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Loans and Leases
 12 Months Ended
Dec. 31, 2020
Receivables [Abstract]  
Loans and Leases Loans and Leases
Tables and data as of December 31, 2020 include the loan and lease balances acquired in the IBKC merger and Truist Bank branch acquisition, which were recorded at fair value on their respective transaction closing dates. See Note 2 - Acquisitions and Divestitures for further information.
As discussed in Note 1 - 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.
The loan and lease portfolio is disaggregated into portfolio segments and then further disaggregated into classes for certain disclosures. GAAP defines a portfolio segment as the level at which an entity develops and documents a systematic method for determining its allowance for credit losses. A class is generally a disaggregation of a portfolio segment and is generally determined based on risk characteristics of the loan and FHN’s method for monitoring and assessing credit risk and performance. FHN's loan and lease portfolio segments are commercial and consumer. The classes of loans and leases are: (1) commercial, financial, and industrial, which includes commercial and industrial loans and leases and loans to mortgage companies, (2) commercial real estate, (3) consumer real estate, which includes both real estate installment and home equity lines of credit, and (4) credit card and other.
The following table provides the amortized cost basis of loans and leases by portfolio segment and class as of December 31, 2020 and 2019, excluding accrued interest of $180 million and $85 million, respectively, which is included in Other assets in the Consolidated Balance Sheets.
December 31,
(Dollars in millions)20202019
Commercial:
Commercial and industrial (a) (b)$27,700 $15,640 
Loans to mortgage companies5,404 4,411 
   Total commercial, financial, and industrial33,104 20,051 
Commercial real estate12,275 4,337 
Consumer:
HELOC2,420 1,287 
Real estate installment loans9,305 4,890 
   Total consumer real estate11,725 6,177 
Credit card and other1,128 496 
Loans and leases$58,232 $31,061 
Allowance for loan and lease losses(963)(200)
Total net loans and leases$57,269 $30,861 
(a)December 31, 2020 balance includes equipment financing leases of $587 million.
(b)Includes PPP loans fully guaranteed by the SBA of $4.1 billion as of December 31, 2020.

Restrictions
Loans and leases with carrying values of $38.6 billion and $19.2 billion were pledged as collateral for borrowings at December 31, 2020 and 2019, respectively.
At December 31, 2020 and 2019, FHN had pledged $7.8 billion and $5.2 billion of commercial loans to secure potential discount window borrowings from the Federal Reserve Bank, which included all of its first and second lien mortgages, HELOCs, and commercial real estate loans to secure potential borrowings from the FHLB-Cincinnati.
Concentrations of Credit Risk
Most of the FHN’s business activity is with clients located in the southern United States. FHN’s lending activity is concentrated in its market areas within those states. As of December 31, 2020, FHN had loans to mortgage companies totaling $5.4 billion and loans to finance and insurance companies total $3.1 billion. As a result, 26% of the C&I segment is sensitive to impacts on the financial services industry.
Credit Quality Indicators
FHN employs a dual grade commercial risk grading methodology to assign an estimate for the probability of default and the loss given default for each commercial loan using factors specific to various industry, portfolio, or product segments that result in a rank ordering of risk and the assignment of grades
PD 1 to PD 16. This credit grading system is intended to identify and measure the credit quality of the loan and lease portfolio by analyzing the migration between grading categories. It is also integral to the estimation methodology utilized in determining the ALLL since an allowance is established for pools of commercial loans based on the credit grade assigned. Each PD grade corresponds to an estimated one-year default probability percentage. PD grades are continually evaluated, but require a formal scorecard annually. As a response to the COVID-19 pandemic, FHN identified a segment of its commercial portfolio that requires a quarterly re-grading process. As borrowers recover, they can be removed from the quarterly re-grading process with credit officer concurrence.
PD 1 through PD 12 are “pass” grades. PD grades 13-16 correspond to the regulatory-defined categories of special mention (13), substandard (14), doubtful (15), and loss (16). Special mention loans and leases have potential weaknesses that, if left uncorrected, may result in deterioration of FHN's credit position at some future date. Substandard commercial loans and leases have well-defined weaknesses and are characterized by the distinct possibility that FHN will sustain some loss if the deficiencies are not corrected. Doubtful commercial loans and leases have the same weaknesses as substandard loans and leases with the added characteristics that the probability of loss is high and collection of the full amount is improbable.
The following tables provide the amortized cost basis of the commercial loan and lease portfolio by year of origination and credit quality indicator as of December 31, 2020:
C&I
(Dollars in millions)20202019201820172016Prior to 2016LMC (a)Revolving
Loans		Revolving
Loans Converted
to Term Loans (b)		Total
Credit Quality Indicator:
Pass (PD grades 1 through 12) (c)$9,081 $5,145 $2,640 $1,762 $1,161 $2,163 $5,404 $4,575 $62 $31,993 
Special Mention (PD grade 13)89 93 70 31 37 64 — 127 1 512 
Substandard, Doubtful, or Loss (PD grades 14,15, and 16)161 70 102 36 42 40 — 91 57 599 
Total C&I$9,331 $5,308 $2,812 $1,829 $1,240 $2,267 $5,404 $4,793 $120 $33,104 
(a)LMC includes non-revolving commercial lines of credit to qualified mortgage companies primarily for the temporary warehousing of eligible mortgage loans prior to the borrower's sale of those mortgage loans to third party investors. The loans are of short duration with maturities less than one year.
(b)    $50 million of C&I loans were converted from revolving to term in 2020.
(c)    2020 balance includes PPP loans.
CRE
(Dollars in millions)20202019201820172016Prior to 2016Revolving
Loans		Revolving
Loans Converted
to Term Loans		Total
Credit Quality Indicator:
Pass (PD grades 1 through 12)$2,501 $3,311 $1,750 $1,140 $946 $1,800 $277 $19 $11,744 
Special Mention (PD grade 13)48 24 117 75 71 54 — — 389 
Substandard, Doubtful, or Loss (PD grades 14,15, and 16)6 13 21 42 27 33 — — 142 
Total CRE$2,555 $3,348 $1,888 $1,257 $1,044 $1,887 $277 $19 $12,275 

The following tables provide the balances of commercial loan portfolio classes with associated allowance, disaggregated by PD grade as of December 31, 2019:
 
(Dollars in millions)
C&I (a)		Loans to
Mortgage
Companies
CRE		TotalPercentage
of Total		Allowance
for Loan
Losses
PD Grade:
Pass (PD grades 1 through 12) $15,036 $4,411 $4,252 $23,699 98 %$114 
Special Mention (PD grade 13)233 — 34 267 1 8 
Substandard, Doubtful, or Loss (PD grades 14, 15, and 16)263 — 44 307 1 30 
Collectively evaluated for impairment15,532 4,411 4,330 24,273 100 152 
Individually evaluated for impairment82 — 2 84 — 6 
Purchased credit-impaired loans26 — 5 31 — 1 
Total commercial loans$15,640 $4,411 $4,337 $24,388 100 %$159 
(a)C&I includes TRUPS loans, which are presented net of a $19 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 FICO
score, among other attributes, to assess the credit quality of consumer borrowers. FICO scores are refreshed on a quarterly basis in an attempt to reflect the recent risk profile of the borrowers. Accruing delinquency amounts are indicators of asset quality within the credit card and other consumer portfolio.
The following table reflects the amortized cost basis by year of origination and refreshed FICO scores for consumer real estate loans as of December 31, 2020. Within consumer real estate, classes include 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 millions)20202019201820172016Prior to 2016Revolving loansRevolving Loans converted to term loans (a)Total
FICO score 740 or greater$1,186 $1,167 $703 $610 $674 $1,719 $1,275 $159 $7,493 
FICO score 720-739157 158 100 77 92 197 186 29 996 
FICO score 700-719122 107 78 76 73 221 177 34 888 
FICO score 660-699130 141 123 75 85 296 264 59 1,173 
FICO score 620-65945 61 37 28 35 127 92 36 461 
FICO score less than 620107 36 52 54 95 261 61 48 714 
Total$1,747 $1,670 $1,093 $920 $1,054 $2,821 $2,055 $365 $11,725 
(a) $36 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 credit card and other loans as of December 31, 2020.
Credit card and other
(Dollars in millions)20202019201820172016Prior to 2016Revolving loansRevolving Loans converted to term loansTotal
FICO score 740 or greater$57 $52 $59 $37 $23 $116 $159 $5 $508 
FICO score 720-7397 7 9 8 8 27 91 2 159 
FICO score 700-7199 8 9 8 4 38 37 3 116 
FICO score 660-69930 12 15 9 9 48 46 3 172 
FICO score 620-6595 5 7 5 10 24 20 1 77 
FICO score less than 62014 7 8 11 9 26 20 1 96 
Total$122 $91 $107 $78 $63 $279 $373 $15 $1,128 
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 :
 
 HELOCRE Installment
Loans
FICO score 740 or greater62 %72 %
FICO score 720-7398 8 
FICO score 700-7198 6 
FICO score 660-69911 8 
FICO score 620-6595 3 
FICO score less than 620 (a)6 3 
Total100 %100 %
(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.
Nonaccrual and Past Due Loans and Leases
Loans and leases are 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 nonaccrual are loans for which FHN continues to receive payments including residential real estate loans where the borrower has been discharged of personal obligation through bankruptcy.
Past due loans are loans contractually past due as to interest or principal payments, but which have not yet been put on nonaccrual status. In accordance with revised Interagency Guidance issued in 2020, FHN is
not required to designate loans with deferrals granted in response to COVID-19 as past due because of such deferrals. If a borrower defers payment, this may result in no contractual payments being past due, and as such, loans would not be considered past due during the period of deferral, and as a result, are excluded from loans past due 30-89 days and loans 90+ days past due in the table below.
The following table reflects accruing and non-accruing loans and leases by class on December 31, 2020:
 AccruingNon-Accruing 
(Dollars in millions)Current30-89
Days
Past Due		90+
Days
Past Due		Total
Accruing		Current30-89
Days
Past Due		90+
Days
Past Due		Total
Non-
Accruing		Total
Loans
Commercial, financial, and industrial:
C&I (a) (b) $27,541 $15 $— $27,556 $88 $12 $44 $144 $27,700 
Loans to mortgage companies5,404 — — 5,404 — — — — 5,404 
Total commercial, financial, and industrial32,945 15 — 32,960 88 12 44 144 33,104 
Commercial real estate:
CRE12,194 23 — 12,217 10 42 6 58 12,275 
Consumer real estate:
HELOC2,336 13 11 2,360 43 3 14 60 2,420 
RE installment loans9,138 40 5 9,183 63 9 50 122 9,305 
Total consumer real estate11,474 53 16 11,543 106 12 64 182 11,725 
Credit card and other:
Credit card279 3 1 283 — — — — 283 
Other838 6 — 844 1 — 1 2 845 
Total credit card and other1,117 9 1 1,127 1 — 1 2 1,128 
Total loans and leases$57,730 $100 $17 $57,847 $205 $66 $115 $386 $58,232 

(a) $101 million of C&I loans are nonaccrual loans that have been specifically reviewed for impairment with no related allowance.
(b) C&I loans include TRUPs loans of $210 million, which is net of an amortizing discount of $18 million.
The following table reflects accruing and non-accruing loans by class on December 31, 2019:
 AccruingNon-Accruing 
(Dollars in millions)Current30-89
Days
Past Due		90+
Days
Past Due		Total
Accruing		Current30-89
Days
Past Due		90+
Days
Past Due		Total
Non-
Accruing		Total
Loans
Commercial, financial, and industrial:
C&I (a)$15,533 $7 $— $15,540 $36 $14 $24 $74 $15,614 
Loans to mortgage companies4,411 — — 4,411 — — — — 4,411 
Purchased credit-impaired loans24 — 2 26 — — — — 26 
Total commercial, financial, and industrial 19,968 7 2 19,977 36 14 24 74 20,051 
Commercial real estate:
Total commercial real estate4,329 1 — 4,330 — 1 1 2 4,332 
Purchased credit-impaired loans5 — — 5 — — — — 5 
Total commercial real estate4,334 1 — 4,335 — 1 1 2 4,337 
Consumer real estate:
HELOC1,217 9 6 1,232 43 4 8 55 1,287 
RE installment loans4,812 13 9 4,834 21 1 9 31 4,865 
Purchased credit-impaired loans19 3 3 25 — — — — 25 
Total consumer real estate6,048 25 18 6,091 64 5 17 86 6,177 
Credit card and other:
Credit card199 1 1 201 — — — — 201 
Other292 2 1 294 — — — — 294 
Purchased credit-impaired loans— — — — — — — — 1 
Total credit card and other491 3 2 496 — — — — 496 
Total loans$30,841 $36 $22 $30,899 $100 $20 $42 $162 $31,061 
Certain previously reported amounts have been reclassified to agree with current presentation.
(a)     C&I loans include $218 million in TRUPs loans, which are presented net of a valuation allowance of $19 million.
Collateral-Dependent Loans

Collateral-dependent loans are defined as loans for which repayment is expected to be derived substantially through the operation or sale of the collateral and where the borrower is experiencing financial difficulty. At a minimum, the estimated value of the collateral for each loan equals the current book value.
As of December 31, 2020, FHN had C&I loans with amortized cost of approximately $167 million that was based on the value of underlying collateral. The collateral for these loans generally consists of business assets including land, buildings, equipment and financial assets. During the year ended December 31, 2020, FHN recognized total charge-offs of approximately $36 million on collateral
dependent loans related to reductions in estimated collateral values, $26 million of which were on collateral dependent loans at December 31, 2020.

Consumer HELOC and installment loans with amortized cost based on the value of underlying real estate collateral were approximately $9 million and $26 million, respectively, as of December 31, 2020. Charge-offs during the year ended December 31, 2020 were not significant for either portfolio class.

Troubled Debt Restructurings
As part of FHN’s ongoing risk management practices, FHN attempts to work with borrowers when necessary to extend or modify loan terms to better align with their current ability to repay. Extensions and modifications to loans are made in accordance with internal policies and guidelines which conform to
regulatory guidance. Each occurrence is unique to the borrower and is evaluated separately.
A modification is classified as a TDR if the borrower is experiencing financial difficulty and it is determined that FHN has granted a concession to the borrower. FHN may determine that a borrower is experiencing financial difficulty if the borrower is currently in default on any of its debt, or if it is probable that a borrower may default in the foreseeable future. Many aspects of a borrower’s financial situation are assessed when determining whether they are experiencing financial difficulty. Concessions could include extension of the maturity date, reductions of the interest rate (which may make the rate lower than current market for a new loan with similar risk), reduction or forgiveness of accrued interest, or principal forgiveness. The assessments of whether a borrower is experiencing (or is likely to experience) financial difficulty, and whether a concession has been granted, are subjective in nature and management’s judgment is required when determining whether a modification is classified as a TDR. In accordance with regulatory guidance, loans were not accounted for as a TDR and have been excluded from the disclosures below. For loan modifications that were made during the year ended December 31, 2020 that met the TDR relief provisions outlined in either the CARES Act, as extended by the CAA, or revised Interagency Guidance, FHN has excluded these modifications from consideration as a TDR, and has excluded loans with these qualifying modifications from designation as a TDR in the information and discussion that follows. See Note 1 - Significant Accounting Policies and Note 4 – Loans and Leases for further discussion regarding TDRs and loan modifications.
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. Within the HELOC and RE 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% 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% per year until the original interest rate prior to modification is achieved. Permanent mortgage TDRs are typically modified by reducing the interest rate (in increments of 25 basis points to a minimum of 2% 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 steps up 1% every year until it reaches the Federal Home Loan Mortgage Corporation Weekly Survey Rate cap. Contractual maturities may be extended to 40 years on permanent mortgages and to 30 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, clients are granted a rate reduction to 0% 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 December 31, 2020 and 2019, FHN had $307 million and $206 million of portfolio loans classified as TDRs, respectively. For TDRs in the loan portfolio, FHN had an ALLL of $12 million, or 4% as of December 31, 2020, and $20 million, or 10% as of December 31, 2019. Additionally, $42 million and $51 million of loans held for sale as of December 31, 2020 and 2019, respectively, were classified as TDRs.
The following tables present the end of period balance for loans modified in a TDR during the years ended December 31, 2020 and 2019:
 20202019
(Dollars in millions)NumberPre-Modification
Outstanding
Recorded Investment		Post-Modification
Outstanding
Recorded Investment		NumberPre-Modification
Outstanding
Recorded Investment		Post-Modification
Outstanding
Recorded Investment
Commercial, financial, and industrial:
C&I112 $195 $188 4 $14 $14 
Commercial real estate:
CRE19 15 15 — — — 
Consumer real estate:
HELOC64 5 5 74 8 8 
RE installment loans117 20 19 104 12 12 
Total consumer real estate181 25 24 178 20 20 
Credit card and other56 1 1 85 1 1 
Total TDRs368 $236 $228 267 $35 $35 
The following tables present TDRs which re-defaulted during 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.
 20202019
(Dollars in millions)NumberRecorded
Investment		NumberRecorded
Investment
Commercial, financial, and industrial:
C&I9 $1 — $— 
Consumer real estate:
HELOC8 — 7 1 
RE installment loans18 1 4 — 
Total consumer real estate26 1 11 1 
Credit card and other24 — 32 — 
Total TDRs59 $2 43 $1 


Loans Acquired with Deteriorated Credit Quality

Upon FHN's adoption of CECL, PCD loans are recorded at an initial amortized cost, which is the sum of the purchase price and the estimated credit losses recorded in the ALLL. Subsequent to this initial recognition, PCD loans are accounted for under the same methodology as non-PCD loans.

As discussed in Note 2, on July 1, 2020, FHN and IBKC closed their merger of equals transaction. On July 17, 2020, First Horizon Bank completed its purchase of 30 branches from Truist Bank. In
connection with these transactions, FHN acquired approximately $25.9 billion in loans from IBKC and purchased approximately $423 million of branch loans from Truist Bank.

For PCD loans acquired or purchased during 2020, a reconciliation of the unpaid principal balance, contractual cash flow owed to FHN at acquisition date, and purchase price is presented in the following table.

(Dollars in millions)C&ICREConsumer Real EstateCredit Card and OtherTotal
Par value (UPB)$4,075 $6,435 $2,394 $193 $13,097 
Allowance for loan and lease losses (138)(100)(44)(5)(287)
(Discount) premium(64)3 (32)— (93)
Purchase price$3,873 $6,338 $2,318 $188 $12,717 

Purchased Credit-Impaired Loans
Before the adoption of CECL on January 1, 2020, FHN applied the guidance in ASC 310-30 to loans that were identified as PCI loans at the acquisition date. The following table presents a rollforward of the accretable yield for the year ended December 31, 2019 and 2018:
 Year Ended December 31,
(Dollars in millions)20192018
Balance, beginning of period$13 $16 
Accretion(6)(10)
Adjustment for payoffs(2)(4)
Adjustment for charge-offs(1)(1)
Increase in accretable yield (a)6 13 
Other— (1)
Balance, end of period$10 $13 
 

(a)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 million. Net charge-offs related to PCI loans
during 2019 were $6 million, compared to $7 million in 2018. The provision for loan losses related to PCI loans during both 2019 and 2018 was $1 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 millions)Carrying valueUnpaid balance
Commercial, financial and industrial$25 $26 
Commercial real estate5 5 
Consumer real estate23 26 
Credit card and other1 1 
Total$54 $58 
Impaired Loans
The following tables provide additional disclosures previously required by ASC Topic 310 related to FHN's December 31, 2019 balances. Information on impaired loans at December 31, 2019 was as follows:
 December 31, 2019
(Dollars in millions)Recorded
Investment		Unpaid
Principal
Balance		Related
Allowance		Average Recorded
Investment		Interest
Income
Recognized
Impaired loans with no related allowance recorded:
Commercial:
C&I$53 $64 $— $61 $1 
Loans to mortgage companies— — — 9 — 
CRE1 1 — 2 — 
Total$54 $65 $— $72 $1 
Consumer:
HELOC (a)$5 $10 $— $7 $— 
RE installment loans (a)7 10 — 8 — 
Total$12 $20 $— $15 $— 
Impaired loans with related allowance recorded:
Commercial:
C&I$30 $32 $6 $17 $— 
Consumer:
HELOC$56 $59 $7 $61 $2 
RE installment loans94 104 13 104 3 
Credit card and other1 1 — 1 — 
Total$151 $164 $20 $166 $5 
Total commercial$84 $97 $6 $89 $1 
Total consumer$163 $184 $20 $181 $5 
Total impaired loans$247 $281 $26 $270 $6 
(a)All discharged bankruptcy loans are charged down to an estimate of net realizable value and do not carry any allowance.