Fair Value of Assets & Liabilities (Tables)

3 Months Ended

Mar. 31, 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 March 31, 2020: 

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

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 March 31, 2020 and 2019, on a recurring basis are summarized as follows: 

	Three Months Ended March 31, 2020
(Dollars in thousands)	Trading securities				Interest- only strips- AFS				Loans held- for-sale				Net  derivative liabilities
Balance on January 1, 2020	$	941			$	19,136			$	14,033			$	(22,795	)
Total net gains/(losses) included in:
Net income	(156		)		(1,295		)		329				(511		)
Purchases	—				5,481				—				—
Sales	—				(8,703		)		—				—
Settlements	—				—				(778		)		2,416
Net transfers into/(out of) Level 3	—				8,485			(b)	—				—
Balance on March 31, 2020	$	785			$	23,104			$	13,584			$	(20,890	)
Net unrealized gains/(losses) included in net income	$	—		(a)	$	(865	)	(c)	$	329		(a)	$	(511	)	(d)

	Three Months Ended March 31, 2019
(Dollars in thousands)	Trading securities				Interest-only-strips-AFS				Loans held-for-sale				Net  derivative liabilities
Balance on January 1, 2019	$	1,524			$	9,902			$	16,273			$	(31,540	)
Total net gains/(losses) included in:
Net income	21				(1,258		)		495				135
Purchases	—				86				—				—
Sales	—				(13,012		)		—				—
Settlements	(148		)		—				(1,017		)		2,435
Net transfers into/(out of) Level 3	—				17,477			(b)	—				—
Balance on March 31, 2019	$	1,397			$	13,195			$	15,751			$	(28,970	)
Net unrealized gains/(losses) included in net income	$	(30	)	(a)	$	(894	)	(c)	$	495		(a)	$	135		(d)

(a) Primarily included in mortgage banking income on the Consolidated Condensed Statements of Income.

(b) Transfers into interest-only strips - AFS level 3 measured on a recurring basis reflect movements from loans held-for-sale (Level 2 nonrecurring).

(c) Primarily included in fixed income on the Consolidated Condensed Statements of Income.

(d)

Included in Other expense.

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 March 31, 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 March 31, 2020
(Dollars in thousands)	Level 1		Level 2		Level 3		Total
Loans held-for-sale—SBAs and USDA	$	—	$	493,876	$	890	$	494,766
Loans held-for-sale—first mortgages	—		—		515		515
Loans, net of unearned income (a)	—		—		31,535		31,535
OREO (b)	—		—		13,881		13,881
Other assets (c)	—		—		10,262		10,262

	Carrying value at 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 months ended March 31, 2020 and 2019:

	Net gains/(losses) Three Months Ended March 31
(Dollars in thousands)	2020			2019
Loans held-for-sale—other consumer	$	—		$	(200	)
Loans held-for-sale—SBAs and USDA	(1,391		)	(683		)
Loans held-for-sale—first mortgages	5			15
Loans, net of unearned income (a)	(4,839		)	200
OREO (b)	(27		)	35
Other assets (c)	(346		)	(675		)
	$	(6,598	)	$	(1,308	)

(a) 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 March 31, 2020 and December 31, 2019: 

(Dollars in thousands)
					Values Utilized
Level 3 Class	Fair Value at March 31, 2020		Valuation Techniques	Unobservable Input	Range	Weighted Average (d)
Available-for-sale- securities SBA-interest only strips	$	23,104	Discounted cash flow	Constant prepayment rate	12%	12%
				Bond equivalent yield	14% - 18%	14%
Loans held-for-sale - residential real estate	14,099		Discounted cash flow	Prepayment speeds - First mortgage	3% - 15%	4.6%
				Foreclosure losses	50% - 66%	64%
				Loss severity trends - First mortgage	2% - 20% of UPB	14.2%
Loans held-for-sale- unguaranteed interest in SBA loans	890		Discounted cash flow	Constant prepayment rate	8% - 12%	10%
				Bond equivalent yield	8%	8%
Derivative liabilities, other	20,890		Discounted cash flow	Visa covered litigation resolution amount	$5.4 billion - $6.0 billion	$5.8 billion
				Probability of resolution scenarios	10% - 50%	16%
				Time until resolution	12 - 36 months	26 months
Loans, net of unearned income (a)	31,535		Appraisals from comparable properties	Marketability adjustments for specific properties	0% - 10% of appraisal	NM
			Other collateral valuations	Borrowing base certificates adjustment	20% - 50% of gross value	NM
				Financial Statements/Auction values adjustment	0% - 25% of reported value	NM
OREO (b)	13,881		Appraisals from comparable properties	Adjustment for value changes since appraisal	0% - 10% of appraisal	NM
Other assets (c)	10,262		Discounted cash flow	Adjustments to current sales yields for specific properties	0% - 15% adjustment to yield	NM
			Appraisals from comparable properties	Marketability adjustments for specific properties	0% - 25% of appraisal	NM

 

NM - Not meaningful.

(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.

	March 31, 2020
(Dollars in thousands)	Fair value carrying amount		Aggregate unpaid principal		Fair value carrying amount less aggregate unpaid principal
Residential real estate loans held-for-sale reported at fair value:
Total loans	$	13,584	$	18,546	$	(4,962	)
Nonaccrual loans	3,181		6,069		(2,888		)
Loans 90 days or more past due and still accruing	190		268		(78		)
	December 31, 2019
(Dollars in thousands)	Fair value carrying amount		Aggregate unpaid principal		Fair value carrying amount less aggregate unpaid principal
Residential real estate loans held-for-sale reported at fair value:
Total loans	$	14,033	$	19,278	$	(5,245	)
Nonaccrual loans	3,532		6,646		(3,114		)
Loans 90 days or more past due and still accruing	163		268		(105		)

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 March 31
(Dollars in thousands)	2020		2019
Changes in fair value included in net income:
Mortgage banking noninterest income
Loans held-for-sale	$	329	$	495

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 March 31, 2020:

	March 31, 2020
	Book Value		Fair Value
(Dollars in thousands)			Level 1		Level 2		Level 3		Total
Assets:
Loans, net of unearned income and allowance for loan losses
Commercial:
Commercial, financial and industrial	$	21,869,914	$	—	$	—	$	22,072,783	$	22,072,783
Commercial real estate	4,592,067		—		—		4,624,811		4,624,811
Consumer:
Consumer real estate (a)	5,996,361		—		—		6,141,872		6,141,872
Credit card & other	475,471		—		—		481,763		481,763
Total loans, net of unearned income and allowance for loan losses	32,933,813		—		—		33,321,229		33,321,229
Short-term financial assets:
Interest-bearing cash	670,525		670,525		—		—		670,525
Federal funds sold	30,050		—		30,050		—		30,050
Securities purchased under agreements to resell	562,435		—		562,435		—		562,435
Total short-term financial assets	1,263,010		670,525		592,485		—		1,263,010
Trading securities (b)	1,877,514		—		1,876,729		785		1,877,514
Loans held-for-sale
Mortgage loans (elected fair value) (b)	13,584		—		—		13,584		13,584
USDA & SBA loans- LOCOM	494,766		—		497,071		905		497,976
Other consumer loans- LOCOM	4,940		—		4,940		—		4,940
Mortgage loans- LOCOM	82,311		—		—		82,311		82,311
Total loans held-for-sale	595,601		—		502,011		96,800		598,811
Securities available-for-sale (b)	4,544,907		—		4,521,803		23,104		4,544,907
Securities held-to-maturity	10,000		—		—		9,824		9,824
Derivative assets (b)	696,250		165,516		530,454		280		696,250
Other assets:
Tax credit investments	250,596		—		—		249,450		249,450
Deferred compensation mutual funds	41,666		41,666		—		—		41,666
Equity, mutual funds, and other (c)	715,549		22,833		—		692,716		715,549
Total other assets	1,007,811		64,499		—		942,166		1,006,665
Total assets	$	42,928,906	$	900,540	$	8,023,482	$	34,394,188	$	43,318,210
Liabilities:
Defined maturity deposits	$	3,058,198	$	—	$	3,105,082	$	—	$	3,105,082
Trading liabilities (b)	452,611		—		452,611		—		452,611
Short-term financial liabilities:
Federal funds purchased	476,013		—		476,013		—		476,013
Securities sold under agreements to repurchase	788,595		—		788,595		—		788,595
Other short-term borrowings	4,060,673		—		4,060,673		—		4,060,673
Total short-term financial liabilities	5,325,281		—		5,325,281		—		5,325,281
Term borrowings:
Real estate investment trust-preferred	46,253		—		—		47,000		47,000
Secured borrowings	17,315		—		—		17,315		17,315
Junior subordinated debentures	144,928		—		—		129,200		129,200
Other long term borrowings	584,255		—		560,530		—		560,530
Total term borrowings	792,751		—		560,530		193,515		754,045
Derivative liabilities (b)	234,984		171,604		42,210		21,170		234,984
Total liabilities	$	9,863,825	$	171,604	$	9,485,714	$	214,685	$	9,872,003

 

(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 $562.0 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 March 31, 2020 and December 31, 2019:

	Contractual Amount				Fair Value
(Dollars in thousands)	March 31, 2020		December 31, 2019		March 31, 2020		December 31, 2019
Unfunded Commitments:
Loan commitments	$	10,966,768	$	12,355,220	$	2,909	$	3,656
Standby and other commitments	455,028		459,268		6,211		5,513