Product Information [Line Items]  
Performance obligation, description of timing one year or less
Non-Interest income  
Product Information [Line Items]  
Accounts receivable $ 8.9
v3.20.2
Financial Information - ASU 2016-13 (Details) - USD ($)
$ in Thousands
Jun. 30, 2020
Mar. 31, 2020
Jan. 01, 2020
Dec. 31, 2019
Jun. 30, 2019
Mar. 31, 2019
Dec. 31, 2018
New Accounting Pronouncements or Change in Accounting Principle [Line Items]              
Loans, net of unearned income $ 32,708,937 [1]     $ 31,061,111 [1] $ 29,712,810    
Allowance for loan losses 537,881 $ 444,490   200,307 $ 192,749 $ 184,911 $ 180,424
Other assets 2,209,235     2,046,338      
Other liabilities 900,884     873,079      
Undivided profits 1,671,629     1,798,442      
Total liabilities and equity $ 48,644,659     $ 43,310,900      
Accounting Standards Update 2016-13              
New Accounting Pronouncements or Change in Accounting Principle [Line Items]              
Loans, net of unearned income     $ 2,980        
Allowance for loan losses     (106,394)        
Other assets (deferred taxes)     31,330        
Other assets     (72,084)        
Other liabilities     23,973        
Undivided profits     (96,057)        
Total liabilities and equity     $ (72,084)        
[1]
June 30, 2020 and December 31, 2019 include $16.9 million and $18.8 million, respectively, of held-to-maturity consumer mortgage loans secured by residential real estate in process of foreclosure.
v3.20.2
Acquisitions and Divestitures - Narrative (Details)
$ in Thousands
Jul. 17, 2020
USD ($)
branch
Jul. 01, 2020
USD ($)
office
state
shares
Jun. 30, 2020
USD ($)
Dec. 31, 2019
USD ($)
Apr. 30, 2019
USD ($)
Business Acquisition [Line Items]          
Assets     $ 48,644,659 $ 43,310,900  
Total loans, net of unearned income and allowance for loan losses     32,171,056 30,860,804  
Securities available-for-sale     5,476,156 4,445,403  
Deposits     $ 37,759,351 $ 32,429,535  
Subprime Consumer Loans | Discontinued Operations, Held-for-sale          
Business Acquisition [Line Items]          
Loans disposed of         $ 25,000
Subsequent Event | SunTrust Banks, Inc. Branches          
Business Acquisition [Line Items]          
Number of bank branches | branch 30        
Loans $ 423,700        
Deposits $ 2,200,000        
Deposits premium percent 3.40%        
Subsequent Event | IBERIABANK (IBKC)          
Business Acquisition [Line Items]          
Equity interest issued, number of shares (in shares) | shares   242,000,000      
Equity interest issued, value assigned   $ 2,500,000      
Number of offices | office   319      
Number of states | state   12      
Assets   $ 34,700,000      
Total loans, net of unearned income and allowance for loan losses   26,100,000      
Securities available-for-sale   3,500,000      
Deposits   $ 28,300,000      
Subsequent Event | NORTH CAROLINA | SunTrust Banks, Inc. Branches          
Business Acquisition [Line Items]          
Number of bank branches | branch 20        
Subsequent Event | VIRGINIA | SunTrust Banks, Inc. Branches          
Business Acquisition [Line Items]          
Number of bank branches | branch 8        
Subsequent Event | GEORGIA | SunTrust Banks, Inc. Branches          
Business Acquisition [Line Items]          
Number of bank branches | branch 2        
v3.20.2
Acquisitions and Divestitures - Merger and Integration Expenses (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Business Acquisition [Line Items]        
Merger and integration expense $ 4,865 $ 8,647 $ 9,037 $ 14,307
Professional fees        
Business Acquisition [Line Items]        
Merger and integration expense 1,327 4,478 2,126 6,345
Employee compensation, incentives and benefits        
Business Acquisition [Line Items]        
Merger and integration expense 87 1,472 483 2,989
Contract employment and outsourcing        
Business Acquisition [Line Items]        
Merger and integration expense 420 17 726 17
Occupancy        
Business Acquisition [Line Items]        
Merger and integration expense (82) 1,505 (107) 1,623
Miscellaneous expense        
Business Acquisition [Line Items]        
Merger and integration expense 503 79 1,325 1,148
All other expense        
Business Acquisition [Line Items]        
Merger and integration expense 2,610 $ 1,096 4,484 $ 2,185
IBERIABANK (IBKC)        
Business Acquisition [Line Items]        
Merger and integration expense 9,456   11,061  
IBERIABANK (IBKC) | Professional fees        
Business Acquisition [Line Items]        
Merger and integration expense 3,748   4,410  
IBERIABANK (IBKC) | Employee compensation, incentives and benefits        
Business Acquisition [Line Items]        
Merger and integration expense 4,705   5,394  
IBERIABANK (IBKC) | Miscellaneous expense        
Business Acquisition [Line Items]        
Merger and integration expense $ 1,003   $ 1,257  
v3.20.2
Investment Securities - Schedule Of FHN's Investment Securities (Details) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Debt Securities, Available-for-sale [Line Items]    
Securities available for sale, amortized cost $ 5,293,746  
Securities available-for-sale 5,476,156 $ 4,445,403
Schedule of Held-to-maturity Securities [Line Items]    
Total 10,000 10,000
Securities held to maturity, gross unrealized gains 0 1
Securities held to maturity, gross unrealized losses (119) 0
Securities held to maturity, fair value 9,881 10,001
Securities pledged as collateral 4,700,000 3,800,000
U.S. treasuries    
Debt Securities, Available-for-sale [Line Items]    
Securities available for sale, amortized cost 999,974 100
Securities available for sale, gross unrealized gains 5 0
Securities available for sale, gross unrealized losses (4) 0
Securities available-for-sale 999,975 100
Government agency issued MBS    
Debt Securities, Available-for-sale [Line Items]    
Securities available for sale, amortized cost 2,383,956 2,316,381
Securities available for sale, gross unrealized gains 103,506 34,692
Securities available for sale, gross unrealized losses (80) (2,556)
Securities available-for-sale 2,487,382 2,348,517
Government agency issued CMO    
Debt Securities, Available-for-sale [Line Items]    
Securities available for sale, amortized cost 1,383,703 1,667,773
Securities available for sale, gross unrealized gains 31,570 9,916
Securities available for sale, gross unrealized losses (8) (7,197)
Securities available-for-sale 1,415,265 1,670,492
Other U.S. government agencies    
Debt Securities, Available-for-sale [Line Items]    
Securities available for sale, amortized cost 403,008 303,463
Securities available for sale, gross unrealized gains 14,284 3,750
Securities available for sale, gross unrealized losses 0 (1,121)
Securities available-for-sale 417,292 306,092
Corporates and other debt    
Debt Securities, Available-for-sale [Line Items]    
Securities available for sale, amortized cost 39,950 40,054
Securities available for sale, gross unrealized gains 463 486
Securities available for sale, gross unrealized losses 0 0
Securities available-for-sale 40,413 40,540
States and municipalities    
Debt Securities, Available-for-sale [Line Items]    
Securities available for sale, amortized cost 83,155 57,232
Securities available for sale, gross unrealized gains 7,228 3,324
Securities available for sale, gross unrealized losses 0 (30)
Securities available-for-sale 90,383 60,526
Securities available-for-sale, excluding interest only strip:    
Debt Securities, Available-for-sale [Line Items]    
Securities available for sale, amortized cost 5,293,746 4,385,003
Securities available for sale, gross unrealized gains 157,056 52,168
Securities available for sale, gross unrealized losses (92) (10,904)
Securities available-for-sale 5,450,710 4,426,267
Interest- only strips- AFS    
Debt Securities, Available-for-sale [Line Items]    
Securities available-for-sale 25,446 19,136
Corporate Bonds    
Schedule of Held-to-maturity Securities [Line Items]    
Total 10,000 10,000
Securities held to maturity, gross unrealized gains 0 1
Securities held to maturity, gross unrealized losses (119) 0
Securities held to maturity, fair value $ 9,881 $ 10,001
v3.20.2
Investment Securities - Schedule Of Amortized Cost And Fair Value By Contractual Maturity (Details) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Held-to-Maturity, Amortized Cost    
Within 1 year $ 0  
After 1 year; within 5 years 0  
After 5 years; within 10 years 10,000  
After 10 years 0  
Subtotal 10,000  
Government agency issued MBS and CMO 0  
Total 10,000 $ 10,000
Held-to-Maturity, Fair Value    
Within 1 year 0  
After 1 year; within 5 years 0  
After 5 years; within 10 years 9,881  
After 10 years 0  
Subtotal 9,881  
Government agency issued MBS and CMO 0  
Securities held to maturity, fair value 9,881 10,001
Available-for-Sale, Amortized Cost    
Within 1 year 1,106,238  
After 1 year; within 5 years 137,571  
After 5 years; within 10 years 3,573  
After 10 years 278,705  
Subtotal 1,526,087  
Government agency issued MBS and CMO 3,767,659  
Securities available for sale, amortized cost 5,293,746  
Available-for-Sale, Fair Value    
Within 1 year 1,108,000  
After 1 year; within 5 years 142,491  
After 5 years; within 10 years 9,623  
After 10 years 313,395  
Subtotal 1,573,509  
Government agency issued MBS and CMO 3,902,647  
Securities available-for-sale $ 5,476,156 $ 4,445,403
v3.20.2
Investment Securities - Schedule Of Realized Gross Gains And Losses On Sale From Available For Sale Portfolio (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Marketable Securities [Abstract]        
Gross gains on sales of securities $ 0 $ 0 $ 0 $ 0
Gross (losses) on sales of securities 0 (267) 0 (267)
Net gain/(loss) on sales of securities $ 0 (267) $ 0 (267)
Cash proceeds   $ 171,400   $ 171,400
v3.20.2
Investment Securities - Schedule Of Investments Within The Available For Sale Portfolio That Had Unrealized Losses (Details) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Schedule of Investments [Line Items]    
Less than 12 months $ 556,675 $ 655,820
12 months or longer 0 553,979
Total fair value 556,675 1,209,799
Unrealized Losses    
Less than 12 months (92) (3,616)
12 months or longer 0 (7,288)
Total unrealized losses (92) (10,904)
U.S. treasuries    
Schedule of Investments [Line Items]    
Less than 12 months 499,895 0
12 months or longer 0 100
Total fair value 499,895 100
Unrealized Losses    
Less than 12 months (4) 0
12 months or longer 0 0
Total unrealized losses (4) 0
Government agency issued MBS    
Schedule of Investments [Line Items]    
Less than 12 months 40,798 174,983
12 months or longer 0 192,755
Total fair value 40,798 367,738
Unrealized Losses    
Less than 12 months (80) (495)
12 months or longer 0 (2,061)
Total unrealized losses (80) (2,556)
Government agency issued CMO    
Schedule of Investments [Line Items]    
Less than 12 months 15,982 378,815
12 months or longer 0 361,124
Total fair value 15,982 739,939
Unrealized Losses    
Less than 12 months (8) (1,970)
12 months or longer 0 (5,227)
Total unrealized losses $ (8) (7,197)
Other U.S. government agencies    
Schedule of Investments [Line Items]    
Less than 12 months   98,471
12 months or longer   0
Total fair value   98,471
Unrealized Losses    
Less than 12 months   (1,121)
12 months or longer   0
Total unrealized losses   (1,121)
States and municipalities    
Schedule of Investments [Line Items]    
Less than 12 months   3,551
12 months or longer   0
Total fair value   3,551
Unrealized Losses    
Less than 12 months   (30)
12 months or longer   0
Total unrealized losses   $ (30)
v3.20.2
Investment Securities - Narrative (Details) - USD ($)
$ in Millions
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Dec. 31, 2019
Marketable Securities [Abstract]          
Debt securities, AFS, accrued interest receivable $ 12.4   $ 12.4    
Carrying amount of equity investments without a readily determinable fair value 24.7   24.7   $ 25.6
Unrealized gain (loss) for equity investments with readily determinable fair values $ 4.8 $ 1.2 $ (0.9) $ 4.6  
v3.20.2
Loans - Schedule Of Loans By Portfolio Segment (Details) - USD ($)
$ in Thousands
Jun. 30, 2020
Mar. 31, 2020
Dec. 31, 2019
Jun. 30, 2019
Mar. 31, 2019
Dec. 31, 2018
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loans, net of unearned income $ 32,708,937 [1]   $ 31,061,111 [1] $ 29,712,810    
Allowance for loan losses 537,881 $ 444,490 200,307 192,749 $ 184,911 $ 180,424
Total net loans 32,171,056   30,860,804      
Commercial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Allowance for loan losses     158,598      
Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loans, net of unearned income 21,393,893   20,051,091 19,054,269    
Allowance for loan losses 318,722 254,516 122,486 116,096 103,713 98,947
Commercial | Commercial real estate            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loans, net of unearned income 4,813,341   4,337,017 3,861,031    
Allowance for loan losses 57,285 47,625 36,112 32,953 34,382 31,311
Consumer | Consumer real estate            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loans, net of unearned income 6,052,393   6,177,139 6,303,134    
Allowance for loan losses 143,757 123,022 28,443 31,532 34,154 37,439
Consumer | Credit Card and Other            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loans, net of unearned income 449,310   495,864 494,376    
Allowance for loan losses $ 18,117 $ 19,327 $ 13,266 $ 12,168 $ 12,662 $ 12,727
[1]
June 30, 2020 and December 31, 2019 include $16.9 million and $18.8 million, respectively, of held-to-maturity consumer mortgage loans secured by residential real estate in process of foreclosure.
v3.20.2
Loans - Asset Quality Indicators (Details)
Jun. 30, 2020
USD ($)
Dec. 31, 2019
USD ($)
 [1]
Jun. 30, 2019
USD ($)
Accounts, Notes, Loans and Financing Receivable [Line Items]      
Loans, net of unearned income $ 32,708,937,000 [1] $ 31,061,111,000 $ 29,712,810,000
Commercial | PD Grade 1      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
Lowest expected default probability 1    
Commercial | Loss      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
Commercial loan grades 16    
Commercial | Special Mention      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
Commercial loan grades 13    
Commercial | Substandard      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
Commercial loan grades 14    
Commercial | Doubtful      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
Commercial loan grades 15    
Commercial | Minimum | Pass      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
Commercial loan grades 1    
Commercial | Minimum | Special Mention      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
Commercial loan grades 13    
Commercial | Minimum | Loan Reassessed      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
Loans, net of unearned income $ 1,000,000    
Commercial | Minimum | PD Grade 13      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
Loans, net of unearned income $ 500,000    
Commercial | Minimum | LGD Grade 1      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
Commercial loan grades 1    
Commercial | Maximum | Loss      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
Commercial loan grades 16    
Commercial | Maximum | Pass      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
Commercial loan grades 12    
Commercial | Maximum | LGD Grade 12      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
Commercial loan grades 12    
[1]
June 30, 2020 and December 31, 2019 include $16.9 million and $18.8 million, respectively, of held-to-maturity consumer mortgage loans secured by residential real estate in process of foreclosure.
v3.20.2
Loans - Balances Of Commercial Loan Portfolio Classes, Disaggregated By PD Grade (Details) - USD ($)
$ in Thousands
 6 Months Ended
Jun. 30, 2020
Dec. 31, 2019
Jun. 30, 2019
Accounts, Notes, Loans and Financing Receivable [Line Items]      
Collectively evaluated for impairment $ 32,419,020   $ 29,343,285
Individually evaluated for impairment 289,917   300,726
Total loans, net of unearned income 32,708,937 [1] $ 31,061,111 [1] 29,712,810
Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
Collectively evaluated for impairment   24,273,207  
Individually evaluated for impairment   84,001  
C&I | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 4,203,052    
2020, Collectively evaluated for impairment 4,181,906    
2020, Individually evaluated for impairment 21,146    
2019 4,009,508    
2019, Collectively evaluated for impairment 4,002,895    
2019, Individually evaluated for impairment 6,613    
2018 1,781,274    
2018, Collectively evaluated for impairment 1,768,820    
2018, Individually evaluated for impairment 12,454    
2017 1,329,918    
2017, Collectively evaluated for impairment 1,307,923    
2017, Individually evaluated for impairment 21,995    
2016 1,022,537    
2016, Collectively evaluated for impairment 1,020,628    
2016, Individually evaluated for impairment 1,909    
Prior to 2016 1,304,683    
Prior to 2016, Collectively evaluated for impairment 1,282,569    
Prior to 2016, Individually evaluated for impairment 22,114    
Non-revolving loans 4,020,591    
Non-revolving, collectively evaluated for impairment 4,020,591    
Non-revolving, individually evaluated for impairment 0    
Revolving Loans 3,612,908    
Revolving, collectively evaluated for impairment 3,562,589    
Revolving, individually evaluated for impairment 50,319    
Revolving Loans converted to term loans (c) 109,422    
Revolving loans converted to term loans, collectively evaluated for impairment 105,446    
Revolving loans converted to term loan, Individually evaluated for impairment 3,976    
Collectively evaluated for impairment 21,253,367   18,904,621
Individually evaluated for impairment 140,526   115,808
Total loans, net of unearned income 21,393,893 20,051,091 19,054,269
Revolving loan converted to term loan during period 22,700    
C&I | C&I | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
Collectively evaluated for impairment   15,313,558  
Individually evaluated for impairment   82,438  
Total loans, net of unearned income 17,164,125 15,395,996  
C&I | Loans to Mortgage Companies | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
Collectively evaluated for impairment   4,410,883  
Individually evaluated for impairment   0  
Total loans, net of unearned income 4,020,591 4,410,883  
C&I | TRUPS | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
Prior to 2016 209,200    
Collectively evaluated for impairment   218,287  
Individually evaluated for impairment   0  
Total loans, net of unearned income 209,177 218,287  
C&I | PD Grade 1 | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 2,078,712    
2019 99,978    
2018 121,167    
2017 75,521    
2016 106,700    
Prior to 2016 108,574    
Non-revolving loans 0    
Revolving Loans 83,309    
Revolving Loans converted to term loans (c) 56    
Total loans, net of unearned income 2,674,017    
C&I | PD Grade 2 | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 56,810    
2019 223,191    
2018 100,816    
2017 79,318    
2016 168,838    
Prior to 2016 90,484    
Non-revolving loans 0    
Revolving Loans 95,035    
Revolving Loans converted to term loans (c) 126    
Total loans, net of unearned income 814,618    
C&I | PD Grade 3 | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 42,983    
2019 153,671    
2018 49,176    
2017 89,945    
2016 30,381    
Prior to 2016 97,338    
Non-revolving loans 741,382    
Revolving Loans 125,470    
Revolving Loans converted to term loans (c) 3,490    
Total loans, net of unearned income 1,333,836    
C&I | PD Grade 3 | TRUPS | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
Prior to 2016 3,300    
C&I | PD Grade 4 | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 261,626    
2019 335,130    
2018 145,047    
2017 122,185    
2016 129,859    
Prior to 2016 142,129    
Non-revolving loans 685,876    
Revolving Loans 259,379    
Revolving Loans converted to term loans (c) 10,653    
Total loans, net of unearned income 2,091,884    
C&I | PD Grade 4 | TRUPS | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
Prior to 2016 60,900    
C&I | PD Grade 5 | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 304,710    
2019 496,565    
2018 220,632    
2017 145,650    
2016 96,325    
Prior to 2016 163,676    
Non-revolving loans 700,944    
Revolving Loans 384,874    
Revolving Loans converted to term loans (c) 12,654    
Total loans, net of unearned income 2,526,030    
C&I | PD Grade 5 | TRUPS | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
Prior to 2016 47,900    
C&I | PD Grade 6 | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 360,649    
2019 714,704    
2018 246,607    
2017 195,634    
2016 53,597    
Prior to 2016 155,755    
Non-revolving loans 1,198,775    
Revolving Loans 667,570    
Revolving Loans converted to term loans (c) 558    
Total loans, net of unearned income 3,593,849    
C&I | PD Grade 6 | TRUPS | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
Prior to 2016 38,600    
C&I | PD Grade 7 | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 309,088    
2019 723,728    
2018 339,953    
2017 145,385    
2016 100,069    
Prior to 2016 171,016    
Non-revolving loans 552,192    
Revolving Loans 598,772    
Revolving Loans converted to term loans (c) 48,291    
Total loans, net of unearned income 2,988,494    
C&I | PD Grade 7 | TRUPS | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
Prior to 2016 13,400    
C&I | PD Grade 8 | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 343,391    
2019 593,106    
2018 194,030    
2017 175,289    
2016 36,044    
Prior to 2016 96,204    
Non-revolving loans 93,900    
Revolving Loans 379,261    
Revolving Loans converted to term loans (c) 7,110    
Total loans, net of unearned income 1,918,335    
C&I | PD Grade 9 | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 171,524    
2019 293,768    
2018 89,519    
2017 66,927    
2016 65,539    
Prior to 2016 75,753    
Non-revolving loans 25,198    
Revolving Loans 283,883    
Revolving Loans converted to term loans (c) 10,670    
Total loans, net of unearned income 1,082,781    
C&I | PD Grade 9 | TRUPS | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
Prior to 2016 20,700    
C&I | PD Grade 10 | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 96,735    
2019 171,901    
2018 85,644    
2017 60,721    
2016 50,429    
Prior to 2016 54,729    
Non-revolving loans 15,325    
Revolving Loans 227,301    
Revolving Loans converted to term loans (c) 5,082    
Total loans, net of unearned income 767,867    
C&I | PD Grade 10 | TRUPS | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
Prior to 2016 18,600    
C&I | PD Grade 11 | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 53,872    
2019 82,677    
2018 74,977    
2017 58,964    
2016 70,190    
Prior to 2016 38,059    
Non-revolving loans 0    
Revolving Loans 148,656    
Revolving Loans converted to term loans (c) 3,233    
Total loans, net of unearned income 530,628    
C&I | PD Grade 12 | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 51,861    
2019 33,083    
2018 52,013    
2017 47,162    
2016 20,214    
Prior to 2016 29,674    
Non-revolving loans 6,999    
Revolving Loans 95,943    
Revolving Loans converted to term loans (c) 477    
Total loans, net of unearned income 337,426    
C&I | PD Grade 13 | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 39,047    
2019 57,585    
2018 10,231    
2017 15,916    
2016 51,816    
Prior to 2016 45,984    
Non-revolving loans 0    
Revolving Loans 114,971    
Revolving Loans converted to term loans (c) 498    
Total loans, net of unearned income 336,048    
C&I | PD Grade 13 | TRUPS | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
Prior to 2016 5,800    
C&I | PD Grade 14 15 16 | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 10,898    
2019 23,808    
2018 39,008    
2017 29,306    
2016 40,627    
Prior to 2016 13,194    
Non-revolving loans 0    
Revolving Loans 98,165    
Revolving Loans converted to term loans (c) 2,548    
Total loans, net of unearned income 257,554    
Commercial real estate | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
Collectively evaluated for impairment 4,813,181   3,852,027
Individually evaluated for impairment 160   1,777
Total loans, net of unearned income 4,813,341 4,337,017 $ 3,861,031
Commercial real estate | Income CRE | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 1,061,575    
2020, Collectively evaluated for impairment 1,061,575    
2020, Individually evaluated for impairment 0    
2019 1,510,795    
2019, Collectively evaluated for impairment 1,510,795    
2019, Individually evaluated for impairment 0    
2018 659,682    
2018, Collectively evaluated for impairment 659,682    
2018, Individually evaluated for impairment 0    
2017 571,891    
2017, Collectively evaluated for impairment 571,891    
2017, Individually evaluated for impairment 0    
2016 348,257    
2016, Collectively evaluated for impairment 348,257    
2016, Individually evaluated for impairment 0    
Prior to 2016 389,834    
Prior to 2016, Collectively evaluated for impairment 389,674    
Prior to 2016, Individually evaluated for impairment 160    
Revolving Loans 209,206    
Revolving, collectively evaluated for impairment 209,206    
Revolving, individually evaluated for impairment 0    
Revolving Loans converted to term loans (c) 17,483    
Revolving loans converted to term loans, collectively evaluated for impairment 17,483    
Revolving loans converted to term loan, Individually evaluated for impairment 0    
Collectively evaluated for impairment 4,768,563 4,242,519  
Individually evaluated for impairment 160 1,563  
Total loans, net of unearned income 4,768,723 4,244,082  
Commercial real estate | Residential CRE | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 21,652    
2020, Collectively evaluated for impairment 21,652    
2020, Individually evaluated for impairment 0    
2019 13,407    
2019, Collectively evaluated for impairment 13,407    
2019, Individually evaluated for impairment 0    
2018 4,459    
2018, Collectively evaluated for impairment 4,459    
2018, Individually evaluated for impairment 0    
2017 2,747    
2017, Collectively evaluated for impairment 2,747    
2017, Individually evaluated for impairment 0    
2016 602    
2016, Collectively evaluated for impairment 602    
2016, Individually evaluated for impairment 0    
Prior to 2016 1,638    
Prior to 2016, Collectively evaluated for impairment 1,638    
Prior to 2016, Individually evaluated for impairment 0    
Revolving Loans 113    
Revolving, collectively evaluated for impairment 113    
Revolving, individually evaluated for impairment 0    
Revolving Loans converted to term loans (c) 0    
Revolving loans converted to term loans, collectively evaluated for impairment 0    
Revolving loans converted to term loan, Individually evaluated for impairment 0    
Collectively evaluated for impairment 44,618 87,960  
Individually evaluated for impairment 0 0  
Total loans, net of unearned income 44,618 $ 87,960  
Commercial real estate | PD Grade 1 | Income CRE | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 21,886    
2019 0    
2018 392    
2017 106    
2016 158    
Prior to 2016 1,190    
Revolving Loans 0    
Revolving Loans converted to term loans (c) 0    
Total loans, net of unearned income 23,732    
Commercial real estate | PD Grade 1 | Residential CRE | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 0    
2019 0    
2018 0    
2017 0    
2016 0    
Prior to 2016 20    
Revolving Loans 0    
Revolving Loans converted to term loans (c) 0    
Total loans, net of unearned income 20    
Commercial real estate | PD Grade 2 | Income CRE | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 7,798    
2019 30,919    
2018 405    
2017 216    
2016 617    
Prior to 2016 3,145    
Revolving Loans 0    
Revolving Loans converted to term loans (c) 0    
Total loans, net of unearned income 43,100    
Commercial real estate | PD Grade 2 | Residential CRE | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 0    
2019 0    
2018 0    
2017 0    
2016 0    
Prior to 2016 0    
Revolving Loans 0    
Revolving Loans converted to term loans (c) 0    
Total loans, net of unearned income 0    
Commercial real estate | PD Grade 3 | Income CRE | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 97,338    
2019 212,413    
2018 75,483    
2017 34,863    
2016 42,468    
Prior to 2016 25,511    
Revolving Loans 78,004    
Revolving Loans converted to term loans (c) 181    
Total loans, net of unearned income 566,261    
Commercial real estate | PD Grade 3 | Residential CRE | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 0    
2019 151    
2018 268    
2017 482    
2016 0    
Prior to 2016 95    
Revolving Loans 0    
Revolving Loans converted to term loans (c) 0    
Total loans, net of unearned income 996    
Commercial real estate | PD Grade 4 | Income CRE | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 90,915    
2019 292,657    
2018 100,058    
2017 130,549    
2016 94,836    
Prior to 2016 45,975    
Revolving Loans 839    
Revolving Loans converted to term loans (c) 238    
Total loans, net of unearned income 756,067    
Commercial real estate | PD Grade 4 | Residential CRE | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 0    
2019 722    
2018 0    
2017 0    
2016 0    
Prior to 2016 106    
Revolving Loans 0    
Revolving Loans converted to term loans (c) 0    
Total loans, net of unearned income 828    
Commercial real estate | PD Grade 5 | Income CRE | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 320,904    
2019 279,229    
2018 138,520    
2017 152,573    
2016 112,018    
Prior to 2016 45,048    
Revolving Loans 37,306    
Revolving Loans converted to term loans (c) 6,224    
Total loans, net of unearned income 1,091,822    
Commercial real estate | PD Grade 5 | Residential CRE | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 93    
2019 0    
2018 0    
2017 0    
2016 76    
Prior to 2016 12    
Revolving Loans 0    
Revolving Loans converted to term loans (c) 0    
Total loans, net of unearned income 181    
Commercial real estate | PD Grade 6 | Income CRE | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 264,892    
2019 215,714    
2018 125,075    
2017 107,697    
2016 33,716    
Prior to 2016 119,742    
Revolving Loans 37,800    
Revolving Loans converted to term loans (c) 7,930    
Total loans, net of unearned income 912,566    
Commercial real estate | PD Grade 6 | Residential CRE | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 14,512    
2019 106    
2018 43    
2017 333    
2016 30    
Prior to 2016 234    
Revolving Loans 0    
Revolving Loans converted to term loans (c) 0    
Total loans, net of unearned income 15,258    
Commercial real estate | PD Grade 7 | Income CRE | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 164,896    
2019 293,784    
2018 121,601    
2017 64,796    
2016 20,076    
Prior to 2016 24,648    
Revolving Loans 40,187    
Revolving Loans converted to term loans (c) 1,224    
Total loans, net of unearned income 731,212    
Commercial real estate | PD Grade 7 | Residential CRE | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 348    
2019 470    
2018 2,904    
2017 1,776    
2016 0    
Prior to 2016 241    
Revolving Loans 13    
Revolving Loans converted to term loans (c) 0    
Total loans, net of unearned income 5,752    
Commercial real estate | PD Grade 8 | Income CRE | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 23,028    
2019 93,700    
2018 55,579    
2017 11,850    
2016 28,382    
Prior to 2016 50,403    
Revolving Loans 6,845    
Revolving Loans converted to term loans (c) 128    
Total loans, net of unearned income 269,915    
Commercial real estate | PD Grade 8 | Residential CRE | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 467    
2019 24    
2018 443    
2017 0    
2016 6    
Prior to 2016 89    
Revolving Loans 100    
Revolving Loans converted to term loans (c) 0    
Total loans, net of unearned income 1,129    
Commercial real estate | PD Grade 9 | Income CRE | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 35,357    
2019 36,942    
2018 25,157    
2017 22,936    
2016 2,219    
Prior to 2016 19,126    
Revolving Loans 280    
Revolving Loans converted to term loans (c) 0    
Total loans, net of unearned income 142,017    
Commercial real estate | PD Grade 9 | Residential CRE | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 325    
2019 520    
2018 262    
2017 0    
2016 490    
Prior to 2016 76    
Revolving Loans 0    
Revolving Loans converted to term loans (c) 0    
Total loans, net of unearned income 1,673    
Commercial real estate | PD Grade 10 | Income CRE | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 23,623    
2019 8,323    
2018 7,323    
2017 2,803    
2016 9,125    
Prior to 2016 17,320    
Revolving Loans 0    
Revolving Loans converted to term loans (c) 0    
Total loans, net of unearned income 68,517    
Commercial real estate | PD Grade 10 | Residential CRE | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 179    
2019 960    
2018 277    
2017 0    
2016 0    
Prior to 2016 6    
Revolving Loans 0    
Revolving Loans converted to term loans (c) 0    
Total loans, net of unearned income 1,422    
Commercial real estate | PD Grade 11 | Income CRE | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 6,936    
2019 21,414    
2018 6,890    
2017 7,347    
2016 3,862    
Prior to 2016 19,638    
Revolving Loans 0    
Revolving Loans converted to term loans (c) 1,330    
Total loans, net of unearned income 67,417    
Commercial real estate | PD Grade 11 | Residential CRE | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 4,093    
2019 8,660    
2018 218    
2017 156    
2016 0    
Prior to 2016 50    
Revolving Loans 0    
Revolving Loans converted to term loans (c) 0    
Total loans, net of unearned income 13,177    
Commercial real estate | PD Grade 12 | Income CRE | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 2,962    
2019 14,437    
2018 2,383    
2017 905    
2016 652    
Prior to 2016 13,476    
Revolving Loans 64    
Revolving Loans converted to term loans (c) 228    
Total loans, net of unearned income 35,107    
Commercial real estate | PD Grade 12 | Residential CRE | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 154    
2019 1,530    
2018 44    
2017 0    
2016 0    
Prior to 2016 538    
Revolving Loans 0    
Revolving Loans converted to term loans (c) 0    
Total loans, net of unearned income 2,266    
Commercial real estate | PD Grade 13 | Income CRE | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 525    
2019 455    
2018 771    
2017 16,185    
2016 0    
Prior to 2016 570    
Revolving Loans 328    
Revolving Loans converted to term loans (c) 0    
Total loans, net of unearned income 18,834    
Commercial real estate | PD Grade 13 | Residential CRE | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 1,310    
2019 0    
2018 0    
2017 0    
2016 0    
Prior to 2016 132    
Revolving Loans 0    
Revolving Loans converted to term loans (c) 0    
Total loans, net of unearned income 1,442    
Commercial real estate | PD Grade 14 15 16 | Income CRE | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 515    
2019 10,808    
2018 45    
2017 19,065    
2016 128    
Prior to 2016 3,882    
Revolving Loans 7,553    
Revolving Loans converted to term loans (c) 0    
Total loans, net of unearned income 41,996    
Commercial real estate | PD Grade 14 15 16 | Residential CRE | Commercial      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 171    
2019 264    
2018 0    
2017 0    
2016 0    
Prior to 2016 39    
Revolving Loans 0    
Revolving Loans converted to term loans (c) 0    
Total loans, net of unearned income $ 474    
[1]
June 30, 2020 and December 31, 2019 include $16.9 million and $18.8 million, respectively, of held-to-maturity consumer mortgage loans secured by residential real estate in process of foreclosure.
v3.20.2
Loans - Balances Of Commercial Loan Portfolio Classes, Disaggregated By PD Grade and Sub Class (Details) - USD ($)
$ in Thousands
Jun. 30, 2020
Mar. 31, 2020
Dec. 31, 2019
Jun. 30, 2019
Mar. 31, 2019
Dec. 31, 2018
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Allowance for loan losses $ 537,881 $ 444,490 $ 200,307 $ 192,749 $ 184,911 $ 180,424
Collectively evaluated for impairment 32,419,020     29,343,285    
Allowance - collectively evaluated for impairment 507,677     159,579    
Individually evaluated for impairment 289,917     300,726    
Allowance - individually evaluated for impairment 30,204     31,181    
Commercial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     $ 24,388,108      
Loan balances percentage of total     100.00%      
Allowance for loan losses     $ 158,598      
Collectively evaluated for impairment     $ 24,273,207      
Percent loan collectively evaluated for impairment     100.00%      
Allowance - collectively evaluated for impairment     $ 151,554      
Individually evaluated for impairment     $ 84,001      
Percent loan individually evaluated for impairment     0.00%      
Allowance - individually evaluated for impairment     $ 6,196      
Purchased credit-impaired loans     $ 30,900      
Percent loan purchased credit impaired     0.00%      
Allowance - purchased credit-impaired loans     $ 848      
Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Allowance for loan losses 318,722 254,516 122,486 116,096 103,713 98,947
Collectively evaluated for impairment 21,253,367     18,904,621    
Allowance - collectively evaluated for impairment 302,145     106,758    
Individually evaluated for impairment 140,526     115,808    
Allowance - individually evaluated for impairment 16,577     8,484    
Commercial | Commercial real estate            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Allowance for loan losses 57,285 $ 47,625 36,112 32,953 $ 34,382 $ 31,311
Collectively evaluated for impairment 4,813,181     3,852,027    
Allowance - collectively evaluated for impairment 57,285     32,953    
Individually evaluated for impairment 160     1,777    
Allowance - individually evaluated for impairment 0     $ 0    
C&I | Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     15,421,921      
Collectively evaluated for impairment     15,313,558      
Individually evaluated for impairment     82,438      
Purchased credit-impaired loans     25,925      
Loans to Mortgage Companies | Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     4,410,883      
Collectively evaluated for impairment     4,410,883      
Individually evaluated for impairment     0      
Purchased credit-impaired loans     0      
TRUPS | Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     218,287      
Allowance for loan losses 18,400   19,100      
Collectively evaluated for impairment     218,287      
Individually evaluated for impairment     0      
Purchased credit-impaired loans     0      
Income CRE | Commercial | Commercial real estate            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     4,248,237      
Collectively evaluated for impairment 4,768,563   4,242,519      
Individually evaluated for impairment 160   1,563      
Purchased credit-impaired loans     4,155      
Residential CRE | Commercial | Commercial real estate            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     88,780      
Collectively evaluated for impairment 44,618   87,960      
Individually evaluated for impairment $ 0   0      
Purchased credit-impaired loans     820      
PD Grade 1 | Commercial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     $ 697,888      
Loan balances percentage of total     3.00%      
Allowance for loan losses     $ 69      
PD Grade 1 | C&I | Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     696,040      
PD Grade 1 | Loans to Mortgage Companies | Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     0      
PD Grade 1 | TRUPS | Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     0      
PD Grade 1 | Income CRE | Commercial | Commercial real estate            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     1,848      
PD Grade 1 | Residential CRE | Commercial | Commercial real estate            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     0      
PD Grade 2 | Commercial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     $ 815,992      
Loan balances percentage of total     4.00%      
Allowance for loan losses     $ 165      
PD Grade 2 | C&I | Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     767,048      
PD Grade 2 | Loans to Mortgage Companies | Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     0      
PD Grade 2 | TRUPS | Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     0      
PD Grade 2 | Income CRE | Commercial | Commercial real estate            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     48,906      
PD Grade 2 | Residential CRE | Commercial | Commercial real estate            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     38      
PD Grade 3 | Commercial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     $ 2,098,520      
Loan balances percentage of total     9.00%      
Allowance for loan losses     $ 274      
PD Grade 3 | C&I | Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     743,123      
PD Grade 3 | Loans to Mortgage Companies | Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     877,210      
PD Grade 3 | TRUPS | Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     3,314      
PD Grade 3 | Income CRE | Commercial | Commercial real estate            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     474,067      
PD Grade 3 | Residential CRE | Commercial | Commercial real estate            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     806      
PD Grade 4 | Commercial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     $ 2,657,818      
Loan balances percentage of total     11.00%      
Allowance for loan losses     $ 738      
PD Grade 4 | C&I | Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     1,237,772      
PD Grade 4 | Loans to Mortgage Companies | Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     692,971      
PD Grade 4 | TRUPS | Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     46,375      
PD Grade 4 | Income CRE | Commercial | Commercial real estate            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     680,223      
PD Grade 4 | Residential CRE | Commercial | Commercial real estate            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     477      
PD Grade 5 | Commercial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     $ 3,725,003      
Loan balances percentage of total     15.00%      
Allowance for loan losses     $ 8,265      
PD Grade 5 | C&I | Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     1,986,761      
PD Grade 5 | Loans to Mortgage Companies | Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     670,402      
PD Grade 5 | TRUPS | Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     72,512      
PD Grade 5 | Income CRE | Commercial | Commercial real estate            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     993,628      
PD Grade 5 | Residential CRE | Commercial | Commercial real estate            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     1,700      
PD Grade 6 | Commercial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     $ 4,683,029      
Loan balances percentage of total     19.00%      
Allowance for loan losses     $ 12,054      
PD Grade 6 | C&I | Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     2,511,290      
PD Grade 6 | Loans to Mortgage Companies | Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     1,410,387      
PD Grade 6 | TRUPS | Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     27,263      
PD Grade 6 | Income CRE | Commercial | Commercial real estate            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     717,062      
PD Grade 6 | Residential CRE | Commercial | Commercial real estate            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     17,027      
PD Grade 7 | Commercial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     $ 3,908,971      
Loan balances percentage of total     16.00%      
Allowance for loan losses     $ 20,409      
PD Grade 7 | C&I | Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     2,708,707      
PD Grade 7 | Loans to Mortgage Companies | Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     509,616      
PD Grade 7 | TRUPS | Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     18,378      
PD Grade 7 | Income CRE | Commercial | Commercial real estate            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     641,345      
PD Grade 7 | Residential CRE | Commercial | Commercial real estate            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     30,925      
PD Grade 8 | Commercial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     $ 2,166,241      
Loan balances percentage of total     9.00%      
Allowance for loan losses     $ 22,514      
PD Grade 8 | C&I | Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     1,743,364      
PD Grade 8 | Loans to Mortgage Companies | Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     136,771      
PD Grade 8 | TRUPS | Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     0      
PD Grade 8 | Income CRE | Commercial | Commercial real estate            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     269,407      
PD Grade 8 | Residential CRE | Commercial | Commercial real estate            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     16,699      
PD Grade 9 | Commercial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     $ 1,393,514      
Loan balances percentage of total     6.00%      
Allowance for loan losses     $ 17,484      
PD Grade 9 | C&I | Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     1,101,873      
PD Grade 9 | Loans to Mortgage Companies | Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     77,139      
PD Grade 9 | TRUPS | Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     31,909      
PD Grade 9 | Income CRE | Commercial | Commercial real estate            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     169,586      
PD Grade 9 | Residential CRE | Commercial | Commercial real estate            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     13,007      
PD Grade 10 | Commercial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     $ 665,145      
Loan balances percentage of total     3.00%      
Allowance for loan losses     $ 10,197      
PD Grade 10 | C&I | Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     563,635      
PD Grade 10 | Loans to Mortgage Companies | Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     21,229      
PD Grade 10 | TRUPS | Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     18,536      
PD Grade 10 | Income CRE | Commercial | Commercial real estate            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     59,592      
PD Grade 10 | Residential CRE | Commercial | Commercial real estate            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     2,153      
PD Grade 11 | Commercial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     $ 579,124      
Loan balances percentage of total     2.00%      
Allowance for loan losses     $ 13,454      
PD Grade 11 | C&I | Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     495,140      
PD Grade 11 | Loans to Mortgage Companies | Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     0      
PD Grade 11 | TRUPS | Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     0      
PD Grade 11 | Income CRE | Commercial | Commercial real estate            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     81,682      
PD Grade 11 | Residential CRE | Commercial | Commercial real estate            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     2,302      
PD Grade 12 | Commercial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     $ 307,945      
Loan balances percentage of total     1.00%      
Allowance for loan losses     $ 8,471      
PD Grade 12 | C&I | Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     262,906      
PD Grade 12 | Loans to Mortgage Companies | Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     15,158      
PD Grade 12 | TRUPS | Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     0      
PD Grade 12 | Income CRE | Commercial | Commercial real estate            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     28,807      
PD Grade 12 | Residential CRE | Commercial | Commercial real estate            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     1,074      
PD Grade 13 | Commercial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     $ 266,915      
Loan balances percentage of total     1.00%      
Allowance for loan losses     $ 8,142      
PD Grade 13 | C&I | Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     232,823      
PD Grade 13 | Loans to Mortgage Companies | Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     0      
PD Grade 13 | TRUPS | Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     0      
PD Grade 13 | Income CRE | Commercial | Commercial real estate            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     32,966      
PD Grade 13 | Residential CRE | Commercial | Commercial real estate            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     1,126      
PD Grade 14 15 16 | Commercial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     $ 307,102      
Loan balances percentage of total     1.00%      
Allowance for loan losses     $ 29,318      
PD Grade 14 15 16 | C&I | Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     263,076      
PD Grade 14 15 16 | Loans to Mortgage Companies | Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     0      
PD Grade 14 15 16 | TRUPS | Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     0      
PD Grade 14 15 16 | Income CRE | Commercial | Commercial real estate            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     43,400      
PD Grade 14 15 16 | Residential CRE | Commercial | Commercial real estate            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loan balance     $ 626      
v3.20.2
Loans - Loans by FICO Score, Consumer (Details) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Jun. 30, 2019
Accounts, Notes, Loans and Financing Receivable [Line Items]      
Total loans, net of unearned income $ 32,708,937 [1] $ 31,061,111 [1] $ 29,712,810
Consumer | Consumer real estate      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 525,422    
2019 789,595    
2018 514,908    
2017 539,006    
2016 684,993    
Prior to 2016 1,801,009    
Revolving loans 884,134    
Revolving loans converted to term loans (c) 313,326    
Total loans, net of unearned income 6,052,393 6,177,139 6,303,134
Consumer | Consumer real estate | FICO score 740 or greater      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 394,137    
2019 576,132    
2018 410,188    
2017 420,822    
2016 527,019    
Prior to 2016 1,255,357    
Revolving loans 626,844    
Revolving loans converted to term loans (c) 135,436    
Total loans, net of unearned income 4,345,935    
Consumer | Consumer real estate | FICO score 720-739      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 43,808    
2019 67,904    
2018 26,383    
2017 37,259    
2016 48,677    
Prior to 2016 132,407    
Revolving loans 76,045    
Revolving loans converted to term loans (c) 28,913    
Total loans, net of unearned income 461,396    
Consumer | Consumer real estate | FICO score 700-719      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 31,459    
2019 66,155    
2018 28,201    
2017 26,164    
2016 45,038    
Prior to 2016 110,244    
Revolving loans 54,941    
Revolving loans converted to term loans (c) 29,613    
Total loans, net of unearned income 391,815    
Consumer | Consumer real estate | FICO score 660-699      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 41,314    
2019 51,096    
2018 33,382    
2017 32,745    
2016 36,625    
Prior to 2016 153,335    
Revolving loans 76,593    
Revolving loans converted to term loans (c) 44,067    
Total loans, net of unearned income 469,157    
Consumer | Consumer real estate | FICO score 620-659      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 12,524    
2019 17,140    
2018 10,922    
2017 12,789    
2016 13,178    
Prior to 2016 70,067    
Revolving loans 24,185    
Revolving loans converted to term loans (c) 29,940    
Total loans, net of unearned income 190,745    
Consumer | Consumer real estate | FICO score less than 620      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 2,180    
2019 11,168    
2018 5,832    
2017 9,227    
2016 14,456    
Prior to 2016 79,599    
Revolving loans 25,526    
Revolving loans converted to term loans (c) 45,357    
Total loans, net of unearned income 193,345    
Consumer | Other Consumer      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 26,822    
2019 55,913    
2018 32,571    
2017 17,220    
2016 10,011    
Prior to 2016 26,315    
Revolving loans 269,748    
Revolving loans converted to term loans (c) 10,710    
Total loans, net of unearned income 449,310 495,864 $ 494,376
Consumer | Other Consumer | FICO score 740 or greater      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 16,160    
2019 36,450    
2018 21,476    
2017 10,499    
2016 3,988    
Prior to 2016 14,774    
Revolving loans 173,832    
Revolving loans converted to term loans (c) 4,401    
Total loans, net of unearned income 281,580    
Consumer | Other Consumer | FICO score 720-739      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 3,238    
2019 5,226    
2018 2,784    
2017 1,615    
2016 747    
Prior to 2016 1,844    
Revolving loans 27,603    
Revolving loans converted to term loans (c) 1,319    
Total loans, net of unearned income 44,376    
Consumer | Other Consumer | FICO score 700-719      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 2,168    
2019 4,246    
2018 2,542    
2017 1,521    
2016 706    
Prior to 2016 1,980    
Revolving loans 19,983    
Revolving loans converted to term loans (c) 1,052    
Total loans, net of unearned income 34,198    
Consumer | Other Consumer | FICO score 660-699      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 3,654    
2019 6,546    
2018 3,149    
2017 2,172    
2016 1,423    
Prior to 2016 2,737    
Revolving loans 27,534    
Revolving loans converted to term loans (c) 1,581    
Total loans, net of unearned income 48,796    
Consumer | Other Consumer | FICO score 620-659      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 1,269    
2019 2,386    
2018 1,576    
2017 891    
2016 836    
Prior to 2016 1,813    
Revolving loans 10,759    
Revolving loans converted to term loans (c) 963    
Total loans, net of unearned income 20,493    
Consumer | Other Consumer | FICO score less than 620      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
2020 333    
2019 1,059    
2018 1,044    
2017 522    
2016 2,311    
Prior to 2016 3,167    
Revolving loans 10,037    
Revolving loans converted to term loans (c) 1,394    
Total loans, net of unearned income 19,867    
Unsecured Debt | Consumer | Other Consumer      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
Revolving loans converted to term loans (c) 3,900    
HELOC | Consumer | Consumer real estate      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
Revolving loans converted to term loans (c) 10,800    
Total loans, net of unearned income $ 1,197,460 $ 1,286,875  
[1]
June 30, 2020 and December 31, 2019 include $16.9 million and $18.8 million, respectively, of held-to-maturity consumer mortgage loans secured by residential real estate in process of foreclosure.
v3.20.2
Loans - Loans by FICO Score Percentage, Consumer (Details) - Accounts Receivable - Credit Concentration Risk
 12 Months Ended
Dec. 31, 2019
HELOC  
Accounts, Notes, Loans and Financing Receivable [Line Items]  
Concentration risk, percentage 100.00%
R/E Installment Loans  
Accounts, Notes, Loans and Financing Receivable [Line Items]  
Concentration risk, percentage 100.00%
FICO score 740 or greater | HELOC  
Accounts, Notes, Loans and Financing Receivable [Line Items]  
Concentration risk, percentage 62.00%
FICO score 740 or greater | R/E Installment Loans  
Accounts, Notes, Loans and Financing Receivable [Line Items]  
Concentration risk, percentage 71.90%
FICO score 720-739 | HELOC  
Accounts, Notes, Loans and Financing Receivable [Line Items]  
Concentration risk, percentage 8.60%
FICO score 720-739 | R/E Installment Loans  
Accounts, Notes, Loans and Financing Receivable [Line Items]  
Concentration risk, percentage 8.30%
FICO score 700-719 | HELOC  
Accounts, Notes, Loans and Financing Receivable [Line Items]  
Concentration risk, percentage 7.60%
FICO score 700-719 | R/E Installment Loans  
Accounts, Notes, Loans and Financing Receivable [Line Items]  
Concentration risk, percentage 6.30%
FICO score 660-699 | HELOC  
Accounts, Notes, Loans and Financing Receivable [Line Items]  
Concentration risk, percentage 10.80%
FICO score 660-699 | R/E Installment Loans  
Accounts, Notes, Loans and Financing Receivable [Line Items]  
Concentration risk, percentage 8.10%
FICO score 620-659 | HELOC  
Accounts, Notes, Loans and Financing Receivable [Line Items]  
Concentration risk, percentage 4.70%
FICO score 620-659 | R/E Installment Loans  
Accounts, Notes, Loans and Financing Receivable [Line Items]  
Concentration risk, percentage 2.80%
FICO score less than 620 | HELOC  
Accounts, Notes, Loans and Financing Receivable [Line Items]  
Concentration risk, percentage 6.30%
FICO score less than 620 | R/E Installment Loans  
Accounts, Notes, Loans and Financing Receivable [Line Items]  
Concentration risk, percentage 2.60%
v3.20.2
Loans - Accruing And Non-Accruing Loans By Class (Details) - USD ($)
$ in Thousands
Jun. 30, 2020
Mar. 31, 2020
Dec. 31, 2019
Jun. 30, 2019
Mar. 31, 2019
Dec. 31, 2018
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Current, Accruing $ 32,441,292   $ 30,841,035      
Total Accruing 32,482,946   30,898,946      
Current, Non-Accruing 153,299   100,382      
Total Non-Accruing 225,991   162,165      
Total loans, net of unearned income 32,708,937 [1]   31,061,111 [1] $ 29,712,810    
Allowance for loan losses 537,881 $ 444,490 200,307 192,749 $ 184,911 $ 180,424
30-89 Days Past Due            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Past Due, Accruing 27,156   36,052      
Past Due, Non-Accruing 4,128   20,217      
90+ Days Past Due            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Past Due, Accruing 14,498   21,859      
Past Due, Non-Accruing 68,564   41,566      
Commercial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Allowance for loan losses     158,598      
Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Current, Accruing 21,260,765   19,967,302      
Total Accruing 21,266,548   19,976,779      
Current, Non-Accruing 79,022   36,564      
Total Non-Accruing 127,345   74,312      
Total loans, net of unearned income 21,393,893   20,051,091 19,054,269    
Allowance for loan losses 318,722 254,516 122,486 116,096 103,713 98,947
Commercial | Commercial, financial, and industrial | 30-89 Days Past Due            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Past Due, Accruing 5,496   7,442      
Past Due, Non-Accruing 254   14,385      
Commercial | Commercial, financial, and industrial | 90+ Days Past Due            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Past Due, Accruing 287   2,035      
Past Due, Non-Accruing 48,069   23,363      
Commercial | Commercial, financial, and industrial | C&I            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Current, Accruing 17,031,822   15,314,292      
Total Accruing 17,036,780   15,321,684      
Current, Non-Accruing 79,022   36,564      
Total Non-Accruing 127,345   74,312      
Total loans, net of unearned income 17,164,125   15,395,996      
Nonaccrual, no allowance 65,300          
Commercial | Commercial, financial, and industrial | C&I | 30-89 Days Past Due            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Past Due, Accruing 4,671   7,155      
Past Due, Non-Accruing 254   14,385      
Commercial | Commercial, financial, and industrial | C&I | 90+ Days Past Due            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Past Due, Accruing 287   237      
Past Due, Non-Accruing 48,069   23,363      
Commercial | Commercial, financial, and industrial | Loans to Mortgage Companies            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Current, Accruing 4,019,766   4,410,883      
Total Accruing 4,020,591   4,410,883      
Current, Non-Accruing 0   0      
Total Non-Accruing 0   0      
Total loans, net of unearned income 4,020,591   4,410,883      
Commercial | Commercial, financial, and industrial | Loans to Mortgage Companies | 30-89 Days Past Due            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Past Due, Accruing 825   0      
Past Due, Non-Accruing 0   0      
Commercial | Commercial, financial, and industrial | Loans to Mortgage Companies | 90+ Days Past Due            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Past Due, Accruing 0   0      
Past Due, Non-Accruing 0   0      
Commercial | Commercial, financial, and industrial | TRUPS            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Current, Accruing 209,177   218,287      
Total Accruing 209,177   218,287      
Current, Non-Accruing 0   0      
Total Non-Accruing 0   0      
Total loans, net of unearned income 209,177   218,287      
Allowance for loan losses 18,400   19,100      
Commercial | Commercial, financial, and industrial | TRUPS | 30-89 Days Past Due            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Past Due, Accruing 0   0      
Past Due, Non-Accruing 0   0      
Commercial | Commercial, financial, and industrial | TRUPS | 90+ Days Past Due            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Past Due, Accruing 0   0      
Past Due, Non-Accruing 0   0      
Commercial | Commercial, financial, and industrial | C&I Purchase Credit Impaired Loans            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Current, Accruing     23,840      
Total Accruing     25,925      
Current, Non-Accruing     0      
Total Non-Accruing     0      
Total loans, net of unearned income     25,925      
Commercial | Commercial, financial, and industrial | C&I Purchase Credit Impaired Loans | 30-89 Days Past Due            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Past Due, Accruing     287      
Past Due, Non-Accruing     0      
Commercial | Commercial, financial, and industrial | C&I Purchase Credit Impaired Loans | 90+ Days Past Due            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Past Due, Accruing     1,798      
Past Due, Non-Accruing     0      
Commercial | Commercial real estate            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Current, Accruing 4,811,179   4,334,283      
Total Accruing 4,811,274   4,335,192      
Current, Non-Accruing 797   0      
Total Non-Accruing 2,067   1,825      
Total loans, net of unearned income 4,813,341   4,337,017 3,861,031    
Allowance for loan losses 57,285 47,625 36,112 32,953 34,382 31,311
Commercial | Commercial real estate | 30-89 Days Past Due            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Past Due, Accruing 95   814      
Past Due, Non-Accruing 0   485      
Commercial | Commercial real estate | 90+ Days Past Due            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Past Due, Accruing 0   95      
Past Due, Non-Accruing 1,270   1,340      
Commercial | Commercial real estate | Income CRE            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Current, Accruing 4,766,561   4,242,044      
Total Accruing 4,766,656   4,242,723      
Current, Non-Accruing 797   0      
Total Non-Accruing 2,067   1,359      
Total loans, net of unearned income 4,768,723   4,244,082      
Commercial | Commercial real estate | Income CRE | 30-89 Days Past Due            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Past Due, Accruing 95   679      
Past Due, Non-Accruing 0   19      
Commercial | Commercial real estate | Income CRE | 90+ Days Past Due            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Past Due, Accruing 0   0      
Past Due, Non-Accruing 1,270   1,340      
Commercial | Commercial real estate | Residential CRE            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Current, Accruing 44,618   87,487      
Total Accruing 44,618   87,494      
Current, Non-Accruing 0   0      
Total Non-Accruing 0   466      
Total loans, net of unearned income 44,618   87,960      
Commercial | Commercial real estate | Residential CRE | 30-89 Days Past Due            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Past Due, Accruing 0   7      
Past Due, Non-Accruing 0   466      
Commercial | Commercial real estate | Residential CRE | 90+ Days Past Due            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Past Due, Accruing 0   0      
Past Due, Non-Accruing 0   0      
Commercial | Commercial real estate | CRE Purchase Credit Impaired Loans            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Current, Accruing     4,752      
Total Accruing     4,975      
Current, Non-Accruing     0      
Total Non-Accruing     0      
Total loans, net of unearned income     4,975      
Commercial | Commercial real estate | CRE Purchase Credit Impaired Loans | 30-89 Days Past Due            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Past Due, Accruing     128      
Past Due, Non-Accruing     0      
Commercial | Commercial real estate | CRE Purchase Credit Impaired Loans | 90+ Days Past Due            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Past Due, Accruing     95      
Past Due, Non-Accruing     0      
Consumer | Consumer Real Estate (a)            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Current, Accruing 5,923,755   6,048,510      
Total Accruing 5,956,069   6,091,445      
Current, Non-Accruing 73,394   63,717      
Total Non-Accruing 96,324   85,694      
Total loans, net of unearned income 6,052,393   6,177,139 6,303,134    
Allowance for loan losses 143,757 123,022 28,443 31,532 34,154 37,439
Consumer | Consumer Real Estate (a) | 30-89 Days Past Due            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Past Due, Accruing 19,514   24,820      
Past Due, Non-Accruing 3,797   5,303      
Consumer | Consumer Real Estate (a) | 90+ Days Past Due            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Past Due, Accruing 12,800   18,115      
Past Due, Non-Accruing 19,133   16,674      
Consumer | Consumer Real Estate (a) | HELOC            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Current, Accruing 1,136,288   1,217,344      
Total Accruing 1,148,824   1,232,169      
Current, Non-Accruing 41,608   43,007      
Total Non-Accruing 48,636   54,706      
Total loans, net of unearned income 1,197,460   1,286,875      
Consumer | Consumer Real Estate (a) | HELOC | 30-89 Days Past Due            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Past Due, Accruing 5,736   9,156      
Past Due, Non-Accruing 1,720   4,227      
Consumer | Consumer Real Estate (a) | HELOC | 90+ Days Past Due            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Past Due, Accruing 6,800   5,669      
Past Due, Non-Accruing 5,308   7,472      
Consumer | Consumer Real Estate (a) | R/E Installment Loans            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Current, Accruing 4,787,467   4,812,446      
Total Accruing 4,807,245   4,834,510      
Current, Non-Accruing 31,786   20,710      
Total Non-Accruing 47,688   30,988      
Total loans, net of unearned income 4,854,933   4,865,498      
Consumer | Consumer Real Estate (a) | R/E Installment Loans | 30-89 Days Past Due            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Past Due, Accruing 13,778   12,894      
Past Due, Non-Accruing 2,077   1,076      
Consumer | Consumer Real Estate (a) | R/E Installment Loans | 90+ Days Past Due            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Past Due, Accruing 6,000   9,170      
Past Due, Non-Accruing 13,825   9,202      
Consumer | Consumer Real Estate (a) | RE Installment Purchase Credit Impaired Loans            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Current, Accruing     18,720      
Total Accruing     24,766      
Current, Non-Accruing     0      
Total Non-Accruing     0      
Total loans, net of unearned income     24,766      
Consumer | Consumer Real Estate (a) | RE Installment Purchase Credit Impaired Loans | 30-89 Days Past Due            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Past Due, Accruing     2,770      
Past Due, Non-Accruing     0      
Consumer | Consumer Real Estate (a) | RE Installment Purchase Credit Impaired Loans | 90+ Days Past Due            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Past Due, Accruing     3,276      
Past Due, Non-Accruing     0      
Consumer | Credit Card and Other            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Current, Accruing 445,593   490,940      
Total Accruing 449,055   495,530      
Current, Non-Accruing 86   101      
Total Non-Accruing 255   334      
Total loans, net of unearned income 449,310   495,864 494,376    
Allowance for loan losses 18,117 $ 19,327 13,266 $ 12,168 $ 12,662 $ 12,727
Consumer | Credit Card and Other | 30-89 Days Past Due            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Past Due, Accruing 2,051   2,976      
Past Due, Non-Accruing 77   44      
Consumer | Credit Card and Other | 90+ Days Past Due            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Past Due, Accruing 1,411   1,614      
Past Due, Non-Accruing 92   189      
Consumer | Credit Card and Other | Credit Card            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Current, Accruing 164,527   198,917      
Total Accruing 167,344   201,171      
Current, Non-Accruing 0   0      
Total Non-Accruing 0   0      
Total loans, net of unearned income 167,344   201,171      
Consumer | Credit Card and Other | Credit Card | 30-89 Days Past Due            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Past Due, Accruing 1,520   1,076      
Past Due, Non-Accruing 0   0      
Consumer | Credit Card and Other | Credit Card | 90+ Days Past Due            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Past Due, Accruing 1,297   1,178      
Past Due, Non-Accruing 0   0      
Consumer | Credit Card and Other | Other Consumer Loans Class            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Current, Accruing 281,066   291,700      
Total Accruing 281,711   293,839      
Current, Non-Accruing 86   101      
Total Non-Accruing 255   334      
Total loans, net of unearned income 281,966   294,173      
Consumer | Credit Card and Other | Other Consumer Loans Class | 30-89 Days Past Due            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Past Due, Accruing 531   1,802      
Past Due, Non-Accruing 77   44      
Consumer | Credit Card and Other | Other Consumer Loans Class | 90+ Days Past Due            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Past Due, Accruing 114   337      
Past Due, Non-Accruing $ 92   189      
Consumer | Credit Card and Other | Other Purchased Credit Impaired Loans            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Current, Accruing     323      
Total Accruing     520      
Current, Non-Accruing     0      
Total Non-Accruing     0      
Total loans, net of unearned income     520      
Consumer | Credit Card and Other | Other Purchased Credit Impaired Loans | 30-89 Days Past Due            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Past Due, Accruing     98      
Past Due, Non-Accruing     0      
Consumer | Credit Card and Other | Other Purchased Credit Impaired Loans | 90+ Days Past Due            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Past Due, Accruing     99      
Past Due, Non-Accruing     $ 0      
[1]
June 30, 2020 and December 31, 2019 include $16.9 million and $18.8 million, respectively, of held-to-maturity consumer mortgage loans secured by residential real estate in process of foreclosure.
v3.20.2
Loans - Narrative (Details) - USD ($)
 6 Months Ended 12 Months Ended
Jun. 30, 2020
Dec. 31, 2019
Mar. 31, 2020
Jun. 30, 2019
Mar. 31, 2019
Dec. 31, 2018
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loans, net of unearned income $ 32,708,937,000 [1] $ 31,061,111,000 [1]   $ 29,712,810,000    
Troubled debt restructurings loans 192,600,000 206,300,000        
Allowance for loan losses $ 537,881,000 200,307,000 $ 444,490,000 192,749,000 $ 184,911,000 $ 180,424,000
Loans to Mortgage Companies            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Percentage of loans collateralized with government guaranteed loans 95.00%          
Allowance For TDRs To Recorded Investment Of TDRs            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Allowance for loan losses $ 13,600,000 $ 19,700,000        
Ratio of the allowance for loan losses to loans 7.00% 10.00%        
Loans Held For Sale, Residential Real Estate            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Troubled debt restructurings loans $ 45,100,000 $ 51,100,000        
Commercial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Allowance for loan losses   158,598,000        
Allowance - purchased credit-impaired loans   848,000        
Commercial | Loans to Mortgage Companies            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Financing receivable, before allowance for credit loss $ 4,000,000,000.0          
Percentage of commercial & industrial loan portfolio 19.00%          
Percentage contributed in total loan 12.00%          
Commercial | Finance Insurance And Loans To Mortgage Companies            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Percentage of commercial & industrial loan portfolio 31.00%          
Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loans, net of unearned income $ 21,393,893,000 20,051,091,000   19,054,269,000    
Allowance for loan losses 318,722,000 122,486,000 254,516,000 116,096,000 103,713,000 98,947,000
Commercial | Finance And Insurance Companies            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Financing receivable, before allowance for credit loss $ 2,500,000,000          
Percentage of commercial & industrial loan portfolio 12.00%          
Percentage contributed in total loan 8.00%          
Consumer | Consumer Real Estate (a)            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loans, net of unearned income $ 6,052,393,000 6,177,139,000   6,303,134,000    
Modified interest rate increase 1.00%          
TDRS Maturities 40 years          
Allowance for loan losses $ 143,757,000 28,443,000 123,022,000 31,532,000 34,154,000 37,439,000
Consumer | Credit Card and Other            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loans, net of unearned income 449,310,000 495,864,000   494,376,000    
Allowance for loan losses $ 18,117,000 13,266,000 $ 19,327,000 12,168,000 $ 12,662,000 $ 12,727,000
Consumer | Permanent Mortgage            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
TDR, reduction of interest rate by increment, basis points 0.25%          
Consumer | Residential Real Estate            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Concentration risk, percentage 19.00%          
Minimum | Commercial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Forbearance agreements time period 6 months          
Minimum | Consumer | Consumer Real Estate (a)            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Modified interest rate 2.00%          
Modified interest rate time period 5 years          
Maximum | Commercial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Forbearance agreements time period 12 months          
Maximum | Consumer | Consumer Real Estate (a)            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Modified interest rate time period 5 years          
TRUPS            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Small bank and business loan, total asset maximum cap $ 15,000,000,000          
TRUPS | Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loans, net of unearned income 209,177,000 218,287,000        
Allowance for loan losses $ 18,400,000 19,100,000        
Heloc And Real Estate Installment Classes | Consumer | Consumer Real Estate (a)            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Modified interest rate increase 2.00%          
TDR, reduction of interest rate by increment, basis points 0.25%          
Heloc And Real Estate Installment Classes | Minimum | Consumer | Consumer Real Estate (a)            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Modified interest rate 1.00%          
Modified interest rate time period 5 years          
Heloc And Real Estate Installment Classes | Maximum | Consumer | Consumer Real Estate (a)            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Modified interest rate time period 5 years          
Credit Card | Consumer | Credit Card and Other            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loans, net of unearned income $ 167,344,000 201,171,000        
Credit card workout program, granted rate reduction 0.00%          
Credit Card | Minimum | Consumer | Credit Card and Other            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Payment reductions, time period 6 months          
Credit Card | Maximum | Consumer | Credit Card and Other            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Payment reductions, time period 1 year          
Credit card workout program, term extension 5 years          
Purchased credit-impaired loans            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loans, net of unearned income       68,799,000    
Allowance for loan losses       1,989,000    
Allowance - purchased credit-impaired loans   2,000,000.0        
Allowance for loan and lease losses write-offs, net   5,800,000        
Provision for loan, lease, and other losses   1,300,000        
Purchased credit-impaired loans | Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loans, net of unearned income       33,840,000    
Allowance for loan losses       854,000    
Purchased credit-impaired loans | Consumer | Consumer Real Estate (a)            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loans, net of unearned income       26,829,000    
Allowance for loan losses       1,078,000    
Purchased credit-impaired loans | Consumer | Credit Card and Other            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loans, net of unearned income       903,000    
Allowance for loan losses       $ 57,000    
PD Grade 1 | Commercial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Lowest expected default probability 1          
Allowance for loan losses   69,000        
PD Grade 1 | Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loans, net of unearned income $ 2,674,017,000          
Loss | Commercial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Commercial loan grades 16          
Loss | Maximum | Commercial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Commercial loan grades 16          
Pass | Minimum | Commercial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Commercial loan grades 1          
Pass | Maximum | Commercial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Commercial loan grades 12          
Special Mention | Commercial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Commercial loan grades 13          
Special Mention | Minimum | Commercial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Commercial loan grades 13          
Substandard | Commercial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Commercial loan grades 14          
Doubtful | Commercial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Commercial loan grades 15          
Loan Reassessed | Minimum | Commercial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loans, net of unearned income $ 1,000,000          
PD Grade 13 | Commercial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Allowance for loan losses   $ 8,142,000        
PD Grade 13 | Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loans, net of unearned income 336,048,000          
PD Grade 13 | Minimum | Commercial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loans, net of unearned income $ 500,000          
LGD Grade 1 | Minimum | Commercial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Commercial loan grades 1          
LGD Grade 12 | Maximum | Commercial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Commercial loan grades 12          
Paycheck Protection Plan | Commercial | Commercial, financial, and industrial            
Accounts, Notes, Loans and Financing Receivable [Line Items]            
Loans, net of unearned income $ 2,100,000,000          
[1]
June 30, 2020 and December 31, 2019 include $16.9 million and $18.8 million, respectively, of held-to-maturity consumer mortgage loans secured by residential real estate in process of foreclosure.
v3.20.2
Loans - Schedule Of Troubled Debt Restructurings Occurring During The Year (Details)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2020
USD ($)
loan
Jun. 30, 2019
USD ($)
loan
Jun. 30, 2020
USD ($)
loan
Jun. 30, 2019
USD ($)
loan
Financing Receivable, Troubled Debt Restructuring [Line Items]        
Number | loan 61 63 106 146
Pre-Modification Outstanding Recorded Investment $ 12,690 $ 5,136 $ 21,198 $ 28,634
Post-Modification Outstanding Recorded Investment $ 12,682 $ 5,083 $ 19,649 $ 28,471
Commercial | C&I        
Financing Receivable, Troubled Debt Restructuring [Line Items]        
Number | loan 1 1 4 3
Pre-Modification Outstanding Recorded Investment $ 4,649 $ 222 $ 10,576 $ 14,117
Post-Modification Outstanding Recorded Investment $ 4,699 $ 222 $ 9,132 $ 14,042
Consumer | Consumer Real Estate (a)        
Financing Receivable, Troubled Debt Restructuring [Line Items]        
Number | loan 44 44 62 110
Pre-Modification Outstanding Recorded Investment $ 7,945 $ 4,805 $ 10,368 $ 14,334
Post-Modification Outstanding Recorded Investment $ 7,892 $ 4,758 $ 10,280 $ 14,255
Consumer | Credit Card and Other        
Financing Receivable, Troubled Debt Restructuring [Line Items]        
Number | loan 16 18 40 33
Pre-Modification Outstanding Recorded Investment $ 96 $ 109 $ 254 $ 183
Post-Modification Outstanding Recorded Investment $ 91 $ 103 $ 237 $ 174
C&I | Commercial | C&I        
Financing Receivable, Troubled Debt Restructuring [Line Items]        
Number | loan 1 1 4 3
Pre-Modification Outstanding Recorded Investment $ 4,649 $ 222 $ 10,576 $ 14,117
Post-Modification Outstanding Recorded Investment $ 4,699 $ 222 $ 9,132 $ 14,042
HELOC | Consumer | Consumer Real Estate (a)        
Financing Receivable, Troubled Debt Restructuring [Line Items]        
Number | loan 4 25 12 44
Pre-Modification Outstanding Recorded Investment $ 152 $ 3,271 $ 1,064 $ 5,375
Post-Modification Outstanding Recorded Investment $ 151 $ 3,235 $ 1,042 $ 5,319
R/E Installment Loans | Consumer | Consumer Real Estate (a)        
Financing Receivable, Troubled Debt Restructuring [Line Items]        
Number | loan 40 19 50 66
Pre-Modification Outstanding Recorded Investment $ 7,793 $ 1,534 $ 9,304 $ 8,959
Post-Modification Outstanding Recorded Investment $ 7,741 $ 1,523 $ 9,238 $ 8,936
v3.20.2
Loans - Schedule Of Troubled Debt Restructurings Within The Previous 12 Months (Details)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2020
USD ($)
loan
Jun. 30, 2019
USD ($)
loan
Jun. 30, 2020
USD ($)
loan
Jun. 30, 2019
USD ($)
loan
Financing Receivable, Troubled Debt Restructuring [Line Items]        
Number | loan 15 9 31 18
Recorded Investment | $ $ 2,262 $ 118 $ 3,597 $ 169
Commercial | C&I        
Financing Receivable, Troubled Debt Restructuring [Line Items]        
Number | loan 0 0 0 0
Recorded Investment | $ $ 0 $ 0 $ 0 $ 0
Consumer | Consumer Real Estate (a)        
Financing Receivable, Troubled Debt Restructuring [Line Items]        
Number | loan 8 2 17 3
Recorded Investment | $ $ 2,233 $ 104 $ 3,537 $ 137
Consumer | Credit Card and Other        
Financing Receivable, Troubled Debt Restructuring [Line Items]        
Number | loan 7 7 14 15
Recorded Investment | $ $ 29 $ 14 $ 60 $ 32
C&I | Commercial | C&I        
Financing Receivable, Troubled Debt Restructuring [Line Items]        
Number | loan 0 0 0 0
Recorded Investment | $ $ 0 $ 0 $ 0 $ 0
HELOC | Consumer | Consumer Real Estate (a)        
Financing Receivable, Troubled Debt Restructuring [Line Items]        
Number | loan 3 1 7 2
Recorded Investment | $ $ 882 $ 66 $ 1,842 $ 99
R/E Installment Loans | Consumer | Consumer Real Estate (a)        
Financing Receivable, Troubled Debt Restructuring [Line Items]        
Number | loan 5 1 10 1
Recorded Investment | $ $ 1,351 $ 38 $ 1,695 $ 38
v3.20.2
Loans - Accrued Interest (Details)
$ in Thousands
Jun. 30, 2020
USD ($)
Accounts, Notes, Loans and Financing Receivable [Line Items]  
Accrued interest $ 92,062
Allowance for Credit Losses on COVID-19 Deferrals  
Accounts, Notes, Loans and Financing Receivable [Line Items]  
Accrued interest (860)
Commercial | Commercial, financial, and industrial  
Accounts, Notes, Loans and Financing Receivable [Line Items]  
Accrued interest 56,828
Commercial | Commercial real estate  
Accounts, Notes, Loans and Financing Receivable [Line Items]  
Accrued interest 16,528
Consumer | Consumer Real Estate (a)  
Accounts, Notes, Loans and Financing Receivable [Line Items]  
Accrued interest 18,020
Consumer | Credit Card and Other  
Accounts, Notes, Loans and Financing Receivable [Line Items]  
Accrued interest $ 1,546
v3.20.2
Loans - Certain Loans Acquired In Transfer Not Accounted For As Debt Securities Accretable Yield Movement Schedule Rollforward (Details)
$ in Thousands
 12 Months Ended
Dec. 31, 2019
USD ($)
Certain Loans Acquired in Transfer Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward]  
Balance, beginning of period $ 13,375
Accretion (5,792)
Adjustment for payoffs (2,438)
Adjustment for charge-offs (479)
Adjustment for pool excess recovery 0
Increase/(decrease) in accretable yield 5,513
Disposal (4)
Other (367)
Balance, end of period $ 9,808
v3.20.2
Loans - Schedule Of Acquired Purchase Credit Impaired Loans By Portfolio Segment (Details)
$ in Thousands
Dec. 31, 2019
USD ($)
Accounts, Notes, Loans and Financing Receivable [Line Items]  
Carrying value $ 54,221
Unpaid balance 58,216
Commercial, financial, and industrial | Commercial  
Accounts, Notes, Loans and Financing Receivable [Line Items]  
Carrying value 24,973
Unpaid balance 25,938
Commercial Real Estate | Commercial  
Accounts, Notes, Loans and Financing Receivable [Line Items]  
Carrying value 5,078
Unpaid balance 5,466
Consumer Real Estate (a) | Consumer  
Accounts, Notes, Loans and Financing Receivable [Line Items]  
Carrying value 23,681
Unpaid balance 26,245
Credit Card and Other | Consumer  
Accounts, Notes, Loans and Financing Receivable [Line Items]  
Carrying value 489
Unpaid balance $ 567
v3.20.2
Loans - Information By Class Related To Individually Impaired Loans (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2019
Dec. 31, 2019
Recorded Investment      
Recorded Investment     $ 246,900
Unpaid Principal Balance      
Unpaid Principal Balance     281,089
Related Allowance     25,916
Average Recorded Investment      
Average Recorded Investment $ 287,938 $ 272,890  
Interest Income Recognized      
Interest Income Recognized 1,514 3,065  
Commercial      
Recorded Investment      
Impaired loans with no related allowance recorded, Recorded investment     54,235
Impaired loans with related allowance recorded, Recorded investment     29,766
Recorded Investment     84,001
Unpaid Principal Balance      
Impaired loans with no related allowance recorded, Unpaid principal balance     65,165
Impaired loans with related allowance recorded, Unpaid principal balance     31,536
Unpaid Principal Balance     96,701
Related Allowance     6,196
Average Recorded Investment      
Impaired loans with no related allowance recorded, Average recorded investment 87,446 72,384  
Impaired loans with related allowance recorded, Average recorded investment 13,913 12,218  
Average Recorded Investment 101,359 84,602  
Interest Income Recognized      
Impaired loans with no related allowance recorded, Interest income recognized 191 384  
Impaired Financing Impaired loans with related allowance recorded, Interest income recognized 0 9  
Interest Income Recognized 191 393  
Consumer      
Recorded Investment      
Impaired loans with no related allowance recorded, Recorded investment     12,533
Impaired loans with related allowance recorded, Recorded investment     150,366
Recorded Investment     162,899
Unpaid Principal Balance      
Impaired loans with no related allowance recorded, Unpaid principal balance     20,492
Impaired loans with related allowance recorded, Unpaid principal balance     163,896
Unpaid Principal Balance     184,388
Related Allowance     19,720
Average Recorded Investment      
Impaired loans with no related allowance recorded, Average recorded investment 15,372 15,803  
Impaired loans with related allowance recorded, Average recorded investment 171,207 172,485  
Average Recorded Investment 186,579 188,288  
Interest Income Recognized      
Impaired loans with no related allowance recorded, Interest income recognized 0 0  
Impaired Financing Impaired loans with related allowance recorded, Interest income recognized 1,323 2,672  
Interest Income Recognized 1,323 2,672  
Commercial, financial, and industrial | Commercial | C&I      
Recorded Investment      
Impaired loans with no related allowance recorded, Recorded investment     52,672
Impaired loans with related allowance recorded, Recorded investment     29,766
Unpaid Principal Balance      
Impaired loans with no related allowance recorded, Unpaid principal balance     63,602
Impaired loans with related allowance recorded, Unpaid principal balance     31,536
Related Allowance     6,196
Average Recorded Investment      
Impaired loans with no related allowance recorded, Average recorded investment 67,337 61,552  
Impaired loans with related allowance recorded, Average recorded investment 10,760 9,026  
Interest Income Recognized      
Impaired loans with no related allowance recorded, Interest income recognized 178 357  
Impaired Financing Impaired loans with related allowance recorded, Interest income recognized 0 0  
Commercial, financial, and industrial | Commercial | Loans to Mortgage Companies      
Average Recorded Investment      
Impaired loans with no related allowance recorded, Average recorded investment 18,628 9,314  
Interest Income Recognized      
Impaired loans with no related allowance recorded, Interest income recognized 0 0  
Commercial, financial, and industrial | Commercial | TRUPS      
Recorded Investment      
Impaired loans with related allowance recorded, Recorded investment     0
Unpaid Principal Balance      
Impaired loans with related allowance recorded, Unpaid principal balance     0
Related Allowance     0
Average Recorded Investment      
Impaired loans with related allowance recorded, Average recorded investment 2,806 2,835  
Interest Income Recognized      
Impaired Financing Impaired loans with related allowance recorded, Interest income recognized 0 0  
Commercial real estate | Commercial | Income CRE      
Recorded Investment      
Impaired loans with no related allowance recorded, Recorded investment     1,563
Impaired loans with related allowance recorded, Recorded investment     0
Unpaid Principal Balance      
Impaired loans with no related allowance recorded, Unpaid principal balance     1,563
Impaired loans with related allowance recorded, Unpaid principal balance     0
Related Allowance     0
Average Recorded Investment      
Impaired loans with no related allowance recorded, Average recorded investment 1,481 1,518  
Impaired loans with related allowance recorded, Average recorded investment 347 357  
Interest Income Recognized      
Impaired loans with no related allowance recorded, Interest income recognized 13 27  
Impaired Financing Impaired loans with related allowance recorded, Interest income recognized 0 9  
Commercial real estate | Commercial | Residential CRE      
Average Recorded Investment      
Impaired loans with no related allowance recorded, Average recorded investment 0 0  
Impaired loans with related allowance recorded, Average recorded investment 0 0  
Interest Income Recognized      
Impaired loans with no related allowance recorded, Interest income recognized 0 0  
Impaired Financing Impaired loans with related allowance recorded, Interest income recognized 0 0  
Consumer real estate | Consumer | HELOC      
Recorded Investment      
Impaired loans with no related allowance recorded, Recorded investment     4,940
Impaired loans with related allowance recorded, Recorded investment     55,522
Unpaid Principal Balance      
Impaired loans with no related allowance recorded, Unpaid principal balance     10,438
Impaired loans with related allowance recorded, Unpaid principal balance     59,122
Related Allowance     7,016
Average Recorded Investment      
Impaired loans with no related allowance recorded, Average recorded investment 6,462 7,030  
Impaired loans with related allowance recorded, Average recorded investment 62,623 63,819  
Interest Income Recognized      
Impaired loans with no related allowance recorded, Interest income recognized 0 0  
Impaired Financing Impaired loans with related allowance recorded, Interest income recognized 504 1,026  
Consumer real estate | Consumer | R/E Installment Loans      
Recorded Investment      
Impaired loans with no related allowance recorded, Recorded investment     7,593
Impaired loans with related allowance recorded, Recorded investment     94,191
Unpaid Principal Balance      
Impaired loans with no related allowance recorded, Unpaid principal balance     10,054
Impaired loans with related allowance recorded, Unpaid principal balance     104,121
Related Allowance     12,282
Average Recorded Investment      
Impaired loans with no related allowance recorded, Average recorded investment 8,910 8,773  
Impaired loans with related allowance recorded, Average recorded investment 107,892 107,975  
Interest Income Recognized      
Impaired loans with no related allowance recorded, Interest income recognized 0 0  
Impaired Financing Impaired loans with related allowance recorded, Interest income recognized 815 1,637  
Credit Card and Other | Consumer      
Recorded Investment      
Impaired loans with related allowance recorded, Recorded investment     653
Unpaid Principal Balance      
Impaired loans with related allowance recorded, Unpaid principal balance     653
Related Allowance     $ 422
Average Recorded Investment      
Impaired loans with related allowance recorded, Average recorded investment 692 691  
Interest Income Recognized      
Impaired Financing Impaired loans with related allowance recorded, Interest income recognized $ 4 $ 9  
v3.20.2
Allowance for Loan Losses - Narrative (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Mar. 31, 2020
Dec. 31, 2019
Mar. 31, 2019
Dec. 31, 2018
Accounts, Notes, Loans and Financing Receivable [Line Items]                
Loans, net of unearned income $ 32,708,937 [1] $ 29,712,810 $ 32,708,937 [1] $ 29,712,810   $ 31,061,111 [1]    
Allowance for loan losses 537,881 192,749 $ 537,881 192,749 $ 444,490 200,307 $ 184,911 $ 180,424
Forecast period to estimate expected credit losses     4 years          
Term to estimate expected credit losses determined by macroeconomics variable     3 years          
Additional term to estimated expected credit losses determined by microeconomics variable diminishing     1 year          
Measurement period of historical losses, pro rata period     1 year          
Expense/(Credit) on unfunded commitments 11,158 (489) $ 20,388 (93)        
Consumer real estate | C&I                
Accounts, Notes, Loans and Financing Receivable [Line Items]                
Weighted average life     3 years          
Commercial                
Accounts, Notes, Loans and Financing Receivable [Line Items]                
Allowance for loan losses           158,598    
Commercial | C&I                
Accounts, Notes, Loans and Financing Receivable [Line Items]                
Loans, net of unearned income 21,393,893 19,054,269 $ 21,393,893 19,054,269   20,051,091    
Allowance for loan losses 318,722 $ 116,096 $ 318,722 $ 116,096 $ 254,516 122,486 $ 103,713 $ 98,947
HELOC and R/E Installment Loans                
Accounts, Notes, Loans and Financing Receivable [Line Items]                
Weighted average life     5 years          
General C&I                
Accounts, Notes, Loans and Financing Receivable [Line Items]                
Collateral for secured borrowings 65,000   $ 65,000          
Collateral, charge off 1,500   13,000          
General C&I | Commercial | C&I                
Accounts, Notes, Loans and Financing Receivable [Line Items]                
Loans, net of unearned income 17,164,125   17,164,125     $ 15,395,996    
HELOC                
Accounts, Notes, Loans and Financing Receivable [Line Items]                
Collateral for secured borrowings 10,000   10,000          
R/E Installment Loans                
Accounts, Notes, Loans and Financing Receivable [Line Items]                
Collateral for secured borrowings 26,000   26,000          
COVID-19 Deferrals                
Accounts, Notes, Loans and Financing Receivable [Line Items]                
Allowance for loan losses 860   860          
Paycheck Protection Plan | Commercial | C&I                
Accounts, Notes, Loans and Financing Receivable [Line Items]                
Loans, net of unearned income $ 2,100,000   $ 2,100,000          
[1]
June 30, 2020 and December 31, 2019 include $16.9 million and $18.8 million, respectively, of held-to-maturity consumer mortgage loans secured by residential real estate in process of foreclosure.
v3.20.2
Allowance for Loan Losses (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Dec. 31, 2019
Allowance for Loan and Lease Losses [Roll Forward]          
Beginning Balance $ 444,490 $ 184,911 $ 200,307 $ 180,424  
Charge-offs (22,907) (12,223) (36,360) (22,750)  
Recoveries 6,298 7,061 12,540 13,075  
Provision/(provision credit) for loan losses 110,000 13,000 255,000 22,000  
Ending Balance 537,881 192,749 537,881 192,749  
Allowance - individually evaluated for impairment 30,204 31,181 30,204 31,181  
Allowance - collectively evaluated for impairment 507,677 159,579 507,677 159,579  
Individually evaluated for impairment 289,917 300,726 289,917 300,726  
Collectively evaluated for impairment 32,419,020 29,343,285 32,419,020 29,343,285  
Loans, net of unearned income 32,708,937 [1] 29,712,810 32,708,937 [1] 29,712,810 $ 31,061,111 [1]
Commercial          
Allowance for Loan and Lease Losses [Roll Forward]          
Beginning Balance     158,598    
Allowance - individually evaluated for impairment         6,196
Allowance - collectively evaluated for impairment         151,554
Individually evaluated for impairment         84,001
Collectively evaluated for impairment         24,273,207
Commercial | C&I          
Allowance for Loan and Lease Losses [Roll Forward]          
Beginning Balance 254,516 103,713 122,486 98,947  
Charge-offs (18,201) (6,590) (24,952) (9,691)  
Recoveries 1,073 519 2,008 1,348  
Provision/(provision credit) for loan losses 81,334 18,454 200,398 25,492  
Ending Balance 318,722 116,096 318,722 116,096  
Allowance - individually evaluated for impairment 16,577 8,484 16,577 8,484  
Allowance - collectively evaluated for impairment 302,145 106,758 302,145 106,758  
Individually evaluated for impairment 140,526 115,808 140,526 115,808  
Collectively evaluated for impairment 21,253,367 18,904,621 21,253,367 18,904,621  
Loans, net of unearned income 21,393,893 19,054,269 21,393,893 19,054,269 20,051,091
Commercial | Commercial Real Estate          
Allowance for Loan and Lease Losses [Roll Forward]          
Beginning Balance 47,625 34,382 36,112 31,311  
Charge-offs (61) (121) (642) (555)  
Recoveries 156 (88) 729 (31)  
Provision/(provision credit) for loan losses 9,565 (1,220) 28,434 2,228  
Ending Balance 57,285 32,953 57,285 32,953  
Allowance - individually evaluated for impairment 0 0 0 0  
Allowance - collectively evaluated for impairment 57,285 32,953 57,285 32,953  
Individually evaluated for impairment 160 1,777 160 1,777  
Collectively evaluated for impairment 4,813,181 3,852,027 4,813,181 3,852,027  
Loans, net of unearned income 4,813,341 3,861,031 4,813,341 3,861,031 4,337,017
Consumer | Consumer Real Estate (a)          
Allowance for Loan and Lease Losses [Roll Forward]          
Beginning Balance 123,022 34,154 28,443 37,439  
Charge-offs (1,968) (1,714) (4,278) (4,518)  
Recoveries 3,987 5,525 7,542 9,566  
Provision/(provision credit) for loan losses 18,716 (6,433) 19,058 (10,955)  
Ending Balance 143,757 31,532 143,757 31,532  
Allowance - individually evaluated for impairment 13,275 22,255 13,275 22,255  
Allowance - collectively evaluated for impairment 130,482 8,199 130,482 8,199  
Individually evaluated for impairment 148,543 182,442 148,543 182,442  
Collectively evaluated for impairment 5,903,850 6,093,863 5,903,850 6,093,863  
Loans, net of unearned income 6,052,393 6,303,134 6,052,393 6,303,134 6,177,139
Consumer | Credit Card and Other          
Allowance for Loan and Lease Losses [Roll Forward]          
Beginning Balance 19,327 12,662 13,266 12,727  
Charge-offs (2,677) (3,798) (6,488) (7,986)  
Recoveries 1,082 1,105 2,261 2,192  
Provision/(provision credit) for loan losses 385 2,199 7,110 5,235  
Ending Balance 18,117 12,168 18,117 12,168  
Allowance - individually evaluated for impairment 352 442 352 442  
Allowance - collectively evaluated for impairment 17,765 11,669 17,765 11,669  
Individually evaluated for impairment 688 699 688 699  
Collectively evaluated for impairment 448,622 492,774 448,622 492,774  
Loans, net of unearned income $ 449,310 494,376 449,310 494,376 $ 495,864
Cumulative Effect, Period Of Adoption, Adjustment          
Allowance for Loan and Lease Losses [Roll Forward]          
Beginning Balance     106,394    
Cumulative Effect, Period Of Adoption, Adjustment | Commercial | C&I          
Allowance for Loan and Lease Losses [Roll Forward]          
Beginning Balance     18,782    
Cumulative Effect, Period Of Adoption, Adjustment | Commercial | Commercial Real Estate          
Allowance for Loan and Lease Losses [Roll Forward]          
Beginning Balance     (7,348)    
Cumulative Effect, Period Of Adoption, Adjustment | Consumer | Consumer Real Estate (a)          
Allowance for Loan and Lease Losses [Roll Forward]          
Beginning Balance     92,992    
Cumulative Effect, Period Of Adoption, Adjustment | Consumer | Credit Card and Other          
Allowance for Loan and Lease Losses [Roll Forward]          
Beginning Balance     $ 1,968    
Purchased credit-impaired loans          
Allowance for Loan and Lease Losses [Roll Forward]          
Ending Balance   1,989   1,989  
Loans, net of unearned income   68,799   68,799  
Purchased credit-impaired loans | Commercial | C&I          
Allowance for Loan and Lease Losses [Roll Forward]          
Ending Balance   854   854  
Loans, net of unearned income   33,840   33,840  
Purchased credit-impaired loans | Commercial | Commercial Real Estate          
Allowance for Loan and Lease Losses [Roll Forward]          
Ending Balance   0   0  
Loans, net of unearned income   7,227   7,227  
Purchased credit-impaired loans | Consumer | Consumer Real Estate (a)          
Allowance for Loan and Lease Losses [Roll Forward]          
Ending Balance   1,078   1,078  
Loans, net of unearned income   26,829   26,829  
Purchased credit-impaired loans | Consumer | Credit Card and Other          
Allowance for Loan and Lease Losses [Roll Forward]          
Ending Balance   57   57  
Loans, net of unearned income   $ 903   $ 903  
[1]
June 30, 2020 and December 31, 2019 include $16.9 million and $18.8 million, respectively, of held-to-maturity consumer mortgage loans secured by residential real estate in process of foreclosure.
v3.20.2
Intangible Assets - Summary Of Intangible Assets and Accumulated Amortization Included In The Consolidated Statements of Condition (Details) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Intangible Assets [Line Items]    
Gross Carrying Amount $ 185,772 $ 240,637
Accumulated Amortization (66,164) (110,437)
Net Carrying Value 119,608 130,200
Core deposit intangibles    
Intangible Assets [Line Items]    
Gross Carrying Amount 157,150 157,150
Accumulated Amortization (56,561) (47,372)
Net Carrying Value 100,589 109,778
Customer relationships (a)    
Intangible Assets [Line Items]    
Gross Carrying Amount 23,000 77,865
Accumulated Amortization (6,158) (60,150)
Net Carrying Value 16,842 17,715
Finite-lived intangible assets, fully amortized   54,900
Other    
Intangible Assets [Line Items]    
Gross Carrying Amount 5,622 5,622
Accumulated Amortization (3,445) (2,915)
Net Carrying Value 2,177 2,707
State banking licenses    
Intangible Assets [Line Items]    
Indefinite-lived intangible assets, excluding goodwill $ 300 $ 300
v3.20.2
Intangible Assets - Narrative (Details) - USD ($)
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Dec. 31, 2019
Dec. 31, 2018
Goodwill and Intangible Assets Disclosure [Abstract]            
Amortization expense $ 5,300,000 $ 6,200,000 $ 10,600,000 $ 12,400,000    
Goodwill [Line Items]            
Goodwill 1,432,787,000 $ 1,432,787,000 1,432,787,000 $ 1,432,787,000 $ 1,432,787,000 $ 1,432,787,000
Non-Strategic            
Goodwill [Line Items]            
Gross goodwill 200,000,000.0   200,000,000.0   200,000,000  
Accumulated impairments 114,100,000   114,100,000   114,100,000  
Accumulated divestiture related write-offs 85,900,000   85,900,000   85,900,000  
Goodwill $ 0   $ 0   $ 0  
v3.20.2
Intangible Assets - Schedule Of Estimated Aggregate Amortization Expense for Intangible Assets (Details)
$ in Thousands
Jun. 30, 2020
USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]  
Remainder of 2020 $ 10,568
2021 19,547
2022 17,412
2023 16,117
2024 14,679
2025 $ 12,580
v3.20.2
Intangible Assets - Summary Of Gross Goodwill And Accumulated Impairment Losses And Write-Offs Detailed By Reportable Segments (Details) - USD ($)
$ in Thousands
 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Goodwill [Roll Forward]    
Goodwill, Beginning balance $ 1,432,787 $ 1,432,787
Additions 0 0
Goodwill, Ending balance 1,432,787 1,432,787
Regional Banking    
Goodwill [Roll Forward]    
Goodwill, Beginning balance 1,289,819 1,289,819
Additions 0 0
Goodwill, Ending balance 1,289,819 1,289,819
Fixed Income    
Goodwill [Roll Forward]    
Goodwill, Beginning balance 142,968 142,968
Additions 0 0
Goodwill, Ending balance $ 142,968 $ 142,968
v3.20.2
Other Income And Other Expense (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
All other income and commissions:        
Deferred compensation $ 8,171 $ 1,938 $ (1,336) $ 7,412
Other service charges 4,582 5,624 9,801 9,493
Mortgage banking 4,138 2,572 6,569 4,458
ATM and interchange fees 4,009 4,262 8,221 7,503
Letter of credit fees 1,559 1,253 3,021 2,621
Electronic banking fees 1,182 1,267 2,212 2,538
Dividend income 1,057 1,809 2,187 4,122
Insurance commissions 401 566 1,190 1,190
Gain/(loss) on extinguishment of debt 0 0 0 (1)
Other 4,890 6,376 12,488 10,962
Total 29,989 25,667 44,353 50,298
All other expense:        
Expense/(Credit) on unfunded commitments 11,158 (489) 20,388 (93)
Non-service components of net periodic pension and post-retirement cost 2,961 559 5,469 991
Other insurance and taxes 2,599 2,495 5,278 5,189
Miscellaneous loan costs 2,356 857 3,450 1,884
Supplies 1,933 1,342 4,344 3,146
Employee training and dues 654 1,251 1,995 2,708
Customer relations 632 1,540 2,636 3,139
Travel and entertainment 474 2,906 3,183 5,618
OREO 437 25 253 (341)
Tax credit investments 426 267 772 942
Litigation and regulatory matters (c) (3) 8,230 (16) 8,217
Other 12,118 26,158 21,193 33,046
Total 35,751 28,681 68,977 48,012
Non-Strategic        
All other income and commissions:        
Total $ 710 567 $ 1,506 1,515
All other expense:        
Litigation and regulatory matters (c)   $ 8,300   $ 8,300
v3.20.2
Components of Other Comprehensive Income/(loss) - Schedule of Changes in AOCI (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Mar. 31, 2020
Jun. 30, 2019
Mar. 31, 2019
Jun. 30, 2020
Jun. 30, 2019
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Balance, beginning of period $ 5,055,580 $ 5,076,008 $ 4,846,521 $ 4,785,380 $ 5,076,008 $ 4,785,380
Net unrealized gains/(losses) 610   55,566   102,043 108,117
Amounts reclassified from AOCI 756   3,096   2,767 6,010
Other comprehensive income/(loss) 1,366 103,444 58,662 55,465 104,810 114,127
Balance, end of period 5,208,385 5,055,580 4,926,081 4,846,521 5,208,385 4,926,081
Securities AFS            
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Balance, beginning of period 119,357 31,079 (27,121) (75,736) 31,079 (75,736)
Net unrealized gains/(losses) (1,030)   47,991   87,248 96,606
Amounts reclassified from AOCI 0   201   0 201
Other comprehensive income/(loss) (1,030)   48,192   87,248 96,807
Balance, end of period 118,327 119,357 21,071 (27,121) 118,327 21,071
Cash Flow Hedges            
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Balance, beginning of period 16,288 3,227 (6,725) (12,112) 3,227 (12,112)
Net unrealized gains/(losses) 1,640   7,575   14,795 11,511
Amounts reclassified from AOCI (1,623)   1,334   (1,717) 2,785
Other comprehensive income/(loss) 17   8,909   13,078 14,296
Balance, end of period 16,305 16,288 2,184 (6,725) 16,305 2,184
Pension and Post-retirement Plans            
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Balance, beginning of period (271,809) (273,914) (287,305) (288,768) (273,914) (288,768)
Net unrealized gains/(losses) 0   0   0 0
Amounts reclassified from AOCI 2,379   1,561   4,484 3,024
Other comprehensive income/(loss) 2,379   1,561   4,484 3,024
Balance, end of period (269,430) (271,809) (285,744) (287,305) (269,430) (285,744)
Total            
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Balance, beginning of period (136,164) [1] (239,608) [1] (321,151) [2] (376,616) [2] (239,608) [1] (376,616) [2]
Other comprehensive income/(loss) 1,366 [1] 103,444 [1] 58,662 [1] 55,465 [2]    
Balance, end of period $ (134,798) [1] $ (136,164) [1] $ (262,489) [2] $ (321,151) [2] $ (134,798) [1] $ (262,489) [2]
[1]
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.
[2]
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.
v3.20.2
Components of Other Comprehensive Income/(loss) - Schedule of Reclassification from AOCI (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Accumulated Other Comprehensive Income (Loss) [Line Items]        
Interest and fees on loans $ 305,913 $ 352,112 $ 632,512 $ 684,050
Provision/(benefit) for income taxes 12,780 34,467 17,547 61,525
Amounts reclassified from AOCI 756 3,096 2,767 6,010
All other expense 35,751 28,681 68,977 48,012
Securities AFS        
Accumulated Other Comprehensive Income (Loss) [Line Items]        
Amounts reclassified from AOCI 0 201 0 201
Cash Flow Hedges        
Accumulated Other Comprehensive Income (Loss) [Line Items]        
Amounts reclassified from AOCI (1,623) 1,334 (1,717) 2,785
Pension and Post-retirement Plans        
Accumulated Other Comprehensive Income (Loss) [Line Items]        
Amounts reclassified from AOCI 2,379 1,561 4,484 3,024
Reclassification out of Accumulated Other Comprehensive Income        
Accumulated Other Comprehensive Income (Loss) [Line Items]        
Amounts reclassified from AOCI 756 3,096 2,767 6,010
Reclassification out of Accumulated Other Comprehensive Income | Securities AFS        
Accumulated Other Comprehensive Income (Loss) [Line Items]        
Debt securities gains/(losses), net 0 267 0 267
Provision/(benefit) for income taxes 0 (66) 0 (66)
Amounts reclassified from AOCI 0 201 0 201
Reclassification out of Accumulated Other Comprehensive Income | Cash Flow Hedges        
Accumulated Other Comprehensive Income (Loss) [Line Items]        
Interest and fees on loans (2,153) 1,772 (2,277) 3,699
Provision/(benefit) for income taxes 530 (438) 560 (914)
Amounts reclassified from AOCI (1,623) 1,334 (1,717) 2,785
Reclassification out of Accumulated Other Comprehensive Income | Pension and Post-retirement Plans        
Accumulated Other Comprehensive Income (Loss) [Line Items]        
Amounts reclassified from AOCI 2,379 1,561 4,484 3,024
All other expense 3,155 2,074 5,946 4,017
Reclassification from AOCI, current period, tax $ (776) $ (513) $ (1,462) $ (993)
v3.20.2
Earnings Per Share - Schedule Of Reconciliation Of Net Income/(Loss) to Net Income/(Loss) Available to Common Shareholders (Details) - USD ($)
$ / shares in Units, shares in Thousands, $ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Mar. 31, 2020
Jun. 30, 2019
Mar. 31, 2019
Jun. 30, 2020
Jun. 30, 2019
Earnings Per Share [Abstract]            
Net income/(loss) $ 56,665 $ 16,472 $ 113,742 $ 103,405 $ 73,137 $ 217,147
Net income attributable to noncontrolling interest 2,851   2,852   5,703 5,672
Net income/(loss) attributable to controlling interest 53,814   110,890   67,434 211,475
Preferred stock dividends 1,550 $ 1,550 1,550 $ 1,550 3,100 3,100
Net income/(loss) available to common shareholders $ 52,264   $ 109,340   $ 64,334 $ 208,375
Weighted average common shares outstanding - basic (in shares) 312,090   314,063   311,843 315,740
Effect of dilutive securities (in shares) 846   1,723   949 1,980
Weighted average common shares outstanding - diluted (in shares) 312,936   315,786   312,792 317,720
Net income/(loss) per share available to common shareholders (in dollars per share) $ 0.17   $ 0.35   $ 0.21 $ 0.66
Diluted income/(loss) per share available to common shareholders (in dollars per share) $ 0.17   $ 0.35   $ 0.21 $ 0.66
v3.20.2
Earnings Per Share - Schedule Of Anti-Dilutive Options and Awards (Details) - $ / shares
shares in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]        
Weighted average exercise price of stock options excluded from the calculation of diluted EPS (in dollars per share) $ 15.80 $ 21.03 $ 18.26 $ 21.39
Employee Stock Option        
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]        
Stock options excluded from the calculation of diluted EPS (in shares) 5,134 2,773 3,291 2,692
Other Equity Awards        
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]        
Stock options excluded from the calculation of diluted EPS (in shares) 4,389 2,403 3,934 1,985
v3.20.2
Contingencies And Other Disclosures (Details) - USD ($)
$ in Millions
Jun. 30, 2020
Dec. 31, 2019
Commitments and Contingencies Disclosure [Abstract]    
Estimated litigation liability $ 0.3  
Accrued losses on loan repurchase exposure $ 12.9 $ 14.5
v3.20.2
Pension, Savings, And Other Employee Benefits - Narrative (Details) - USD ($)
$ in Millions
 6 Months Ended 12 Months Ended
Jun. 30, 2020
Dec. 31, 2019
Defined Benefit Plan Disclosure [Line Items]    
Defined benefit plan, expected contributions by employer remainder of year $ 5.2  
Savings Plan    
Defined Benefit Plan Disclosure [Line Items]    
Employer investment in qualified defined contribution plan 100.00%  
Maximum percent of employee pre-tax contributions that may be matched by the Company (percent) 6.00%  
Qualified Plan | Pension Benefits    
Defined Benefit Plan Disclosure [Line Items]    
Estimated social security benefits age 65 years  
Nonqualified Plan | Pension Benefits    
Defined Benefit Plan Disclosure [Line Items]    
Pension plan contribution   $ 5.2
v3.20.2
Pension, Savings, And Other Employee Benefits - Schedule Of Components Of Net Periodic Benefit Cost (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Pension Benefits        
Defined Benefit Plan Disclosure [Line Items]        
Service cost $ 8 $ 8 $ 16 $ 16
Interest cost 5,910 7,575 11,819 15,150
Expected return on plan assets (6,169) (9,173) (12,337) (18,346)
Prior service cost/(credit) 0 0 0 0
Actuarial (gain)/loss 3,224 2,435 6,448 4,870
Net periodic benefit cost/(credit) 2,973 845 5,946 1,690
Other Benefits        
Defined Benefit Plan Disclosure [Line Items]        
Service cost 24 24 49 48
Interest cost 307 351 611 702
Expected return on plan assets (311) (269) (622) (538)
Prior service cost/(credit) 8 0 16 0
Actuarial (gain)/loss (79) (117) (154) (234)
Net periodic benefit cost/(credit) $ (51) $ (11) $ (100) $ (22)
v3.20.2
Business Segment Information - Amounts Of Consolidated Revenue, Expense, Tax And Assets (Details)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2020
USD ($)
Mar. 31, 2020
USD ($)
Jun. 30, 2019
USD ($)
Mar. 31, 2019
USD ($)
Jun. 30, 2020
USD ($)
segment
Jun. 30, 2019
USD ($)
Segment Reporting, Measurement Disclosures [Abstract]            
Number of operating segments | segment         4  
Segment Reporting Information [Line Items]            
Net interest income $ 305,344   $ 303,610   $ 608,146 $ 598,118
Provision/(provision credit) for loan losses 110,000   13,000   255,000 22,000
Noninterest income 206,269   157,993   381,025 299,038
Noninterest expense 332,168   300,394   643,487 596,484
Income/(loss) before income taxes 69,445   148,209   90,684 278,672
Provision/(benefit) for income taxes 12,780   34,467   17,547 61,525
Net income/(loss) 56,665 $ 16,472 113,742 $ 103,405 73,137 217,147
Asset impairments, professional fees, and other customer-contact and technology-related expenses     9,100     9,000
Average assets 47,934,074   41,243,007   45,742,993 41,064,093
Regional Banking            
Segment Reporting Information [Line Items]            
Net interest income 349,749   297,534   649,936 583,636
Provision/(provision credit) for loan losses 108,311   17,776   253,752 31,218
Noninterest income 79,312   81,565   161,208 154,626
Noninterest expense 202,297   192,413   413,331 391,043
Income/(loss) before income taxes 118,453   168,910   144,061 316,001
Provision/(benefit) for income taxes 26,948   39,788   31,349 73,909
Net income/(loss) 91,505   129,122   112,712 242,092
Average assets 35,732,966   30,210,728   33,952,986 29,515,773
Fixed Income            
Segment Reporting Information [Line Items]            
Net interest income 13,545   6,171   24,459 13,503
Noninterest income 113,235   65,622   208,958 119,429
Noninterest expense 83,039   55,534   164,102 106,067
Income/(loss) before income taxes 43,741   16,259   69,315 26,865
Provision/(benefit) for income taxes 10,679   3,840   16,778 6,297
Net income/(loss) 33,062   12,419   52,537 20,568
Average assets 3,260,362   3,127,305   3,512,277 2,988,548
Corporate            
Segment Reporting Information [Line Items]            
Net interest income (63,493)   (7,146)   (76,852) (15,060)
Noninterest income 12,943   9,401   9,225 22,754
Noninterest expense 43,218   56,873   58,667 98,652
Income/(loss) before income taxes (93,768)   (54,618)   (126,294) (90,958)
Provision/(benefit) for income taxes (25,097)   (13,525)   (31,469) (25,296)
Net income/(loss) (68,671)   (41,093)   (94,825) (65,662)
Average assets 8,168,307   6,827,937   7,476,249 7,439,591
Non-Strategic            
Segment Reporting Information [Line Items]            
Net interest income 5,543   7,051   10,603 16,039
Provision/(provision credit) for loan losses 1,689   (4,776)   1,248 (9,218)
Noninterest income 779   1,405   1,634 2,229
Noninterest expense 3,614   (4,426)   7,387 722
Income/(loss) before income taxes 1,019   17,658   3,602 26,764
Provision/(benefit) for income taxes 250   4,364   889 6,615
Net income/(loss) 769   13,294   2,713 20,149
Average assets $ 772,439   $ 1,077,037   $ 801,481 $ 1,120,181
v3.20.2
Business Segment Information - Disaggregation of Revenue (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Disaggregation of Revenue [Line Items]        
Fixed income $ 112,421 $ 66,414 $ 208,056 $ 120,163
Deposit transactions and cash management 30,787 32,374 61,077 63,995
Brokerage, management fees and commissions 13,800 14,120 29,205 26,753
Trust services and investment management 7,733 7,888 14,928 14,914
Bankcard income 6,652 6,355 13,905 13,307
Bank-owned life insurance (BOLI) 6,380 5,126 10,969 9,528
Debt securities gains (losses), net 0 (267) 0 (267)
Equity securities gains/(losses), net (1,493) 316 (1,468) 347
All other income and commissions (Note 7) 29,989 25,667 44,353 50,298
Total noninterest income 206,269 157,993 381,025 299,038
Regional Banking        
Disaggregation of Revenue [Line Items]        
Fixed income 81 46 202 63
Deposit transactions and cash management 29,541 30,632 58,368 60,658
Brokerage, management fees and commissions 13,800 14,120 29,205 26,753
Trust services and investment management 7,750 7,902 14,963 14,958
Bankcard income 6,551 6,597 13,703 13,640
Bank-owned life insurance (BOLI) 0 0 0 0
Debt securities gains (losses), net 0 0 0 0
Equity securities gains/(losses), net 0 0 0 0
All other income and commissions (Note 7) 21,589 22,268 44,767 38,554
Total noninterest income 79,312 81,565 161,208 154,626
Fixed Income        
Disaggregation of Revenue [Line Items]        
Fixed income 112,340 65,262 207,854 118,994
Deposit transactions and cash management 0 1 0 4
Brokerage, management fees and commissions 0 0 0 0
Trust services and investment management 0 0 0 0
Bankcard income 0 0 0 0
Bank-owned life insurance (BOLI) 0 0 0 0
Debt securities gains (losses), net 0 0 0 0
Equity securities gains/(losses), net 0 0 0 0
All other income and commissions (Note 7) 895 359 1,104 431
Total noninterest income 113,235 65,622 208,958 119,429
Corporate        
Disaggregation of Revenue [Line Items]        
Fixed income 0 0 0 0
Deposit transactions and cash management 1,204 1,707 2,640 3,270
Brokerage, management fees and commissions 0 0 0 0
Trust services and investment management (17) (14) (35) (44)
Bankcard income 74 60 143 122
Bank-owned life insurance (BOLI) 6,380 5,126 10,969 9,528
Debt securities gains (losses), net 0 (267) 0 (267)
Equity securities gains/(losses), net (1,493) 316 (1,468) 347
All other income and commissions (Note 7) 6,795 2,473 (3,024) 9,798
Total noninterest income 12,943 9,401 9,225 22,754
Non-Strategic        
Disaggregation of Revenue [Line Items]        
Fixed income 0 1,106 0 1,106
Deposit transactions and cash management 42 34 69 63
Brokerage, management fees and commissions 0 0 0 0
Trust services and investment management 0 0 0 0
Bankcard income 27 (302) 59 (455)
Bank-owned life insurance (BOLI) 0 0 0 0
Debt securities gains (losses), net 0 0 0 0
Equity securities gains/(losses), net 0 0 0 0
All other income and commissions (Note 7) 710 567 1,506 1,515
Total noninterest income 779 1,405 1,634 2,229
Underwriting, portfolio advisory, and other noninterest income        
Disaggregation of Revenue [Line Items]        
Revenue from contract with customer $ 8,800 $ 7,100 $ 18,100 $ 14,400
v3.20.2
Variable Interest Entities - Summary Of VIE Consolidated By FHN (Details) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Assets:    
Other assets $ 2,209,235 $ 2,046,338
Total assets 48,644,659 43,310,900
Liabilities:    
Other liabilities 900,884 873,079
Total liabilities 43,436,274 38,234,892
Rabbi Trusts Used for Deferred Compensation Plans    
Assets:    
Other assets 93,212 91,873
Total assets 93,212 91,873
Liabilities:    
Other liabilities 71,783 70,830
Total liabilities $ 71,783 $ 70,830
v3.20.2
Variable Interest Entities - Summary of the Impact of Qualifying LIHTC Investments (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Low income housing tax credits        
Variable Interest Entity [Line Items]        
Amortization of qualifying LIHTC investments $ 5,752 $ 4,287 $ 11,313 $ 8,285
Affordable Housing Tax Credits And Other Tax Benefits (4,758) (3,522) (9,356) (7,151)
Other tax benefits related to qualifying LIHTC investments        
Variable Interest Entity [Line Items]        
Affordable Housing Tax Credits And Other Tax Benefits $ (2,583) $ (1,609) $ (5,138) $ (3,219)
v3.20.2
Variable Interest Entities - Summary Of VIE Not Consolidated By FHN (Details) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Jun. 30, 2019
Variable Interest Entity [Line Items]      
Loans, net of unearned income $ 32,708,937 [1] $ 31,061,111 [1] $ 29,712,810
Trading securities 1,116,450 1,346,207  
Term borrowings 2,032,476 791,368  
Securities available-for-sale 5,476,156 4,445,403  
Low Income Housing Partnerships      
Variable Interest Entity [Line Items]      
Maximum Loss Exposure 248,712 237,668  
Liability Recognized 124,318 136,404  
Maximum loss exposure, contractual funding commitments 124,300 136,400  
Low Income Housing Partnerships | Other Assets      
Variable Interest Entity [Line Items]      
Maximum loss exposure, current investments 124,400 101,300  
Other Tax Credit Investments      
Variable Interest Entity [Line Items]      
Maximum Loss Exposure 5,959 6,282  
Liability Recognized 0 0  
Small Issuer Trust Preferred Holdings      
Variable Interest Entity [Line Items]      
Maximum Loss Exposure 209,177 238,397  
Liability Recognized 0 0  
On Balance Sheet Trust Preferred Securitization      
Variable Interest Entity [Line Items]      
Maximum Loss Exposure 32,144 33,265  
Liability Recognized 82,030 80,908  
Loans, net of unearned income 112,500 112,500  
Trading securities 1,700 1,700  
Term borrowings 82,000 80,900  
Proprietary & Agency Residential Mortgage Securitizations      
Variable Interest Entity [Line Items]      
Maximum Loss Exposure 628 941  
Liability Recognized 0 0  
Holdings Of Agency Mortgage Backed Securities      
Variable Interest Entity [Line Items]      
Maximum Loss Exposure 4,561,144 4,537,685  
Liability Recognized 0 0  
Trading securities 700,000 500,000  
Securities available-for-sale 3,900,000 4,000,000  
Commercial Loan Troubled Debt Restructurings      
Variable Interest Entity [Line Items]      
Maximum Loss Exposure 43,432 45,169  
Liability Recognized 0 0  
Maximum loss exposure, contractual funding commitments   1,800  
Loans, net of unearned income 43,400 43,400  
Sale Leaseback Transaction      
Variable Interest Entity [Line Items]      
Maximum Loss Exposure 18,052 18,111  
Liability Recognized 0 0  
Proprietary Trust Preferred Issuances      
Variable Interest Entity [Line Items]      
Maximum Loss Exposure 0 0  
Liability Recognized $ 167,014 $ 167,014  
[1]
June 30, 2020 and December 31, 2019 include $16.9 million and $18.8 million, respectively, of held-to-maturity consumer mortgage loans secured by residential real estate in process of foreclosure.
v3.20.2
Derivatives - Narrative (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Nov. 01, 2019
Jun. 30, 2020
Jun. 30, 2019
Mar. 31, 2017
Mar. 31, 2016
Jun. 30, 2020
Jun. 30, 2019
Dec. 31, 2019
Derivative Instruments, Gain (Loss) [Line Items]                
Collateral cash payables   $ 361,087       $ 361,087   $ 145,334
Total trading revenues   100,300 $ 54,500     178,600 $ 99,000  
Cash flow hedge length of time         5 years      
Hedged amount of foreign currency denominated loans   13,800       13,800   18,400
Derivative assets (Note 14)   599,445       599,445   182,984
Derivative liability   75,226       75,226   44,238
Cash Flow Hedge | Hedged Items                
Derivative Instruments, Gain (Loss) [Line Items]                
Variability in cash flows related to debt instruments (primarily loans)         $ 250,000      
Notional       $ 650,000        
Derivative, expired during period           200,000    
Visa Class B Shares                
Derivative Instruments, Gain (Loss) [Line Items]                
Derivative liabilities related to sale   18,000       18,000   22,800
Additional Derivative Agreements | Derivative Instruments With Adjustable Collateral Posting Thresholds                
Derivative Instruments, Gain (Loss) [Line Items]                
Net fair value of derivative assets with adjustable posting thresholds   253,700       253,700   63,100
Net fair value of derivative liabilities with adjustable posting thresholds   3,800       3,800   6,400
Collateral received   340,000       340,000   148,500
Securities posted collateral   43,500       43,500   18,400
Additional Derivative Agreements | Derivative Instruments With Accelerated Termination Provisions                
Derivative Instruments, Gain (Loss) [Line Items]                
Net fair value of derivative assets with adjustable posting thresholds   253,600       253,600   63,100
Net fair value of derivative liabilities with adjustable posting thresholds   25,500       25,500   10,300
Collateral received   340,000       340,000   148,500
Securities posted collateral   65,100       65,100   22,700
Minimum | Cash Flow Hedge | Hedged Items                
Derivative Instruments, Gain (Loss) [Line Items]                
Derivative, term of contract       3 years        
Maximum | Cash Flow Hedge | Hedged Items                
Derivative Instruments, Gain (Loss) [Line Items]                
Derivative, term of contract       7 years        
Counterparties                
Derivative Instruments, Gain (Loss) [Line Items]                
Collateral cash receivables   230,200       230,200   136,600
Collateral cash payables   130,600       130,600   53,000
Senior Subordinated Notes | Senior Debt Maturing In December 2019                
Derivative Instruments, Gain (Loss) [Line Items]                
Term borrowings   400,000       400,000    
Debt redeemed $ 400,000              
Senior Subordinated Notes | Senior Debt Maturing In December 2020                
Derivative Instruments, Gain (Loss) [Line Items]                
Term borrowings   500,000       500,000    
Derivatives, interest rate contracts                
Derivative Instruments, Gain (Loss) [Line Items]                
Collateral cash payables   348,497       348,497   143,334
Derivative assets (Note 14)   564,037       564,037   162,344
Derivative liability   44,743       44,743   24,431
Derivatives, interest rate contracts | Cash Flow Hedge | Hedged Items                
Derivative Instruments, Gain (Loss) [Line Items]                
Variability in cash flows related to debt instruments (primarily loans)   700,000       700,000   $ 900,000
Credit Risk Contract                
Derivative Instruments, Gain (Loss) [Line Items]                
Derivative asset, notional amount   93,800       93,800    
Derivative liability, notional amount   246,100       246,100    
Derivative assets (Note 14)   170       170    
Derivative liability   $ 830       $ 830    
v3.20.2
Derivatives - Derivatives Associated with Fixed Income Trading Activities (Details) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Customer interest rate contracts    
Derivative Instruments, Gain (Loss) [Line Items]    
Notional $ 3,667,914 $ 2,697,522
Assets 254,246 65,768
Liabilities 1,827 6,858
Offsetting upstream interest rate contracts    
Derivative Instruments, Gain (Loss) [Line Items]    
Notional 3,667,914 2,697,522
Assets 7,454 2,583
Liabilities 17,667 3,994
Option contracts purchased | Long    
Derivative Instruments, Gain (Loss) [Line Items]    
Notional   40,000
Assets   131
Liabilities   0
Forwards and futures purchased    
Derivative Instruments, Gain (Loss) [Line Items]    
Notional 7,351,632 9,217,350
Assets 31,853 17,029
Liabilities 787 3,187
Forwards and futures sold    
Derivative Instruments, Gain (Loss) [Line Items]    
Notional 7,744,323 9,403,112
Assets 3,555 3,611
Liabilities $ 29,696 $ 16,620
v3.20.2
Derivatives - Derivatives Associated With Interest Rate Risk Management Activities (Details) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Customer interest rate contracts    
Derivative Instruments, Gain (Loss) [Line Items]    
Notional $ 3,667,914 $ 2,697,522
Assets 254,246 65,768
Liabilities 1,827 6,858
Offsetting upstream interest rate contracts    
Derivative Instruments, Gain (Loss) [Line Items]    
Notional 3,667,914 2,697,522
Assets 7,454 2,583
Liabilities 17,667 3,994
Customer Interest Rate Contracts Hedging | Hedging Instruments And Hedged Items | Customer interest rate contracts    
Derivative Instruments, Gain (Loss) [Line Items]    
Notional 3,679,991 3,044,067
Assets 297,233 90,394
Liabilities 258 3,515
Customer Interest Rate Contracts Hedging | Hedging Instruments And Hedged Items | Offsetting upstream interest rate contracts    
Derivative Instruments, Gain (Loss) [Line Items]    
Notional 3,679,991 3,044,067
Assets 4,877 3,537
Liabilities 24,922 9,735
Debt Hedging | Hedging Instruments And Hedged Items | Interest Rate Swap    
Derivative Instruments, Gain (Loss) [Line Items]    
Notional 500,000 500,000
Assets 27  
Liabilities   69
Debt Hedging | Hedging Instruments And Hedged Items | Term Borrowings, Par    
Derivative Instruments, Gain (Loss) [Line Items]    
Term borrowings 500,000 500,000
Debt Hedging | Hedging Instruments And Hedged Items | Term Borrowings, Cumulative Fair Value Hedging Adjustments    
Derivative Instruments, Gain (Loss) [Line Items]    
Term borrowings 2,142 (1,604)
Debt Hedging | Hedging Instruments And Hedged Items | Term Borrowings, Unamortized Premium (Discount) and Issuance Costs    
Derivative Instruments, Gain (Loss) [Line Items]    
Term borrowings (296) (740)
Debt Hedging | Hedging Instruments And Hedged Items | Term Borrowings    
Derivative Instruments, Gain (Loss) [Line Items]    
Term borrowings $ 501,846 $ 497,656
v3.20.2
Derivatives - Gains/(Losses) on Derivatives Associated with Interest Rate Risk Management Activities (Details) - Hedging Instruments And Hedged Items - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Customer Interest Rate Contracts Hedging | Customer interest rate contracts        
Derivative Instruments, Gain (Loss) [Line Items]        
Gains (losses) related to interest rate derivatives $ 15,844 $ 50,706 $ 211,396 $ 79,818
Customer Interest Rate Contracts Hedging | Offsetting upstream interest rate contracts        
Derivative Instruments, Gain (Loss) [Line Items]        
Gains (losses) related to interest rate derivatives (15,844) (50,706) (211,396) (79,818)
Debt Hedging | Interest Rate Swap        
Derivative Instruments, Gain (Loss) [Line Items]        
Gains (losses) related to interest rate derivatives (737) 6,697 4,197 10,976
Debt Hedging | Term Borrowings        
Derivative Instruments, Gain (Loss) [Line Items]        
Gains/(Losses) related to term borrowings $ 720 $ (6,605) $ (3,745) $ (10,871)
v3.20.2
Derivatives - Derivatives Associated With Cash Flow Hedges (Details) - Cash Flow Hedge - Hedging Instruments And Hedged Items - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Mar. 31, 2017
Mar. 31, 2016
Derivative Instruments, Gain (Loss) [Line Items]        
Notional     $ 650,000  
Variability in cash flows related to debt instruments (primarily loans)       $ 250,000
Interest Rate Contract        
Derivative Instruments, Gain (Loss) [Line Items]        
Variability in cash flows related to debt instruments (primarily loans) $ 700,000 $ 900,000    
Interest Rate Swap        
Derivative Instruments, Gain (Loss) [Line Items]        
Notional 700,000 900,000    
Assets 29      
Liabilities $ 48 $ 241    
v3.20.2
Derivatives - Gains/(Losses) on Derivatives Associated with Cash Flow Hedges (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Derivative Instruments, Gain (Loss) [Line Items]        
Gain/(loss) expected to be reclassified to earnings in the next twelve months     $ (9,600)  
Hedging Instruments And Hedged Items        
Derivative Instruments, Gain (Loss) [Line Items]        
Gain (loss), cash flow hedges $ 1,640 $ 7,575 14,795 $ 11,511
Gain/(loss) reclassified from AOCI into Interest income (1,623) 1,334 (1,717) 2,785
Hedging Instruments And Hedged Items | Interest Rate Swap        
Derivative Instruments, Gain (Loss) [Line Items]        
Gain (loss), cash flow hedges $ 69 $ 11,896 $ 17,443 $ 19,114
v3.20.2
Derivatives - Derivative Assets and Collateral Received (Details) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Derivative [Line Items]    
Gross amounts of recognized assets $ 599,445 $ 182,984
Derivative liabilities available for offset 0 0
Net amount 599,445 182,984
Derivative liabilities available for offset (9,180) (18,896)
Collateral received (361,087) (145,334)
Net amount 229,178 18,754
Derivative assets not subject to master netting agreements 300 100
Derivatives, interest rate contracts    
Derivative [Line Items]    
Gross amounts of recognized assets 564,037 162,344
Derivative liabilities available for offset 0 0
Net amount 564,037 162,344
Derivative liabilities available for offset (2,253) (5,604)
Collateral received (348,497) (143,334)
Net amount 213,287 13,406
Forward Contracts    
Derivative [Line Items]    
Gross amounts of recognized assets 35,408 20,640
Derivative liabilities available for offset 0 0
Net amount 35,408 20,640
Derivative liabilities available for offset (6,927) (13,292)
Collateral received (12,590) (2,000)
Net amount $ 15,891 $ 5,348
v3.20.2
Derivatives - Derivative Liabilities and Collateral Pledged (Details) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Derivative [Line Items]    
Gross amounts of recognized liabilities $ 75,226 $ 44,238
Derivative assets available for offset 0 0
Derivative liability 75,226 44,238
Derivative assets available for offset (9,180) (18,896)
Collateral pledged (62,388) (25,204)
Net amount 3,658 138
Derivative liabilities not subject to master netting agreements 19,200 23,200
Derivatives, interest rate contracts    
Derivative [Line Items]    
Gross amounts of recognized liabilities 44,743 24,431
Derivative assets available for offset 0 0
Derivative liability 44,743 24,431
Derivative assets available for offset (2,253) (5,604)
Collateral pledged (38,832) (18,689)
Net amount 3,658 138
Forward Contracts    
Derivative [Line Items]    
Gross amounts of recognized liabilities 30,483 19,807
Derivative assets available for offset 0 0
Derivative liability 30,483 19,807
Derivative assets available for offset (6,927) (13,292)
Collateral pledged (23,556) (6,515)
Net amount $ 0 $ 0
v3.20.2
Master Netting and Similar Agreements—Repurchase, Reverse Repurchase, and Securities Borrowing Transactions - Securities Purchased Under Agreements To Resell And Collateral Pledged By Counterparties (Details) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Securities Purchased under Agreements to Resell [Abstract]    
Gross amounts of recognized assets $ 302,267 $ 586,629
Gross amounts offset in the Statements of Condition 0 0
Net amounts of assets presented in the Statements of Condition 302,267 586,629
Offsetting securities sold under agreements to repurchase (23,207) (21,004)
Securities collateral (not recognized on FHN’s Statements of Condition) (277,660) (562,702)
Net amount $ 1,400 $ 2,923
v3.20.2
Master Netting and Similar Agreements—Repurchase, Reverse Repurchase, and Securities Borrowing Transactions - Securities Sold Under Agreements To Repurchase And Collateral Pledged By Company (Details) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Securities Sold under Agreements to Repurchase [Abstract]    
Gross amounts of recognized liabilities $ 1,482,585 $ 716,925
Gross amounts offset in the Statements of Condition 0 0
Net amounts of liabilities presented in the Statements of Condition 1,482,585 716,925
Offsetting securities purchased under agreements to resell (23,207) (21,004)
Securities/ government guaranteed loans collateral (1,459,297) (695,879)
Net amount $ 81 $ 42
v3.20.2
Master Netting and Similar Agreements—Repurchase, Reverse Repurchase, and Securities Borrowing Transactions - Schedule of the Remaining Contractual Maturity by Collateral Type of Securities Sold Under Agreements To Repurchase (Details) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]    
Securities sold under agreements to repurchase $ 1,482,585 $ 716,925
Overnight and Continuous    
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]    
Securities sold under agreements to repurchase 1,462,091 712,380
Up to 30 Days    
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]    
Securities sold under agreements to repurchase 20,494 4,545
U.S. treasuries    
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]    
Securities sold under agreements to repurchase 539,974 41,364
U.S. treasuries | Overnight and Continuous    
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]    
Securities sold under agreements to repurchase 539,974 41,364
U.S. treasuries | Up to 30 Days    
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]    
Securities sold under agreements to repurchase 0 0
Government agency issued MBS    
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]    
Securities sold under agreements to repurchase 526,612 345,718
Government agency issued MBS | Overnight and Continuous    
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]    
Securities sold under agreements to repurchase 512,170 341,173
Government agency issued MBS | Up to 30 Days    
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]    
Securities sold under agreements to repurchase 14,442 4,545
Government agency issued CMO    
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]    
Securities sold under agreements to repurchase 6,052  
Government agency issued CMO | Overnight and Continuous    
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]    
Securities sold under agreements to repurchase 0  
Government agency issued CMO | Up to 30 Days    
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]    
Securities sold under agreements to repurchase 6,052  
Other U.S. government agencies    
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]    
Securities sold under agreements to repurchase 139,756 54,924
Other U.S. government agencies | Overnight and Continuous    
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]    
Securities sold under agreements to repurchase 139,756 54,924
Other U.S. government agencies | Up to 30 Days    
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]    
Securities sold under agreements to repurchase 0 0
Government guaranteed loans (SBA and USDA)    
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]    
Securities sold under agreements to repurchase 270,191 274,919
Government guaranteed loans (SBA and USDA) | Overnight and Continuous    
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]    
Securities sold under agreements to repurchase 270,191 274,919
Government guaranteed loans (SBA and USDA) | Up to 30 Days    
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]    
Securities sold under agreements to repurchase $ 0 $ 0
v3.20.2
Fair Value of Assets & Liabilities - Schedule Of Assets And Liabilities Measured At Fair Value On A Recurring Basis (Details) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Trading securities $ 1,116,450 $ 1,346,207
Loans held-for-sale 13,263 14,033
Securities available-for-sale 5,476,156 4,445,403
Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Loans held-for-sale 13,263 14,033
Securities available-for-sale 5,476,156 4,445,403
Total other assets 670,968 252,573
Total assets 7,276,837 6,058,216
Total other liabilities 94,389 67,480
Total liabilities 327,131 573,061
Level 1 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Loans held-for-sale 0 0
Securities available-for-sale 0 0
Total other assets 106,672 90,098
Total assets 106,672 90,098
Total other liabilities 30,483 19,807
Total liabilities 30,483 19,807
Level 2 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Loans held-for-sale 0 0
Securities available-for-sale 5,450,710 4,426,267
Total other assets 564,126 162,475
Total assets 7,130,658 5,934,008
Total other liabilities 45,091 24,878
Total liabilities 277,833 530,459
Level 3 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Loans held-for-sale 13,263 14,033
Securities available-for-sale 25,446 19,136
Total other assets 170 0
Total assets 39,507 34,110
Total other liabilities 18,815 22,795
Total liabilities 18,815 22,795
Deferred compensation mutual funds | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Total other assets 48,572 46,815
Deferred compensation mutual funds | Level 1 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Total other assets 48,572 46,815
Deferred compensation mutual funds | Level 2 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Total other assets 0 0
Deferred compensation mutual funds | Level 3 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Total other assets 0 0
Derivatives, forwards and futures | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Total other assets 35,408 20,640
Total other liabilities 30,483 19,807
Derivatives, forwards and futures | Level 1 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Total other assets 35,408 20,640
Total other liabilities 30,483 19,807
Derivatives, forwards and futures | Level 2 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Total other assets 0 0
Total other liabilities 0 0
Derivatives, forwards and futures | Level 3 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Total other assets 0 0
Total other liabilities 0 0
Derivatives, interest rate contracts | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Total other assets 563,866 162,413
Total other liabilities 44,722 24,412
Derivatives, interest rate contracts | Level 1 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Total other assets 0 0
Total other liabilities 0 0
Derivatives, interest rate contracts | Level 2 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Total other assets 563,866 162,413
Total other liabilities 44,722 24,412
Derivatives, interest rate contracts | Level 3 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Total other assets 0 0
Total other liabilities 0 0
Derivatives, other | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Total other assets 430 62
Total other liabilities 19,184 23,261
Derivatives, other | Level 1 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Total other assets 0 0
Total other liabilities 0 0
Derivatives, other | Level 2 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Total other assets 260 62
Total other liabilities 369 466
Derivatives, other | Level 3 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Total other assets 170 0
Total other liabilities 18,815 22,795
U.S. treasuries | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Securities available-for-sale 999,975 100
U.S. treasuries | Level 1 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Securities available-for-sale 0 0
U.S. treasuries | Level 2 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Securities available-for-sale 999,975 100
U.S. treasuries | Level 3 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Securities available-for-sale 0 0
Government agency issued MBS | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Securities available-for-sale 2,487,382 2,348,517
Government agency issued MBS | Level 1 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Securities available-for-sale 0 0
Government agency issued MBS | Level 2 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Securities available-for-sale 2,487,382 2,348,517
Government agency issued MBS | Level 3 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Securities available-for-sale 0 0
Government agency issued CMO | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Securities available-for-sale 1,415,265 1,670,492
Government agency issued CMO | Level 1 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Securities available-for-sale 0 0
Government agency issued CMO | Level 2 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Securities available-for-sale 1,415,265 1,670,492
Government agency issued CMO | Level 3 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Securities available-for-sale 0 0
Other U.S. government agencies | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Securities available-for-sale 417,292 306,092
Other U.S. government agencies | Level 1 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Securities available-for-sale 0 0
Other U.S. government agencies | Level 2 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Securities available-for-sale 417,292 306,092
Other U.S. government agencies | Level 3 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Securities available-for-sale 0 0
States and municipalities | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Securities available-for-sale 90,383 60,526
States and municipalities | Level 1 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Securities available-for-sale 0 0
States and municipalities | Level 2 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Securities available-for-sale 90,383 60,526
States and municipalities | Level 3 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Securities available-for-sale 0 0
Corporates and other debt | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Securities available-for-sale 40,413 40,540
Corporates and other debt | Level 1 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Securities available-for-sale 0 0
Corporates and other debt | Level 2 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Securities available-for-sale 40,413 40,540
Corporates and other debt | Level 3 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Securities available-for-sale 0 0
Equity, mutual funds, and other | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Total other assets 22,692 22,643
Equity, mutual funds, and other | Level 1 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Total other assets 22,692 22,643
Equity, mutual funds, and other | Level 2 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Total other assets 0 0
Equity, mutual funds, and other | Level 3 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Total other assets 0 0
Interest- only strips- AFS | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Securities available-for-sale 25,446 19,136
Interest- only strips- AFS | Level 1 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Securities available-for-sale 0 0
Interest- only strips- AFS | Level 2 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Securities available-for-sale 0 0
Interest- only strips- AFS | Level 3 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Securities available-for-sale 25,446 19,136
Fixed Income | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Trading securities 1,115,822 1,345,266
Total trading liabilities - fixed income 232,742 505,581
Fixed Income | Level 1 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Trading securities 0 0
Total trading liabilities - fixed income 0 0
Fixed Income | Level 2 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Trading securities 1,115,822 1,345,266
Total trading liabilities - fixed income 232,742 505,581
Fixed Income | Level 3 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Trading securities 0 0
Total trading liabilities - fixed income 0 0
Fixed Income | U.S. treasuries | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Trading securities 119,121 134,844
Total trading liabilities - fixed income 195,753 406,380
Fixed Income | U.S. treasuries | Level 1 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Trading securities 0 0
Total trading liabilities - fixed income 0 0
Fixed Income | U.S. treasuries | Level 2 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Trading securities 119,121 134,844
Total trading liabilities - fixed income 195,753 406,380
Fixed Income | U.S. treasuries | Level 3 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Trading securities 0 0
Total trading liabilities - fixed income 0 0
Fixed Income | Government agency issued MBS | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Trading securities 431,765 268,024
Total trading liabilities - fixed income   33
Fixed Income | Government agency issued MBS | Level 1 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Trading securities 0 0
Total trading liabilities - fixed income   0
Fixed Income | Government agency issued MBS | Level 2 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Trading securities 431,765 268,024
Total trading liabilities - fixed income   33
Fixed Income | Government agency issued MBS | Level 3 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Trading securities 0 0
Total trading liabilities - fixed income   0
Fixed Income | Government agency issued CMO | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Trading securities 226,732 250,652
Fixed Income | Government agency issued CMO | Level 1 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Trading securities 0 0
Fixed Income | Government agency issued CMO | Level 2 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Trading securities 226,732 250,652
Fixed Income | Government agency issued CMO | Level 3 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Trading securities 0 0
Fixed Income | Other U.S. government agencies | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Trading securities 91,203 124,972
Total trading liabilities - fixed income 578 88
Fixed Income | Other U.S. government agencies | Level 1 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Trading securities 0 0
Total trading liabilities - fixed income 0 0
Fixed Income | Other U.S. government agencies | Level 2 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Trading securities 91,203 124,972
Total trading liabilities - fixed income 578 88
Fixed Income | Other U.S. government agencies | Level 3 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Trading securities 0 0
Total trading liabilities - fixed income 0 0
Fixed Income | States and municipalities | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Trading securities 17,467 120,744
Total trading liabilities - fixed income 756  
Fixed Income | States and municipalities | Level 1 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Trading securities 0 0
Total trading liabilities - fixed income 0  
Fixed Income | States and municipalities | Level 2 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Trading securities 17,467 120,744
Total trading liabilities - fixed income 756  
Fixed Income | States and municipalities | Level 3 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Trading securities 0 0
Total trading liabilities - fixed income 0  
Fixed Income | Corporates and other debt | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Trading securities 229,556 445,253
Total trading liabilities - fixed income 35,655 99,080
Fixed Income | Corporates and other debt | Level 1 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Trading securities 0 0
Total trading liabilities - fixed income 0 0
Fixed Income | Corporates and other debt | Level 2 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Trading securities 229,556 445,253
Total trading liabilities - fixed income 35,655 99,080
Fixed Income | Corporates and other debt | Level 3 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Trading securities 0 0
Total trading liabilities - fixed income 0 0
Fixed Income | Equity, mutual funds, and other | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Trading securities (22) 777
Fixed Income | Equity, mutual funds, and other | Level 1 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Trading securities 0 0
Fixed Income | Equity, mutual funds, and other | Level 2 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Trading securities (22) 777
Fixed Income | Equity, mutual funds, and other | Level 3 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Trading securities 0 0
Mortgage Banking | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Trading securities 628 941
Mortgage Banking | Level 1 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Trading securities 0 0
Mortgage Banking | Level 2 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Trading securities 0 0
Mortgage Banking | Level 3 | Recurring    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Trading securities $ 628 $ 941
v3.20.2
Fair Value of Assets & Liabilities - Summary Of Changes In Level 3 Assets And Liabilities Measured At Fair Value (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]        
Beginning balance $ (20,890) $ (28,970) $ (22,795) $ (31,540)
Net income (201) (19) (712) 116
Purchases 0 0 0 0
Sales 0 0 0 0
Settlements 2,446 2,444 4,862 4,879
Net transfers into/(out of) Level 3 0 0 0 0
Ending balance (18,645) (26,545) (18,645) (26,545)
Net unrealized gains/(losses) included in net income (201) (19) (712) 116
Trading securities        
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]        
Beginning balance 785 1,397 941 1,524
Net income (157) 8 (313) 29
Purchases 0 0 0 0
Sales 0 0 0 0
Settlements 0 (150) 0 (298)
Net transfers into/(out of) Level 3 0 0 0 0
Ending balance 628 1,255 628 1,255
Net unrealized gains/(losses) included in net income 0 (36) 0 (66)
Interest- only strips- AFS        
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]        
Beginning balance 23,104 13,195 19,136 9,902
Net income (1,233) (141) (2,528) (1,399)
Purchases 0 0 5,481 86
Sales 0 (14,199) (8,703) (27,211)
Settlements 0 0 0 0
Net transfers into/(out of) Level 3 3,575 18,937 12,060 36,414
Ending balance 25,446 17,792 25,446 17,792
Net unrealized gains/(losses) included in net income (959) (543) (1,813) (1,435)
Loans held- for-sale        
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]        
Beginning balance 13,584 15,751 14,033 16,273
Net income 422 321 751 816
Purchases 0 10 0 10
Sales 0 0 0 0
Settlements (743) (990) (1,521) (2,007)
Net transfers into/(out of) Level 3 0 0 0 0
Ending balance 13,263 15,092 13,263 15,092
Net unrealized gains/(losses) included in net income $ 422 $ 321 $ 751 $ 816
v3.20.2
Fair Value of Assets & Liabilities - Nonrecurring Fair Value Measurements (Details) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Jun. 30, 2019
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]      
Loans held-for-sale $ 13,263 $ 14,033  
Loans, net of unearned income 32,708,937 [1] 31,061,111 [1] $ 29,712,810
OREO [2] 15,134 17,838  
Non Recurring      
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]      
Loans, net of unearned income 66,062 42,208  
OREO 13,177 15,660  
Other assets 9,835 10,608  
Non Recurring | Small Business Administration And USDA      
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]      
Loans held-for-sale 644,219 493,524  
Non Recurring | First Mortgages      
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]      
Loans held-for-sale 504 516  
Non Recurring | Level 1      
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]      
Loans, net of unearned income 0 0  
OREO 0 0  
Other assets 0 0  
Non Recurring | Level 1 | Small Business Administration And USDA      
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]      
Loans held-for-sale 0 0  
Non Recurring | Level 1 | First Mortgages      
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]      
Loans held-for-sale 0 0  
Non Recurring | Level 2      
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]      
Loans, net of unearned income 0 0  
OREO 0 0  
Other assets 0 0  
Non Recurring | Level 2 | Small Business Administration And USDA      
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]      
Loans held-for-sale 643,445 492,595  
Non Recurring | Level 2 | First Mortgages      
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]      
Loans held-for-sale 0 0  
Non Recurring | Level 3      
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]      
Loans, net of unearned income 66,062 42,208  
OREO 13,177 15,660  
Other assets 9,835 10,608  
Non Recurring | Level 3 | Small Business Administration And USDA      
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]      
Loans held-for-sale 774 929  
Non Recurring | Level 3 | First Mortgages      
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]      
Loans held-for-sale $ 504 $ 516  
[1]
June 30, 2020 and December 31, 2019 include $16.9 million and $18.8 million, respectively, of held-to-maturity consumer mortgage loans secured by residential real estate in process of foreclosure.
[2]
June 30, 2020 and December 31, 2019 include $7.8 million and $9.2 million, respectively, of foreclosed residential real estate.
v3.20.2
Fair Value of Assets & Liabilities - Gains/(losses) on Nonrecurring Fair Value Measurements (Details) - Non Recurring - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Net gains/(losses), Loans, net of unearned income $ (1,274) $ (4,639) $ (6,113) $ (4,436)
Net gains/(losses), Real estate acquired by foreclosure (142) (9) (169) 26
Net gains/(losses), Other assets (426) (267) (772) (942)
Gain (loss) on financial assets measured on non-recurring basis (3,093) (5,979) (9,261) (6,620)
First Mortgages        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Net gains/(losses), Loans held for sale (4) 10 1 25
SBAs        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Net gains/(losses), Loans held for sale $ (1,247) $ (1,074) $ (2,208) $ (1,293)
v3.20.2
Fair Value of Assets & Liabilities - Narrative (Details) - Corporate
$ in Millions
 12 Months Ended
Dec. 31, 2019
USD ($)
Disposition of Acquired Properties  
Segment Reporting Information [Line Items]  
Asset impairment charges $ 4.6
Reversed asset impairment charges 0.7
Disposition of Acquired Properties | 2019 Business Optimization  
Segment Reporting Information [Line Items]  
Asset impairment charges 1.5
Leased Assets | 2019 Business Optimization  
Segment Reporting Information [Line Items]  
Asset impairment charges 14.0
Reversed asset impairment charges 1.4
Leased Assets | Rebranding Initiative  
Segment Reporting Information [Line Items]  
Asset impairment charges $ 7.1
v3.20.2
Fair Value of Assets & Liabilities - Schedule Of Unobservable Inputs Utilized In Determining The Fair Value Of Level 3 Recurring And Non-Recurring Measurements (Details)
$ in Thousands
Jun. 30, 2020
USD ($)
month
Dec. 31, 2019
USD ($)
month
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Securities available-for-sale $ 5,476,156 $ 4,445,403
Loans held-for-sale 13,263 14,033
Derivative liability 75,226 44,238
Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative liability 18,645 22,795
Loans net of unearned income 66,062 42,208
OREO, fair value 13,177 15,660
Loans Held For Sale - SBA | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Loans held-for-sale 774 929
Other Assets | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Other assets $ 9,835 $ 10,608
Constant prepayment rate | Weighted Average | Discounted cash flow | Loans Held For Sale - SBA | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Loans held-for-sale, measurement input 0.10 0.10
Constant prepayment rate | Minimum | Discounted cash flow | Loans Held For Sale - SBA | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Loans held-for-sale, measurement input 0.08  
Constant prepayment rate | Maximum | Discounted cash flow | Loans Held For Sale - SBA | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Loans held-for-sale, measurement input 0.12  
Bond equivalent yield | Discounted cash flow | Loans Held For Sale - SBA | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Loans held-for-sale, measurement input   0.09
Bond equivalent yield | Weighted Average | Discounted cash flow | Loans Held For Sale - SBA | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Loans held-for-sale, measurement input 0.08 0.09
Prepayment Speeds | Minimum | Discounted cash flow | Loans Held For Sale - SBA | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Loans held-for-sale, measurement input   0.08
Prepayment Speeds | Maximum | Discounted cash flow | Loans Held For Sale - SBA | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Loans held-for-sale, measurement input   0.12
Foreclosure losses | Weighted Average | Discounted cash flow | Loans Held For Sale, Residential Real Estate | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Loans held-for-sale, measurement input 0.63 0.64
Foreclosure losses | Minimum | Discounted cash flow | Loans Held For Sale, Residential Real Estate | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Loans held-for-sale, measurement input 0.50 0.50
Foreclosure losses | Maximum | Discounted cash flow | Loans Held For Sale, Residential Real Estate | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Loans held-for-sale, measurement input 0.65 0.66
Visa covered litigation resolution amount | Weighted Average | Discounted cash flow | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative liability, measurement input, value $ 5,800,000 $ 5,800,000
Visa covered litigation resolution amount | Minimum | Discounted cash flow | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative liability, measurement input, value 5,400,000 5,400,000
Visa covered litigation resolution amount | Maximum | Discounted cash flow | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative liability, measurement input, value $ 6,000,000 $ 6,000,000
Probability of resolution scenarios | Weighted Average | Discounted cash flow | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative liability, measurement input 0.16 0.16
Probability of resolution scenarios | Minimum | Discounted cash flow | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative liability, measurement input 0.10 0.10
Probability of resolution scenarios | Maximum | Discounted cash flow | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative liability, measurement input 0.50 0.50
Time until resolution | Weighted Average | Discounted cash flow | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative liability, measurement input | month 24 29
Time until resolution | Minimum | Discounted cash flow | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative liability, measurement input | month 9 15
Time until resolution | Maximum | Discounted cash flow | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative liability, measurement input | month 33 39
Marketability adjustments for specific properties | Minimum | Appraisals from comparable properties | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Loans net of unearned income, measurement input 0.00 0.00
Other assets, measurement input 0.00 0.00
Marketability adjustments for specific properties | Maximum | Appraisals from comparable properties | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Loans net of unearned income, measurement input 0.10 0.10
Other assets, measurement input 0.25 0.25
Borrowing base certificates adjustment | Minimum | Other collateral valuations | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Loans net of unearned income, measurement input 0.20 0.20
Borrowing base certificates adjustment | Maximum | Other collateral valuations | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Loans net of unearned income, measurement input 0.50 0.50
Financial Statements/Auction values adjustment | Minimum | Other collateral valuations | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Loans net of unearned income, measurement input 0.00 0.00
Financial Statements/Auction values adjustment | Maximum | Other collateral valuations | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Loans net of unearned income, measurement input 0.25 0.25
Adjustment for value changes since appraisal | Minimum | Appraisals from comparable properties | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
OREO measurement input 0.00 0.00
Adjustment for value changes since appraisal | Maximum | Appraisals from comparable properties | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
OREO measurement input 0.10 0.10
Adjustments to current sales yields for specific properties | Minimum | Discounted cash flow | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Other assets, measurement input 0.00 0.00
Adjustments to current sales yields for specific properties | Maximum | Discounted cash flow | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Other assets, measurement input 0.15 0.15
Residential Real Estate | Loans Held For Sale, Residential Real Estate | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Loans held-for-sale $ 13,767 $ 14,549
First Mortgages | Prepayment Speeds | Weighted Average | Discounted cash flow | Loans Held For Sale, Residential Real Estate | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Loans held-for-sale, measurement input 0.058 0.041
First Mortgages | Prepayment Speeds | Minimum | Discounted cash flow | Loans Held For Sale, Residential Real Estate | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Loans held-for-sale, measurement input 0.05 0.03
First Mortgages | Prepayment Speeds | Maximum | Discounted cash flow | Loans Held For Sale, Residential Real Estate | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Loans held-for-sale, measurement input 0.15 0.14
First Mortgages | Loss severity | Weighted Average | Discounted cash flow | Loans Held For Sale, Residential Real Estate | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Loans held-for-sale, measurement input 0.136 0.143
First Mortgages | Loss severity | Minimum | Discounted cash flow | Loans Held For Sale, Residential Real Estate | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Loans held-for-sale, measurement input 0.04 0.03
First Mortgages | Loss severity | Maximum | Discounted cash flow | Loans Held For Sale, Residential Real Estate | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Loans held-for-sale, measurement input 0.21 0.24
HELOC | Prepayment Speeds | Weighted Average | Discounted cash flow | Loans Held For Sale, Residential Real Estate | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Loans held-for-sale, measurement input   0.076
HELOC | Prepayment Speeds | Minimum | Discounted cash flow | Loans Held For Sale, Residential Real Estate | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Loans held-for-sale, measurement input   0.00
HELOC | Prepayment Speeds | Maximum | Discounted cash flow | Loans Held For Sale, Residential Real Estate | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Loans held-for-sale, measurement input   0.12
HELOC | Loss severity | Weighted Average | Discounted cash flow | Loans Held For Sale, Residential Real Estate | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Loans held-for-sale, measurement input   0.50
HELOC | Loss severity | Minimum | Discounted cash flow | Loans Held For Sale, Residential Real Estate | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Loans held-for-sale, measurement input   0.00
HELOC | Loss severity | Maximum | Discounted cash flow | Loans Held For Sale, Residential Real Estate | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Loans held-for-sale, measurement input   0.72
Interest- only strips- AFS | Available-for-sale Securities | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Securities available-for-sale $ 25,446 $ 19,136
Interest- only strips- AFS | Constant prepayment rate | Discounted cash flow | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Debt securities, available-for-sale, measurement input 0.12  
Interest- only strips- AFS | Constant prepayment rate | Weighted Average | Discounted cash flow | Available-for-sale Securities | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Debt securities, available-for-sale, measurement input 0.12 0.12
Interest- only strips- AFS | Bond equivalent yield | Weighted Average | Discounted cash flow | Available-for-sale Securities | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Debt securities, available-for-sale, measurement input 0.15 0.16
Interest- only strips- AFS | Bond equivalent yield | Minimum | Discounted cash flow | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Debt securities, available-for-sale, measurement input 0.14 0.16
Interest- only strips- AFS | Bond equivalent yield | Maximum | Discounted cash flow | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Debt securities, available-for-sale, measurement input 0.15 0.17
Interest- only strips- AFS | Prepayment Speeds | Discounted cash flow | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Debt securities, available-for-sale, measurement input   0.12
Non Recurring    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Other assets $ 9,835 $ 10,608
Non Recurring | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Other assets $ 9,835 $ 10,608
SBAs | Non Recurring | Bond equivalent yield | Discounted cash flow | Loans Held For Sale - SBA | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Loans held-for-sale, measurement input 0.08  
v3.20.2
Fair Value of Assets & Liabilities - Summary Of Differences Between The Fair Value Carrying Amount Of Mortgages Held-For-Sale And Aggregate Unpaid Principal Amount (Details) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Loans held-for-sale $ 13,263 $ 14,033
Fair value carrying amount less aggregate unpaid principal - Total loans (4,594) (5,245)
Nonaccrual loans 2,740 3,532
Fair value carrying amount less aggregate unpaid principal - Nonaccrual loans (3,034) (3,114)
Loans 90 days or more past due and still accruing 186 163
Fair value carrying amount less aggregate unpaid principal - Loans 90 days or more past due and still accruing (136) (105)
Aggregate unpaid principal    
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Loans held-for-sale 17,857 19,278
Nonaccrual loans 5,774 6,646
Loans 90 days or more past due and still accruing $ 322 $ 268
v3.20.2
Fair Value of Assets & Liabilities - Changes In Fair Value Of Assets And Liabilities Which Fair Value Option Included In Current Period Earnings (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Mortgage Banking Noninterest Income | Loans held- for-sale        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Changes in fair value included in net income $ 422 $ 321 $ 751 $ 816
v3.20.2
Fair Value of Assets & Liabilities - Summary Of Book Value And Estimated Fair Value Of Financial Instruments (Details) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Total loans, net of unearned income and allowance for loan losses $ 32,171,056 $ 30,860,804
Short-term financial assets:    
Interest-bearing cash 3,135,844 482,405
Federal funds sold 113,000 46,536
Securities purchased under agreements to resell 302,267 586,629
Trading securities 1,116,450 1,346,207
Securities available-for-sale 5,476,156 4,445,403
Securities held-to-maturity 10,000 10,000
Derivative assets 599,445 182,984
Other assets:    
Total assets 48,644,659 43,310,900
Liabilities:    
Trading Liabilities 232,742 505,581
Short-term financial liabilities:    
Federal funds purchased 778,529 548,344
Securities sold under agreements to repurchase 1,482,585 716,925
Other short-term borrowings 130,583 2,253,045
Term borrowings:    
Other long term borrowings 2,032,476 791,368
Derivative liabilities 75,226 44,238
Total liabilities 43,436,274 38,234,892
Fair Value, Inputs, Level 3 | FHLB-Cincinnati Stock    
Term borrowings:    
Restricted investments 190,400 76,000
Fair Value, Inputs, Level 3 | FRB Stock    
Term borrowings:    
Restricted investments 130,700 130,700
Reported Value Measurement    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Total loans, net of unearned income and allowance for loan losses 32,171,056 30,860,804
Short-term financial assets:    
Interest-bearing cash 3,135,844 482,405
Federal funds sold 113,000 46,536
Securities purchased under agreements to resell 302,267 586,629
Total short-term financial assets 3,551,111 1,115,570
Trading securities 1,116,450 1,346,207
Loans held-for-sale 745,655 593,790
Securities available-for-sale 5,476,156 4,445,403
Securities held-to-maturity 10,000 10,000
Derivative assets 599,704 183,115
Other assets:    
Tax credit investments 257,547 247,075
Deferred compensation assets 48,572 46,815
Equity, mutual funds, and other 343,825 229,352
Total other assets 649,944 523,242
Total assets 44,320,076 39,078,131
Liabilities:    
Defined maturity 2,655,702 3,618,337
Trading Liabilities 232,742 505,581
Short-term financial liabilities:    
Federal funds purchased 778,529 548,344
Securities sold under agreements to repurchase 1,482,585 716,925
Other short-term borrowings 130,583 2,253,045
Short Term Financial Liabilities 2,391,697 3,518,314
Term borrowings:    
Real estate investment trust-preferred 46,270 46,236
Secured Borrowings 15,370 21,975
Junior subordinated debentures 145,262 144,593
Other long term borrowings 1,825,574 578,564
Total term borrowings 2,032,476 791,368
Derivative liabilities 94,389 67,480
Total liabilities 7,407,006 8,501,080
Reported Value Measurement | Commercial, financial, and industrial    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Total loans, net of unearned income and allowance for loan losses 21,075,171 19,928,605
Reported Value Measurement | Commercial Real Estate    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Total loans, net of unearned income and allowance for loan losses 4,756,056 4,300,905
Reported Value Measurement | Consumer Real Estate (a)    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Total loans, net of unearned income and allowance for loan losses 5,908,636 6,148,696
Reported Value Measurement | Credit Card and Other    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Total loans, net of unearned income and allowance for loan losses 431,193 482,598
Reported Value Measurement | Mortgage loans (elected fair value)    
Short-term financial assets:    
Loans held-for-sale 13,263 14,033
Reported Value Measurement | Government guaranteed loans (SBA and USDA)    
Short-term financial assets:    
Loans held-for-sale 644,219 493,525
Reported Value Measurement | Other consumer loans- LOCOM    
Short-term financial assets:    
Loans held-for-sale 4,758 5,197
Reported Value Measurement | Mortgage loans- LOCOM    
Short-term financial assets:    
Loans held-for-sale 83,415 81,035
Estimate of Fair Value Measurement    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Total loans, net of unearned income and allowance for loan losses 32,508,563 31,218,152
Short-term financial assets:    
Interest-bearing cash 3,135,844 482,405
Federal funds sold 113,000 46,536
Securities purchased under agreements to resell 302,267 586,629
Total short-term financial assets 3,551,111 1,115,570
Trading securities 1,116,450 1,346,207
Loans held-for-sale 750,611 596,535
Securities available-for-sale 5,476,156 4,445,403
Securities held-to-maturity 9,881 10,001
Derivative assets 599,704 183,115
Other assets:    
Tax credit investments 257,705 244,755
Deferred compensation assets 48,572 46,815
Equity, mutual funds, and other 343,825 229,352
Total other assets 650,102 520,922
Total assets 44,662,578 39,435,905
Liabilities:    
Defined maturity 2,695,759 3,631,090
Trading Liabilities 232,742 505,581
Short-term financial liabilities:    
Federal funds purchased 778,529 548,344
Securities sold under agreements to repurchase 1,482,585 716,925
Other short-term borrowings 130,583 2,253,045
Short Term Financial Liabilities 2,391,697 3,518,314
Term borrowings:    
Real estate investment trust-preferred 47,000 47,000
Secured Borrowings 15,370 21,975
Junior subordinated debentures 138,950 142,375
Other long term borrowings 1,877,080 574,287
Total term borrowings 2,078,400 785,637
Derivative liabilities 94,389 67,480
Total liabilities 7,492,987 8,508,102
Loan commitments 2,492 3,656
Standby and other commitments 6,112 5,513
Estimate of Fair Value Measurement | Commercial, financial, and industrial    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Total loans, net of unearned income and allowance for loan losses 21,216,054 20,096,397
Estimate of Fair Value Measurement | Commercial Real Estate    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Total loans, net of unearned income and allowance for loan losses 4,768,706 4,300,489
Estimate of Fair Value Measurement | Consumer Real Estate (a)    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Total loans, net of unearned income and allowance for loan losses 6,085,159 6,334,187
Estimate of Fair Value Measurement | Credit Card and Other    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Total loans, net of unearned income and allowance for loan losses 438,644 487,079
Estimate of Fair Value Measurement | Mortgage loans (elected fair value)    
Short-term financial assets:    
Loans held-for-sale 13,263 14,033
Estimate of Fair Value Measurement | Government guaranteed loans (SBA and USDA)    
Short-term financial assets:    
Loans held-for-sale 649,175 496,270
Estimate of Fair Value Measurement | Other consumer loans- LOCOM    
Short-term financial assets:    
Loans held-for-sale 4,758 5,197
Estimate of Fair Value Measurement | Mortgage loans- LOCOM    
Short-term financial assets:    
Loans held-for-sale 83,415 81,035
Estimate of Fair Value Measurement | Fair Value, Inputs, Level 1    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Total loans, net of unearned income and allowance for loan losses 0 0
Short-term financial assets:    
Interest-bearing cash 3,135,844 482,405
Federal funds sold 0 0
Securities purchased under agreements to resell 0 0
Total short-term financial assets 3,135,844 482,405
Trading securities 0 0
Loans held-for-sale 0 0
Securities available-for-sale 0 0
Securities held-to-maturity 0 0
Derivative assets 35,408 20,640
Other assets:    
Tax credit investments 0 0
Deferred compensation assets 48,572 46,815
Equity, mutual funds, and other 22,692 22,643
Total other assets 71,264 69,458
Total assets 3,242,516 572,503
Liabilities:    
Defined maturity 0 0
Trading Liabilities 0 0
Short-term financial liabilities:    
Federal funds purchased 0 0
Securities sold under agreements to repurchase 0 0
Other short-term borrowings 0 0
Short Term Financial Liabilities 0 0
Term borrowings:    
Real estate investment trust-preferred 0 0
Secured Borrowings 0 0
Junior subordinated debentures 0 0
Other long term borrowings 0 0
Total term borrowings 0 0
Derivative liabilities 30,483 19,807
Total liabilities 30,483 19,807
Estimate of Fair Value Measurement | Fair Value, Inputs, Level 1 | Commercial, financial, and industrial    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Total loans, net of unearned income and allowance for loan losses 0 0
Estimate of Fair Value Measurement | Fair Value, Inputs, Level 1 | Commercial Real Estate    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Total loans, net of unearned income and allowance for loan losses 0 0
Estimate of Fair Value Measurement | Fair Value, Inputs, Level 1 | Consumer Real Estate (a)    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Total loans, net of unearned income and allowance for loan losses 0 0
Estimate of Fair Value Measurement | Fair Value, Inputs, Level 1 | Credit Card and Other    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Total loans, net of unearned income and allowance for loan losses 0 0
Estimate of Fair Value Measurement | Fair Value, Inputs, Level 1 | Mortgage loans (elected fair value)    
Short-term financial assets:    
Loans held-for-sale 0 0
Estimate of Fair Value Measurement | Fair Value, Inputs, Level 1 | Government guaranteed loans (SBA and USDA)    
Short-term financial assets:    
Loans held-for-sale 0 0
Estimate of Fair Value Measurement | Fair Value, Inputs, Level 1 | Other consumer loans- LOCOM    
Short-term financial assets:    
Loans held-for-sale 0 0
Estimate of Fair Value Measurement | Fair Value, Inputs, Level 1 | Mortgage loans- LOCOM    
Short-term financial assets:    
Loans held-for-sale 0 0
Estimate of Fair Value Measurement | Fair Value, Inputs, Level 2    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Total loans, net of unearned income and allowance for loan losses 0 0
Short-term financial assets:    
Interest-bearing cash 0 0
Federal funds sold 113,000 46,536
Securities purchased under agreements to resell 302,267 586,629
Total short-term financial assets 415,267 633,165
Trading securities 1,115,822 1,345,266
Loans held-for-sale 653,141 500,520
Securities available-for-sale 5,450,710 4,426,267
Securities held-to-maturity 0 0
Derivative assets 564,126 162,475
Other assets:    
Tax credit investments 0 0
Deferred compensation assets 0 0
Equity, mutual funds, and other 0 0
Total other assets 0 0
Total assets 8,199,066 7,067,693
Liabilities:    
Defined maturity 2,695,759 3,631,090
Trading Liabilities 232,742 505,581
Short-term financial liabilities:    
Federal funds purchased 778,529 548,344
Securities sold under agreements to repurchase 1,482,585 716,925
Other short-term borrowings 130,583 2,253,045
Short Term Financial Liabilities 2,391,697 3,518,314
Term borrowings:    
Real estate investment trust-preferred 0 0
Secured Borrowings 0 0
Junior subordinated debentures 0 0
Other long term borrowings 1,877,080 574,287
Total term borrowings 1,877,080 574,287
Derivative liabilities 45,091 24,878
Total liabilities 7,242,369 8,254,150
Estimate of Fair Value Measurement | Fair Value, Inputs, Level 2 | Commercial, financial, and industrial    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Total loans, net of unearned income and allowance for loan losses 0 0
Estimate of Fair Value Measurement | Fair Value, Inputs, Level 2 | Commercial Real Estate    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Total loans, net of unearned income and allowance for loan losses 0 0
Estimate of Fair Value Measurement | Fair Value, Inputs, Level 2 | Consumer Real Estate (a)    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Total loans, net of unearned income and allowance for loan losses 0 0
Estimate of Fair Value Measurement | Fair Value, Inputs, Level 2 | Credit Card and Other    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Total loans, net of unearned income and allowance for loan losses 0 0
Estimate of Fair Value Measurement | Fair Value, Inputs, Level 2 | Mortgage loans (elected fair value)    
Short-term financial assets:    
Loans held-for-sale 0 0
Estimate of Fair Value Measurement | Fair Value, Inputs, Level 2 | Government guaranteed loans (SBA and USDA)    
Short-term financial assets:    
Loans held-for-sale 648,383 495,323
Estimate of Fair Value Measurement | Fair Value, Inputs, Level 2 | Other consumer loans- LOCOM    
Short-term financial assets:    
Loans held-for-sale 4,758 5,197
Estimate of Fair Value Measurement | Fair Value, Inputs, Level 2 | Mortgage loans- LOCOM    
Short-term financial assets:    
Loans held-for-sale 0 0
Estimate of Fair Value Measurement | Fair Value, Inputs, Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Total loans, net of unearned income and allowance for loan losses 32,508,563 31,218,152
Short-term financial assets:    
Interest-bearing cash 0 0
Federal funds sold 0 0
Securities purchased under agreements to resell 0 0
Total short-term financial assets 0 0
Trading securities 628 941
Loans held-for-sale 97,470 96,015
Securities available-for-sale 25,446 19,136
Securities held-to-maturity 9,881 10,001
Derivative assets 170 0
Other assets:    
Tax credit investments 257,705 244,755
Deferred compensation assets 0 0
Equity, mutual funds, and other 321,133 206,709
Total other assets 578,838 451,464
Total assets 33,220,996 31,795,709
Liabilities:    
Defined maturity 0 0
Trading Liabilities 0 0
Short-term financial liabilities:    
Federal funds purchased 0 0
Securities sold under agreements to repurchase 0 0
Other short-term borrowings 0 0
Short Term Financial Liabilities 0 0
Term borrowings:    
Real estate investment trust-preferred 47,000 47,000
Secured Borrowings 15,370 21,975
Junior subordinated debentures 138,950 142,375
Other long term borrowings 0 0
Total term borrowings 201,320 211,350
Derivative liabilities 18,815 22,795
Total liabilities 220,135 234,145
Estimate of Fair Value Measurement | Fair Value, Inputs, Level 3 | Commercial, financial, and industrial    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Total loans, net of unearned income and allowance for loan losses 21,216,054 20,096,397
Estimate of Fair Value Measurement | Fair Value, Inputs, Level 3 | Commercial Real Estate    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Total loans, net of unearned income and allowance for loan losses 4,768,706 4,300,489
Estimate of Fair Value Measurement | Fair Value, Inputs, Level 3 | Consumer Real Estate (a)    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Total loans, net of unearned income and allowance for loan losses 6,085,159 6,334,187
Estimate of Fair Value Measurement | Fair Value, Inputs, Level 3 | Credit Card and Other    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Total loans, net of unearned income and allowance for loan losses 438,644 487,079
Estimate of Fair Value Measurement | Fair Value, Inputs, Level 3 | Mortgage loans (elected fair value)    
Short-term financial assets:    
Loans held-for-sale 13,263 14,033
Estimate of Fair Value Measurement | Fair Value, Inputs, Level 3 | Government guaranteed loans (SBA and USDA)    
Short-term financial assets:    
Loans held-for-sale 792 947
Estimate of Fair Value Measurement | Fair Value, Inputs, Level 3 | Other consumer loans- LOCOM    
Short-term financial assets:    
Loans held-for-sale 0 0
Estimate of Fair Value Measurement | Fair Value, Inputs, Level 3 | Mortgage loans- LOCOM    
Short-term financial assets:    
Loans held-for-sale 83,415 81,035
Contractual Amount    
Term borrowings:    
Loan commitments 12,945,839 12,355,220
Standby and other commitments $ 469,567 $ 459,268
v3.20.2
Restructuring, Repositioning, and Efficiency (Details) - 2019 Business Optimization - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Restructuring Cost and Reserve [Line Items]        
Total restructuring, repositioning, and efficiency charges $ 40 $ 18,668 $ 3 $ 30,820
Employee compensation, incentives and benefits        
Restructuring Cost and Reserve [Line Items]        
Total restructuring, repositioning, and efficiency charges 32 2,557 89 9,062
Professional fees        
Restructuring Cost and Reserve [Line Items]        
Total restructuring, repositioning, and efficiency charges 7 4,242 14 8,537
Occupancy        
Restructuring Cost and Reserve [Line Items]        
Total restructuring, repositioning, and efficiency charges 0 72 2 889
Other        
Restructuring Cost and Reserve [Line Items]        
Total restructuring, repositioning, and efficiency charges $ 1 $ 11,797 $ (102) $ 12,332