Investment Securities

12 Months Ended

Dec. 31, 2021

The following tables summarize FHN’s investment securities as of December 31, 2021 and 2020:

Table 8.3.1a

INVESTMENT SECURITIES AT YE 2021


	December 31, 2021
(Dollars in millions)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities available for sale:

Government agency issued MBS	$	5,062	$	42	$	(49)	$	5,055
Government agency issued CMO	2,296		8		(47)		2,257
Other U.S. government agencies	861		4		(15)		850

States and municipalities	535		11		(1)		545
Total securities available for sale (a)	$	8,754	$	65	$	(112)	$	8,707




Securities held to maturity:
Government agency issued MBS	$	509	$	—	$	(5)	$	504
Government agency issued CMO	203		—		(2)		201
Total securities held to maturity	$	712	$	—	$	(7)	$	705

(a)Includes $6.5 billion of securities pledged to secure public deposits, securities sold under agreements to repurchase, and for other purposes.

Table 8.3.1b

INVESTMENT SECURITIES AT YE 2020


	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

Securities held to maturity:
Corporate and other debt	$	10	$	—	$	—	$	10
Total securities held to maturity	$	10	$	—	$	—	$	10

(a)SBA interest-only strips were 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.

The amortized cost and fair value by contractual maturity for the debt securities portfolio as of December 31, 2021 is provided below:

Table 8.3.2

DEBT SECURITIES PORTFOLIO MATURITIES


	Held to Maturity				Available for Sale
(Dollars in millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Within 1 year	$	—	$	—	$	17	$	18
After 1 year through 5 years	—		—		149		149
After 5 years through 10 years	—		—		351		349
After 10 years	—		—		879		879
Subtotal	—		—		1,396		1,395
Government agency issued MBS and CMO (a)	712		705		7,358		7,312
Total	$	712	$	705	$	8,754	$	8,707

(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 AFS securities for the years ended December 31, 2021, 2020 and 2019 were insignificant. Gross losses on sales of AFS securities were insignificant for the year ended December 31, 2021, $4 million for the year ended 2020, and insignificant for the year ended December 31, 2019. Cash proceeds from the sales of AFS

securities during 2021, 2020 and 2019 were $68 million, $629 million, and $192 million, respectively.

The following tables provide information on investments within the available-for-sale portfolio that had unrealized losses as of December 31, 2021 and 2020:

Table 8.3.3a

AFS INVESTMENT SECURITIES WITH UNREALIZED LOSSES AT YE 2021


	As of December 31, 2021
	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	$	2,973	$	(41)	$	184	$	(8)	$	3,157	$	(49)
Government agency issued CMO	1,436		(37)		248		(10)		1,684		(47)
Other U.S. government agencies	459		(11)		90		(4)		549		(15)

States and municipalities	68		(1)		—		—		68		(1)
Total	$	4,936	$	(90)	$	522	$	(22)	$	5,458	$	(112)

Table 8.3.3b

AFS INVESTMENT SECURITIES WITH UNREALIZED LOSSES AT YE 2020


	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)

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 $23 million and $22 million as of December 31, 2021 and 2020, respectively. Consistent with FHN's review of the related securities, there were no credit-related write downs of AIR for AFS debt securities during the reporting period. Additionally, for AFS debt securities with unrealized losses, FHN does not intend to sell 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 HTM securities, an allowance for credit losses is required to absorb estimated lifetime credit losses. Total AIR not included in the fair value or amortized cost basis of HTM debt securities was $1 million as of December 31, 2021. FHN has assessed the risk of credit loss and has determined that zero allowance for credit losses for HTM

securities was necessary as of December 31, 2021 and 2020. 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.

The carrying amount of equity investments without a readily determinable fair value was $70 million and $57 million at December 31, 2021 and 2020, respectively. The year-to-date 2021 and 2020 gross amounts of upward and downward valuation adjustments were not significant.

Unrealized gains of $3 million and $7 million were recognized during 2021 and 2020, respectively, for equity investments with readily determinable fair values.