Investment Securities

12 Months Ended

Dec. 31, 2020

The following tables summarize FHN’s investment securities on December 31, 2020 and 2019:


	December 31, 2020
(Dollars in millions)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities available for sale:
U.S. treasuries	$	613	$	—	$	—	$	613
Government agency issued MBS	3,722		92		(2)		3,812
Government agency issued CMO	2,380		29		(3)		2,406
Other U.S. government agencies	672		12		—		684
Corporate and other debt	40		1		(1)		40
States and municipalities	445		15		—		460
	$	7,872	$	149	$	(6)	8,015
AFS securities recorded at fair value through earnings:
SBA-interest only strips (a)							32
Total securities available for sale (b)							$	8,047

(a)SBA-interest only strips are recorded at elected fair value. See Note 24 - Fair Value of Assets and Liabilities for additional information.

(b)Includes $6.4 billion of securities pledged to secure public deposits, securities sold under agreements to repurchase, and for other purposes.


	December 31, 2019
(Dollars in millions)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities available for sale:
U.S. treasuries	$	—	$	—	$	—	$	—
Government agency issued MBS	2,316		35		(3)		2,348
Government agency issued CMO	1,668		10		(7)		1,671
Other U.S. government agencies	304		4		(1)		307
Corporate and other debt	40		—		—		40
States and municipalities	57		3		—		60
	$	4,385	$	52	$	(11)	4,426
AFS securities recorded at fair value through earnings:
SBA-interest only strips (a)							19
Total securities available for sale (b)							$	4,445

(a)SBA-interest only strips are recorded at elected fair value. See Note 24 - 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 debt securities portfolio on December 31, 2020 is provided below:


	Available for Sale
(Dollars in millions)	Amortized Cost		Fair Value
Within 1 year	$	756	$	758
After 1 year through 5 years	160		162
After 5 years through 10 years	184		192
After 10 years	670		717
Subtotal	1,770		1,829
Government agency issued MBS and CMO (a)	6,102		6,218
Total	$	7,872	$	8,047

(a)Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

Gross gains on sales of debt investment securities for the years ended December 31, 2020, 2019 and 2018 were insignificant. Gross losses on sales of debt investment securities were $4 million for the year ended 2020 and insignificant for the years ended December 31, 2019 and 2018. Cash proceeds from the sale of available-for-sale securities during 2020 and 2019 were $629 million and $192 million, respectively and were not material in 2018.

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


	As of December 31, 2020
	Less than 12 months				12 months or longer				Total
(Dollars in millions)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. treasuries	$	307	$	—	$	—	$	—	$	307	$	—
Government agency issued MBS	426		(2)		—		—		426		(2)
Government agency issued CMO	586		(3)		—		—		586		(3)
Other U.S. government agencies	80		(1)		—		—		80		(1)

States and municipalities	1		—		—		—		1		—
Total	$	1,400	$	(6)	$	—	$	—	$	1,400	$	(6)


	As of December 31, 2019
	Less than 12 months				12 months or longer				Total
(Dollars in millions)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses

Government agency issued MBS	$	175	$	(1)	$	193	$	(2)	$	368	$	(3)
Government agency issued CMO	379		(2)		361		(5)		740		(7)
Other U.S. government agencies	98		(1)		—		—		98		(1)

States and municipalities	4		—		—		—		4		—
Total	$	656	$	(4)	$	554	$	(7)	$	1,210	$	(11)

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 $22 million as of December 31, 2020.

Consistent with FHN's review of the related securities, there were no credit-related write downs of AIR for AFS securities during the reporting period. Additionally, for AFS debt securities with unrealized losses as of the balance sheet date, 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 $57 million and $26 million at December 31, 2020 and 2019,

respectively. The year-to-date 2020 and 2019 gross amounts of upward and downward valuation adjustments were not significant.

Unrealized gains of $7 million and unrealized losses of $7 million were recognized during 2020 and 2019, respectively, for equity investments with readily determinable fair values.