Fair Value of Assets and Liabilities (Tables)

12 Months Ended

Dec. 31, 2022

Fair Value Disclosures [Abstract]

Schedule of Assets and Liabilities Measured on Recurring Basis

The following table presents the balances of assets and liabilities measured at fair value on a recurring basis as of December 31, 2022 and 2021:

Table 8.23.1

BALANCES OF ASSETS & LIABILITIES

MEASURED AT FAIR VALUE ON A RECURRING BASIS

	December 31, 2022
(Dollars in millions)	Level 1		Level 2		Level 3		Total
Trading securities:
U.S. treasuries	$	—	$	101	$	—	$	101
Government agency issued MBS	—		144		—		144
Government agency issued CMO	—		61		—		61
Other U.S. government agencies	—		115		—		115
States and municipalities	—		54		—		54
Corporate and other debt	—		875		—		875
Interest-only strips (elected fair value)	—		—		25		25
Total trading securities	—		1,350		25		1,375
Loans held for sale (elected fair value)	—		29		22		51
Securities available for sale:
Government agency issued MBS	—		4,763		—		4,763
Government agency issued CMO	—		2,313		—		2,313
Other U.S. government agencies	—		1,163		—		1,163
States and municipalities	—		597		—		597
Total securities available for sale	—		8,836		—		8,836
Other assets:
Deferred compensation mutual funds	112		—		—		112
Equity, mutual funds, and other	22		—		—		22
Derivatives, forwards and futures	9		—		—		9
Derivatives, interest rate contracts	—		449		—		449
Derivatives, other	—		2		—		2
Total other assets	143		451		—		594
Total assets	$	143	$	10,666	$	47	$	10,856
Trading liabilities:
U.S. treasuries	$	—	$	275	$	—	$	275
Government issued agency MBS	—		2		—		2
Corporate and other debt	—		58		—		58
Total trading liabilities	—		335		—		335
Other liabilities:
Derivatives, forwards and futures	8		—		—		8
Derivatives, interest rate contracts	—		922		—		922
Derivatives, other	—		1		27		28
Total other liabilities	8		923		27		958
Total liabilities	$	8	$	1,258	$	27	$	1,293

	December 31, 2021
(Dollars in millions)	Level 1		Level 2		Level 3		Total
Trading securities:
U.S. treasuries	$	—	$	85	$	—	$	85
Government agency issued MBS	—		464		—		464
Government agency issued CMO	—		62		—		62
Other U.S. government agencies	—		276		—		276
States and municipalities	—		34		—		34
Corporate and other debt	—		642		—		642
Interest-only strips (elected fair value)	—		—		38		38
Total trading securities	—		1,563		38		1,601
Loans held for sale (elected fair value)	—		230		28		258
Securities available for sale:
Government agency issued MBS	—		5,055		—		5,055
Government agency issued CMO	—		2,257		—		2,257
Other U.S. government agencies	—		850		—		850
States and municipalities	—		545		—		545
Total securities available for sale	—		8,707		—		8,707
Other assets:
Deferred compensation mutual funds	125		—		—		125
Equity, mutual funds, and other	25		—		—		25
Derivatives, forwards and futures	12		—		—		12
Derivatives, interest rate contracts	—		311		—		311
Derivatives, other	—		1		—		1
Total other assets	162		312		—		474
Total assets	$	162	$	10,812	$	66	$	11,040
Trading liabilities:
U.S. treasuries	$	—	$	334	$	—	$	334
Government agency issued MBS	—		1		—		1
Corporate and other debt	—		91		—		91
Total trading liabilities	—		426		—		426
Other liabilities:
Derivatives, forwards and futures	11		—		—		11
Derivatives, interest rate contracts	—		93		—		93
Derivatives, other	—		1		23		24
Total other liabilities	11		94		23		128
Total liabilities	$	11	$	520	$	23	$	554

Summary of Changes in Level 3 Assets and Liabilities Measured At Fair Value

Changes in Recurring Level 3 Fair Value Measurements

The changes in Level 3 assets and liabilities measured at fair value for the years ended December 31, 2022, 2021 and 2020 on a recurring basis are summarized as follows:

Table 8.23.2

CHANGES IN LEVEL 3 ASSETS & LIABILITIES MEASURED AT FAIR VALUE

	Year Ended December 31, 2022
(Dollars in millions)	Interest-only strips			Loans held for sale			Net  derivative liabilities
Balance on January 1, 2022	$	38		$	28		$	(23)
Total net gains (losses) included in net income	(7)			—			(23)
Purchases	—			2			—
Sales	(76)			(12)			—
Settlements	—			(2)			19
Repayments	—			(1)			—
Net transfers into (out of) Level 3	70		(b)	7			—
Balance on December 31, 2022	$	25		$	22		$	(27)
Net unrealized gains (losses) included in net income	$	(2)	(c)	$	—	(a)	$	(23)	(d)

	Year Ended December 31, 2021
(Dollars in millions)	Interest-only strips			Loans held for sale			Loans held for investment			Net  derivative liabilities
Balance on January 1, 2021	$	32		$	12		$	16		$	(14)
Total net gains (losses) included in net income	3			1			—			(19)
Purchases	—			10			—			—
Sales	(68)			(18)			—			—
Settlements	—			(3)			(2)			10
Net transfers into (out of) Level 3	71		(b)	26		(e)	(14)		(e)	—
Balance on December 31, 2021	$	38		$	28		$	—		$	(23)
Net unrealized gains (losses) included in net income	$	(2)	(c)	$	1	(a)	$	—		$	(19)	(d)

	Year Ended December 31, 2020
(Dollars in millions)	Trading securities			Interest-only strips- AFS			Loans held for sale			Loans held for investment		Net  derivative liabilities
Balance on January 1, 2020	$	1		$	19		$	14		$	—	$	(23)
Acquired	—			—			—			14		—
Total net gains (losses) included in net income	(1)			(6)			1			—		(1)
Purchases	—			6			—			—		—
Sales	—			(11)			—			(4)		—
Settlements	—			—			(3)			(3)		10
Net transfers into (out of) Level 3	—			24		(b)	—			9		—
Balance on December 31, 2020	$	—		$	32		$	12		$	16	$	(14)
Net unrealized gains (losses) included in net income	$	—	(a)	$	(4)	(c)	$	1	(a)	$	—	$	(1)	(d)

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

(b)Transfers into interest-only strips 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 Statements of Income.

(d)Included in other expense.

(e)The loans held for investment at fair value option portfolio was transferred to the loans held for sale portfolio on April 1, 2021.

Summary of Changes in Level 3 Net Derivative Asset (Liability) Measured at Fair Value

Changes in Recurring Level 3 Fair Value Measurements

The changes in Level 3 assets and liabilities measured at fair value for the years ended December 31, 2022, 2021 and 2020 on a recurring basis are summarized as follows:

Table 8.23.2

CHANGES IN LEVEL 3 ASSETS & LIABILITIES MEASURED AT FAIR VALUE

	Year Ended December 31, 2022
(Dollars in millions)	Interest-only strips			Loans held for sale			Net  derivative liabilities
Balance on January 1, 2022	$	38		$	28		$	(23)
Total net gains (losses) included in net income	(7)			—			(23)
Purchases	—			2			—
Sales	(76)			(12)			—
Settlements	—			(2)			19
Repayments	—			(1)			—
Net transfers into (out of) Level 3	70		(b)	7			—
Balance on December 31, 2022	$	25		$	22		$	(27)
Net unrealized gains (losses) included in net income	$	(2)	(c)	$	—	(a)	$	(23)	(d)

	Year Ended December 31, 2021
(Dollars in millions)	Interest-only strips			Loans held for sale			Loans held for investment			Net  derivative liabilities
Balance on January 1, 2021	$	32		$	12		$	16		$	(14)
Total net gains (losses) included in net income	3			1			—			(19)
Purchases	—			10			—			—
Sales	(68)			(18)			—			—
Settlements	—			(3)			(2)			10
Net transfers into (out of) Level 3	71		(b)	26		(e)	(14)		(e)	—
Balance on December 31, 2021	$	38		$	28		$	—		$	(23)
Net unrealized gains (losses) included in net income	$	(2)	(c)	$	1	(a)	$	—		$	(19)	(d)

	Year Ended December 31, 2020
(Dollars in millions)	Trading securities			Interest-only strips- AFS			Loans held for sale			Loans held for investment		Net  derivative liabilities
Balance on January 1, 2020	$	1		$	19		$	14		$	—	$	(23)
Acquired	—			—			—			14		—
Total net gains (losses) included in net income	(1)			(6)			1			—		(1)
Purchases	—			6			—			—		—
Sales	—			(11)			—			(4)		—
Settlements	—			—			(3)			(3)		10
Net transfers into (out of) Level 3	—			24		(b)	—			9		—
Balance on December 31, 2020	$	—		$	32		$	12		$	16	$	(14)
Net unrealized gains (losses) included in net income	$	—	(a)	$	(4)	(c)	$	1	(a)	$	—	$	(1)	(d)

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

(b)Transfers into interest-only strips 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 Statements of Income.

(d)Included in other expense.

(e)The loans held for investment at fair value option portfolio was transferred to the loans held for sale portfolio on April 1, 2021.

Nonrecurring Fair Value Measurements

For assets measured at fair value on a nonrecurring basis which were still held on the Consolidated Balance Sheets at December 31, 2022, 2021 and 2020, respectively, the following table provides the level of valuation assumptions used to determine each adjustment and the related carrying value.

Table 8.23.3

LEVEL OF VALUATION ASSUMPTIONS FOR ASSETS

MEASURED AT FAIR VALUE ON A NON-RECURRING BASIS

	Carrying value at December 31, 2022								Year Ended December 31, 2022
(Dollars in millions)	Level 1		Level 2		Level 3		Total		Net gains (losses)
Loans held for sale—SBAs and USDA	$	—	$	506	$	—	$	506	$	(3)
Loans and leases (a)	—		—		135		135		(19)
OREO (b)	—		—		3		3		—
Other assets (c)	—		—		43		43		(6)
									$	(28)

	Carrying value at December 31, 2021								Year Ended December 31, 2021
(Dollars in millions)	Level 1		Level 2		Level 3		Total		Net gains (losses)
Loans held for sale—SBAs and USDA	$	—	$	852	$	1	$	853	$	(2)
Loans held for sale—first mortgages	—		—		1		1		—
Loans and leases (a)	—		—		84		84		(13)
OREO (b)	—		—		3		3		(1)
Other assets (c)	—		—		30		30		(2)
									$	(18)

	Carrying value at December 31, 2020								Year Ended December 31, 2020
(Dollars in millions)	Level 1		Level 2		Level 3		Total		Net gains (losses)
Loans held for sale—SBAs and USDA	$	—	$	508	$	1	$	509	$	(3)
Loans held for sale—first mortgages	—		—		1		1		—
Loans and leases (a)	—		—		77		77		(12)
OREO (b)	—		—		15		15		(1)
Other assets (c)	—		—		9		9		(2)
									$	(18)

(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 credit 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.

Schedule of Unobservable Inputs Utilized In Determining The Fair Value of Level 3 Recurring And Non-Recurring Measurements

The following table provides information regarding the unobservable inputs utilized in determining the fair value of Level 3 recurring and non-recurring measurements as of December 31, 2022 and 2021:

Table 8.23.4

UNOBSERVABLE INPUTS USED

IN LEVEL 3 FAIR VALUE MEASUREMENTS

(Dollars in millions)					Values Utilized
Level 3 Class	Fair Value at December 31, 2022		Valuation Techniques	Unobservable Input	Range	Weighted Average (d)
Trading securities - SBA interest-only strips	$	25	Discounted cash flow	Constant prepayment rate	12%-13%	12%
				Bond equivalent yield	17%	17%
Loans held for sale - residential real estate	$	22	Discounted cash flow	Prepayment speeds - First mortgage	2% - 8%	3%
				Foreclosure losses	63% - 75%	65%
				Loss severity trends - First mortgage	0% - 11% of UPB	5%
Derivative liabilities, other	$	27	Discounted cash flow	Visa covered litigation resolution amount	$5.6 billion - $6.0 billion	$5.9 billion
				Probability of resolution scenarios	5% - 25%	20%
				Time until resolution	12 - 42 months	28 months
Loans and leases (a)	$	135	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)	$	3	Appraisals from comparable properties	Adjustment for value changes since appraisal	0% - 10% of appraisal	NM
Other assets (c)	$	43	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 credit 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 millions)					Values Utilized
Level 3 Class	Fair Value at December 31, 2021		Valuation Techniques	Unobservable Input	Range	Weighted Average (d)
Trading securities - SBA interest-only strips	$	38	Discounted cash flow	Constant prepayment rate	11% - 12%	11%
				Bond equivalent yield	11% - 14%	11%
Loans held for sale - residential real estate	$	29	Discounted cash flow	Prepayment speeds - First mortgage	4% - 12%	5%
				Foreclosure losses	54% - 66%	65%
				Loss severity trends - First mortgage	1% - 14% of UPB	8%
Loans held for sale - unguaranteed interest in SBA loans	$	1	Discounted cash flow	Constant prepayment rate	8% - 12%	10%
				Bond equivalent yield	11%	11%
Derivative liabilities, other	$	23	Discounted cash flow	Visa covered litigation resolution amount	$5.8 billion - $6.2 billion	$6.0 billion
				Probability of resolution scenarios	15% - 35%	24%
				Time until resolution	12 - 36 months	25 months
Loans and leases (a)	$	84	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)	$	3	Appraisals from comparable properties	Adjustment for value changes since appraisal	0% - 10% of appraisal	NM
Other assets (c)	$	30	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 credit 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 table reflects the differences between the fair value carrying amount of residential real estate loans held for sale and held for investment measured at fair value in accordance with management’s election and the aggregate unpaid principal amount FHN is contractually entitled to receive at maturity.

Table 8.23.5

DIFFERENCES BETWEEN FAIR VALUE CARRYING AMOUNTS

AND CONTRACTUAL AMOUNTS OF RESIDENTIAL REAL ESTATE LOANS REPORTED AT FAIR VALUE

	December 31, 2022
(Dollars in millions)	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	$	51	$	58	$	(7)
Nonaccrual loans	5		8		(3)
Loans 90 days or more past due and still accruing	1		1		—
	December 31, 2021
(Dollars in millions)	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	$	258	$	264	$	(6)
Nonaccrual loans	4		7		(3)

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:

Table 8.23.6

CHANGES IN FAIR VALUE RECOGNIZED IN NET INCOME

	Year Ended December 31,
(Dollars in millions)	2022		2021		2020
Changes in fair value included in net income:
Mortgage banking and title noninterest income
Loans held for sale	$	(9)	$	(10)	$	4

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 Balance Sheets as of December 31, 2022 and December 31, 2021:

Table 8.23.7

BOOK VALUE AND ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS

	December 31, 2022
	Book Value		Fair Value
(Dollars in millions)			Level 1		Level 2		Level 3		Total
Assets:
Loans and leases, net of allowance for loan and lease losses
Commercial:
Commercial, financial and industrial	$	31,473	$	—	$	—	$	31,329	$	31,329
Commercial real estate	13,082		—		—		12,909		12,909
Consumer:
Consumer real estate	12,053		—		—		11,934		11,934
Credit card and other	809		—		—		810		810
Total loans and leases, net of allowance for loan and lease losses	57,417		—		—		56,982		56,982
Short-term financial assets:
Interest-bearing deposits with banks	1,384		1,384		—		—		1,384
Federal funds sold	129		—		129		—		129
Securities purchased under agreements to resell	353		—		353		—		353
Total short-term financial assets	1,866		1,384		482		—		1,866
Trading securities (a)	1,375		—		1,350		25		1,375
Loans held for sale:
Mortgage loans (elected fair value) (a)	51		—		29		22		51
USDA & SBA loans - LOCOM	506		—		512		—		512
Mortgage loans - LOCOM	33		—		—		33		33
Total loans held for sale	590		—		541		55		596
Securities available for sale (a)	8,836		—		8,836		—		8,836
Securities held to maturity	1,371		—		1,209		—		1,209
Derivative assets (a)	460		9		451		—		460
Other assets:
Tax credit investments	547		—		—		542		542
Deferred compensation mutual funds	112		112		—		—		112
Equity, mutual funds, and other (b)	275		22		—		253		275
Total other assets	934		134		—		795		929
Total assets	$	72,849	$	—	$	12,869	$	57,857	$	70,726
Liabilities:
Defined maturity deposits	$	2,887	$	—	$	2,890	$	—	$	2,890
Trading liabilities (a)	335		—		335		—		335
Short-term financial liabilities:
Federal funds purchased	400		—		400		—		400
Securities sold under agreements to repurchase	1,013		—		1,013		—		1,013
Other short-term borrowings	1,093		—		1,093		—		1,093
Total short-term financial liabilities	2,506		—		2,506		—		2,506
Term borrowings:
Real estate investment trust-preferred	46		—		—		47		47
Term borrowings—new market tax credit investment	66		—		—		59		59
Secured borrowings	3		—		—		3		3
Junior subordinated debentures	148		—		—		150		150
Other long term borrowings	1,334		—		1,301		—		1,301
Total term borrowings	1,597		—		1,301		259		1,560
Derivative liabilities (a)	958		8		923		27		958
Total liabilities	$	8,283	$	8	$	7,955	$	286	$	8,249

(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 $50 million and FRB stock of $203 million.

	December 31, 2021
	Book Value		Fair Value
(Dollars in millions)			Level 1		Level 2		Level 3		Total
Assets:
Loans and leases, net of allowance for loan and lease losses
Commercial:
Commercial, financial and industrial	$	30,734	$	—	$	—	$	31,020	$	31,020
Commercial real estate	11,955		—		—		11,986		11,986
Consumer:
Consumer real estate	10,609		—		—		11,111		11,111
Credit card and other	891		—		—		906		906
Total loans and leases, net of allowance for loan and lease losses	54,189		—		—		55,023		55,023
Short-term financial assets:
Interest-bearing deposits with banks	14,907		14,907		—		—		14,907
Federal funds sold	153		—		153		—		153
Securities purchased under agreements to resell	488		—		488		—		488
Total short-term financial assets	15,548		14,907		641		—		15,548
Trading securities (a)	1,601		—		1,563		38		1,601
Loans held for sale:
Mortgage loans (elected fair value) (a)	258		—		230		28		258
USDA & SBA loans - LOCOM	853		—		855		1		856
Other loans - LOCOM	24		—		24		—		24
Mortgage loans - LOCOM	37		—		—		37		37
Total loans held for sale	1,172		—		1,109		66		1,175
Securities available for sale (a)	8,707		—		8,707		—		8,707
Securities held to maturity	712		—		705		—		705
Derivative assets (a)	324		12		312		—		324
Other assets:
Tax credit investments	456		—		—		450		450
Deferred compensation mutual funds	125		125		—		—		125
Equity, mutual funds, and other (b)	257		25		—		232		257
Total other assets	838		150		—		682		832
Total assets	$	83,091	$	15,069	$	13,037	$	55,809	$	83,915
Liabilities:
Defined maturity deposits	$	3,500	$	—	$	3,524	$	—	$	3,524
Trading liabilities (a)	426		—		426		—		426
Short-term financial liabilities:
Federal funds purchased	775		—		775		—		775
Securities sold under agreements to repurchase	1,247		—		1,247		—		1,247
Other short-term borrowings	102		—		102		—		102
Total short-term financial liabilities	2,124		—		2,124		—		2,124
Term borrowings:
Real estate investment trust-preferred	46		—		—		47		47
Term borrowings—new market tax credit investment	59		—		—		58		58
Secured borrowings	6		—		—		6		6
Junior subordinated debentures	148		—		—		150		150
Other long term borrowings	1,331		—		1,452		—		1,452
Total term borrowings	1,590		—		1,452		261		1,713
Derivative liabilities (a)	128		11		94		23		128
Total liabilities	$	7,768	$	11	$	7,620	$	284	$	7,915

(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 $29 million and FRB stock of $203 million.

The following table presents the contractual amount and fair value of unfunded loan commitments and standby and other commitments as of December 31, 2022 and December 31, 2021:

Table 8.23.8

UNFUNDED COMMITMENTS

	Contractual Amount				Fair Value
(Dollars in millions)	December 31, 2022		December 31, 2021		December 31, 2022		December 31, 2021
Unfunded Commitments:
Loan commitments	$	25,953	$	24,229	$	1	$	1
Standby and other commitments	754		810		7		6