Investment Securities

3 Months Ended

Mar. 31, 2023

The following tables summarize FHN’s investment securities as of March 31, 2023 and December 31, 2022:


INVESTMENT SECURITIES AT MARCH 31, 2023
	March 31, 2023
(Dollars in millions)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities available for sale:

Government agency issued MBS	$	5,416	$	2	$	(622)	$	4,796
Government agency issued CMO	2,650		—		(336)		2,314
Other U.S. government agencies	1,374		6		(141)		1,239

States and municipalities	650		2		(47)		605
Total securities available for sale (a)	$	10,090	$	10	$	(1,146)	$	8,954

Securities held to maturity:
Government agency issued MBS	$	889	$	—	$	(95)	$	794
Government agency issued CMO	473		—		(53)		420
Total securities held to maturity	$	1,362	$	—	$	(148)	$	1,214

(a)Includes $6.9 billion of securities pledged to secure public deposits, securities sold under agreements to repurchase, and for other purposes.


INVESTMENT SECURITIES AT YE 2022
	December 31, 2022
(Dollars in millions)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities available for sale:

Government agency issued MBS	$	5,457	$	1	$	(695)	$	4,763
Government agency issued CMO	2,682		—		(369)		2,313
Other U.S. government agencies	1,325		—		(162)		1,163

States and municipalities	658		1		(62)		597
Total securities available for sale (a)	$	10,122	$	2	$	(1,288)	$	8,836

Securities held to maturity:
Government agency issued MBS	$	897	$	—	$	(109)	$	788
Government agency issued CMO	474		—		(53)		421
Total securities held to maturity	$	1,371	$	—	$	(162)	$	1,209

(a)Includes $6.5 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 March 31, 2023 is provided below:


DEBT SECURITIES PORTFOLIO MATURITIES
	Held to Maturity				Available for Sale
(Dollars in millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Within 1 year	$	—	$	—	$	9	$	9
After 1 year through 5 years	—		—		127		123
After 5 years through 10 years	—		—		391		357
After 10 years	—		—		1,497		1,355
Subtotal	—		—		2,024		1,844
Government agency issued MBS and CMO (a)	1,362		1,214		8,066		7,110
Total	$	1,362	$	1,214	$	10,090	$	8,954

(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 and losses on sales of AFS securities for the three months ended March 31, 2023 and 2022 were insignificant. Cash proceeds from sales of AFS securities were insignificant for the three months ended March 31, 2023 and March 31, 2022.

The following tables provide information on investments within the available-for-sale portfolio that had unrealized losses as of March 31, 2023 and December 31, 2022:

AFS INVESTMENT SECURITIES WITH UNREALIZED LOSSES


	As of March 31, 2023
	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	$	700	$	(20)	$	3,996	$	(602)	$	4,696	$	(622)
Government agency issued CMO	309		(15)		2,006		(321)		2,315		(336)
Other U.S. government agencies	265		(10)		733		(131)		998		(141)

States and municipalities	53		(2)		451		(45)		504		(47)
Total	$	1,327	$	(47)	$	7,186	$	(1,099)	$	8,513	$	(1,146)


	As of December 31, 2022
	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	$	2,314	$	(249)	$	2,350	$	(446)	$	4,664	$	(695)
Government agency issued CMO	1,104		(123)		1,209		(246)		2,313		(369)
Other U.S. government agencies	643		(67)		424		(95)		1,067		(162)

States and municipalities	493		(48)		54		(14)		547		(62)
Total	$	4,554	$	(487)	$	4,037	$	(801)	$	8,591	$	(1,288)

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. Total AIR not included in the fair value or amortized cost basis of AFS debt securities was $30 million and $32 million as of March 31, 2023 and December 31, 2022, 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 periods. 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 periods.

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 $3 million as of both March 31, 2023 and December 31, 2022. FHN has assessed the risk of credit loss and has determined that no allowance for credit losses for HTM securities was necessary as of March 31, 2023 and December 31, 2022. 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 $80 million and $79 million at March 31, 2023 and December 31, 2022, respectively. The year-to-date 2023 and 2022 gross amounts of upward and downward valuation adjustments were not significant.

Unrealized gains of $2 million and $4 million were recognized in the three months ended March 31, 2023 and 2022, respectively, for equity investments with readily determinable fair values.