Net Interest ~~Income/Net Interest Margin~~Income

Net interest income is FHN's largest source of revenue and is the difference between the interest earned on interest-earning assets (generally loans, leases and investment securities) and the interest expense incurred in connection with interest-bearing liabilities (generally deposits and borrowed funds). The level of net interest income is primarily a function of the difference between the effective yield on average interest-earning assets and the effective cost of interest-bearing liabilities. These factors are influenced by the pricing and mix of interest-earning assets and interest-bearing liabilities which, in turn, are impacted by external factors such as local economic conditions, competition for loans and deposits, the monetary policy of the FRB and market interest ~~rates.The~~rates.

The following tables present ~~the average balance sheets and~~ the major components of net interest income and net interest ~~margin.~~margin:


~~FIRST HORIZON CORPORATION~~			77			~~2Q21~~2Q22 FORM 10-Q REPORT

~~Table 2—Consolidated Average Balance Sheets, Net Interest Income and Yields/Rates~~

Three Months Ended
(Dollars in millions) June 30, 2021 March 31, 2021 June 30, 2020
Average Balance Interest Income/Expense Yield/Rate Average Balance Interest Income/Expense Yield/Rate Average Balance Interest Income/Expense Yield/Rate
Assets:
Loans and leases:
Commercial loans and leases $ 44,890 $ 380 3.39 % $ 45,703 $ 382 3.39 % $ 27,404 $ 244 3.56 %
Consumer loans 11,939 118 3.99 12,519 128 4.13 6,564 65 4.00
Total loans and leases 56,829 498 3.52 58,222 510 3.55 33,968 309 3.65
Loans held for sale 734 7 3.94 842 7 3.16 731 7 3.61
Investment securities 8,401 29 1.39 8,321 29 1.41 4,541 24 2.23
Trading securities 1,322 7 2.03 1,418 7 2.03 1,420 9 2.48
Federal funds sold 38 — 0.13 45 — 0.12 28 — 0.22
Securities purchased under agreements to resell (a) 610 — (0.07) 554 — (0.14) 394 — (0.08)
Interest-bearing deposits with banks 13,051 3 0.10 9,269 2 0.10 1,620 — 0.09
Total earning assets / Total interest income $ 80,985 $ 544 2.70 % $ 78,671 $ 555 2.86 % $ 42,702 $ 349 3.29 %
Cash and due from banks 1,267 1,250 562
Goodwill and other intangible assets, net 1,843 1,857 1,555
Allowance for loan and lease losses (884) (949) (476)
Other assets 4,348 4,572 3,591
Total assets $ 87,559 $ 85,401 $ 47,934
Liabilities and Shareholders' Equity:
Interest-bearing deposits:
Savings $ 27,238 $ 11 0.16 % $ 27,370 $ 12 0.19 % $ 14,118 $ 13 0.36 %
Other interest-bearing deposits 16,029 6 0.15 15,491 6 0.16 9,256 3 0.13
Time deposits 4,487 7 0.65 4,836 6 0.47 2,837 9 1.31
Total interest-bearing deposits 47,754 24 0.20 47,697 24 0.20 26,211 25 0.38
Federal funds purchased 1,006 — 0.10 996 — 0.10 1,037 — 0.12
Securities sold under agreements to repurchase 1,116 1 0.20 1,145 1 0.21 1,011 1 0.36
Trading liabilities 560 2 1.17 518 1 0.73 352 1 1.11
Other short-term borrowings 126 — 1.34 139 — 1.01 555 — 0.17
Term borrowings 1,672 18 4.38 1,670 18 4.39 1,426 14 3.96
Total interest-bearing liabilities / Total interest expense $ 52,234 $ 45 0.34 % $ 52,165 $ 44 0.34 % $ 30,592 $ 41 0.54 %
Noninterest-bearing liabilities:
Noninterest-bearing deposits 25,404 23,284 11,316
Other liabilities 1,462 1,603 908
Total liabilities 79,100 77,052 42,816
Shareholders' equity 8,164 8,054 4,823
Noncontrolling interest 295 295 295
Total shareholders' equity 8,459 8,349 5,118
Total liabilities and shareholders' equity $ 87,559 $ 85,401 $ 47,934
Net earnings assets / Net interest income (TE) / Net interest spread $ 28,751 $ 499 2.36 % $ 26,506 $ 511 2.52 % $ 12,110 $ 308 2.75 %
Taxable equivalent adjustment (2) 0.11 (3) 0.11 (3) 0.15
Net interest income / Net interest margin (b) $ 497 2.47 % $ 508 2.63 % $ 305 2.90 %

~~(a) Negative yield for all periods is driven by negative market rates on reverse repurchase agreements.~~

~~(b) Calculated using total net interest income adjusted for FTE assuming a statutory federal income tax rate of 21% and, where applicable, state income taxes.~~

~~FIRST HORIZON CORPORATION~~

~~2Q21 FORM 10-Q REPORT~~PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)

Table of Contents

~~Second Quarter 2021 versus First Quarter 2021~~

Net interest income in second quarter 2021 decreased $11 million from first quarter 2021 as the impact of lower average loan balances, spreads, short-term rates and a reduction in net merger-related benefits was partially offset by an improvement tied to day count and reduced deposit costs.

~~The net interest margin of 2.47% in second quarter 2021 decreased 16 basis points from first quarter 2021 primarily driven by an increase in excess cash.~~

Average earning assets of $81.0 billion in second quarter 2021 increased $2.3 billion from first quarter 2021 largely due to a $3.8 billion increase in interest-bearing cash which was partially offset by a $1.4 billion decrease in loans and leases.

~~Second Quarter 2021 versus Second Quarter 2020~~

~~Net interes~~t income increased $192 million from second quarter 2020 to $497 million in second quarter 2021 driven by the impact of the IBKC merger and Truist branch acquisition in third quarter 2020. Results also reflect the benefit of growth in PPP lending and continued deposit pricing discipline, partially offset by the effect of lower interest rates and spreads.

Second quarter 2021 net interest margin decreased 43 basis points from 2.90% in second quarter 2020, driven by the impact of lower interest earning asset yields from a decline in short-term interest rates and greater levels of excess cash. Results also reflect the benefit of higher purchase accounting accretion from the IBKC merger and additional PPP lending.

~~Average earning assets increased $38.3 billion to $81.0 billion in second quarter 2021 from $42.7 billion in the second quarter of 2020, primarily driven by the IBKC merger and Truist branch acquisition.~~

~~FIRST HORIZON CORPORATION~~

~~2Q21 FORM 10-Q REPORT~~

Table I.2.2

~~Table 3—Consolidated YTD Average Balance Sheets, Net Interest Income and Yields/Rates~~
Six Months Ended
June 30, 2021 June 30, 2020
(Dollars in millions) Average Balance Interest Income/Expense Yield/Rate Average Balance Interest Income/Expense Yield/Rate
Assets:
Loans and leases:
Commercial loans and leases $ 45,294 $ 762 3.39 % $ 25,648 $ 500 3.92 %
Consumer loans 12,227 245 4.06 6,598 137 4.17
Total loans and leases 57,521 1,007 3.53 32,246 637 3.97
Loans held for sale 788 14 3.52 661 13 4.08
Investment securities 8,361 58 1.40 4,504 52 2.37
Trading securities 1,370 14 2.00 1,626 23 2.73
Federal funds sold 41 — 0.12 19 — 0.44
Securities purchased under agreements to resell (a) 582 — (0.10) 605 2 0.74
Interest-bearing deposits with banks 11,170 5 0.10 1,084 2 0.35
Total earning assets / Total interest income $ 79,833 $ 1,098 2.77 % $ 40,745 $ 729 3.60 %
Cash and due from banks 1,259 586
Goodwill and other intangible assets, net 1,850 1,558
Premises and equipment, net 734 451
Allowance for loan and lease losses (916) (415)
Other assets 3,726 2,818
Total assets $ 86,486 $ 45,743
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
Savings $ 27,303 $ 23 0.17 % $ 13,118 $ 39 0.60 %
Other interest-bearing deposits 15,761 12 0.15 8,999 17 0.38
Time deposits 4,661 13 0.56 3,097 23 1.51
Total interest-bearing deposits 47,725 48 0.18 25,214 79 0.63
Federal funds purchased 1,001 — 0.10 892 3 0.57
Securities sold under agreements to repurchase 1,130 2 0.21 894 4 0.79
Trading liabilities 539 3 0.96 551 4 1.56
Other short-term borrowings 132 1 1.17 1,121 5 0.94
Term borrowings 1,671 37 4.38 1,109 22 3.97
Total interest-bearing liabilities / Total interest expense $ 52,198 $ 91 0.34 % $ 29,781 $ 117 0.79 %
Noninterest-bearing liabilities:
Noninterest-bearing deposits 24,350 9,991
Other liabilities 1,534 911
Total liabilities 78,082 40,683
Shareholders' equity 8,109 4,765
Noncontrolling interest 295 295
Total shareholders' equity 8,404 5,060
Total liabilities and shareholders' equity $ 86,486 $ 45,743
Net earnings assets / Net interest income (TE) / Net interest spread $ 27,635 $ 1,007 2.43 % $ 10,964 $ 612 2.81 %
Taxable equivalent adjustment (3) 0.12 (4) 0.21
Net interest income / Net interest margin (b) $ 1,004 2.55 % $ 608 3.02 %
QUARTER-TO-DATE AVERAGE BALANCES, NET INTEREST INCOME & YIELDS/RATES


	Three Months Ended
(Dollars in millions)	June 30, 2022						March 31, 2022						June 30, 2021
	Average Balance		Interest Income/Expense		Yield/Rate		Average Balance		Interest Income/Expense		Yield/Rate		Average Balance		Interest Income/Expense		Yield/Rate
Assets:
Loans and leases:
Commercial loans and leases	$	43,589	$	382	3.52	%	$	42,444	$	339	3.24	%	$	44,890	$	380	3.39	%
Consumer loans	11,987		112		3.74		11,638		108		3.71		11,939		118		3.99
Total loans and leases	55,576		494		3.57		54,082		447		3.34		56,829		498		3.52
Loans held for sale	1,027		10		3.89		1,156		10		3.51		734		7		3.94






Investment securities	9,781		46		1.87		9,668		38		1.59		8,401		29		1.39
Trading securities	1,509		13		3.43		1,594		11		2.75		1,322		7		2.03

Federal funds sold	228		1		1.11		81		—		0.19		38		—		0.13
Securities purchased under agreements to resell (a)	629		1		0.49		672		—		(0.07)		610		—		(0.07)
Interest-bearing deposits with banks	10,989		21		0.79		14,902		7		0.19		13,051		3		0.10

Total earning assets / Total interest income	$	79,739	$	586	2.95	%	$	82,155	$	513	2.52	%	$	80,985	$	544	2.70	%

Cash and due from banks	1,281						1,226						1,267
Goodwill and other intangible assets, net	1,789						1,802						1,843

Allowance for loan and lease losses	(621)						(658)						(884)
Other assets	4,138						4,062						4,348
Total assets	$	86,326					$	88,587					$	87,559

Liabilities and Shareholders' Equity:

Interest-bearing deposits:
Savings	$	24,841	$	5	0.08	%	$	26,330	$	3	0.05	%	$	27,238	$	11	0.16	%
Other interest-bearing deposits	16,273		9		0.22		16,557		4		0.09		16,029		6		0.15
Time deposits	3,040		4		0.50		3,343		4		0.51		4,487		7		0.65
Total interest-bearing deposits	44,154		18		0.16		46,230		11		0.10		47,754		24		0.20
Federal funds purchased	733		1		0.80		884		—		0.20		1,006		—		0.10
Securities sold under agreements to repurchase	770		1		0.32		1,001		—		0.10		1,116		1		0.35
Trading liabilities	585		4		2.52		614		2		1.69		560		2		1.17
Other short-term borrowings	207		—		0.81		110		1		0.13		126		—		0.07
Term borrowings	1,597		17		4.38		1,591		17		4.29		1,672		18		4.38
Total interest-bearing liabilities / Total interest expense	$	48,046	$	41	0.34	%	$	50,430	$	31	0.25	%	$	52,234	$	45	0.34	%

Noninterest-bearing liabilities:
Noninterest-bearing deposits	27,791						27,926						25,404
Other liabilities	1,875						1,613						1,462
Total liabilities	77,712						79,969						79,100

Shareholders' equity	8,319						8,323						8,164
Noncontrolling interest	295						295						295
Total shareholders' equity	8,614						8,618						8,459
Total liabilities and shareholders' equity	$	86,326					$	88,587					$	87,559

Net earnings assets / Net interest income (TE) / Net interest spread	$	31,693	$	545	2.61	%	$	31,725	$	482	2.27	%	$	28,751	$	499	2.36	%
Taxable equivalent adjustment			(3)		0.13				(3)		0.10				(2)		0.11
Net interest income / Net interest margin (b)			$	542	2.74	%			$	479	2.37	%			$	497	2.47	%

(a) ~~2021~~Negative yield is driven by negative market rates on reverse repurchase agreements.

(b) Calculated using total net interest income adjusted for FTE assuming a statutory federal income tax rate of 21% and, where applicable, state income taxes.


~~FIRST HORIZON CORPORATION~~			8078			~~2Q21~~2Q22 FORM 10-Q REPORT


PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
Table of Contents

Second Quarter 2022 versus First Quarter 2022

Net interest income of $542 million in second quarter 2022 increased $63 million from first quarter 2022 driven by an increase in interest rates, higher average loan balances, and greater investment portfolio income, partially offset by a $6 million reduction tied to net merger-related and PPP loan portfolio benefits and higher funding costs.

The net interest margin of 2.74% in second quarter 2022 increased 37 basis points from first quarter 2022 primarily due to higher interest rates, lower interest-bearing cash balances, improved security yields, and loan growth, partially offset by an increase in funding costs.

Average earning assets of $79.7 billion in second quarter 2022 decreased $2.4 billion from first quarter 2022 largely due to a $3.9 billion decrease in interest-bearing cash, offset by a $1.5 billion increase in loans and leases, driven by a $1.1 billion increase in commercial loans and a $350 million increase in consumer loans.

Second Quarter 2022 versus Second Quarter 2021

Net interest income increased $45 million from second quarter 2021 driven by both higher earning asset yields and higher investment portfolio balances.

Second quarter 2022 net interest margin increased 27 basis points from 2.47% in second quarter 2021, driven by the impact of higher yields on loans, interest-bearing cash and investments.

A $1.3 billion decrease in average loans and leases drove the $1.2 billion decrease in average earning assets from second quarter 2021, mostly due to forgiveness within the PPP program.


			79			2Q22 FORM 10-Q REPORT


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Table of Contents

Table I.2.3

YEAR-TO-DATE AVERAGE BALANCES, NET INTEREST INCOME & YIELDS/RATES


	Six Months Ended
	June 30, 2022						June 30, 2021
(Dollars in millions)	Average Balance		Interest Income/Expense		Yield/Rate		Average Balance		Interest Income/Expense		Yield/Rate
Assets:
Loans and leases:
Commercial loans and leases	$	43,020	$	721	3.38	%	$	45,294	$	762	3.39	%
Consumer loans	11,813		220		3.72		12,227		245		4.06
Total loans and leases	54,833		941		3.45		57,521		1,007		3.53
Loans held for sale	1,091		20		3.69		788		14		3.52






Investment securities	9,725		84		1.73		8,361		58		1.40
Trading securities	1,552		24		3.07		1,370		14		2.00

Federal funds sold	155		—		0.87		41		—		0.12
Securities purchased under agreements to resell (a)	650		1		0.21		582		—		(0.10)
Interest-bearing deposits with banks	12,934		29		0.45		11,170		5		0.10

Total earning assets / Total interest income	$	80,940	$	1,099	2.73	%	$	79,833	$	1,098	2.77	%

Cash and due from banks	1,254						1,259
Goodwill and other intangible assets, net	1,795						1,850
Premises and equipment, net	650						734
Allowance for loan and lease losses	(639)						(916)
Other assets	3,450						3,726
Total assets	$	87,450					$	86,486

Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
Savings	$	25,581	$	8	0.06	%	$	27,303	$	23	0.17	%
Other interest-bearing deposits	16,414		13		0.15		15,761		12		0.15
Time deposits	3,191		8		0.51		4,661		13		0.56
Total interest-bearing deposits	45,186		29		0.13		47,725		48		0.18
Federal funds purchased	808		2		0.47		1,001		—		0.10
Securities sold under agreements to repurchase	885		1		0.19		1,130		2		0.34
Trading liabilities	599		6		2.10		539		3		0.96
Other short-term borrowings	159		—		0.58		132		1		0.07
Term borrowings	1,594		35		4.33		1,671		37		4.38
Total interest-bearing liabilities / Total interest expense	$	49,231	$	73	0.30	%	$	52,198	$	91	0.34	%

Noninterest-bearing liabilities:
Noninterest-bearing deposits	27,859						24,350
Other liabilities	1,744						1,534
Total liabilities	78,834						78,082

Shareholders' equity	8,321						8,109
Noncontrolling interest	295						295
Total shareholders' equity	8,616						8,404
Total liabilities and shareholders' equity	$	87,450					$	86,486

Net earnings assets / Net interest income (TE) / Net interest spread	$	31,709	$	1,026	2.43	%	$	27,635	$	1,007	2.43	%
Taxable equivalent adjustment			(5)		0.12				(3)		0.12
Net interest income / Net interest margin (b)			$	1,021	2.55	%			$	1,004	2.55	%

(a) Yield is driven by negative market rates on reverse repurchase agreements.

(b) Calculated using total net interest income adjusted for FTE assuming a statutory federal income tax rate of 21% and, where applicable, state income taxes.


			80			2Q22 FORM 10-Q REPORT


PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
Table of Contents

For the six months ended June 30, ~~2021,~~2022, net interest income of $1.0 billion increased ~~$396~~$17 million from the same period one year ago ~~period~~largely driven by lower interest-bearing deposit costs and higher levels of interest-earning cash.

Despite the ~~benefit~~decrease in average loans and leases, total average earning assets increased $1.1 billion in the first six months of ~~the IBKC merger~~2022 from higher levels of interest-bearing cash and ~~Truist branch acquisition in third quarter 2020. Results also reflect the impact of lower interest-earning asset yields and spreads in addition to deposit pricing discipline.~~ investment securities.

The year-to-date ~~2021~~ net interest margin ~~decreased 38 basis points from~~of 2.55% remained unchanged compared to the ~~year ago~~same period ~~largely~~of 2021 as the ~~impact of lower loan~~decrease in earning asset yields ~~and significantly higher levels of excess cash~~ was ~~partially~~ offset by a ~~reduction~~decrease in ~~deposit costs.~~the cost of interest-bearing liabilities.

Provision for Credit Losses

The provision for credit losses includes the provision for loan and lease losses and the provision for unfunded lending commitments. The provision for credit losses is the expense necessary to maintain the ALLL and the accrual for unfunded lending commitments at levels appropriate to absorb

management’s estimate of credit losses expected over the life of the loan and lease portfolio and the portfolio of unfunded loan commitments.

~~The~~

For the second quarter 2022, provision for credit losses was ~~a benefit of $115~~$30 million compared to a benefit of ~~$45~~$40 million in

first quarter ~~2021,~~2022, largely reflecting ~~continued improvement~~the impact of non-PPP loan growth and a revised macroeconomic outlook. The second quarter 2022 provision increased $145 million from second quarter 2021 and increased $150 million on a year-to-date basis. The provision benefit in ~~the overall~~2021 reflected an improved macroeconomic outlook, positive credit grade migration, and lower loan balances. Similarly, the provision for credit losses decreased $236 million from second quarter 2020 and decreased $435 million on a year-to-date basis, driven by an improvement in the overall macroeconomic outlook, positive credit grade migration and lower loan balances.

For additional information about general asset quality trends, refer to the Asset Quality section in this MD&A.

Noninterest Income

The following table presents the significant components of noninterest income for each of the periods presented:

Table ~~4 - Noninterest Income~~I.2.4

NONINTEREST INCOME


	Three Months Ended						2Q22 vs. 1Q22				2Q22 vs. 2Q21
(Dollars in millions)	June 30, 2022		March 31, 2022		June 30, 2021		$ Change		% Change		$ Change		% Change
Noninterest income:
Fixed income	$	51	$	73	$	102	$	(22)	(30)	%	$	(51)	(50)	%
Deposit transactions and cash management	42		44		44		(2)		(5)		(2)		(5)
Mortgage banking and title income	34		22		38		12		55		(4)		(11)
Brokerage, management fees and commissions	24		24		21		—		—		3		14
Card and digital banking fees	23		20		21		3		15		2		10
Other service charges and fees	15		13		11		2		15		4		36
Trust services and investment management	12		13		14		(1)		(8)		(2)		(14)
Securities gains (losses), net	—		6		11		(6)		(100)		(11)		(100)
Deferred compensation income	(17)		(4)		7		(13)		325		(24)		(343)
Other income	17		18		16		(1)		(6)		1		6
Total noninterest income	$	201	$	229	$	285	$	(28)	(12)	%	$	(84)	(29)	%

Three Months Ended 2Q21 vs. 1Q21 2Q21 vs. 2Q20
(Dollars in millions) June 30, 2021 March 31, 2021 June 30, 2020 $ Change % Change $ Change % Change
Noninterest income:
Fixed income $ 102 $ 126 $ 112 $ (24) (19) % $ (10) (9) %
Mortgage banking and title income 38 53 4 (15) (28) % 34 NM
Deposit transactions and cash management 44 42 31 2 5 % 13 42 %
Brokerage, management fees and commissions 21 20 14 1 5 % 7 50 %
Trust services and investment management 14 12 8 2 17 % 6 75 %
Bankcard income 15 11 7 4 36 % 8 NM
Securities gains (losses), net 11 — (1) 11 NM 12 — %
Other income 40 34 31 6 18 % 9 29 %
Total noninterest income $ 285 $ 298 $ 206 $ (13) (4) % $ 79 38 %
~~Certain previously reported amounts have been reclassified~~


			81			2Q22 FORM 10-Q REPORT


PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
Table of Contents

Second Quarter 2022 versus First Quarter 2022

Compared to ~~agree~~first quarter 2022, noninterest income decreased $28 million, or 12%, largely reflecting lower fixed income and deferred compensation income offset by an increase in mortgage banking and title fees. Noninterest income results were also impacted by lower securities gains.

Fixed income of $51 million decreased $22 million reflecting the impact of higher long-term rates and macroeconomic uncertainty and volatility. Fixed income average daily revenue of $0.6 million compared with ~~current presentation.~~$1 million in first quarter 2022.

Mortgage banking and title income of $34 million increased $12 million driven by a gain recognized on the sale of mortgage servicing rights.

Second Quarter 2022 versus Second Quarter 2021

Noninterest income of $201 million for second quarter 2022 decreased $84 million, or 29%, compared to second

quarter 2021, primarily reflecting lower fixed income, deferred compensation income and securities gains.

Fixed income of $51 million decreased $51 million from second quarter 2021. Fixed income product revenue decreased $53 million, reflecting less favorable market conditions, while revenue from other products increased $2 million, largely driven by higher loans sales and portfolio advisory fees.

Deferred compensation income decreased $24 million reflecting fluctuations in equity market valuations relative to the prior year.

Table I.2.5

NONINTEREST INCOME


	Six Months Ended
(Dollars in millions)	June 30, 2022		June 30, 2021		$ Change		% Change
Noninterest income:
Fixed income	$	124	$	228	$	(104)	(46)	%
Deposit transactions and cash management	86		86		—		—	%
Mortgage banking and title income	56		91		(35)		(38)	%
Brokerage, management fees and commissions	48		41		7		17	%
Card and digital banking fees	43		38		5		13	%
Other service charges and fees	28		21		7		33	%
Trust services and investment management	25		26		(1)		(4)	%
Securities gains (losses), net	6		11		(5)		(45)	%
Deferred compensation income	(21)		9		(30)		NM
Other income	35		32		3		9	%
Total noninterest income	$	430	$	583	$	(153)	(26)	%

NM – Not meaningful

~~Noninterest~~For the six months ended June 30, 2022, noninterest income of ~~$285~~$430 million decreased ~~$13~~$153 million, or ~~4%, from strong first quarter 2021 levels. Fixed income decreased $24 million, or 19%~~26%, compared to ~~strong first quarter results, reflecting a continued~~the same period in 2021, primarily from lower fixed income, mortgage banking and title income and deferred compensation income.

Fixed income product revenue of $99 million decreased $107 million largely driven by less favorable ~~operating environment including elevated liquidity~~market conditions. Revenue from other products of $25 million increased $3 million primarily driven by higher fees from loan and ~~weak loan demand among depository customers.~~ derivative sales.

Mortgage banking and title income of $56 million decreased ~~$15~~$35 million ~~or 28%, reflecting~~driven by lower origination volume given the ~~intentional~~impact of higher long-term rates as well as a continued mix shift ~~in origination mix~~ toward portfolio loans, ~~and lower~~partially offset by the gain on sale ~~spreads. Bankcard~~

of mortgage servicing rights.

Deferred compensation income ~~increased $4~~decreased $30 million ~~compared~~for the year-to-date period of 2022 largely driven by equity market valuations relative to ~~first quarter 2021 largely from higher transaction volume and an increase in rebate benefits. In addition, securities gains of $11 million were recognized in~~ the ~~second quarter, primarily related to a legacy IBKC equity investment.~~prior year.


~~FIRST HORIZON CORPORATION~~			8182			~~2Q21~~2Q22 FORM 10-Q REPORT

Compared to second quarter 2020, noninterest income increased $79 million, or 38%, largely driven by the impact of the IBKC merger. Results also reflect the benefit of securities gains and improvements in service charges and fees and bankcard income.


PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
Table of Contents

Noninterest Expense

The following ~~table presents~~tables present the significant components of noninterest ~~income~~expense for each of the ~~year-to-date~~ periods presented:

Table ~~5 -~~ I.2.6

NONINTEREST EXPENSE


	Three Months Ended						2Q22 vs. 1Q22				2Q22 vs. 2Q21
(Dollars in millions)	June 30, 2022		March 31, 2022		June 30, 2021		$ Change		% Change		$ Change		% Change
Noninterest expense:
Personnel expense	$	265	$	280	$	306	$	(15)	(5)	%	$	(41)	(13)	%
Net occupancy expense	33		32		33		1		3		—		—
Computer software	29		29		30		—		—		(1)		(3)
Operations services	23		20		19		3		15		4		21
Legal and professional fees	17		23		16		(6)		(26)		1		6
Amortization of intangible assets	13		13		14		—		—		(1)		(7)
Contract employment and outsourcing	12		19		13		(7)		(37)		(1)		(8)
Equipment expense	11		11		12		—		—		(1)		(8)
Advertising and public relations	10		11		5		(1)		(9)		5		100
Communications and delivery	9		10		10		(1)		(10)		(1)		(10)
Other expense	66		45		40		21		47		26		65
Total noninterest expense	$	488	$	493	$	498	$	(5)	(1)	%	$	(10)	(2)	%

Second Quarter 2022 versus First Quarter 2022

Noninterest ~~Income - YTD~~expense of $488 million decreased $5 million, or 1%, compared with first quarter 2022. Personnel expense decreased $15 million reflecting lower revenue-based incentives and commissions and deferred compensation expense, partially offset by higher TD transaction-related expenses. Other noninterest expense increased $21 million, primarily from $12 million in derivative valuation adjustments on prior Visa Class-B share sales and increases in fraud losses, FDIC insurance and customer relations. Results also reflect decreases in contract employment and outsourcing expense and legal and professional fees primarily attributable to lower IBKC merger-related and Proposed TD Merger-related costs.

Six Months Ended
(Dollars in millions) June 30, 2021 June 30, 2020 $ Change % Change
Noninterest income:
Fixed income $ 228 $ 208 $ 20 10 %
Mortgage banking and title income 91 7 84 NM
Deposit transactions and cash management 86 61 25 41 %
Brokerage, management fees and commissions 41 29 12 41 %
Trust services and investment management 26 15 11 73 %
Bankcard income 25 14 11 79 %
Securities gains (losses), net 11 (1) 12 NM
Other income 75 48 27 56 %
Total noninterest income $ 583 $ 381 $ 202 53 %
Second Quarter 2022 versus Second Quarter 2021

~~Certain previously reported amounts have been reclassified to agree with current presentation.~~Noninterest expense of $488 million decreased $10 million, or 2%, from second quarter 2021 largely

~~NM – Not meaningful~~

~~For the six months ended June 30, 2021, noninterest income of $583~~reflecting a $41 million ~~increased $202 million, or 53%, compared to the same period~~decrease in ~~2020, driven~~personnel expense offset by ~~the impact of the IBKC merger as well as~~ a ~~$20~~$26 million increase in ~~fixed income, higher securities gains~~other expense. The decrease in personnel expense was largely attributable to lower deferred compensation and ~~higher~~incentive-based compensation costs. The increase in other ~~noninterest income.~~

~~Fixed income product revenue of $206~~expense was attributable to $12 million ~~increased 15%, largely driven by favorable market conditions including a steeper yield curve~~in derivative valuation adjustments related to prior Visa Class-B share sales and ~~increased depository liquidity. Revenue from other products of $22 million decreased $7 million, or 24%, primarily driven by lower fees from derivative~~increases in fraud losses, travel and ~~loan sales.~~

entertainment, FDIC insurance and customer relations.

~~Deferred compensation income (included in other income) increased $10 million for the year-to-date period of 2021 largely driven by equity market valuations relative to the prior year.~~


~~FIRST HORIZON CORPORATION~~			8283			~~2Q21~~2Q22 FORM 10-Q REPORT

~~Noninterest Expense~~


PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
Table of Contents

Table I.2.7

~~The following tables present~~NONINTEREST EXPENSE


	Six Months Ended
(Dollars in millions)	June 30, 2022		June 30, 2021		$ Change		% Change
Noninterest expense:
Personnel expense	$	545	$	624	$	(79)	(13)	%
Net occupancy expense	64		71		(7)		(10)	%
Computer software	58		57		1		2	%
Operations services	43		35		8		23	%
Legal and professional fees	40		31		9		29	%
Amortization of intangible assets	26		28		(2)		(7)	%
Contract employment and outsourcing	31		27		4		15	%
Equipment expense	23		23		—		—	%
Advertising and public relations	21		9		12		133	%
Communications and delivery	19		19		—		—	%

Other expense	112		118		(6)		(5)	%
Total noninterest expense	$	982	$	1,042	$	(60)	(6)	%

For the ~~significant components of~~six months ended June 30, 2022, noninterest expense ~~for each of the periods presented:~~

~~Table 6 - Noninterest Expense~~

Three Months Ended 2Q21 vs. 1Q21 2Q21 vs. 2Q20
(Dollars in millions) June 30, 2021 March 31, 2021 June 30, 2020 $ Change % Change $ Change % Change
Noninterest expense:
Personnel expense $ 306 $ 318 $ 200 $ (12) (4) % $ 106 53 %
Net occupancy expense 33 37 21 (4) (11) % 12 57 %
Computer software 30 28 17 2 7 % 13 76 %
Legal and professional fees 16 14 13 2 14 % 3 23 %
Operations services 19 16 12 3 19 % 7 58 %
Equipment expense 12 11 9 1 9 % 3 33 %
Amortization of intangible assets 14 14 5 — — % 9 NM
Other expense 68 106 43 (38) (36) % 25 58 %
Total noninterest expense $ 498 $ 544 $ 320 $ (46) (8) % $ 178 56 %

~~Certain previously reported amounts have been reclassified to agree with current presentation.~~

~~NM – Not meaningful~~

~~Compared to first quarter 2021, noninterest expense of $498 million~~ decreased ~~$46~~$60 million, or 8%6%, ~~driven by a $38 million decrease~~largely attributable to decreases in ~~merger~~personnel and ~~acquisition-related~~occupancy expense. Personnel expense ~~also~~ decreased ~~compared to first quarter 2021 as a result of the benefit of merger cost saves,~~$79 million reflecting lower ~~levels of medical costs, and lower~~revenue-based incentives and commissions ~~which included the impact of~~and deferred compensation expense. Occupancy expense decreased $7 million largely reflecting lower ~~fixed income~~IBKC merger-related expenses.

Year-to-date results also reflect increases in advertising and ~~mortgage banking results.~~

~~Noninterest expense increased $178 million, or 56%, compared to second quarter 2020 largely driven by the impact of the IBKC merger~~public relations, legal and ~~Truist branch acquisition.~~professional fees, and operations services.

Total merger and acquisition ~~expenses were $32~~expense was $75 million ~~in second quarter 2021~~for the first six months of 2022 compared to ~~$70~~$102 million ~~in first quarter 2021 and $14 million in second quarter 2020.~~for the same period of 2021.


~~FIRST HORIZON CORPORATION~~			8384			~~2Q21~~2Q22 FORM 10-Q REPORT

~~Table 7 - Noninterest Expense-YTD~~


PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
Table of Contents

Six Months Ended 2Q21 vs. 2Q20
(Dollars in millions) June 30, 2021 June 30, 2020 $ Change % Change
Noninterest expense:
Personnel expense $ 624 $ 384 $ 240 63 %
Net occupancy expense 71 41 30 73 %
Computer software 57 32 25 78 %
Legal and professional fees 31 22 9 41 %
Operations services 35 23 12 52 %
Equipment expense 23 17 6 35 %
Amortization of intangible assets 28 11 17 NM
Other expense 173 93 80 86 %
Total noninterest expense $ 1,042 $ 623 $ 419 67 %

For the six months ended June 30, 2021, noninterest expense increased $419 million, or 67%, primarily attributable to the impact of the IBKC merger and Truist branch acquisition. In addition to the impact of the merger and branch acquisition, the increase in personnel expense reflects an increase in revenue-based compensation and an increase in deferred compensation expense driven by equity market valuations. Other expense in 2021 included $36 million in merger and acquisition expense tied to asset impairments primarily related to continuing acquisition integration efforts associated with reduction of leased office space and banking center optimization. Total merger and acquisition expense was $102 million in the first six months of 2021 compared to $20 million for the same period of 2020.

Income Taxes

FHN recorded income tax ~~expense~~expense of $48 million in second quarter 2022 compared to $8857 million in first quarter 2022 and $88 million in second quarter ~~2021, compared to~~ ~~$71 million~~ ~~in first quarter 2021 and~~ ~~$13 million~~ ~~in second quarter 2020.~~2021. For the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, FHN recorded income tax expense of ~~$159~~$105 million and $159 million, respectively.

~~$18 million, respectively.~~ The effective tax rate was approximately ~~22.0%~~21.3%, ~~23.2%~~22.4%, and ~~18.4% fo~~r22.0% for the three months ended June 30, ~~2021,~~2022, March 31, ~~2021~~2022 and June 30, ~~2020, respectively.~~2021, respectively. The effective tax rate was ~~approximate~~lyapproximately 21.9% and 22.6% ~~and 19.4% fo~~rfor the six months ended June 30, ~~2021~~2022 and ~~June 30, 2020,~~2021, respectively.

FHN’s effective tax rate is favorably affected by recurring items such as bank-owned life insurance, tax-exempt income, and tax credits and other tax benefits from tax credit investments. The effective rate is unfavorably affected by the non-deductibility of ~~a portion of FHN's~~portions of: FDIC premium, executive compensation and merger expenses. FHN’s effective

tax rate also may be affected by items that may occur in any given period but are not consistent from period to period, such as changes in unrecognized tax benefits. The rate also may be affected by items resulting from business combinations.

A deferred tax asset or deferred tax liability is recognized for the tax consequences of temporary differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. The tax consequence is calculated by applying current enacted statutory tax rates ~~applicable to future years,~~ to these temporary ~~differences.~~differences in future years. As of June 30, ~~2021,~~2022, FHN’s gross DTA and gross DTL were $~~433~~521 million and ~~$439~~$406 million, respectively, resulting in a net ~~DTL~~DTA of $6$115 million at June 30, ~~2021,~~2022, compared with a net DTA of ~~less than $1~~$52 million at December 31, ~~2020.~~2021.

As of June 30, ~~2021,~~2022, FHN had deferred tax asset balances related to federal and state income tax carryforwards of ~~$39~~$47 million and $9$3 million, respectively, which will expire at various dates.

Based on current analysis, FHN believes that ~~it will be able~~its ability to realize the ~~value of its~~ DTA ~~and that no valuation allowance~~ is ~~needed.~~more likely than not. FHN monitors its DTA and the need for a valuation allowance on a quarterly basis. A significant adverse change in FHN’s taxable earnings outlook could result in the need for a valuation allowance.

Business Segment Results

FHN's reportable segments include Regional Banking, Specialty Banking and Corporate. See Note 12 - Business Segment Information for additional disclosures related to FHN's segments.

Regional Banking

The Regional Banking segment generated pre-tax income of $230 million for second quarter 2022, a decrease of $39 million compared to first quarter 2022, driven by an $82 million increase in provision for credit losses partially offset by a $39 million increase in net interest income and a $4 million decrease in noninterest expense. The increase in provision largely reflects the impact of loan growth and a revised macroeconomic outlook. The increase in net interest income is reflective of higher interest rates, lower interest-bearing cash balances, improved security yields, and loan growth, partially offset by an increase in funding costs.

Pre-tax income for second quarter 2022 decreased $141 million compared to $371 million for second quarter 2021 largely driven by a $140 million increase in provision for credit losses. The provision benefit in the prior year reflected an improved macroeconomic outlook, positive credit grade migration, and lower loan balances. Net interest income of $465 million increased $21 million from second quarter 2021 driven by higher earning asset yields. Noninterest expense increased $27 million largely attributable to increases in personnel expense and fraud losses.

Pre-tax income of $499 million for the six months ended June 30, 2022 decreased $158 million compared to the same period of 2021, largely from a $138 million increase in provision for credit losses. Results also reflect a $33 million increase in revenue and $53 million increase in noninterest expense.

Specialty Banking

Pre-tax income in the Specialty Banking segment of $139 million for second quarter 2022 increased $23 million compared to first quarter 2022, driven by a $20 million decline in noninterest expense and lower provision for credit losses of $16 million, offset by a $13 million decline in revenue. Fixed income of $51 million decreased $22 million, reflecting the impact of higher long-term rates and macroeconomic uncertainty and volatility. Mortgage banking and title income of $34 million increased $12 million driven by a gain recognized on the sale of mortgage servicing rights. The decline in noninterest expense was largely reflective of lower personnel expense of $16 million.

Pre-tax income in the Specialty Banking segment decreased $39 million compared to second quarter 2021 largely driven by lower revenue partially offset by lower noninterest expense. The decline in revenue was primarily attributable to declines in net interest income and fixed income.


~~FIRST HORIZON CORPORATION~~			8485			~~2Q21~~2Q22 FORM 10-Q REPORT

~~Business Segment Results~~PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)

Table of Contents

During 2020, FHN reorganized its internal management structure and, accordingly, its segment reporting structure. Historically, FHN's primary business segments were Regional Banking, Fixed Income, Corporate, and Non-strategic. The closing of the FHN and IBKC merger of equals transaction prompted organizational changes to better integrate and execute the combined Company's strategic priorities across all lines of businesses. As a result, FHN revised its reportable segments to include Regional Banking, Specialty Banking and Corporate. Segment results for 2020 have been recast to adjust for the realignment of the segment reporting structure. See Note 13 - Business Segment Information for additional disclosures related to FHN's operating segments.

~~Regional Banking~~

~~The Regional Banking segment generated pre-tax~~Pre-tax income of $361 million for second quarter 2021 compared to $286 million for first quarter 2021 primarily driven by lower provision for credit losses from continued improvement in the overall macroeconomic outlook, positive credit migration, and lower loan balances. In addition, total revenue increased $25 million on a linked quarter basis largely due to higher net interest income.

~~Pre-tax income for second quarter 2021 increased $348 million compared to $13 million for second quarter 2020. The Regional Banking segment generated pre-tax income of $646~~$255 million for the six months ended June 30, 2022 decreased $117 million from the same period of 2021 ~~compared to $9~~largely reflecting a $134 million ~~for the six months ended June 30, 2020. These increases reflected an increase in revenue offset by an increase~~decrease in noninterest ~~expense resulting from the IBKC merger and a decrease in the provision for credit losses resulting from improvement in the macroeconomic outlook.~~

~~Specialty Banking~~

~~The Specialty Banking segment generated pre-tax~~ income of $177 million for second quarter 2021 compared to $197 million for first quarter 2021. The decrease reflected lower revenue partially offset by lower provision for credit losses and lower noninterest expense. The decline in revenue was primarily attributabletied to lower fixed income and mortgage banking and title fees. Fixed income decreased $23 million compared to strong first quarter results reflecting a continued favorable operating environment including elevated liquidity and weak loan demand among depository customers. Mortgage banking and title income decreased $14 million

~~reflecting the impact of higher long-term rates, housing supply constraints, lower gain on sale spreads and an intentional shift in origination mix toward portfolio loans.~~

Corporate

Pre-tax ~~income in~~loss for the ~~Specialty Banking~~Corporate segment ~~increased $52~~was $144 million for second quarter ~~2021~~2022 compared to ~~$125~~$130 million for first quarter 2022, largely reflecting a $21 million increase in noninterest expense. Noninterest expense results for second quarter 2022 reflect $12 million in derivative valuation adjustments on prior Visa Class-B share sales. Merger and acquisition-related expenses were relatively consistent with the prior quarter.

Pre-tax loss in the Corporate segment decreased $6 million compared to $150 million for second quarter ~~2020.~~2021. Net interest expense decreased $36 million from the impact of funds transfer pricing. Noninterest income decreased $36 million compared to second quarter 2021, largely the result of lower deferred compensation income and lower securities gains. The decline in deferred compensation income was attributable to the impact of equity market valuations relative to the prior year. Noninterest expense decreased $8 million from the second quarter 2021, reflecting lower deferred compensation expense partially offset by derivative valuation adjustments on prior Visa Class-B share sales in second quarter 2022. Merger and acquisition-related expenses were $38 million compared to $32 million in second quarter 2021.

Pre-tax ~~income~~loss of ~~$374~~$275 million for the six months ended June 30, ~~2021 increased $200~~2022 decreased $49 million compared to ~~$174~~the same period of 2021. Noninterest income of $2 million ~~for the six months ended June 30, 2020. These increases were largely driven by an increase in revenue offset by an increase in noninterest~~decreased $36 million reflecting lower deferred compensation income and securities gains. Noninterest expense ~~resulting from the IBKC merger~~of $132 million decreased $62 million reflecting lower deferred compensation expense and ~~a decrease~~incentive-based compensation costs in the ~~provision for credit losses resulting from improvement in the macroeconomic outlook.~~

~~Corporate~~

The Corporate segment generated pre-tax loss of $139 million for second quarter 2021 compared to $176 million for first quarter 2021, reflecting a decrease in noninterest expense primarily from lower merger and integration-related costs and an increase in noninterest income primarily resulting from securities gains related to a legacy IBKC equity investment. These improvements were partially offset by higher net interest expense.

Pre-tax loss in the Corporate segment increased $71 million compared to second quarter 2020. Pre-tax loss of $315 million for the six months ended June 30, 2021 increased $223 million compared to $92 million for the six months ended June 30, 2020. The increase in pre-tax loss for these periods was attributable to merger and integration-related costs,current year, as well as the impact of the IBKC merger and a decrease in net interest income resulting from the impact of funds transfer pricing, partially offset by an increase in deferred compensation income driven by equity market valuations relative to the prior year and securities gainsimpairments on long-lived assets related to ~~a legacy IBKC equity investment.~~acquisition integration efforts in 2021.


~~FIRST HORIZON CORPORATION~~			8586			~~2Q21~~2Q22 FORM 10-Q REPORT

~~Financial Condition~~PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)

Table of Contents

Analysis of Financial Condition

Total period-end assets were ~~$87.9~~$85.1 billion atas of June 30, ~~2021~~2022 compared to ~~$84.2~~$89.1 billion at December 31, ~~2020. Asset growth~~2021. The decrease in total assets during ~~2021~~2022 was driven by a ~~$5.2~~$5.4 billion decrease in interest-bearing deposits with banks from lower customer deposits, offset by a $1.7 billion increase in ~~cash from deposit growth, offset by a $1.5 billion decrease in~~ loans and ~~leases.~~leases and a $209 million increase in investment securities.

Earning assets consist of loans and leases, loans held for sale, investment securities, and other earning assets, such as trading securities and interest-bearing deposits with banks. A detailed discussion of the major components of earning assets is provided in the following sections.

Loans and Leases

Period-end loans and leases ~~decreased $1.5 million, or 3% to $56.7~~of $56.5 billion increased $1.7 billion as of June 30, ~~2021 from $58.2 billion on~~2022 compared to December 31, ~~2020, driven~~2021. Year-to-date loan growth included a $1.0 billion increase in commercial loans and leases primarily from CRE growth and a $629 million increase in consumer loans. Total loan growth was tempered by a ~~$559~~$663 million decrease in ~~commercial loans primarily tied to~~ PPP ~~loans, as well as a $986 million decrease in consumer~~ loans. Average loans and leases ~~decreased~~of $55.6 billion increased $1.5 billion from first quarter 2022 primarily from a $1.1 billion increase in commercial loans.

Compared to ~~$56.8 billion in~~ second quarter 2021, ~~compared to $58.2~~average loans and leases decreased $1.2 billion, ~~in first quarter 2021 and increased from $34.0 billion in second quarter 2020~~ primarily from ~~acquired~~a decline in PPP loans ~~during third quarter 2020.~~and credit card and other non-real estate consumer loans, offset primarily by non-PPP commercial loan growth.

The following table provides detail regarding FHN's loans and leases as of June 30, ~~2021~~2022 and December 31, ~~2020~~2021.

Table ~~8—Loans and Leases~~I.2.8

LOANS & LEASES


		As of June 30, 2021				As of December 31, 2020							As of June 30, 2022				As of December 31, 2021
(Dollars in millions)	(Dollars in millions)	Amount		Percent of total		Amount		Percent of total		Growth Rate		(Dollars in millions)	Amount		Percent of total		Amount		Percent of total		Growth Rate
Commercial:	Commercial:											Commercial:
Commercial, financial, and industrial (a)	Commercial, financial, and industrial (a)	$	32,528	57	%	$	33,104	57	%	(2)	%	Commercial, financial, and industrial (a)	$	31,276	55	%	$	31,068	57	%	1	%
Commercial real estate	Commercial real estate	12,292		22		12,275		21		—		Commercial real estate	12,942		23		12,109		22		7
Total commercial	Total commercial	44,820		79		45,379		78		(1)		Total commercial	44,218		78		43,177		79		2
Consumer:	Consumer:											Consumer:
Consumer real estate	Consumer real estate	10,865		19		11,725		20		(7)		Consumer real estate	11,441		20		10,772		20		6
Credit card and other	Credit card and other	1,002		2		1,128		2		(11)		Credit card and other	870		2		910		1		(4)
Total consumer	Total consumer	11,867		21		12,853		22		(8)		Total consumer	12,311		22		11,682		21		5
Total loans and leases	Total loans and leases	$	56,687	100	%	$	58,232	100	%	(3)	%	Total loans and leases	$	56,529	100	%	$	54,859	100	%	3	%

(a)Includes equipment financing loans and leases.

C&I loans are ~~the~~the largest component of the loan portfolio, ~~comprising 57%~~comprising 55% of total loans at the end of the second quarter ~~2021~~2022 and 57% at year-end ~~2020~~.2021. C&I ~~loans decreased 2%~~loans increased 1% from December 31, ~~2020,~~2021, largely ~~driven~~driven by ~~a decrease in~~Regional Banking growth partially offset by PPP ~~loans and lower balances within Specialty Banking, primarily from mortgage warehouse lending.~~loan run-off of $663 million. Commercial real estate loans increased ~~slightly~~$833 million in ~~second quarter~~ ~~2021~~2022 driven by growth in both Regional Banking and Specialty Banking loans.

~~Total co~~Consumer loans ~~decreased 8%~~of $12.3 billion increased $629 million from year-end ~~2020 to $11.9 billion as of June 30,~~ 2021, largely driven by ~~paydowns~~growth in real estate installment loans, ~~and home equity lines of credit~~primarily within the Regional Banking segment.

Loans Held for Sale

In 2020, FHN obtained IBKC's mortgage banking operations which includes origination and servicing of

residential first lien ~~mortgage~~mortgages that conform to standards established by GSEs that are major investors in U.S. home mortgages but can also consist of junior lien and jumbo loans secured by residential property. These loans are primarily ~~fixed~~

sold to private companies that are unaffiliated with the GSEs on a servicing-released basis. For further detail, see Note 5 - Mortgage Banking Activity.

~~rate single-family residential mortgage loans originated by IBKC and committed to be sold in the secondary market.~~ The legacy FHN loans HFS ~~portfolio~~portfolio consists of small business, other consumer loans, ~~the~~ mortgage warehouse, USDA, student, and home equity loans.

On June 30, ~~2021~~2022 and December 31, ~~2020~~2021, ~~loans~~loans HFS were ~~$977~~$870 million and ~~$1.0~~$1.2 billion, respectively. ~~The decrease in loans HFS was primarily driven by a seasonal slowdown in mortgage volume, as well as a reduction in refinance activity impacted by a recent rise in mortgage interest rates.~~ Held-for-sale consumer mortgage loans secured by residential real estate in process of foreclosure totaled $2$5 million at ~~both~~ June 30, ~~2021~~2022 and $3 million at December 31, ~~2020.~~2021


~~FIRST HORIZON CORPORATION~~			8687			~~2Q21~~2Q22 FORM 10-Q REPORT


PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
Table of Contents

Asset Quality

Loan and Lease Portfolio Composition

FHN groups its loans into portfolio segments based on internal classifications reflecting the manner in which the ALLL is established and how credit risk is measured, monitored, and reported. From time to time, and if conditions are such that certain subsegments are uniquely affected by economic or market conditions or are experiencing greater deterioration than other components of the loan portfolio, management may determine the ALLL at a more granular level. Commercial loans and leases are composed of C&I loans and leases and CRE loans. Consumer loans are composed of consumer real estate loans and credit card and other loans. FHN has a concentration of residential real estate loans ~~(19%~~(20% of total ~~loans)~~loans at both June 30, 2022 and

December 31, 2021). Industry concentrations are discussed under the C&I heading below.

Credit underwriting guidelines are outlined in Item 7 of FHN’s Annual Report on Form 10-K, as amended, for the year ended December 31, ~~2020 in the Loan Portfolio Composition discussion~~2021 in the Asset Quality Section within the Analysis of Financial Condition discussion. FHN’s credit underwriting guidelines and loan product offerings as of June 30, ~~2021~~2022 are generally consistent with those reported and disclosed in FHN’s Form 10-K, as amended, for the year ended December 31, ~~2020.~~2021.

Commercial Loan and Lease Portfolios

C&I

The C&I portfolio ~~totaled $32.5 billi~~ontotaled $31.3 billion as of June 30, ~~2021~~2022 and ~~$33.1~~$31.1 billion as of December 31, ~~2020~~2021 and

is comprised of loans and leases used for general business purposes. Products offered in the C&I portfolio include term loan financing of owner-occupied real estate and fixed assets, PPP loans, direct financing and sales-type leases, working capital lines of credit, and trade credit enhancement through letters of cr~~edit.~~credit.

The increase in C&I loans from December 31, 2021 was driven by Regional Banking growth, which exceeded a $663 million decrease in PPP loans. Excluding PPP loans, C&I loan growth was $871 million. The largest

geographical concentrations of balances in the C&I portfolio as of June 30, ~~2021~~2022 were in Tennessee ~~(20%~~(21%), Florida ~~(12%~~(13%), Texas (10%), ~~Louisiana (8%),~~ North Carolina ~~(8%~~(7%), Louisiana (7%), California ~~(6%~~(5%), and Georgia (5%). No other state represented more than 5% of the portfolio.

The following table provides the composition of the C&I portfolio by industry as of June 30, ~~2021,~~2022, and December 31, ~~2020.~~2021. For purposes of this disclosure, industries are determined based on the North American Industry Classification System (NAICS) industry codes used by Federal statistical agencies in classifying business establishments for the collection, analysis, and publication of statistical data related to the U.S. business economy.

Table ~~9 —~~ I.2.9

C&I ~~Loan Portfolio by Industry~~PORTFOLIO BY INDUSTRY


		June 30, 2021				December 31, 2020					June 30, 2022				December 31, 2021
(Dollars in millions)	(Dollars in millions)	Amount		Percent		Amount		Percent		(Dollars in millions)	Amount		Percent		Amount		Percent
Industry:	Industry:									Industry:
Finance and insurance										Finance and insurance	$	3,667	12	%	$	3,483	11	%
Loans to mortgage companies	Loans to mortgage companies	$	4,876	15	%	$	5,404	16	%	Loans to mortgage companies	3,441		11		4,518		15
Finance and insurance		3,199		10		3,130		10

Real estate rental and leasing (a)										Real estate rental and leasing (a)	3,002		9		2,771		9
Health care and social assistance	Health care and social assistance	2,741		8		2,689		8		Health care and social assistance	2,479		8		2,413		8
Real estate rental and leasing (a)		2,502		8		2,365		7

Accommodation and food service	Accommodation and food service	2,480		8		2,303		7		Accommodation and food service	2,206		7		2,221		7

Manufacturing										Manufacturing	2,119		7		1,950		6
Wholesale trade	Wholesale trade	2,062		6		2,079		6		Wholesale trade	2,087		7		1,845		6
Manufacturing		2,065		6		1,907		6

Retail trade	Retail trade	1,570		5		1,531		5		Retail trade	1,657		5		1,532		5
Energy	Energy	1,469		5		1,686		5		Energy	1,337		4		1,325		4

Other (professional, construction, transportation, etc.) (b)	Other (professional, construction, transportation, etc.) (b)	9,564		29		10,010		30		Other (professional, construction, transportation, etc.) (b)	9,281		30		9,010		29
Total C&I loan portfolio	Total C&I loan portfolio	$	32,528	100	%	$	33,104	100	%	Total C&I loan portfolio	$	31,276	100	%	$	31,068	100	%

(a)Leasing, rental of real estate, equipment, and goods.

(b)Industries in this category each comprise less than 5% as of June 30, ~~2021.~~

2022.


~~FIRST HORIZON CORPORATION~~			8788			~~2Q21~~2Q22 FORM 10-Q REPORT


PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
Table of Contents

Industry Concentrations

Loan concentrations exist when there are loans to numerous borrowers engaged in similar activities that would cause them to be similarly impacted by economic or other conditions. Loans to mortgage companies and ~~borrowers~~borrowers in the finance and insurance industry were ~~25%~~23% and 26% of FHN’s C&I loan portfolio as of June 30, 2022 and December 31, 2021, respectively, and as a result could be affected by items that uniquely impact the financial services in~~dustry.~~industry. As of June 30, ~~2021,~~2022, FHN did not have any other concentrations of C&I loans in any single industry of 10% or more of total loans.

Loans to Mortgage Companies

Loans to mortgage companies were ~~15%~~11% of the C&I portfolio as of June 30, ~~2021~~2022 and ~~16%~~15% as of December 31, ~~2020.~~2021. This portfolio generally fluctuates with mortgage rates and seasonal factors and includes 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. Generally, new loan originations to mortgage lenders ~~increases~~increase when there is a decline in mortgage rates and ~~decreases~~ decrease when rates rise. In periods of economic uncertainty, this trend may not occur even if interest rates are declining. In second quarter ~~2021, 53%~~2022, 76% of the loan originations were home purchases and ~~47%~~24% were refinance transactions. On a year-to-date basis, home purchases were approximately ~~58%~~67% of ~~originations were refinance transactions.~~total loan originations.

Finance and Insurance

The finance and insurance component represented ~~10%~~12% of the C&I portfolio as of June 30, ~~2021~~2022 and 11% as of December 31, ~~2020,~~2021, and includes TRUPs (i.e., long-term unsecured loans to bank and insurance-related businesses), loans to bank holding companies, and asset-based lending to consumer finance companies. As of June 30, ~~2021,~~2022, asset-based lending to consumer finance companies represents approximately ~~$1.3~~$1.5 billion of the finance and insurance component.

Paycheck Protection Program

In 2020, Congress created the Paycheck Protection Program (PPP). in response to the economic disruption

associated with the COVID-19 pandemic. Under the PPP, qualifying businesses ~~may~~could receive loans from private lenders, such as FHN, that are fully guaranteed by the Small Business Administration. These loans potentially are partly or fully forgivable, depending upon the borrower’s use of the funds and maintenance of employment levels. To the extent forgiven, the borrower is relieved from payment while the lender is still paid from the program. ~~Congress made revisions~~

~~to the PPP in 2021, and may make further revisions in the future.~~

AtThe C&I portfolio as of June 30, ~~2021, FHN had 38,075 of~~2022 includes 2,858 loans made under the PPP ~~loans~~ with an aggregate principal balance of ~~$3.8 billion. For these loans, there~~$375 million, which are ~~remaining net lender fees of approximately $70 million~~fully government guaranteed with the SBA. Due to ~~be paid to FHN as of June 30, 2021.~~

~~Because~~the government guarantee and forgiveness provisions, PPP loans ~~carry a full SBA guarantee, they do not~~are considered to have ~~any~~no credit risk and ~~will~~do not affect the amount of provision and ALLL recorded. As a result, no ALLL is recorded for PPP loans as of June 30, ~~2021,~~2022, and FHN has assigned a risk weight of zero to PPP loans for regulatory capital purposes.

For these loans, there are remaining net lender fees of approximately $2 million to be paid to FHN as of June 30, 2022. During 2022, FHN continues to work with its clients that have applied for and received PPP loan forgiveness. Through June 30, 2022, over $5 billion of the original $6 billion in PPP loans originated by FHN and IBERIABANK prior to acquisition have been forgiven by the SBA.

Commercial Real Estate

The CRE portfolio ~~totale~~tota~~d $12.3~~led $12.9 billion as of ~~both~~ June 30, ~~2021 a~~nd 2022 and $12.1 billion as of December 31, ~~2020~~.2021. The CRE portfolio reflects financings for both commercial construction and nonconstruction loans. The ~~largest~~largest geographical ~~concentration~~concentrsations of CRE loan balances as of June 30, ~~2021~~2022 were in Florida ~~(27%~~(26%), North Carolina ~~(12%), Louisiana (12%~~(11%), Texas (12%), ~~Tennessee (9%~~Louisiana (10%), Georgia (10%), and ~~Georgia~~Tennessee (9%). No other state represented more than 5% of the portfolio. This por ~~portfolio~~tfolio contains loans, draws on lines, and letters of credit to commercial real estate developers for the construction and mini-permanent financing of income-producing real estate. Subcategories of the CRE portfolio consist of multi-family (26%), office (22%), retail ~~(18%~~(19%), industrial ~~(12%~~(14%), hospitality (11%), land/land development (2%), and other ~~(9%~~(6%).

Consumer Loan Portfolios

Consumer Real Estate

The consumer real estate ~~portfolio totale~~p~~d $10.9 billion~~ortfolio totaled $11.4 billion and ~~$11.7~~$10.8 billion as of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively,, and is ~~primarily~~primarily composed of home equity lines and installment loans. The largest geographical ~~con~~co~~centrations~~ncentrations of balances as of June 30, ~~2021,~~2022 were in Florida ~~(32%~~(31%), Tennessee ~~(25%~~(23%), Louisiana ~~(10%~~

(9%), Texas (8%), North Carolina ~~(8%~~(7%), and ~~Texas~~New York (5%). No other state represented more than 5% of the portfolio.

As of June 30, ~~2021,~~2022, approximately ~~86%~~88% of the consumer real estate portfolio was in a first lien position. At origination, the weighted average FICO score of this portfolio was ~~753~~756 and the refreshed FICO scores averaged ~~764~~753 as of June 30, ~~2021,~~2022, no significant change from FICO scores of ~~753~~755 and ~~763,~~754, respectively, as of December 31, ~~2020.~~


			89			2Q22 FORM 10-Q REPORT


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2021. Generally, performance of this portfolio is affected by life events that affect borrowers’ finances, the level of unemployment, and home prices.


~~FIRST HORIZON CORPORATION~~			88			~~2Q21 FORM 10-Q REPORT~~

As of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, FHN had held-for-investment consumer mortgage loans secured by real estate that were in the process of foreclosure totaling ~~$31~~$29 million and ~~$36~~$20 million, respectively.

HELOCs comprised ~~$2.2~~$1.9 billion and ~~$2.4~~$2.0 billion of the consumer real estate portfolio as of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. FHN’s HELOCs typically have a 5 or 10 year draw period followed by a 10 or 20 year repayment period, respectively. During the draw period, a borrower is able to draw on the line and is only required to make interest payments. The line is frozen if a borrower becomes past due on payments. Once the draw period has ended, the line is closed and the borrower is required to make both principal and interest payments monthly until the loan matures. The

principal payment generally is fully amortizing, but payment amounts will

adjust when variable rates reset to reflect changes in the prime rate.

As of ~~both~~ June 30, ~~2021 and~~ ~~December 31, 2020~~,2022, approximately ~~87%~~90% of FHN's HELOCs were in the draw ~~period.~~period compared to 88% at December 31, 2021. It is expected that ~~$435~~$459 million, or ~~23%~~26%, of HELOCs currently in the draw period will enter the repayment period during the next 60 months, based on current terms. Generally, delinquencies for HELOCs that have entered the repayment period are initially higher than HELOCs still in the draw period because of the increased minimum payment requirement. However, over time, performance of these loans usually begins to stabilize. HELOCs ~~are monitored closely for those~~ nearing the end of the draw period.d are closely monitored.

The following table presents HELOCs currently in the draw period, ~~and expected timing of conversion to~~broken down by months remaining in the ~~repayment~~draw period.

Table ~~10—HELOC Draw To Repayment Schedule~~I.2.10

HELOC DRAW TO REPAYMENT SCHEDULE


		June 30, 2021				December 31, 2020					June 30, 2022				December 31, 2021
(Dollars in millions)	(Dollars in millions)	Repayment Amount		Percent		Repayment Amount		Percent		(Dollars in millions)	Repayment Amount		Percent		Repayment Amount		Percent
Months remaining in draw period:	Months remaining in draw period:									Months remaining in draw period:
0-12	0-12	$	56	3	%	$	73	4	%	0-12	$	35	2	%	$	43	2	%
13-24	13-24	51		3		66		3		13-24	38		2		42		2
25-36	25-36	51		3		62		3		25-36	76		4		50		3
37-48	37-48	105		5		67		3		37-48	128		7		136		8
49-60	49-60	172		9		187		8		49-60	182		11		160		9
>60	>60	1,464		77		1,662		79		>60	1,278		74		1,324		76
Total	Total	$	1,899	100	%	$	2,117	100	%	Total	$	1,737	100	%	$	1,755	100	%

Credit Card and Other

The credit card and other portfolio, which isis primarily within the Regional Banking segment, t~~otaled $1.0 billion~~totaled $870 million as of June 30, ~~2021~~2022 and $910 million as of December 31, 2021. This portfolio primarily ~~includes~~ consists of consumer-relatedco~~nsumer-related~~

credits, including home equity and other personal consumer loans, c~~redit~~credit card receivables, and automobile loans. The ~~$126~~$40 million decrease ~~from December 31, 2020~~ was driven by net repayments of automobile loans, consumer construction ~~loans.~~loans, and credit cards.

Allowance for ~~Loan and Lease~~Credit Losses

~~Management’s policy~~The ACL is ~~to maintain the ALLL~~maintained at a level sufficient to ~~recognize current expected~~provide appropriate reserves to absorb estimated future credit losses onin accordance with GAAP. For additional information regarding the ~~amortized cost basis~~ACL, see Note 4 of ~~the loan~~this Report and ~~lease~~ "Critical Accounting Policies and Estimates" and Note 5 in FHN's 2021 Form 10-K, as amended.~~portfolio.~~

The ALLL decreased to ~~$815~~$624 million onas of June 30, ~~2021~~2022 from ~~$963~~$670 million onas of December 31, ~~2020 reflecting improvement~~2021. The ALLL balance as of June 30, 2022 reflects the continued decrease in the unfavorable impact of COVID-19, offset by

potential economic instability projected in the macroeconomic ~~forecast compared to 2020, positive grade migration,~~

forecasts resulting from inflation and ~~lower~~interest rate increases, as well as the impact of loan ~~balances.~~growth. The ~~ratio of~~ ALLL to total loans and leases ratio decreased 2112 basis points to 1.10%. The ACL to total loans and leases ratio decreased to 1.24% as of June 30, 2022 from 1.34% as of December 31, ~~2020 to 1.44% on June 30,~~ 2021.

The provision for loan and lease losses is the charge to or release of earnings necessary to maintain the ALLL at a sufficient level reflecting management’s estimate of current expected losses on the amortized cost basis of the loan and lease portfolio. Provision credit was $109 million in second quarter 2021 compared to a provision expense of $110 million in second quarter 2020. The decrease is primarily attributable to an improving economic forecast, as second quarter 2020 was negatively impacted by the economic uncertainty around the COVID-19 pandemic.

~~Asset quality trends may continue to be impacted by the economic uncertainty attributable to the COVID-19 pandemic. The C&I portfolio reflects a~~

broad mix of categories with the heaviest concentration in loans to mortgage companies which carry minimal credit risk. The C&I portfolio as of June 30, 2021 includes $3.8 billion of loans made under the Paycheck Protection Program of the SBA. PPP loans are fully government guaranteed with the SBA. Due to the government guarantee and forgiveness provisions, PPP loans are considered to have no credit risk.


PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
Table of Contents

The CRE portfolio metrics may continue to be impacted by the COVID-19 pandemic due to travel and occupancy restrictions set by state and local governments affecting the hospitality and retail industries. The consumer portfolio may also continue to be impacted by the COVID-19 pandemic if consumer unemployment continues to remain elevated and clients are unable to continue making loan payments. The consumer portfolio, however, is high quality with no subprime and minimal exposure to other traditional categories of high risk lending.

Consolidated Net Charge-offs

Net ~~recov~~charge-offs~~eries~~ in second quarter ~~2021~~2022 were ~~$10~~$12 million, or an annualized 79 basis points of total loans and leases, compared to net ~~charge-offs~~recoveries of ~~$17~~$10 million, or 207 basis points of total loans and leases, in second quarter ~~2020.~~2021.

Net ~~recoveries~~charge-offs in the commercial portfolio in second quarter ~~2021~~2022 were $4$10 million compared to ~~charge-offs~~recoveries of ~~$17 million in second quarter 2020. The decrease in net charge-offs reflected continued improvement in overall asset quality.~~

~~Net recoveries in the consumer portfolio~~ w~~ere $6~~$4 million in second quarter 2021, ~~driven by consumer real estate~~with the increase attributable to both higher gross charge-offs and lower

gross recoveries compared to the prior year. Net charge-offs in the ~~Corporate and Regional Banking segments,~~consumer portfolio were $2 million in second quarter 2022 compared to ~~minimal~~$6 million in net recoveries in second quarter ~~2020.~~2021. The increase in net charge-offs from the prior year was attributable to higher gross credit card charge-offs and lower gross consumer real estate recoveries.

Table ~~11—Analysis of Allowance for Loan and Lease Losses and Charge-offs~~I.2.11

(Dollars in millions)
Allowance for loan and lease losses (a) June 30, 2021 December 31, 2020 June 30, 2020
C&I $ 385 $ 453 $ 319
CRE 210 242 57
Consumer real estate 203 242 144
Credit card and other 17 26 18
Total allowance for loan and lease losses $ 815 $ 963 $ 538
Period-end loans and leases (b)
C&I $ 32,528 $ 33,104 $ 21,394
CRE 12,292 12,275 4,813
Consumer real estate 10,865 11,725 6,053
Credit card and other 1,002 1,128 449
Total period-end loans and leases $ 56,687 $ 58,232 $ 32,709
ALLL / loans and leases %
C&I 1.18 % 1.37 % 1.49 %
CRE 1.71 1.97 1.19
Consumer real estate 1.87 2.07 2.38
Credit card and other 1.71 2.34 4.03
Total ALLL / loans and leases % 1.44 % 1.65 % 1.64 %
Quarter-to-date net charge-offs (recoveries)
C&I $ (3) $ 31 $ 17
CRE (1) (1) —
Consumer real estate (7) (3) (2)
Credit card and other 1 2 2
ANALYSIS OF ALLOWANCE FOR CREDIT LOSSES AND CHARGE-OFFS


(Dollars in millions)		June 30, 2022			December 31, 2021			June 30, 2021
Allowance for loan and lease losses
	C&I	$	274		$	334		$	385
	CRE	141			154			210
	Consumer real estate	183			163			203
	Credit card and other	26			19			17
	Total allowance for loan and lease losses	$	624		$	670		$	815


Reserve for remaining unfunded commitments
	C&I	$	53		$	46		$	57
	CRE	17			12			9
	Consumer real estate	10			8			9
	Credit card and other	—			—			—
	Total reserve for remaining unfunded commitments	$	80		$	66		$	75

Allowance for credit losses
	C&I	$	327		$	380		$	442
	CRE	158			166			219
	Consumer real estate	193			171			212
	Credit card and other	26			19			17
	Total allowance for credit losses	$	704		$	736		$	890

Period-end loans and leases
	C&I	$	31,276		$	31,068		$	32,528
	CRE	12,942			12,109			12,292
	Consumer real estate	11,441			10,772			10,865
	Credit card and other	870			910			1,002
	Total period-end loans and leases	$	56,529		$	54,859		$	56,687

ALLL / loans and leases %
	C&I	0.88		%	1.07		%	1.18		%
	CRE	1.09			1.27			1.71
	Consumer real estate	1.60			1.51			1.87
	Credit card and other	3.01			2.14			1.71
	Total ALLL / loans and leases %	1.10		%	1.22		%	1.44		%

ACL / loans and leases %
	C&I	1.04		%	1.22		%	1.37		%
	CRE	1.22			1.37			1.80
	Consumer real estate	1.69			1.59			1.94


~~FIRST HORIZON CORPORATION~~			9091			~~2Q21~~2Q22 FORM 10-Q REPORT

Total net charge-offs (recoveries) $ (10) $ 29 $ 17
Average loans and leases (b)
C&I $ 32,540 $ 34,196 $ 22,694
CRE 12,350 12,400 4,710
Consumer real estate 10,926 12,030 6,088
Credit card and other 1,013 1,194 476
Total average loans and leases $ 56,829 $ 59,820 $ 33,968
Charge-off % (annualized)
C&I (0.04) % 0.36 % 0.30 %
CRE (0.02) (0.02) (0.01)
Consumer real estate (0.28) (0.12) (0.13)
Credit card and other 0.51 0.68 1.35
Total charge-off % (0.07) % 0.19 % 0.20 %
ALLL / annualized net charge-offs
C&I NM 3.67 x 4.63 x
CRE NM NM NM
Consumer real estate NM NM NM
Credit card and other 3.29 x 3.23 x 2.82 x
Total ALLL / net charge-offs NM 8.41 x 8.05 x
ALLL / NPLs
C&I 3.14 x 3.15 x 2.50 x
CRE 3.00 x 4.15 x 27.71 x
Consumer real estate 1.36 x 1.33 x 1.49 x
Credit card and other 7.25 x 13.13 x 71.14 x
Total ALLL / NPLs 2.37 x 2.49 x 2.38 x


PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
Table of Contents


	Credit card and other	3.01			2.09			1.71
	Total ACL / loans and leases %	1.24		%	1.34		%	1.58		%

Quarter-to-date net charge-offs (recoveries)
	C&I	$	11		$	1		$	(3)
	CRE	(1)			—			(1)
	Consumer real estate	(4)			(3)			(7)
	Credit card and other	6			3			1
	Total net charge-offs (recoveries)	$	12		$	1		$	(10)

Average loans and leases
	C&I	$	30,963		$	30,780		$	32,540
	CRE	12,626			12,221			12,350
	Consumer real estate	11,120			10,738			10,926
	Credit card and other	867			943			1,013
	Total average loans and leases	$	55,576		$	54,682		$	56,829

Charge-off % (annualized)
	C&I	0.14		%	0.01		%	(0.04)		%
	CRE	(0.03)			(0.01)			(0.02)
	Consumer real estate	(0.12)			(0.10)			(0.28)
	Credit card and other	2.49			1.26			0.51
	Total charge-off %	0.09		%	0.01		%	(0.07)		%

ALLL / annualized net charge-offs
	C&I	616		%	7,238		%	NM
	CRE	NM			NM			NM
	Consumer real estate	NM			NM			NM
	Credit card and other	121			164			329		%
	Total ALLL / net charge-offs	1,257		%	17,374		%	NM

NM - not meaningful

~~(a)~~The increase in the ALLL from second quarter 2020 was primarily attributable to the allowance recorded on acquired non-PCD loans and the decline in the economic forecast attributable to the COVID-19 pandemic, while the decrease from first quarter 2021 was from an improvement in the overall economic forecast.

~~(b)The increase in period-end and average loans and leases from second quarter 2020 is primarily the result of $26.3 billion in acquired loans and leases in third quarter 2020.~~

Nonperforming Assets

Nonperforming loans are loans placed on nonaccrual if it becomes evident that full collection of principal and interest is at risk, if 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 nonaccruals 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. NPAs consist of nonperforming loans and OREO (excluding OREO from government insured mortgages).

~~Reflecting an overall improvement in asset quality, total~~

Total NPAs (including NPLs HFS) ~~decreased~~increased to ~~$362~~$309 million as of June 30, ~~2021~~2022 from ~~$406~~$285 million as of December 31, ~~2020.~~2021, driven by higher nonaccrual loans in the C&I and consumer real estate portfolios. The nonperforming ~~assets~~loans and leases ratio ~~(nonperforming assets excluding NPLs HFS~~increased 3 basis points to ~~total period-end loans plus OREO) was 0.62%~~0.53% as of June 30, ~~2021, down 7 basis points from~~ ~~0.69% as of December 31, 2020. The ratio of the ALLL to NPLs was 2.4 times as of June 30, 2021 compared to 2.5 times as of December 31, 2020.~~

2022.


~~FIRST HORIZON CORPORATION~~			91			~~2Q21 FORM 10-Q REPORT~~

Certain nonperforming loans in both the commercial and consumer portfolios are deemed collateral-dependent and are charged down to an estimate of collateral value less costs to sell. Because the estimated loss has been recognized through a partial charge-off, typically an ALLL is not recorded.


			92			2Q22 FORM 10-Q REPORT


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Table ~~12—Nonperforming Assets by Loan Portfolio~~I.2.12

(Dollars in millions)
Nonperforming loans and leases June 30, 2021 December 31, 2020
C&I $ 123 $ 144
CRE 70 58
Consumer real estate 149 182
Credit card and other 2 2
Total nonperforming loans and leases (a) $ 344 $ 386
Nonperforming loans held for sale (a) $ 8 $ 5
Foreclosed real estate and other assets (b) 10 15
Total nonperforming assets (a) (b) $ 362 $ 406
Nonperforming loans and leases to total loans and leases
C&I 0.38 % 0.43 %
CRE 0.57 0.48
Consumer real estate 1.37 1.56
Credit card and other 0.24 0.18
Total NPL % 0.61 % 0.66 %
NONACCRUAL/NONPERFORMING LOANS, FORECLOSED ASSETS, & OTHER DISCLOSURES


(Dollars in millions)










Nonperforming loans and leases		June 30, 2022			December 31, 2021
	C&I	$	129		$	125
	CRE	11			9
	Consumer real estate	159			138
	Credit card and other	2			3
	Total nonperforming loans and leases (a)	$	301		$	275

Nonperforming loans held for sale (a)		$	6		$	7
Foreclosed real estate and other assets (b)		2			3
	Total nonperforming assets (a) (b)	$	309		$	285

Nonperforming loans and leases to total loans and leases
	C&I	0.41		%	0.40		%
	CRE	0.08			0.08
	Consumer real estate	1.39			1.29
	Credit card and other	0.29			0.31
	Total NPL %	0.53		%	0.50		%

ALLL / NPLs
	C&I	213		%	268		%
	CRE	1,331			1,671
	Consumer real estate	115			118
	Credit card and other	1,021			699
	Total ALLL / NPLs	207		%	244		%

(a)Excludes loans and leases that are 90 or more days past due and still accruing interest.

(b)Balances do not include government-insured foreclosed real estate. Foreclosed real estate from GNMA loans totaled $1 million atas of both June 30, ~~2021~~2022 and ~~$2 million at~~ December 31, ~~2020.~~2021.


~~FIRST HORIZON CORPORATION~~			9293			~~2Q21~~2Q22 FORM 10-Q REPORT


PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
Table of Contents

The following table provides nonperforming assets by business segment:

Table ~~13—Nonperforming Assets by Segment~~I.2.13

(Dollars in millions)
Nonperforming loans and leases (a) (b) June 30, 2021 December 31, 2020
Regional Banking $ 209 $ 216
Specialty Banking 91 117
Corporate 44 53
Consolidated $ 344 $ 386
Foreclosed real estate (c)
Regional Banking $ 8 $ 12
Specialty Banking 1 1
Corporate 1 2
Consolidated $ 10 $ 15
Nonperforming Assets (a) (b) (c)
Regional Banking $ 217 $ 228
Specialty Banking 92 118
Corporate 45 55
Consolidated $ 354 $ 401
Nonperforming loans and leases to loans and leases
Regional Banking 0.53 % 0.54 %
Specialty Banking 0.55 0.68
Corporate 5.09 5.70
Consolidated 0.61 % 0.66 %
NPA % (d)
Regional Banking 0.55 % 0.57 %
Specialty Banking 0.55 0.68
Corporate 5.17 5.87
Consolidated 0.62 % 0.69 %
NONPERFORMING ASSETS BY SEGMENT



(Dollars in millions)
Nonperforming loans and leases (a) (b)		June 30, 2022			December 31, 2021
	Regional Banking	$	202		$	163
	Specialty Banking	65			78
	Corporate	34			34
	Consolidated	$	301		$	275
Foreclosed real estate (c)
	Regional Banking	$	—		$	2
	Specialty Banking	1			—
	Corporate	1			1
	Consolidated	$	2		$	3
Nonperforming Assets (a) (b) (c)
	Regional Banking	$	202		$	165
	Specialty Banking	66			78
	Corporate	35			35
	Consolidated	$	303		$	278
Nonperforming loans and leases to loans and leases
	Regional Banking	0.51		%	0.43		%
	Specialty Banking	0.40			0.48
	Corporate	6.41			5.39
	Consolidated	0.53		%	0.50		%
NPA % (d)
	Regional Banking	0.51		%	0.44		%
	Specialty Banking	0.40			0.48
	Corporate	6.55			5.51
	Consolidated	0.54		%	0.51		%

(a)Excludes loans and leases that are 90 or more days past due and still accruing interest.

(b)Excludes loans classified as held for sale.

(c)Excludes foreclosed real estate and receivables related to government insured mortgages of $4$1 million ~~and $5 million at~~as of both June 30, ~~2021~~2022 and December 31, ~~2020, respectively.~~2021.

(d)Ratio is non-performing assets to total loans and leases plus foreclosed real estate.


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Lending Assistance for Borrowers

In addition to PPP loans, other customer support initiatives in response to the COVID-19 pandemic include incremental lending assistance for borrowers through delayed payment programs and fee waivers.

The following table provides the UPB of loans related to deferrals granted to FHN’s customers as of June 30, ~~2021~~2022 and December 31, ~~2020.~~2021.


~~FIRST HORIZON CORPORATION~~			93			~~2Q21 FORM 10-Q REPORT~~

Table ~~14—Customer Deferrals~~I.2.14

(Dollars in millions) As of June 30, 2021 As of December 31, 2020
Commercial:
C&I $ 38 $ 104
CRE 124 194
Total Commercial $ 162 $ 298
Consumer:
HELOC $ 8 $ 14
R/E installment loans 102 202
Credit card and other 3 4
Total Consumer $ 113 $ 220
Total $ 275 $ 518
CUSTOMER DEFERRALS


(Dollars in millions)	As of June 30, 2022		As of December 31, 2021
Commercial:
C&I	$	—	$	9

CRE	—		26
Total Commercial	$	—	$	35
Consumer:
HELOC	$	4	$	5
Real estate installment loans	19		44
Credit card and other	—		—
Total Consumer	$	23	$	49
Total	$	23	$	84

~~Commercial deferrals at~~ ~~June 30, 2021 were comprised primarily of professional commercial real estate (48% or $78 million) and general commercial (37% or $61 million).~~

To the extent that loans were past due atas of June 30, ~~2021~~2022 or December 31, ~~2020~~2021 and had been granted a deferral, they were excluded from loans past due 30 to 89

days and loans past due 90 days or more in the table and discussion below.

Past Due Loans and Potential Problem Assets

Past due loans are loans contractually past due as to interest or principal payments, but which have not yet

been put on nonaccrual status. Loans ~~in the portfolio that are~~ 90 days or more past due and still accruing were ~~$14~~$17 million onas of June 30, ~~2021,~~2022 compared to ~~$17~~$40 million onas of December 31, ~~2020. The decrease was primarily driven by consumer real estate loans.~~2021. Loans 30 to 89 days past due were ~~$83~~$106 million onas of June 30, ~~2021,~~2022 compared to ~~$100~~ $108

million onas of December 31, ~~2020.~~2021. The decrease ~~included~~was driven by a ~~$23~~$25 million decrease in ~~consumer real estate~~C&I loans past due less than 90 days, partially offset by a ~~$17~~$15 million ~~decrease~~increase in CRE loans and a ~~$2 million decrease in credit card and other consumer loans, partially offset by a $25~~$7 million increase in ~~C&I~~consumer real estate loans past due 30 to 89 days.


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Table ~~15—Accruing Delinquencies~~I.2.15

(Dollars in millions)
Accruing loans and leases 30+ days past due June 30, 2021 December 31, 2020
C&I $ 41 $ 15
CRE 6 23
Consumer real estate 42 69
Credit card and other 8 10
Total 30+ Delinquency $ 97 $ 117
Accruing loans and leases 30+ days past due %
C&I 0.13 % 0.05 %
CRE 0.05 0.19
Consumer real estate 0.39 0.58
Credit card and other 0.80 0.87
Total 30+ Delinquency % 0.17 % 0.20 %
Accruing loans and leases 90+ days past due (a) (b) (c):
C&I $ 1 $ —
CRE — —
Consumer real Estate 12 16
Credit card and other 1 1
Total accruing loans and leases 90+ days past due $ 14 $ 17
Loans held for sale
30 to 89 days past due (b) $ 5 $ 6
30 to 89 days past due - guaranteed portion (b) (d) 3 5
90+ days past due (b) 26 12
90+ days past due - guaranteed portion (b) (d) 12 10
ACCRUING DELINQUENCIES & OTHER CREDIT DISCLOSURES


(Dollars in millions)
Accruing loans and leases 30+ days past due		June 30, 2022			December 31, 2021
	C&I	$	28		$	58
	CRE	28			13
	Consumer real estate	58			70
	Credit card and other	9			7
	Total accruing loans and leases 30+ days past due	$	123		$	148

Accruing loans and leases 30+ days past due %
	C&I	0.09		%	0.19		%
	CRE	0.22			0.11
	Consumer real estate	0.51			0.65
	Credit card and other	0.96			0.76
	Total accruing loans and leases 30+ days past due %	0.22		%	0.27		%






Accruing loans and leases 90+ days past due (a) (b) (c):

	C&I	$	—		$	5



	Consumer real Estate	14			33
	Credit card and other	3			2

	Total accruing loans and leases 90+ days past due	$	17		$	40



Loans held for sale
30 to 89 days past due		$	5		$	7
30 to 89 days past due - guaranteed portion (d)		2			2
90+ days past due		14			24
90+ days past due - guaranteed portion (d)		5			12

(a)Excludes loans classified as held for sale.

(b)Amounts are not included in nonperforming/nonaccrual loans.

(c)Amounts are also included in accruing loans and leases 30+ days past due.

(d)Guaranteed loans include FHA, VA, and GNMA loans repurchased through the GNMA buyout program.

Potential problem assets represent those assets where information about possible credit problems of borrowers has caused management to have serious doubts about the borrower’s ability to comply with present repayment terms and includes loans past due 90 days or more and still accruing. This definition is believed to be substantially consistent with the standards established by Federal banking regulators for

loans classified as ~~substandard.~~substandard. Potential problem assets in the loan portfolio were ~~$715~~$491 million on June 30, ~~2021~~2022 and ~~$718~~$597 million on December 31, ~~2020.~~2021. The current expectation of losses from potential problem assets has been included in management’s

analysis for assessing the adequacy of the allowance for loan and lease losses.

Troubled Debt Restructurings and Loan Modifications

As part of FHN’s ongoing risk management practices, FHN attempts to work with borrowers when appropriate 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. In a situation where an economic concession has been granted to a borrower that is experiencing


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~~situation where an economic concession has been granted to a borrower that is experiencing~~ financial difficulty, FHN identifies and reports that loan as a TDR.

For loan modifications ~~that were made during 2021 and 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 43 – Loans and Leases for further discussion regarding TDRs and loan modifications.

On June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, FHN had ~~$274~~$199 million and ~~$307~~$206 million portfolio loans classified as held-for-investment TDRs, respectively. For these TDRs, including specific reserves, FHN had an allowance for loan and lease losses of ~~$16~~$6 million, or 3% of TDR balances as of June 30, 2022, and $12 million, or 6% of TDR balances, as of ~~June 30, 2021, and $15 million, or 5% of TDR balances, as of~~ December 31, ~~2020.~~2021. Additionally, FHN had ~~$38~~$32 million and ~~$42~~$35 million of HFS loans classified as TDRs as of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively.

The following table provides a summary of TDRs for the periods ended June 30, ~~2021~~2022 and December 31, ~~2020:~~2021:

~~Table 16—Troubled Debt Restructurings~~

(Dollars in millions) June 30, 2021 December 31, 2020
Held-for-investment:
   Consumer real estate:
      Current $ 74 $ 77
      Delinquent 2 2
      Non-accrual (a) 47 61
   Total consumer real estate 123 140
   Credit card and other:
      Current 1 1
      Delinquent — —
      Non-accrual — —
   Total credit card and other 1 1
   Commercial loans:
      Current 68 82
      Delinquent — —
      Non-accrual 82 84
   Total commercial loans 150 166
Total held-for-investment $ 274 $ 307
Held-for-sale:
      Current $ 33 $ 36
      Delinquent 4 5
      Non-accrual 1 1
Total held-for-sale 38 42
Total troubled debt restructurings $ 312 $ 349
Table I.2.16

TROUBLED DEBT RESTRUCTURINGS


(Dollars in millions)	June 30, 2022		December 31, 2021
Held for investment:
Commercial loans:
Current	$	28	$	53
Delinquent	—		—
Non-accrual	25		35
Total commercial loans	$	53	$	88
Consumer real estate:
Current	$	78	$	60
Delinquent	7		4
Non-accrual (a)	61		53
Total consumer real estate	$	146	$	117
Credit card and other:
Current	$	—	$	1
Delinquent	—		—
Non-accrual	—		—
Total credit card and other	—		1





Total held for investment	$	199	$	206

Held for sale:
Current	$	25	$	27
Delinquent	6		7
Non-accrual	1		1
Total held for sale	32		35
Total troubled debt restructurings	$	231	$	241

(a)Balances as of both June 30, ~~2021~~2022 and December 31, ~~2020,~~2021 include $12 million ~~and $11 million, respectively,~~ of discharged bankruptcies.


~~FIRST HORIZON CORPORATION~~			96			~~2Q21 FORM 10-Q REPORT~~

Investment Securities

FHN’s investment securities portfolio consists principally of debt securities ~~including~~available for sale. FHN maintains a highly-rated securities portfolio consisting primarily of government agency issued mortgage-backed securities and ~~government agency issued~~ collateralized mortgage obligations ~~all of which are classified as AFS. The~~. The securities portfolio provides a source of income and liquidity and is

an important tool used to balance the interest rate risk of the loan and deposit portfolios. The securities portfolio is periodically evaluated in light of established ALM objectives, changing market conditions that could affect the profitability of the portfolio, the regulatory environment, and the level of interest rate risk to which


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FHN is exposed. These evaluations may result in steps taken to adjust the overall balance sheet positioning.

Investment securities ~~were~~ we~~$8.4~~re $9.6 billion and $9.4 billion on June 30, ~~2021,~~ ~~up from $8.0 billion on~~2022 and December 31, ~~2020 and~~2021, respectively,

~~represented~~representing approximately ~~10% o~~f11% of total assets ~~for~~at the end of both periods. See Note 32 - Investment Securities for more information ~~about~~about the securities ~~portfolio, including gross unrealized gains and losses by type of security, contractual maturities, and securities pledged.~~

~~Deposits~~

~~Total deposits as of~~ ~~June 30, 2021~~ ~~increased 5% to $73.3 billion~~ ~~from~~ ~~$70.0 billion~~ ~~on December 31, 2020, driven by an increase in non-interest bearing deposits largely reflecting the impact of government stimulus checks and PPP loan funding.~~portfolio.

Deposits

Total deposits of $70.5 billion as of June 30, 2022 decreased $4.3 billion from December 31, 2021 reflecting a continued downward trend from mid-2021 highs driven by excess liquidity associated with the COVID-19 pandemic. Interest-bearing deposits decreased $3.6 billion and noninterest-bearing deposits decreased $769 million.

See Tables I.2.2 and I.2.3 - Average Balances, Net Interest Income and Yields/Rates in this Report for information on average deposits including average rates paid. The following table summarizes the major components of deposits as of June 30, ~~2021~~2022 and December 31, ~~2020.~~2021.

Table ~~17— Deposits~~I.2.17

DEPOSITS


		June 30, 2021				December 31, 2020									June 30, 2022				December 31, 2021
(Dollars in millions)	(Dollars in millions)	Amount		Percent of total		Amount		Percent of total		Change		Percent		(Dollars in millions)	Amount		Percent of total		Amount		Percent of total		Change		Percent
Savings	Savings	$	27,415	37	%	$	27,324	39	%	$	91	—	%	Savings	$	24,376	35	%	$	26,457	35	%	$	(2,081)	(8)	%
Time deposits	Time deposits	4,304		6		5,070		7		(766)		(15)		Time deposits	2,888		4		3,500		5		(612)		(17)
Other interest-bearing deposits	Other interest-bearing deposits	15,728		22		15,415		22		313		2		Other interest-bearing deposits	16,172		23		17,055		23		(883)		(5)

Interest-bearing deposits		47,447		65		47,809		68		(362)		(1)
Total interest-bearing deposits														Total interest-bearing deposits	43,436		62		47,012		63		(3,576)		(8)
Noninterest-bearing deposits	Noninterest-bearing deposits	25,833		35		22,173		32		3,660		17		Noninterest-bearing deposits	27,114		38		27,883		37		(769)		(3)
Total deposits	Total deposits	$	73,280	100	%	$	69,982	100	%	$	3,298	5	%	Total deposits	$	70,550	100	%	$	74,895	100	%	$	(4,345)	(6)	%

Short-Term Borrowings

Short-term borrowings include federal funds purchased, securities sold under agreements to repurchase, trading liabilities, and other short-term borrowings. Total short-term borrowings were~~$2.2~~ $2.3 billion and $2.6 billion as of June 30, ~~2021~~2022 and December 31, ~~2020.~~2021, respectively.

Short-term borrowings balances fluctuate largely based on the level of FHLB borrowing as a result of loan demand, deposit levels and balance sheet funding strategies. Trading liabilities fluctuate based on various factors,

including levels of trading securities and hedging strategies. Federal funds purchased fluctuates depending on the amount of excess funding of FHN’s correspondent bank customers. Balances of securities sold under agreements to

~~resell~~ repurchase fluctuate based on cost attractiveness relative to FHLB borrowing levels and the ability to pledge securities toward such transactions.

Term Borrowings

Term borrowings include senior and subordinated borrowings with original maturities greater than one year. ~~Term~~

Total term borrowings ~~were~~ ~~$1.7~~were $1.6 billion as as of June 30, ~~2021~~2022 and December 31, ~~2020.~~2021.

Capital

Management’s objectives are to provide capital sufficient to cover the risks inherent in FHN’s businesses, to maintain excess capital to well-capitalized standards, and to assure ready ~~access~~access to the capital markets. Total equity was $8.6 ~~billion~~billion at June 30, ~~2021~~2022 and ~~$8.3~~$8.5 billion at December 31, ~~2020.~~2021. Significant changes included net income of ~~$546~~

$374 million and the issuance of ~~$145~~$494 million in Series FG preferred stock, which were offset by ~~$185~~ $181

million in common and preferred dividends ~~$126 million in common share repurchases, $100 million from the call of Series A preferred stock~~ and a decrease in AOCI of ~~$63~~$675 million.


~~FIRST HORIZON CORPORATION~~			97			~~2Q21 FORM 10-Q REPORT~~

The following tables provide a reconciliation of shareholders’ equity from the Consolidated Balance Sheets to Common Equity Tier 1, Tier 1 and Total Regulatory Capital as well as certain selected capital ratios:


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Table ~~18—Regulatory Capital and Ratios~~I.2.18

(Dollars in millions) June 30, 2021 December 31, 2020
Shareholders’ equity $ 8,270 $ 8,012
Modified CECL transitional amount (a) 152 191
FHN non-cumulative perpetual preferred (520) (470)
Common equity tier 1 before regulatory adjustments $ 7,902 $ 7,733
Regulatory adjustments:
Disallowed goodwill and other intangibles (1,733) (1,757)
Net unrealized (gains) losses on securities available for sale (43) (108)
Net unrealized (gains) losses on pension and other postretirement plans 254 260
Net unrealized (gains) losses on cash flow hedges (8) (12)
Disallowed deferred tax assets — (5)
Other deductions from common equity tier 1 — (1)
Common equity tier 1 $ 6,372 $ 6,110
FHN non-cumulative perpetual preferred (b) 426 377
Qualifying noncontrolling interest— First Horizon Bank preferred stock 295 295
Tier 1 capital $ 7,093 $ 6,782
Tier 2 capital 1,055 1,153
Total regulatory capital $ 8,148 $ 7,935
Risk-Weighted Assets
First Horizon Corporation $ 61,991 $ 63,140
First Horizon Bank 61,392 62,508
Average Assets for Leverage
First Horizon Corporation 86,160 82,347
First Horizon Bank 85,500 81,709
REGULATORY CAPITAL DATA


(Dollars in millions)	June 30, 2022		December 31, 2021
Shareholders’ equity	$	8,256	$	8,199
Modified CECL transitional amount (a)	85		114
FHN non-cumulative perpetual preferred stock	(1,014)		(520)
Common equity tier 1 before regulatory adjustments	$	7,327	$	7,793
Regulatory adjustments:
Disallowed goodwill and other intangibles	(1,687)		(1,711)
Net unrealized (gains) losses on securities available for sale	671		36
Net unrealized (gains) losses on pension and other postretirement plans	252		255
Net unrealized (gains) losses on cash flow hedges	40		(3)
Disallowed deferred tax assets	—		(2)
Other deductions from common equity tier 1	(1)		(1)
Common equity tier 1	$	6,602	$	6,367
FHN non-cumulative perpetual preferred stock (b)	920		426
Qualifying noncontrolling interest— First Horizon Bank preferred stock	295		295

Tier 1 capital	$	7,817	$	7,088
Tier 2 capital	907		830
Total regulatory capital	$	8,724	$	7,918
Risk-Weighted Assets
First Horizon Corporation	$	67,294	$	64,183
First Horizon Bank	66,608		63,601
Average Assets for Leverage
First Horizon Corporation	85,724		87,683
First Horizon Bank	85,022		86,953

June 30, 2021 December 31, 2020
Ratio Amount Ratio Amount
Common Equity Tier 1
First Horizon Corporation 10.28 % $ 6,372 9.68 % $ 6,110
First Horizon Bank 10.98 6,738 10.46 6,537
Tier 1
First Horizon Corporation 11.44 7,093 10.74 6,782
First Horizon Bank 11.46 7,033 10.93 6,832
Total
First Horizon Corporation 13.14 8,148 12.57 7,935
First Horizon Bank 12.88 7,908 12.52 7,827
Tier 1 Leverage
First Horizon Corporation 8.23 7,093 8.24 6,782
First Horizon Bank 8.23 7,033 8.36 6,832
Other Capital Ratios
Total period-end equity to period-end assets 9.74 9.86
Tangible common equity to tangible assets (c) 6.87 6.89
Adjusted tangible common equity to risk-weighted assets (c) 9.47 8.82
Table I.2.19

REGULATORY RATIOS & AMOUNTS


	June 30, 2022				December 31, 2021
	Ratio		Amount		Ratio		Amount
Common Equity Tier 1
First Horizon Corporation	9.81	%	$	6,602	9.92	%	$	6,367
First Horizon Bank	10.47		6,972		10.75		6,838
Tier 1
First Horizon Corporation	11.62		7,817		11.04		7,088
First Horizon Bank	10.91		7,267		11.22		7,133
Total
First Horizon Corporation	12.96		8,724		12.34		7,918
First Horizon Bank	12.06		8,031		12.41		7,893
Tier 1 Leverage
First Horizon Corporation	9.12		7,817		8.08		7,088
First Horizon Bank	8.55		7,267		8.20		7,133
Other Capital Ratios
Total period-end equity to period-end assets	10.04				9.53
Tangible common equity to tangible assets (c)	6.55				6.73
Adjusted tangible common equity to risk-weighted assets (c)	9.11				9.20

(a)The modified CECL transitional amount ~~is calculated as defined in the final rule issued by the banking regulators on August 26, 2020 and~~ includes ~~the full amount of~~ the impact to retained earnings from the initial adoption of CECL plus 25% of the change in the adjusted allowance for credit losses since FHN’s initial adoption of CECL through December 31, 2021. For June 30, ~~2021 and~~2022, 25% of the full amount at December 31, ~~2020~~.2021 is phased out and not included in Common Equity Tier 1 capital.

(b)The $94 million carrying value of the Series D preferred stock does not qualify as Tier 1 capital because the earliest redemption date is less than five years from the issuance date, which was re-set to July 1, 2020 when the IBKC merger closed.

(c)Tangible common equity to tangible assets and adjusted tangible common equity to risk-weighted assets are non-GAAP measures and are reconciled to total equity to total assets (GAAP) in the Non-GAAP to GAAP Reconciliation - Table ~~24.~~I.2.27.


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Banking regulators define minimum capital ratios for bank holding companies and their bank subsidiaries. Based on the capital rules and definitions prescribed by the banking regulators, should any depository institution’s capital ratios decline below predetermined levels, it would become subject to a series of increasingly restrictive regulatory actions.

The system categorizes a depository institution’s capital position into one of five categories ranging from well-capitalized to critically under-capitalized. For an institution the size of FHN to qualify as well-capitalized, Common Equity Tier 1, Tier 1 Capital, Total Capital, and Leverage capital ratios must be at least 6.50%, 8.00%, 10.00%, and 5.00%, respectively. Furthermore, a capital conservation buffer of 50 basis points above these levels must be maintained on the Common Equity Tier 1, Tier 1 Capital and Total Capital ratios to avoid restrictions on dividends, share repurchases and certain discretionary bonuses.

As of June 30, ~~2021,~~2022, each of FHN and First Horizon Bank had sufficient capital to qualify as well-capitalized institutions and to meet the capital conservation buffer

requirement. Capital ratios for both FHN and First Horizon Bank are calculated under the final rule issued by the banking regulators in 2020 to delay the effects of CECL on regulatory capital for two years, followed by a three-year transition period.

For ~~both~~ FHN, the Tier 1 and ~~First Horizon Bank, the~~Total risk-based regulatory capital ratios increased in second quarter ~~2021~~2022 relative to year-end ~~2020~~2021 primarily from the impact of net income less dividends ~~and share repurchases~~ during the first six months of ~~2021~~2022. FHN's Tier 1 Capital and ~~a decrease~~Tier 1 Leverage ratios as of June 30, 2022 further benefited from the issuance of its Series G preferred stock. FHN and First Horizon Bank's risk-based regulatory capital ratios were negatively impacted in 2022 from an increase in risk-weighted assets ~~primarily~~ from ~~loan activity.~~ December 31, 2021.

During ~~2021,~~2022, capital ratios are expected to remain above well-capitalized standards plus the required capital conservation buffer. ~~The Tier 1 Leverage ratio for both FHN and First Horizon Bank decreased from~~ ~~December 31, 2020 as a result of an increase in average assets.~~

Common Stock Purchase Programs

General ~~Authority~~Purchase Program

Pursuant to Board authority, FHN may repurchase shares of its common stock from time to time and will evaluate the level of capital and take action designed to generate or use capital, as appropriate, for the interests of the shareholders, subject to legal and regulatory restrictions. FHN’s Board has not authorized a preferred stock purchase program.

On January 23, 2018, FHN announced a $250 million share purchase authority with an expiration date of January 31, 2020. On January 29, 2019, FHN announced a $250 million increase in that authority (to $500 million total) along with an extension of the expiration date to January 31, 2021. On January 27, 2021, FHN announced that its Board of Directors approved a new $500 million common share purchase program ~~expiring~~that was to expire on January 31, 2023, replacing the 2018 program, which was terminated. On October 26, 2021, FHN announced that the 2021 program had been increased by $500 million and extended to October 31, 2023. ~~The new~~ Like the 2018 program, the 2021

program is not tied to any compensation ~~plan, and replaced the previous general share repurchase program, which was terminated by the Board.~~plan. Purchases may be made in the open market or through privately negotiated transactions, including under Rule 10b5-1 plans as well as accelerated share repurchase and other structured transactions. The timing and exact amount of common share repurchases will be subject to various factors, including FHN's capital position, financial performance, capital impacts of strategic initiatives, market conditions and regulatory considerations.

As of June 30, ~~2021, $116~~2022, $401 million in purchases had been made life-to-date under ~~this authority~~the 2021 program at an average price per share of ~~$17.28,~~$16.60, or ~~$17.26~~$16.58 excluding commissions. Management does not currently anticipate purchasing additional shares under this authority.

Table ~~19—Issuer Purchases of Common Stock - General Authority~~I.2.20

(Dollar values and volume in thousands, except per share data) Total number
of shares
purchased Average price
paid per share (a) Total number of
shares purchased
as part of publicly
announced programs Maximum approximate dollar value that may yet be purchased under the programs
2021
April 1 to April 30 397 $ 18.02 397 $ 434,099
May 1 to May 31 1,537 18.77 1,537 405,248
June 1 to June 30 1,123 18.74 1,123 384,212
Total 3,057 $ 18.66 3,057
COMMON STOCK PURCHASES—GENERAL PROGRAM


(Dollar values and volume in thousands, except per share data)	Total number of shares purchased	Average price paid per share (a)	Total number of shares purchased as part of publicly announced programs	Maximum approximate dollar value that may yet be purchased under the programs
2022
April 1 to April 30	—	N/A	—	$	598,646
May 1 to May 31	—	N/A	—	598,646
June 1 to June 30	—	N/A	—	598,646
Total	—	N/A	—

(a) Represents total costs including commissions paid.


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Compensation ~~Authority~~Plans Purchase Program

A consolidated compensation plan share purchase program was announced on August 6, 2004. This program consolidated into a single share purchase program all of the previously authorized compensation plan share programs as well as the renewal of the authorization to purchase shares for use in connection with two compensation plans for which the share purchase authority had expired.

The total amount authorized under this consolidated compensation plan share purchase program is 29.6 million shares calculated before adjusting for stock dividends distributed through January 1, 2011. The authorization has been reduced for that portion which relates to

~~which relates to~~ compensation plans for which no ~~options~~stock option awards remain outstanding. The shares may be purchased over the option exercise ~~period~~periods of the various compensation plans on or before December 31, 2023. Purchases may be made in the open market or through privately negotiated transactions and are subject to various factors including FHN's capital position, financial performance, capital impacts of strategic initiatives, market conditions and regulatory restrictions. As of June 30, ~~2021,~~2022, the maximum number of shares that may be purchased under the program was ~~23.4~~22.6 million shares. Management currently does not anticipate purchasing a material number of shares under this authority during ~~2021.~~2022.

Table ~~20—Issuer Purchase of Common Stock - Compensation Authority~~I.2.21

(Volume in thousands, except per share data) Total number
of shares
purchased Average price
paid per share Total number of
shares purchased
as part of publicly
announced programs Maximum number
of shares that may
yet be purchased
under the programs
2021
April 1 to April 30 32 $ 12.96 32 23,778
May 1 to May 31 244 18.20 244 23,534
June 1 to June 30 102 17.51 102 23,432
Total 378 $ 17.57 378
COMMON STOCK PURCHASES—COMPENSATION PLANS PROGRAM


(Volume in thousands, except per share data)	Total number of shares purchased	Average price paid per share		Total number of shares purchased as part of publicly announced programs	Maximum number of shares that may yet be purchased under the programs
2022
April 1 to April 30	9	$	23.31	9	22,955
May 1 to May 31	238	21.65		238	22,717
June 1 to June 30	88	22.35		88	22,629
Total	334	$	21.87	334

Risk Management

There have been no significant changes to FHN’s risk management practices as described under “Risk Management” included in Item 7 of FHN’s ~~2020~~2021 Annual Report on Form ~~10-K.~~10-K, as amended.

~~MARKET RISK MANAGEMENT~~Market Risk Management

Value-at-Risk and Stress Testing

VaR is a statistical risk measure used to estimate the potential loss in value from adverse market movements over an assumed fixed holding period within a stated confidence level. FHN employs a model to compute daily VaR measures for its trading

securities inventory. FHN computes VaR using historical simulation with a 1-year lookback period at a 99% confidence level ~~and~~with 1-day and 10-day time horizons. Additionally, FHN computes a

Stressed VaR measure. The SVaR computation uses the same model but with model inputs reflecting historical data from a continuous 12-month period that reflects a period of significant financial stress appropriate for ~~our~~the trading securities portfolio.

A summary of FHN’s VaR and SVaR measures for 1-day and 10-day time horizons is presented in the following table:


~~FIRST HORIZON CORPORATION~~			~~100~~101			~~2Q21~~2Q22 FORM 10-Q REPORT

~~A summary of FHN’s VaR and SVaR measures for 1-day and 10-day time horizons is as follows:~~


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Table ~~21—~~I.2.22

VaR ~~and~~& SVaR ~~Measures~~MEASURES


		Three Months Ended June 30, 2021						Six Months Ended June 30, 2021						As of June 30, 2021			Three Months Ended June 30, 2022						Six Months Ended June 30, 2022						As of June 30, 2022
(Dollars in millions)	(Dollars in millions)	Mean		High		Low		Mean		High		Low				(Dollars in millions)	Mean		High		Low		Mean		High		Low
1-day	1-day															1-day
VaR	VaR	$	1	$	2	$	1	$	2	$	4	$	1	$	1	VaR	$	2	$	2	$	2	$	2	$	2	$	2	$	2
SVaR	SVaR	4		6		2		4		6		2		4		SVaR	5		6		4		5		7		4		5
10-day	10-day															10-day
VaR	VaR	3		5		1		7		21		1		2		VaR	8		11		4		6		11		3		8
SVaR	SVaR	17		23		11		16		23		11		16		SVaR	24		28		20		24		34		18		20

		Three Months Ended June 30, 2020						Six Months Ended June 30, 2020						As of June 30, 2020			Three Months Ended June 30, 2021						Six Months Ended June 30, 2021						As of June 30, 2021
(Dollars in millions)	(Dollars in millions)	Mean		High		Low		Mean		High		Low				(Dollars in millions)	Mean		High		Low		Mean		High		Low
1-day	1-day															1-day
VaR	VaR	$	3	$	5	$	2	$	3	$	7	$	1	$	3	VaR	$	1	$	2	$	1	$	2	$	4	$	1	$	1
SVaR	SVaR	4		6		3		6		18		3		3		SVaR	4		6		2		4		6		2		4
10-day	10-day															10-day
VaR	VaR	13		19		8		10		25		2		13		VaR	3		5		1		7		21		1		2
SVaR	SVaR	14		19		9		20		43		9		13		SVaR	17		23		11		16		23		11		16


		Year Ended December 31, 2020						As of December 31, 2020			Year Ended December 31, 2021						As of December 31, 2021
(Dollars in millions)	(Dollars in millions)	Mean		High		Low				(Dollars in millions)	Mean		High		Low
1-day	1-day									1-day
VaR	VaR	$	3	$	7	$	1	$	2	VaR	$	1	$	4	$	1	$	2
SVaR	SVaR	5		18		1		2		SVaR	4		7		2		5
10-day	10-day									10-day
VaR	VaR	13		25		2		10		VaR	5		21		1		5
SVaR	SVaR	18		43		6		10		SVaR	18		27		11		22

FHN’s overall VaR measure includes both interest rate risk and credit spread risk. Separate measures of these component risks are as follows:

Table ~~22—Schedule of Risks Included in~~I.2.23

SCHEDULE OF RISKS INCLUDED IN VaR


		As of June 30, 2021				As of June 30, 2020				As of December 31, 2020					As of June 30, 2022				As of June 30, 2021				As of December 31, 2021
(Dollars in millions)	(Dollars in millions)	1-day		10-day		1-day		10-day		1-day		10-day		(Dollars in millions)	1-day		10-day		1-day		10-day		1-day		10-day
Interest rate risk	Interest rate risk	$	—	$	2	$	1	$	4	$	1	$	2	Interest rate risk	$	1	$	1	$	—	$	2	$	1	$	1
Credit spread risk	Credit spread risk	1		1		2		8		2		6		Credit spread risk	—		1		1		1		1		1

The potential risk of loss reflected by FHN’s VaR measures assumes the trading securities inventory is static. Because FHN Financial procures fixed income securities for purposes of distribution to clients, its trading securities inventory turns over regularly. Additionally, FHNF traders actively manage the trading securities inventory continuously throughout each trading day. Accordingly, FHNF’s trading

securities inventory is highly dynamic, rather than static. As a result, it would be rare for FHNF to

incur a negative revenue day in its fixed income activities ofat the ~~level~~levels indicated by its VaR ~~measurements.~~measures.

In addition to being used in FHN’s daily market risk management process, the VaR and SVaR measures are also used by FHN in computing its regulatory


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market risk capital requirements in accordance with the Market Risk Capital rules. For additional information regarding FHN's capital adequacy refer to the Capital section of this MD&A.


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FHN also performs stress tests on its trading securities portfolio to calculate the potential loss under various assumed market scenarios. Key assumed stresses used in those tests are:

Down 25 bps - assumes an instantaneous downward move in interest rates of 25 basis points at all points on the interest rate yield curve.

Up 25 bps - assumes an instantaneous upward move in interest rates of 25 basis points at all points on the interest rate yield curve.

Curve flattening - assumes an instantaneous flattening of the interest rate yield curve through an increase in short-term rates and a decrease in long-term rates. The 2-year point on the Treasury yield curve is assumed to increase 15 basis points and the 10-year point on the Treasury yield curve is assumed to decrease 15 basis points. Shifts in other points on the yield curve are predicted based on their correlation to the 2-year and 10-year points.

Curve steepening - assumes an instantaneous steepening of the interest rate yield curve through a decrease in short-term rates and an increase in ~~long-term~~long-

term rates. The 2-year point on the Treasury yield curve is assumed to decrease 15 basis points and the 10-year point on the Treasury yield curve is assumed to increase 15 basis points. Shifts in other points on the yield curve are predicted based on their correlation to the 2-year and 10-year points.

Credit spread widening - assumes an instantaneous increase in credit spreads (the difference between yields on Treasury securities and non-Treasury securities) of 25 basis points.

Model Validation

Trading risk management personnel within FHN Financial have primary responsibility for model risk management with respect to the model used by FHN to compute its VaR measures and perform stress testing on the trading inventory. Among other procedures, these personnel monitor model results and perform periodic backtesting as part of an ongoing process of validating the accuracy of the model. These model risk management activities are subject to annual review by FHN’s Model Validation Group, an independent assurance group charged with oversight responsibility for FHN’s model risk management.

Interest Rate Risk Management

~~INTEREST RATE RISK MANAGEMENT~~

Net Interest Income Simulation Analysis

The information provided in this section, including the discussion regarding the outcomes of simulation analysis and rate shock analysis, is forward-looking. Actual results, if the assumed scenarios were to occur, could differ because of interest rate movements, the ability of management to execute its business plans, and other factors, including those presented in the Forward-Looking Statements section of this Report.

Management uses a simulation model to measure interest rate risk and to formulate strategies to improve balance sheet positioning, earnings, or both, within FHN’s interest rate risk, liquidity, and capital guidelines. Interest rate exposure is measured by forecasting 12 months of NII under various interest rate scenarios and comparing the percentage change in NII for each scenario to a base case scenario where interest rates remain unchanged. Assumptions are made regarding future balance sheet composition, interest rate movements, and loan and deposit pricing. In addition, assumptions are made about the magnitude of asset prepayments and earlier than anticipated deposit withdrawals. The results of these scenarios help FHN develop strategies for managing exposure to interest rate risk. While management believes the assumptions used and scenarios selected in its simulations are reasonable, simulation modeling provides only an estimate, not a precise calculation, of exposure to any given change in interest rates.

Based on a static balance sheet as of June 30, ~~2021,~~2022, NII exposures over the next 12 months assuming rate shocks

of ~~plus~~plus/minus 25 basis points, plus/minus 50 basis points, plus/minus 100 basis points, and plus 200 basis points are estimated to have ~~favorable~~ variances as shown in the table below.

Table ~~23 - Interest Rate Sensitivity~~I.2.24


~~Shifts in Interest Rates (in bps)~~						~~% Change in Projected Net Interest Income~~
~~+25~~						~~2.2%~~
~~+50~~						~~4.5%~~
~~+100~~						~~9.8%~~
~~+200~~						~~17.8%~~

INTEREST RATE SENSITIVITY


Shifts in Interest Rates (in bps)						% Change in Projected Net Interest Income
-100						-15.4%
-50						-7.6%
-25						-3.7%
+25						+3.0%
+50						+5.9%
+100						+11.8%
+200						+20.5%

A steepening yield curve scenario where long-term rates increase by 50 basis points and short-term rates are static, results in a favorable NII variance of ~~0.9%~~0.3%. A flattening yield curve scenario where long-term rates decrease by 50 basis points and short-term rates are static, results in an unfavorable NII variance of ~~1.2%~~0.4%. ~~Rate shocks of minus 25 basis points and 50~~


~~FIRST HORIZON CORPORATION~~			~~102~~			~~2Q21 FORM 10-Q REPORT~~

~~basis points result in unfavorable NII variances of 1.5% and 1.9%, assuming the absence of negative rates.~~ These hypothetical scenarios ~~scenarios~~ are used to create a risk measurement framework, and do not necessarily represent management’s current view of future interest rates or market developments.

FHN’s net interest income ~~has~~had been ~~and likely will continue to be,~~ impacted by the disruption from the COVID-19 pandemic and its variants as well as the ~~low rate~~low-rate environment. The ~~increase in the unemployment rate, client loan deferral requests, the~~ impact of


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government ~~assistance~~stimulus programs and other developments ~~have influenced~~continue to influence net interest income ~~results. Although many of those~~results, although the impacts from these programs have ~~started~~abated.

Interest rates have been increasing over the past two quarters as the Federal Reserve has pivoted its monetary

policy actions to ~~abate, impacts are expected to continue for some time.~~ curb inflation pressures, with the expectation that rates will increase further in the future.

FHN continues to monitor current economic trends and potential exposures closely.

~~LIQUIDITY RISK MANAGEMENT~~

Liquidity Risk Management

Among other things, ALCO is responsible for liquidity management: the funding of assets with liabilities of appropriate duration, while mitigating the risk of unexpected cash needs. ALCO and the Board of Directors have adopted a Liquidity Policy of which the objective is to ensure that FHN meets its cash and collateral obligations promptly, in a cost-effective manner and with the highest degree of reliability. The maintenance of adequate levels of asset and liability liquidity should provide FHN with the ability to meet both expected and unexpected cash and collateral needs. Key liquidity ratios, asset liquidity levels, and the amount available from funding sources are reported to ALCO on a regular basis. FHN’s Liquidity Policy establishes liquidity limits that are deemed appropriate for FHN’s risk profile.

In accordance with the Liquidity Policy, ALCO manages FHN’s exposure to liquidity risk through a dynamic, real time forecasting methodology. Base liquidity forecasts are reviewed by ALCO and are updated as financial conditions dictate. In addition to the baseline liquidity reports, robust stress testing of assumptions and funds availability are periodically reviewed. FHN maintains a contingency funding plan that may be executed should unexpected difficulties arise in accessing funding that affects FHN, the industry, or both. Subject to market conditions and compliance with applicable regulatory requirements from time to time, funds are available from a number of sources, including the available-for-sale securities portfolio, dealer and commercial customer repurchase agreements, access to the overnight and term Federal Funds markets, incremental borrowing capacity at the ~~FHL~~FHBLB ($~~13.4~~12.9 billion was available as of June 30, ~~2021)~~2022), brokered deposits, loan sales, syndications, and access to the Federal Reserve Bank.

Core deposits are a significant source of funding and have historically been a stable source of liquidity for banks. Generally, core deposits represent funding from a financial institution's ~~customer~~client base which ~~provide~~provides inexpensive, predictable pricing. The ratio of ~~total~~average loans, excluding loans HFS ~~and~~and restricted real estate loans, to average core deposits was ~~83% f~~or 76% for June 30, ~~2021~~2022 and ~~97%~~ 80% for December 31, ~~2020.~~2021.

FHN may also use unsecured short-term borrowings as a source of liquidity. Federal funds purchased from correspondent bank clients are considered to be substantially more stable than funds purchased in the national broker markets for federal funds due to the long, historical, and reciprocal nature of banking services

provided by FHN to these correspondent banks. The remainder of FHN’s wholesale short-term borrowings consists of securities sold under agreements to repurchase transactions accounted for as secured borrowings with business clients or broker dealer counterparties.

Both FHN and First Horizon Bank have the ability to generate liquidity by issuing senior or subordinated unsecured debt, preferred equity, and common equity, subject to market conditions and compliance with applicable regulatory requirements. In ~~May 2021,~~February 2022, FHN issued ~~$150 million~~and sold to TD 4,936 shares of Series ~~F Non-Cumulative~~G Perpetual Convertible Preferred Stock ~~and announced the full redemption of its $100 million Series A Non-Cumulative Perpetual Preferred Stock which subsequently was redeemed~~ in ~~July.~~a private placement transaction for $494 million. As of June 30, ~~2021~~2022, FHN had outstanding $1.3 billion in senior and subordinated unsecured debt and ~~$520 million~~$1.0 billion in non-cumulative perpetual preferred stock. As of June 30, ~~2021,~~2022, First Horizon Bank and subsidiaries had outstanding preferred shares of $295 million, which are reflected as noncontrolling interest on the Consolidated Balance Sheets.

Parent company liquidity is primarily provided by cash flows stemming from dividends and interest payments collected from subsidiaries. These sources of cash represent the primary sources of funds to pay cash dividends to shareholders and principal and interest to debt holders of FHN. Applying the dividend restrictions imposed under applicable federal and state rules as outlined above, the Bank’s total amount available for dividends was ~~$1.1~~$1.2 billion as of July 1, ~~2021.~~ 2022.

In March 2022, FHN agreed to suspend the Dividend Reinvestment Plan in connection with the TD acquisition. As a result of the suspension of the Plan, participants in the Plan received their first quarter 2022 FHN dividend, paid on April 1, 2022, in cash. During the suspension period, dividend payments of FHN will not be automatically reinvested in additional shares of FHN common stock and participants in the Plan will be unable to purchase shares of FHN common stock through optional cash investments under the Plan.

First Horizon Bank declared and paid common dividends to the parent company in the ~~amount~~amounts of ~~$183~~$180 million, $85 million, and $85 million in first, second and third quarter ~~2021~~2022 and ~~$180~~$770 million in ~~2020.~~2021. First Horizon Bank declared ~~preferred dividends in the second quarter of 2021 which were payable in July 2021~~ and paid preferred dividends in first and second quarter ~~of 2021~~2022 and in each quarter of ~~2020.~~2021. Additionally, First Horizon Bank declared preferred dividends in third quarter ~~2021,~~2022, payable in October ~~2021.~~

2022.


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Payment of a dividend to shareholders of FHN is dependent on several factors which are considered by the Board. These factors include FHN’s current and prospective capital, liquidity, and other needs, applicable regulatory restrictions (including capital conservation buffer requirements) and availability of funds to FHN through a dividend from First Horizon Bank. Additionally, banking regulators generally require insured banks and bank holding companies to pay cash dividends only out of current operating earnings. ~~Consequently, the decision~~ ~~of whether FHN will pay future dividends and the amount of dividends will be affected by current operating results.~~

FHN paid a cash dividend of $0.15 per common share on July 1, ~~2021.~~2022. FHN paid cash dividends of ~~$1,550 per Series A preferred share,~~ $1,625 per Series E preferred share and ~~$874.72~~$1,175 per Series F preferred

share on July ~~12, 2021~~11, 2022 and $331.25 per Series B preferred share and ~~$165.00~~$165 per Series C preferred share on August ~~2, 2021.~~1, 2022. In addition, in July ~~2021,~~2022, the Board approved cash dividends per share in the following amounts:

Table I.2.25

CASH DIVIDENDS

APPROVED BUT NOT PAID

Dividend/Share

Record Date

Payment Date

Common Stock

0.15

09/~~10/2021~~09/2022

10/~~01/2021~~03/2022

Preferred Stock

Series C

165.00

10/~~15/2021~~17/2022

11/01/~~2021~~2022

Series D

305.00

10/~~15/2021~~17/2022

11/01/~~2021~~2022

Series E

1,625.00

09/~~24/2021~~23/2022

10/~~12/2021~~11/2022

Series F

1,175.00

09/~~24/2021~~23/2022

10/~~12/2021~~11/2022

~~Repurchase Obligations and Off-Balance Sheet Arrangements~~

Off-Balance Sheet Arrangements

In the normal course of business, FHN is a party to a number of activities that contain credit, market and operational risk that are not reflected in whole or in part in the consolidated financial statements. Such activities include traditional off-balance sheet credit-related financial instruments. FHN enters into commitments to extend credit to borrowers, including loan commitments, lines of credit, standby letters of credit, and commercial letters of credit. Many of the commitments are expected to expire unused or be only partially used; therefore, the total amount of commitments does not necessarily represent future cash requirements. Based on its available liquidity and available borrowing capacity, FHN anticipates it will continue to have sufficient funds to meet its current commitments.

Repurchase Obligations

Prior to September 2008, ~~FHN~~legacy First Horizon originated loans through its pre-2009 mortgage business, primarily first lien home loans, with the intention of selling them. As discussed in Note 1110 - Contingencies and Other Disclosures, FHN's principal remaining exposures for those activities relate to (i) indemnification claims by underwriters, loan purchasers, and other parties which assert that FHN-originated loans caused or contributed to losses which FHN is legally obliged to indemnify, and (ii) indemnification or other claims related to FHN's servicing of pre-2009 mortgage loans.

FHN’s approach for determining the adequacy of the repurchase and foreclosure reserve has evolved, sometimes substantially, based on changes in information available. Repurchase/make-whole rates vary based on purchaser, vintage, and claim type. For those loans repurchased or covered by a make-whole payment, cumulative average loss severities range between 50 and 60 percent of the UPB.

In determining potential loss content, claims are analyzed by purchaser, vintage, and claim type. FHN considers various inputs including claim rate estimates, historical average repurchase and loss severity rates, mortgage insurance cancellations, and mortgage insurance curtailment requests. Inputs are applied to claims in the

active pipeline, as well as to historical average inflows to estimate loss content related to potential future inflows. Management also evaluates the nature of claims from purchasers and/or servicers of loans sold to determine if qualitative adjustments are appropriate.


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Repurchase and Foreclosure Liability

FHN’s repurchase and foreclosure liability, primarily related to its pre-2009 mortgage business, is comprised of accruals to cover estimated loss content in the active pipeline (consisting of mortgage loan repurchase, make-whole, foreclosure/servicing demands and certain related exposures), estimated future inflows, and estimated loss content related to certain known claims not currently included in the active pipeline. The liability contemplates repurchase/make-whole and damages obligations and estimates for probable incurred losses associated with loan populations excluded from the settlements with the GSEs, as well as other whole loans sold, mortgage insurance cancellation rescissions, and loans included in bulk servicing sales effected prior to the settlements with the GSEs. FHN compares the estimated probable incurred losses determined under the applicable loss estimation approaches for the respective periods with current reserve levels. Changes in the estimated required liability levels are recorded as necessary through the repurchase

and foreclosure provision. The repurchase and foreclosure liability was ~~$16~~$17 million as of June 30, ~~2021~~2022 and December 31, ~~2020.~~2021.

~~Off-Balance Sheet Arrangements~~


~~FIRST HORIZON CORPORATION~~			~~104~~			~~2Q21 FORM 10-Q REPORT~~

~~standby letters of credit. Many of the commitments are expected to expire unused or be only partially used; therefore, the total amount of commitments does not necessarily represent future cash~~

~~requirements. Based on its available liquidity and available borrowing capacity, FHN anticipates it will continue to have sufficient funds to meet its current commitments.~~

Market Uncertainties and Prospective Trends

FHN’s future results could be affected both positively and negatively by several known trends. Key among those are changes in the U.S. and global economy and outlook, government actions affecting interest rates, ~~government actions intended to stimulate the economy,~~ and government actions and proposals which could have positive or negative impacts on the economy at large or on certain ~~businesses.~~ businesses, industries, or sectors.

Additional risks relate to how the COVID-19 pandemic continues to affect FHN’s clients, political uncertainty, changes in federal policies (including those publicly discussed, formally proposed, or recently implemented) and the potential impacts of those changes on our businesses and clients, and whether FHN’s strategic initiatives will succeed.

Inflation, Recession, and Federal Reserve Policy

In March 2020, in response to the economic downturn associated with the COVID-19 pandemic along with societal and government reactions to it, the Federal Reserve ~~lowered~~"eased" by lowering short-term interest rates ~~twice~~ and ~~started a “quantitative easing”~~operating an asset purchase program intended to lower longer-term interest rates and foster access to credit. The effective yields of 10-year and 30-year U.S. Treasury securities achieved record low rates. These changes in interest rates and the volatility in the market negatively impacted FHN’s net interest margin. Amortization of net processing fees related to government relief programs associated with the COVID-19 pandemic, including the Paycheck Protection Program, ~~has~~ offset a portion of the net interest margin decline. ~~In the first half of~~During 2021, ~~interest~~easing policy continued. Interest rates ~~have~~ fluctuated but ~~within a~~remained very low, ~~rate range,~~ continuing to adversely impact FHN's net interest margin. ~~FHN expects that when~~Inflation in the U.S. rose significantly during 2021 but, in 2021, was viewed as transitory.

The first half of 2022 has been marked by: inflation continuing strongly; the Federal Reserve ~~begins~~reversing course to ~~reverse its "easing" strategies, it will start~~implement a "tightening" policy to contain inflation by ~~reducing its asset purchases rather than by raising short term~~increasing short-term interest rates ~~directly.~~and ending asset

~~COVID-19 Pandemic~~

~~Government and societal reaction to the COVID-19 pandemic caused extraordinary disruption to~~

purchases; many broad indicators suggesting near-term recession, including contractions in the U.S. economy ~~as well as to the local economies within FHN's footprint,~~ during the ~~final three~~first and second quarters; continuing supply-chain difficulties impacting many industries; and low unemployment rates. Historically, while it is common for unemployment to rise only after a recession has begun, it is unusual for unemployment to remain low in the context of the events in 2022 so far. The delayed reaction is likely to be temporary, however: if recessionary pressures continue to grow, demand for labor eventually will abate.

Amplifying inflationary pressures and general uncertainties this year, the Russian military invaded Ukraine in February. Much of Europe and the rest of the world, including the U.S., has imposed economic sanctions on Russia for its attack, its ongoing military campaign resulting in substantial civilian casualties, and the manner in which it has prosecuted the war which, reportedly, has significantly violated several international conventions and treaties. The war and sanctions resulted in global oil and gas prices rising precipitously in early 2022, along with the prices of several other commodities exported by Russia, Ukraine, or both, including certain grains and vegetable oils. Also, several U.S. and European multi-national companies have pulled operations and assets out


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of Russia and parts of Ukraine, compounding the economic impact of the war on the global economy.

The Federal Reserve's recent public comments indicate that short-term rates are expected to be raised several more times during 2022, until inflation is judged to be adequately controlled. Moreover, the Federal Reserve has expressed its intent to bring inflation under control even at the risk of creating, or deepening, an economic recession.

During this still-ongoing and still-volatile transition period, the yield curve has flattened and modestly inverted at times. Unusual yield curve effects, including inversion, may continue. A traditional measure of inversion occurs when the two-year rate is higher than the ten-year rate. Inversion incidents have been more frequent early in the third quarter. Traditional inversion occurred briefly several times during the first two quarters of ~~2020 and continuing into~~2022, but has not been sustained. Sustained traditional yield curve inversion is viewed, with statistical support, as a harbinger of economic recession.

As a result of the prospects for recession, coupled with the uncertainties associated with the war in eastern Europe, financial markets world-wide have been volatile in 2022. Financial asset values broadly fell during the first half of ~~2021. Business activity,~~2022, especially ~~lending (other than lending related to home mortgages), declined throughout 2020 and into~~during the ~~first half of this year. In certain business lines,~~ second quarter.

FHN ~~reduced~~cannot predict exactly when or ~~stopped new lending because of the pandemic.~~how much short-term rates will be raised, nor how market-driven long-term

~~During~~rates will behave, nor how those actions may affect financial markets, during the ~~first half~~remainder of ~~2021, especially later~~2022.

In several respects FHN is likely to benefit from rising rates, as long as the rise in ~~that period,~~lending rates outpaces the inevitable rise in ~~many of~~deposit and other funding rates. For instance, FHN's ~~markets COVID-19 restrictions were at least partially eased as vaccine production and distribution increased. During the latter part of~~net interest margin widened significantly in the second quarter of ~~2021, FHN saw~~2022. However, the ~~lending pipeline start to improve~~general increase in ~~several areas (unrelated to home mortgages).~~

~~In most of its markets, FHN expects the impact of COVID-19 restrictions to continue to diminish over the rest of~~interest rates this year ~~with further progress in vaccination rates. However, the risk of resurgence remains as new virus variants continue to be identified~~has pushed home mortgage rates in the U.S. higher. FHN's direct mortgage lending, lending to mortgage companies, and ~~around the world. FHN continues~~title insurance activities have seen business decline in 2022. If mortgage rates continue to ~~closely monitor the pandemic~~rise, FHN's revenues and ~~its effects on clients, especially credit quality,~~earnings from those areas likely will continue to fall compared with 2021.

More generally, a recession accompanying rising rates likely would have a significant negative impact on FHN's ~~communities,~~businesses overall. Demand for loans is likely to fall, reserves for loan losses are likely to rise, many commercial activities that generate fee income are likely to decline, and oncompetition for clients is likely to sharpen. FHN already has begun to experience some of these impacts in 2022. The deeper or longer a recession lasts, the ~~financial markets. FHN continues~~more significant these negative impacts are likely to ~~reach out to clients to discuss challenges and solutions, to provide line draws and new extensions to existing clients, to provide support~~be for ~~small businesses through the Paycheck Protection Program and other stimulus programs, and to provide lending and deposit assistance through deferrals and waived fees.~~FHN.

LIBOR & Reference Rate Reform

LIBOR

The London Inter-Bank Offered Rate ("LIBOR") isfor many years was the most widely used reference rate in the ~~world, and has been for many years.~~world. A ~~substantial majority~~large but declining portion of FHN's floating rate loans use LIBOR, denominated in U.S. Dollars ("USD"), as the reference rate to determine the interest rate paid by the client/borrower. In addition, certain floating-rate securities issued by FHN use USD LIBOR as the reference rate.

LIBOR is based on a mix of transaction-based data and expert judgment about market conditions. ~~Before 2014, it was based mainly on expert judgment.~~ It is published in different tenors, which are time periods such as 1-week, 1-month, 12-month, etc.

LIBOR Discontinuance

About a decade ago, evidence emerged that some members of the panel that set LIBOR may have manipulated the published LIBOR rates rather than using strictly good-faith judgments. Several banks were fined.


~~FIRST HORIZON CORPORATION~~			~~105~~			~~2Q21 FORM 10-Q REPORT~~

In 2017, the Chief Executive of the United Kingdom Financial Conduct Authority (the “FCA”)—the governmental regulator of LIBOR—announced that it ~~intends~~intended to halt persuading or compelling banks to submit rates for the calculation of LIBOR after 2021. In 2021, the FCA announced that tenors of USD LIBOR ~~will~~would no longer be published as follows:

•One week and 2-month USD LIBOR ~~will~~would not be published after December 31, 2021; and

•All other USD LIBOR tenors (e.g., overnight, 1-month, 3-month, 6-month and 12-month tenors) ~~will~~would not be published after June 30, 2023.

U.S. Regulatory Position

In 2020, the Federal Reserve, the OCC, and the FDIC jointly encouraged U.S. banks to transition away from LIBOR for new contracts as soon as practicable and, in any event, by December 31, 2021. They noted that entering into new contracts that use LIBOR as a reference rate after December 31, 2021 would create safety and soundness risks.

U.S. Federal Legislation

In March 2022, Congress passed the Adjustable Interest Rate (LIBOR) Act. The legislation addresses loans that will remain on LIBOR as of the June 30, 2023, and that either have no fallback provisions or that contain fallback provisions that do not identify a specific benchmark replacement. Per the legislation, at the final cessation of USD LIBOR, banks may cause such loans to fall back to a SOFR-based benchmark rate, with such rate to be selected by the Federal Reserve Board. The LIBOR Act also provides safe harbor from liability for banks that select the Board-


			107			2Q22 FORM 10-Q REPORT


PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
Table of Contents

selected replacement benchmark rate at the cessation of LIBOR.

Alternatives to LIBOR

LIBOR became the market-preferred reference rate because it was perceived by lenders and borrowers as being superior to alternatives in a wide range of circumstances. ~~FHN believes~~Now that the origination of LIBOR-indexed loans has ended, no single alternative reference rate ~~will immediately replace~~has replaced LIBOR for USD transactions. Instead, ~~FHN believes it is likely that~~a number of different ~~alternatives will be~~reference rates are being used in different circumstances. Although it is difficult to predict which alternatives will be favored by market participants in any particular situation, at this time it seems likely that the following alternative reference rates may be used by market participants once USD LIThese include~~BOR is discontinued:~~:

•Daily SOFR. The Alternative Reference Rates Committee (“ARRC”) is a group of private-market and financial regulator participants convened by the Federal Reserve and the New York Federal Reserve Bank to help ensure a successful transition from USD LIBOR to a more robust reference rate. The ARRC has recommended the Secured Overnight Financing Rate (“SOFR”) as its preferred alternative. SOFR resets daily and is based on actual transaction data for the U.S. Treasury repurchase market. Accordingly, SOFR represents a ~~riskless~~nearly risk-free secured overnight rate.

•CME Term SOFR. Published by CME Group, Term SOFR is a forward-looking rate, with 1-month, 3-month, 6-month and ~~6-month~~12-month tenors, and is based on

SOFR futures contracts. The ARRC has recommended conventions for Term SOFR rates and has recommended CME Group as the administrator for Term SOFR.

•AMERIBOR. The American Interbank Offered Rate (“AMERIBOR”) Index is produced by the American Financial Exchange. AMERIBOR is based on actual transaction data involving credit decisions by many financial institutions, on an unsecured basis.

•BSBY. The Bloomberg short-term bank yield index ("BSBY") is a proprietary rate index calculated and published by Bloomberg Index Services Limited. BSBY is based on actual transaction data involving unsecured credit.

•Prime. Although traditional prime rates (with each bank setting its own) are not likely to regain the prominence they had decades ago when U.S. banks were much smaller and the industry was more fragmented, for some clients and products banks may increase their usage of prime rates.

The alternatives listed above were made available to the majority of FHN’s commercial clients starting in November 2021. In accordance with the U.S. regulatory position, FHN ceased entering into new LIBOR based contracts as of December 31, 2021. Other alternative reference rates are being developed and ~~considered. The alternatives listed above are those~~ FHN ~~currently expects to make available to clients by November 2021.~~

may consider them at a future time.

Each alternative reference rate has advantages and disadvantages compared with other alternatives in various

circumstances. Despite being supported by the ~~Federal Reserve's~~ ARRC, Daily SOFR ~~appears unlikely~~has not gained significant traction among middle market commercial borrowers. When assessing Daily SOFR, some borrowers have observed that the adoption of a rate with a daily reset introduces operational complexities, including changes to ~~gain~~ the ~~level~~loan's interest calculation and billing cycle. By contrast, CME Term SOFR is a rate that: 1) like LIBOR, has rate reset tenors of monthly or longer and 2) like Daily SOFR, carries the endorsement of the ARRC. For these reasons, CME Term SOFR has gained traction among many middle market ~~acceptance~~commercial borrowers.

All of the alternative reference rates selected by FHN to date meet the International Organization of Securities Commissions ("IOSCO") Principles for Financial Benchmarks, as affirmed by the rate administrator and/or an independent auditor. While banking regulators have stated that banks are free to choose the index rates they offer clients, some public sector officials have urged caution in using the new credit sensitive alternative reference rates (a category that includes BSBY and ~~usage~~AMERIBOR), primarily due to the robustness of underlying data used to derive the rates. More specifically, there is concern of an “inverted pyramid” effect where a large number of financial contracts could be priced using an index derived from a relatively low volume of transactions. In an interagency statement on October 20, 2021, U.S. banking regulatory agencies noted that “supervised institutions should understand how their chosen reference rate is constructed and be aware of any fragilities associated with that rate and the markets that underlie it”. IOSCO has also warned of the potential for the “inverted pyramid” problem and will monitor how the IOSCO label is used by administrators.

FHN is monitoring the credit sensitive reference rates and regulatory guidance around use of such rates. FHN plans to limit use of credit sensitive rates to commercial loans (approximately 2% of global USD LIBOR ~~has enjoyed within~~market) and related customer swaps (pending development of derivatives markets for these rates). Additionally, FHN expects that each financial contract will contain fallback language to guide transition from a credit sensitive rate to an alternative should that action be deemed necessary in the U.S. Key aspects of SOFR that support this view are: (a) SOFR fundamentally is an overnight rate, and so is not easily or reliably translated into typical LIBOR tenors; and (b) SOFR is both secured and riskless, and so does not necessarily track a bank's cost of funds very well. For a bank, it is critical to avoid significant mismatches over time between its (variable) cost of funds and its (variable) interest income. Term SOFR attempts to address some of these shortcomings, but not all of them.

future.

FHN's Actions to Date & Transition Plans

Starting in 2019, ~~legacy First Horizon and legacy IBERIABANK both~~FHN modernized the fallback language used in ~~their~~its loan documentation to better handle how floating rate loans would be re-set if LIBOR ceased to be published during the loan term.

In the fourth quarter of 2021, FHN ~~began to notify~~ceased using USD LIBOR for new lending and renegotiated terms with clients whose loans are based on 1-week or 2-month USD LIBOR, which ~~will~~ceased publication at the end of 2021. Only a small portion of FHN's clients had such loans.


~~FIRST HORIZON CORPORATION~~			~~106~~108			~~2Q21~~2Q22 FORM 10-Q REPORT


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Table of Contents

~~cease at~~On the ~~end of~~consumer side, FHN began transitioning from LIBOR-based adjustable rate mortgages ("ARMS") to SOFR-based ARMs in November 2021, and ~~began re-negotiating terms with those clients. Only~~no longer offers LIBOR-based ARMs. SOFR has emerged as a ~~small portion~~market standard for ARMs in the U.S. and is the conforming convention for Fannie Mae and Freddie Mac.

For all products, FHN developed a go-to-market strategy which included pricing considerations, associate training, and client communications. All required systems, processes, and reporting were updated to accommodate the transition. FHN ceased origination of ~~FHN's clients have such loans.~~

~~FHN currently plans~~new contracts tied to ~~cease using USD~~ LIBOR on ~~new lending late in 2021. In 2022, FHN currently plans to re-negotiate terms with all clients who have LIBOR loans that do not contain the modernized fallback language.~~

Currently, FHN does not have a settled plan to substitute any particular alternative for LIBOR. Each of the leading alternatives mentioned above is undergoing further development and refinement, and it remains unclear which alternative(s) FHN and its clients generally will prefer, and in which situations. FHN has formulated tentative internal preferences for certain alternatives in certain situations, and expects that formulation to evolve and expand during the rest of 2021.

December 31, 2021

In addition, FHN has established a LIBOR Transition Office to assist associates in working with their clients to re-negotiate terms of loan and derivative contracts that extend past the June 30, 2023 cessation date for the remaining USD LIBOR tenors noted above. FHN bankers have begun amending the pricing of existing LIBOR-based commercial loans via a rate change at the time of renewal or via amendments to ~~1) assess~~ the ~~potential effects for affected~~loan documents to change the benchmark rate. Additionally, FHN bankers have begun amending interest rate derivative contracts whose tenors extend beyond the June 30, 2023 final cessation date of LIBOR.

While FHN has exposure to LIBOR in various contracts (e.g. securities, derivatives), FHN's primary exposure to LIBOR is in floating rate loans to customers and ~~derivatives, and 2) assess revisions~~derivative contracts issued to ~~systems, processes, and pricing needed~~customers through FHN Financial. Below is a summary of these exposures as of June 30, 2022:

Table I.2.26

LIBOR EXPOSURES



(Dollars in billions)	As of June 30, 2022		Mature after June 2023
Commercial loans (a)	$	19	$	15
Consumer loans (a)	3		3
Customer swaps (b)	9		9

(a) Amounts represent outstanding loan balances as of June 30, 2022.

(b) FHN has entered into offsetting upstream transactions with dealers to ~~implement alternative reference rates.~~offset its market risk exposure.

Financial Accounting Aspects

~~The transition from LIBOR could impact or change FHN’s hedge accounting practices.~~

In 2020, the FASB issued ASU 2020-04, “Facilitation of the Effects of Reference Rate Reform on Financial Reporting,” which provides several optional expedients and exceptions to ease the potential burden in accounting for reference rate reform. The scope of ASU 2020-04 was expanded in 2021 with

ASU 2021-01, "Scope". Refer to the Accounting Changes ~~Issued but Not Currently Effective~~With Extended Transition Periods section of Note 1 - Basis of Presentation and Accounting Policies for additional information.

In April 2022, the FASB proposed to extend the relief under Topic 848 (Reference Rate Reform) by two years, from December 31, 2022 to December 31, 2024.

U.S. Tax Accommodation

~~The~~On December 30, 2021, the IRS ~~has~~ released final guidance that is intended to facilitate the transition of existing contracts from LIBOR to new reference rates without triggering modification accounting or taxable exchange treatment for those contracts. This guidance specifies what must be met in order to qualify for the beneficial transition approach and FHN is considering this guidance in its transition plans.

~~Limited Data Security Incident~~

As reported previously, in April 2021 FHN became aware of a data security incident affecting a limited number of client accounts. FHN has determined that an unauthorized party obtained login credentials from an unknown source. Using the credentials and exploiting a vulnerability in third-party security software, the party gained unauthorized access to a limited number of online client bank accounts and to personal information in those accounts. The party fraudulently obtained an aggregate of less than $1 million from some of those accounts. FHN remediated the software vulnerability, notified the appropriate regulators and enforcement authorities, reset passwords for affected accounts, reimbursed clients for the stolen funds, and continues to work with affected clients as needed. This event did not have a material adverse effect on FHN's business, results of operations, or financial condition.

Critical Accounting Policies and Estimates

FHN has made no significant changes in its critical accounting policies and estimates from those disclosed in its ~~2020~~2021 Annual Report on Form ~~10-K.~~10-K, as amended.

Accounting Changes ~~With Extended Transition Periods~~

Refer to Note 1 – Basis of Presentation and Accounting Policies for a detail of accounting changes with extended transition periods and accounting changes issued but not currently effective, which section is incorporated into MD&A by this reference.


~~FIRST HORIZON CORPORATION~~			~~107~~109			~~2Q21~~2Q22 FORM 10-Q REPORT

~~Non-GAAP Information~~PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)

Table of Contents

Non-GAAP Information

Table ~~24—Non-GAAP to~~I.2.27

NON-GAAP TO GAAP ~~Reconciliation~~

Three Months Ended Six Months Ended
(Dollars in millions; shares in thousands) June 30, 2021 March 31, 2021 June 30, 2020 June 30, 2021 June 30, 2020
Pre-provision Net Revenue (Non-GAAP)
Net interest income (GAAP) $ 497 $ 508 $ 305 $ 1,004 $ 608
Plus: Noninterest income (GAAP) 285 298 206 583 381
Total revenues (GAAP) 782 806 511 1,587 989
Less: Noninterest expense (GAAP) 498 544 320 1,042 623
Pre-provision net revenue (Non-GAAP) $ 284 $ 262 $ 191 $ 545 $ 366
Average Tangible Common Equity (Non-GAAP)
Average total equity (GAAP) $ 8,459 $ 8,349 $ 5,118 $ 8,404 $ 5,060
Less: Average noncontrolling interest (a) 295 295 295 295 295
Less: Average preferred stock (a) 513 470 150 492 123
(A) Total average common equity $ 7,651 $ 7,584 $ 4,673 $ 7,617 $ 4,642
Less: Average intangible assets (GAAP) (b) 1,843 1,857 1,555 1,850 1,558
(B) Average Tangible Common Equity (Non-GAAP) $ 5,808 $ 5,727 $ 3,118 $ 5,767 $ 3,084
Net Income Available to Common Shareholders
(C) Net income available to common shareholders (annualized) (GAAP) $ 1,182 $ 911 $ 210 $ 1,047 $ 129
Tangible Common Equity (Non-GAAP)
(D) Total equity (GAAP) $ 8,565 $ 8,307 $ 5,208 $ 8,565 $ 5,208
Less: Noncontrolling interest (a) 295 295 295 295 295
Less: Preferred stock (a) 520 470 240 520 240
(E) Total common equity $ 7,750 $ 7,542 $ 4,673 $ 7,750 $ 4,673
Less: Intangible assets (GAAP) (b) 1,836 1,850 1,553 1,836 1,553
(F) Tangible common equity (Non-GAAP) 5,914 5,692 3,120 5,914 3,120
Less: Unrealized gains (losses) on AFS securities, net of tax 43 5 119 43 119
(G) Adjusted tangible common equity (Non-GAAP) $ 5,871 $ 5,687 $ 3,001 $ 5,871 $ 3,001
Tangible Assets (Non-GAAP)
(H) Total assets (GAAP) $ 87,908 $ 87,513 $ 48,645 $ 87,908 $ 48,645
Less: Intangible assets (GAAP) (b) 1,836 1,850 1,553 1,836 1,553
(I) Tangible assets (Non-GAAP) $ 86,072 $ 85,663 $ 47,092 $ 86,072 $ 47,092
Risk-Weighted Assets
(J) Risk-weighted assets (c) $ 61,991 $ 62,339 $ 37,038 $ 61,991 $ 37,038
Period-end Shares Outstanding
(K) Period-end shares outstanding 550,865 552,374 312,359 550,865 312,359
Ratios
(C)/(A) Return on average common equity (GAAP) 15.45 % 12.01 % 4.50 % 13.75 % 2.79 %
(C)/(B) Return on average tangible common equity (Non-GAAP) 20.36 15.90 6.74 18.16 4.19
(D)/(H) Total period-end equity to period-end assets (GAAP) 9.74 9.49 10.71 9.74 10.71
(F)/(I) Tangible common equity to tangible assets (Non-GAAP) 6.87 6.64 6.63 6.87 6.63
(G)/(J) Adjusted tangible common equity to risk-weighted assets (Non-GAAP) 9.47 9.12 8.10 9.47 8.10
(E)/(K) Book value per common share (GAAP) $ 14.07 $ 13.65 $ 14.96 $ 14.07 $ 14.96
(F)/(K) Tangible book value per common share (Non-GAAP) $ 10.74 $ 10.30 $ 9.99 $ 10.74 $ 9.99
RECONCILIATION


	Three Months Ended						Six Months Ended
(Dollars in millions; shares in thousands)	June 30, 2022			March 31, 2022			June 30, 2021			June 30, 2022			June 30, 2021
Pre-provision Net Revenue (Non-GAAP)
Net interest income (GAAP)	$	542		$	479		$	497		$	1,021		$	1,004
Plus: Noninterest income (GAAP)	201			229			285			430			583
Total revenues (GAAP)	743			708			782			1,451			1,587
Less: Noninterest expense (GAAP)	488			493			498			982			1,042
Pre-provision net revenue (Non-GAAP)	$	255		$	215		$	284		$	469		$	545



Average Tangible Common Equity (Non-GAAP)
Average total equity (GAAP)	$	8,614		$	8,618		$	8,459		$	8,616		$	8,404
Less: Average noncontrolling interest (a)	295			295			295			295			295
Less: Average preferred stock (a)	1,014			695			513			855			492
(A) Total average common equity	$	7,305		$	7,628		$	7,651		$	7,466		$	7,617
Less: Average goodwill and other intangible assets (GAAP) (b)	1,789			1,802			1,843			1,795			1,850
(B) Average tangible common equity (Non-GAAP)	$	5,516		$	5,826		$	5,808		$	5,671		$	5,767

Net Income Available to Common Shareholders
(C) Net income available to common shareholders (annualized) (GAAP)	$	666		$	756		$	1,182		$	711		$	1,047

Tangible Common Equity (Non-GAAP)
(D) Total equity (GAAP)	$	8,551		$	8,696		$	8,565		$	8,551		$	8,565
Less: Noncontrolling interest (a)	295			295			295			295			295
Less: Preferred stock (a)	1,014			1,014			520			1,014			520
(E) Total common equity	$	7,242		$	7,387		$	7,750		$	7,242		$	7,750
Less: Goodwill and other intangible assets (GAAP) (b)	1,783			1,796			1,836			1,783			1,836
(F) Tangible common equity (Non-GAAP)	5,459			5,591			5,914			5,459			5,914
Less: Unrealized gains (losses) on AFS securities, net of tax	(671)			(440)			43			(671)			43
(G) Adjusted tangible common equity (Non-GAAP)	$	6,130		$	6,031		$	5,871		$	6,130		$	5,871

Tangible Assets (Non-GAAP)
(H) Total assets (GAAP)	$	85,132		$	88,660		$	87,908		$	85,132		$	87,908
Less: Goodwill and other intangible assets (GAAP) (b)	1,783			1,796			1,836			1,783			1,836
(I) Tangible assets (Non-GAAP)	$	83,349		$	86,864		$	86,072		$	83,349		$	86,072

Risk-Weighted Assets
(J) Risk-weighted assets (c)	$	67,294		$	65,042		$	61,991		$	67,294		$	61,991

Period-end Shares Outstanding
(K) Period-end shares outstanding	536,333			534,587			550,865			536,333			550,865

Ratios
(C)/(A) Return on average common equity (GAAP)	9.12		%	9.92		%	15.45		%	9.52		%	13.75		%
(C)/(B) Return on average tangible common equity (Non-GAAP)	12.07			12.98			20.36			12.54			18.16
(D)/(H) Total period-end equity to period-end assets (GAAP)	10.04			9.81			9.74			10.04			9.74
(F)/(I) Tangible common equity to tangible assets (Non-GAAP)	6.55			6.44			6.87			6.55			6.87
(G)/(J) Adjusted tangible common equity to risk-weighted assets (Non-GAAP)	9.11			9.27			9.47			9.11			9.47
(E)/(K) Book value per common share (GAAP)	$	13.50		$	13.82		$	14.07		$	13.50		$	14.07
(F)/(K) Tangible book value per common share (Non-GAAP)	$	10.18		$	10.46		$	10.74		$	10.18		$	10.74

Loans and leases excluding PPP loans (Non-GAAP)
Commercial loans and leases excluding PPP loans	$	43,843		$	42,643		$	40,980		$	43,843		$	40,980
PPP loans	375			642			3,840			375			3,840
Total commercial loans and leases	44,218			43,285			44,820			44,218			44,820
Total consumer loans	12,311			11,727			11,867			12,311			11,867
Total loans and leases	$	56,529		$	55,012		$	56,687		$	56,529		$	56,687

(a) Included in total equity on the Consolidated Balance Sheets.

(b) Includes goodwill and other intangible assets, net of amortization.


~~FIRST HORIZON CORPORATION~~			~~108~~110			~~2Q21~~2Q22 FORM 10-Q REPORT


PART I, ITEM 3. DISCLOSURES ABOUT MARKET RISK AND ITEM 4. CONTROLS & PROCEDURES
Table of Contents

Item 3. Quantitative and Qualitative Disclosures about Market Risk

The information called for by this item is contained in

~~(a)~~

Management’s Discussion and Analysis of Financial Condition and Results of Operations included as Item 2 of Part I of this report, including in particular the section entitled “Risk Management” beginning on page ~~100~~(a) Management’s Discussion and Analysis of Financial Condition and Results of Operations included as Item 2 of Part I of this report, including in particular the section entitled “Risk Management” beginning on page 101 of this report and the subsections entitled “Market Risk Management” beginning on page 101 and “Interest Rate Risk Management” beginning on page 103 of this report, and

(b) Note 14 to the Consolidated Financial Statements appearing on pages 47-53 of this report, ~~and the subsections entitled “Market Risk Management” beginning on page~~ ~~100~~ ~~and “Interest Rate Risk Management” beginning on page~~ ~~102~~ ~~of this report, and~~

~~(b)~~

~~Note 15 to the Consolidated Financial Statements appearing on pages~~ ~~48-54~~ ~~of this report,~~

all of which materials are incorporated herein by reference. For additional information concerning market risk and our

(a)Evaluation of Disclosure Controls and Procedures. ~~FHN’s~~ Our management, with the participation of ~~FHN’s~~our chief executive officer and chief financial officer, has evaluated the effectiveness of ~~FHN’s~~our disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) as of the end of the period covered by this quarterly report. Based on that evaluation, the chief executive officer and the chief financial officer have concluded that ~~FHN’s~~our disclosure controls and procedures

were effective as of the end of the period covered by this report.

(b)Changes in Internal Control over Financial Reporting. ~~Other than as explained below, there~~ There have not been any changes in our internal control over financial reporting during the ~~first~~second fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

On July 1, 2020, FHN and IBERIABANK Corporation ("IBKC") closed their merger-of-equals transaction. As permitted by Securities and Exchange Commission rules, we elected to exclude IBKC from our assessment of internal control over financial reporting as of December 31, 2020. Our integration of IBKC’s systems and processes with our own could cause changes to our internal controls over financial reporting in future periods.


~~FIRST HORIZON CORPORATION~~			~~109~~111			~~2Q21~~2Q22 FORM 10-Q REPORT


PART II—OTHER INFORMATION, ITEMS 1. THROUGH 5.
Table of Contents



PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The “Contingencies” section of Note 1110 to the Consolidated Financial Statements beginning on page 36 of this Report is incorporated into this Item by reference.

Item 1A. Risk Factors

Material changes from risk factor disclosures in FHN's Annual Report on Form 10-K, as amended, for the year ended December 31, ~~2020, as supplemented in FHN's Quarterly Report on Form 10-Q for the period ended March 31,~~ 2021:

Not applicable.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds


			~~(a) & (b)~~			~~Not Applicable~~

			~~(c)~~			The "Common Stock Purchase Programs” section including tables 19 and 20 and explanatory discussions included in Item 2 of Part I of this report under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” beginning on page 99 (a) Unregistered Equity Securities Sold During the second quarter of 2022, FHN sold no common or preferred equity securities which were not registered under the Securities Act of 1933, as amended. (b) Use of Proceeds If Rule 463 is Applicable Not applicable (c) Equity Repurchases The "Common Stock Purchase Programs” section including tables I.2.20 and I.2.21 and explanatory discussions included in Item 2 of Part I of this report under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” beginning on page 100 of this report, is incorporated herein by reference.

Items 3., 4., and 5.

Not applicable

~~Not applicable~~


~~FIRST HORIZON CORPORATION~~			~~110~~112			~~2Q21~~2Q22 FORM 10-Q REPORT


PART II—OTHER INFORMATION, ITEM 6. EXHIBITS
Table of Contents

Item 6. Exhibits

~~(a) Exhibits~~10-Q EXHIBIT TABLE

Exh. No.

Description of Exhibit to this Report

Filed Here

Mngt Exh

Furnished

Incorporated by Reference to

Form

Exh. No.

Filing Date

2.1

Agreement and Plan of Merger dated as of February 27, 2022, between FHN, The Toronto-Dominion Bank, TD Bank US Holding Company, and Falcon Holdings Acquisition Co. [conformed copy]

10-K

2.1

3/01/2022

3.1

Amended and Restated Charter of First Horizon Corporation

8-K

3.1

7/30/2021

3.2

Articles of Amendment of the Restated Charter of FHN, related to the Series G Preferred Stock

8-K

3.1

3/03/2022

3.3

Bylaws of First Horizon Corporation, as amended and rest ated effective July 26 , 2022

8-K

3.1

7/27/2022

4.1

FHN agrees to furnish to the Securities and Exchange Commission upon request a copy of each instrument defining the rights of the holders of the senior and subordinated long-term debt of FHN and its consolidated subsidiaries

10.1

Form of Grant Notice for Retention RSUs—TD Merger Integration Award Program (Special Leader Group) [2022]

31(a)

Rule 13a-14(a) Certifications of CEO (pursuant to Section 302 of the Sarbanes-Oxley Act of 2002)

31(b)

Rule 13a-14(a) Certifications of CFO (pursuant to Section 302 of the Sarbanes-Oxley Act of 2002)

32(a)

18 USC 1350 Certifications of CEO (pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)

32(b)

18 USC 1350 Certifications of CFO (pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)

XBRL Exhibits

101

The following financial information from First Horizon Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, formatted in Inline XBRL: (i) Consolidated Balance Sheets at June 30, 2022 and December 31, 2021; (ii) Consolidated Statements of Income for the Three and Six Months Ended June 30, 2022 and 2021; (iii) Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2022 and 2021; (iv) Consolidated Statements of Changes in Equity for the Three and Six Months Ended June 30, 2022 and 2021; (v) Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2022 and 2021; (vi) Notes to Consolidated Financial Statements.

101. INS

XBRL Instance Document -- the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101. SCH

Inline XBRL Taxonomy Extension Schema

101. CAL

Inline XBRL Taxonomy Extension Calculation Linkbase

101. LAB

Inline XBRL Taxonomy Extension Label Linkbase

101. PRE

Inline XBRL Taxonomy Extension Presentation Linkbase

101. DEF

Inline XBRL Taxonomy Extension Definition Linkbase

104

Cover Page Interactive Data File, formatted in Inline XBRL (included in Exhibit 101)

In the Exhibit ~~Table below:~~Table: the “Filed Here” column denotes each exhibit which is filed or furnished (as applicable) with this report; the “Mngt Exh” column denotes each exhibit that

represents a management contract or compensatory plan or arrangement required to be identified as such; and the “Furnished” column denotes each exhibit that is ~~“furnished”~~


			113			2Q22 FORM 10-Q REPORT


PART II—OTHER INFORMATION, ITEM 6. EXHIBITS
Table of Contents

“furnished” pursuant to 18 U.S.C. Section 1350 or otherwise, and is not “filed” as part of this Report or as a separate disclosure document.

In many agreements filed as exhibits, each party makes representations and warranties to other parties. Those representations and warranties are made only to and for

the benefit of those other parties in the context of a business contract. Exceptions to such representations and warranties may be partially or fully waived by such parties, or not enforced by such parties, in their discretion. No such representation or warranty may be relied upon by any other person for any purpose.

~~EXHIBIT TABLE~~

Exh No Description of Exhibit to this Report Filed Here Mngt Exh Furn-ished Incorporated by Reference to
Form Exh No. Filing Date
3.1
Amended and Restated Charter of First Horizon Corporation
8-K 3.1 7/30/2021
4.1
Deposit Agreement, dated as of May 3 , 202 1 , by and among First Horizon Corporation, Equiniti Trust Company, as depositary, and the holders from time to time of the depositary receipts described therein [Series F ]
8-K 4.1 5/03/2021
4.2
Form of certificate representing the Series F preferred stock
8-K 4.2 5/03/2021
4.3
Form of D epositary R eceipt -Series F representing the Depositary Shares (included as part of Exhibit 4.1 to this report )
8-K 4.3 5/03/2021
4.4
Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934
X
4.5 FHN agrees to furnish to the Securities and Exchange Commission upon request a copy of each instrument defining the rights of the holders of the senior and subordinated long-term debt of FHN and its consolidated subsidiaries
10.1
List of Certain Benefits Available to Certain Executive Officers
X X
31(a)
Rule 13a-14(a) Certifications of CEO (pursuant to Section 302 of Sarbanes-Oxley Act of 2002)
X
31(b)
Rule 13a-14(a) Certifications of CFO (pursuant to Section 302 of the Sarbanes-Oxley Act of 2002)
X
32(a)
18 USC 1350 Certifications of CEO (pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)
X X
32(b)
18 USC 1350 Certifications of CFO (pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)
X X
XBRL Exhibits
101 The following financial information from First Horizon Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, formatted in Inline XBRL: (i) Consolidated Balance Sheets at June 30, 2021 and December 31, 2020; (ii) Consolidated Statements of Income for the Three and Six Months Ended June 30, 2021 and 2020; (iii) Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2021 and 2020; (iv) Consolidated Statements of Changes in Equity for the Three and Six Months Ended June 30, 2021 and 2020; (v) Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2021 and 2020; (vi) Notes to Consolidated Financial Statements. X
101. INS XBRL Instance Document -- the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101. SCH Inline XBRL Taxonomy Extension Schema X
101. CAL Inline XBRL Taxonomy Extension Calculation Linkbase X


~~FIRST HORIZON CORPORATION~~			~~111~~114			~~2Q21~~2Q22 FORM 10-Q REPORT

~~Exh No~~

~~Description of Exhibit to this Report~~

~~Filed Here~~

~~Mngt Exh~~

~~Furn-ished~~

~~Incorporated by Reference to~~

~~Form~~

~~Exh No.~~

~~Filing Date~~

~~101. LAB~~

~~Inline XBRL Taxonomy Extension Label Linkbase~~

~~101. PRE~~

~~Inline XBRL Taxonomy Extension Presentation Linkbase~~

~~101. DEF~~

~~Inline XBRL Taxonomy Extension Definition Linkbase~~

~~104~~

~~Cover Page Interactive Data File, formatted in Inline XBRL (included in Exhibit 101)~~


~~FIRST HORIZON CORPORATION~~SIGNATURES
~~112~~ Table of Contents			~~2Q21 FORM 10-Q REPORT~~

~~SIGNATURES~~Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

FIRST HORIZON CORPORATION

(Registrant)

Date: August ~~5, 2021~~4, 2022

By:

/s/ ~~Anthony J. Restel~~Hope Dmuchowski

Name:

~~Anthony J. Restel~~Hope Dmuchowski

Title:

Senior Executive Vice President—~~Chief Operating Officer~~ and ~~interim~~ Chief Financial Officer

(Duly Authorized Officer and Principal Financial Officer)


~~FIRST HORIZON CORPORATION~~			~~113~~115			~~2Q21~~2Q22 FORM 10-Q REPORT


TN		62-0803242
(State or other jurisdiction incorporation of organization)		(IRS Employer Identification No.)

165 Madison Avenue
Memphis,	Tennessee	38103
(Address of principal executive office)		(Zip Code)


Class						Outstanding on July ~~31, 2021~~29, 2022
Common Stock, $.625 par value						~~549,333,271~~536,609,492


ACL			Allowance for credit losses
~~ADR~~			~~Average daily revenue~~
AFS			Available for sale
AIR			Accrued interest receivable
ALCO			Asset/Liability Committee
ALLL			Allowance for loan and lease losses
ALM			Asset/liability management
AMERIBOR			American Interbank Offered Rate
AOCI			Accumulated other comprehensive income
ARRC			Alternative Reference Rates Committee
ASC			FASB Accounting Standards Codification
Associate			Person employed by FHN
ASU			Accounting Standards Update
Bank			First Horizon Bank
BOLI			Bank-owned life insurance
BSBY			Bloomberg short-term bank yield index
C&I			Commercial, financial, and industrial loan portfolio
CARES Act			Coronavirus Aid, Relief, and Economic Security Act
CBF			Capital Bank Financial
~~CCAR~~			~~Comprehensive Capital Analysis and Review~~
CD			~~Certificate of deposit~~
CECL			Current expected credit loss
CEO			Chief Executive Officer
~~CFPB~~			~~Consumer Financial Protection Bureau~~
CMO			Collateralized mortgage obligations
Company			First Horizon Corporation
Corporation			First Horizon Corporation
~~CRA~~			~~Community Reinvestment Act~~
CRE			Commercial Real Estate loan portfolio
CRMC			Credit Risk Management Committee
~~DSCR~~			~~Debt service coverage ratios~~
DTA			Deferred tax asset

DTL			Deferred tax liability
EPS			Earnings per share
~~ESOP~~Fannie Mae			~~Employee stock ownership plan~~Federal National Mortgage Association
FASB			Financial Accounting Standards Board


FDIC			Federal Deposit Insurance Corporation
Federal Reserve			Federal Reserve Board
~~FFP~~			~~Federal funds purchased~~
~~FFS~~			~~Federal funds sold~~
FHA			Federal Housing Administration
FHLB			Federal Home Loan Bank
FHLMC / Freddie Mac			~~Federal Home Loan Mortgage Corporation~~
FHN			First Horizon Corporation
FHNF			FHN Financial; FHN's fixed income division
FICO			Fair Isaac Corporation
~~FINRA~~			~~Financial Industry Regulatory Authority~~
~~FNMA / Fannie Mae~~			~~Federal National Mortgage Association~~
First Horizon			First Horizon Corporation


FRB			Federal Reserve Bank or the Federal Reserve Board
~~FTBNA~~Freddie Mac			~~First Tennessee Bank National Association (former name of the Bank)~~Federal Home Loan Mortgage Corporation
FTE			Fully taxable equivalent
~~FTHC~~			~~First Tennessee Housing Corporation~~
~~FTNF~~			~~FTN Financial (former name of FHNF)~~
~~FTNMC~~			~~First Tennessee New Markets Corporation~~
FTRESC			FT Real Estate Securities Company, Inc.
GAAP			Generally accepted accounting principles (U.S.)
GNMA			Government National Mortgage Association or Ginnie Mae
GSE			Government sponsored enterprises, in this report references Fannie Mae and Freddie Mac
HELOC			Home equity line of credit
HFS			Held for Sale
HTM			Held to maturity
~~HUD~~			~~Department of Housing and Urban Development~~
IBKC			IBERIABANK Corporation
IBKC merger			FHN's merger of equals with IBKC that closed July 2020
ISDA			International Swap and Derivatives Association


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



Glossary of Acronyms and Terms			1
Forward-Looking Statements			3
Non-GAAP Information			45

Part I. Financial Information			56
Item 1. Financial Statements			56
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			74
Item 3. Quantitative and Qualitative Disclosures about Market Risk			~~109~~111
Item 4. Controls and Procedures			~~109~~111

Part II. Other Information			~~110~~112
Item 1. Legal Proceedings			~~110~~112
Item 1A. Risk Factors			~~110~~112
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			~~110~~112
Item 3. Defaults Upon Senior Securities			~~110~~112
Item 4. Mine Safety Disclosures			~~110~~112
Item 5. Other Information			~~110~~112
Item 6. Exhibits			~~111~~113









Signatures			~~113~~115


IRS			Internal Revenue Service
LGD			Loss given default
LIBOR			London Inter-Bank Offered Rate
LIHTC			Low Income Housing Tax Credit
LLC			Limited Liability Company
LMC			Loans to mortgage companies
LOCOM			Lower of cost or market
LRRD			Loan Rehab and Recovery Department
LTV			Loan-to-value
MBS			Mortgage-backed securities
MD&A			Management’s Discussion and Analysis of Financial Condition and Results of Operations
~~MSR~~			~~Mortgage servicing rights~~
~~MSRB~~			~~Municipal Securities Rulemaking Board~~
NAICS			North American Industry Classification System
NII			Net interest income
~~NIM~~			~~Net interest margin~~
NM			Not meaningful
NMTC			New Market Tax Credit
~~NOL~~			~~Net operating loss~~
NPA			Nonperforming asset
Non-PCD			Non-Purchased Credit Deteriorated Financial Assets
NPL			Nonperforming loan
~~NSF~~			~~Non-sufficient funds~~
~~OCC~~			~~Office of the Comptroller of the Currency~~
~~OIS~~			~~Overnight indexed swap~~
OREO			Other Real Estate Owned
~~OTC~~			~~One-time close, a mortgage product which allowed simplified conversion of a construction loan to permanent financing~~
~~OTTI~~			~~Other than temporary impairment~~
PCAOB			Public Company Accounting Oversight Board


PCD			Purchased ~~Credit Deteriorated Financial Assets~~credit deteriorated financial assets
PCI			Purchased credit impaired
PD			Probability of default
PM			Portfolio managers
PPP			Paycheck Protection Program
PSU			Performance Stock Unit
RE			Real estate
RM			Relationship managers
ROA			Return on assets


~~ROCE~~			~~Return on average common shareholders' equity~~
~~ROTCE~~			~~Return on tangible common equity~~

RPL			Reasonably Possible Loss
~~RSU~~			~~Restricted stock unit~~
~~RULC~~			~~Reserve for unfunded lending commitments~~
~~RWA~~			~~Risk-weighted assets~~
SBA			Small Business Administration
SEC			Securities and Exchange Commission
SOFR			Secure Overnight Funding Rate
SVaR			Stressed Value-at-Risk
TD			The Toronto-Dominion Bank
TATDBNA			~~Tangible assets~~TD Bank, N.A.
~~TCE~~TD-US			~~Tangible common equity~~TD Bank US Holding Company
TD Merger Agreement			Merger agreement between FHN, TD, TD-US, and a TD-US subsidiary
Proposed TD Merger			The merger transactions contemplated by the TD Merger Agreement
TDR			Troubled Debt Restructuring
TRUP			Trust preferred loan
UPB			Unpaid principal balance
USDA			United States Department of Agriculture
VaR			Value-at-Risk
VIE			Variable Interest Entities
we / us / our			First Horizon Corporation


FORWARD-LOOKING STATEMENTS AND NON-GAAP INFORMATION
Table of Contents


Consolidated Balance Sheets (unaudited)			67

Consolidated Statements of Income (unaudited)			78

Consolidated Statements of Comprehensive Income (unaudited)			810

Consolidated Statements of Changes in Equity (unaudited)			911

Consolidated Statements of Cash Flows (unaudited)			1113

Notes to the Consolidated Financial Statements (unaudited)			1214
Note 1 Basis of Presentation and Accounting Policies			1214

Note 2 ~~Acquisitions and Divestitures~~Investment Securities			1316
Note 3 ~~Investment Securities~~Loans and Leases			1519
Note 4 ~~Loans and Leases~~			18
~~Note 5~~ Allowance for Credit Losses			27
Note 65 Mortgage Banking Activity			30
Note 76 Goodwill and Other Intangible Assets			31

Note 87 Preferred Stock			32
Note 98 Components of Other Comprehensive Income (Loss)			33
Note 109 Earnings Per Share			35
Note 1110 Contingencies and Other Disclosures			36
Note 1211 Retirement Plans			38
Note 12 Business Segment Information			39
Note 13 ~~Business Segment Information~~Variable Interest Entities			4044
Note 14 ~~Variable Interest Entities~~Derivatives			4547
Note 15 ~~Derivatives~~			48
~~Note 16~~ Master Netting and Similar Agreements - Repurchase, Reverse Repurchase, and Securities Borrowing Transactions			5554
Note 1716 Fair Value of Assets and Liabilities			5756
Note 1 7 Other Events			73


		(Unaudited)		December 31,			(Unaudited)		December 31,
		June 30,					June 30,
(Dollars in millions, except per share amounts)	(Dollars in millions, except per share amounts)	2021		2020		(Dollars in millions, except per share amounts)	2022		2021
Assets	Assets					Assets
Cash and due from banks	Cash and due from banks	$	1,303	$	1,203	Cash and due from banks	$	1,133	$	1,147
Interest-bearing deposits with banks	Interest-bearing deposits with banks	13,451		8,351		Interest-bearing deposits with banks	9,475		14,907
Federal funds sold and securities purchased under agreements to resell	Federal funds sold and securities purchased under agreements to resell	622		445		Federal funds sold and securities purchased under agreements to resell	712		641
Trading securities	Trading securities	1,035		1,176		Trading securities	1,392		1,601
Securities available for sale at fair value	Securities available for sale at fair value	8,388		8,047		Securities available for sale at fair value	8,941		8,707
Loans held for sale (including $377 and $405 at fair value, respectively)		977		1,022
Loans and leases (including $0 and $16 at fair value, respectively)		56,687		58,232
Securities held to maturity (fair value of $601 and $705, respectively)						Securities held to maturity (fair value of $601 and $705, respectively)	687		712
Loans held for sale (including $143 and $258 at fair value, respectively)						Loans held for sale (including $143 and $258 at fair value, respectively)	870		1,172
Loans and leases						Loans and leases	56,529		54,859
Allowance for loan and lease losses	Allowance for loan and lease losses	(815)		(963)		Allowance for loan and lease losses	(624)		(670)
Net loans and leases	Net loans and leases	55,872		57,269		Net loans and leases	55,905		54,189
Premises and equipment	Premises and equipment	714		759		Premises and equipment	636		665
Goodwill	Goodwill	1,511		1,511		Goodwill	1,511		1,511
Other intangible assets	Other intangible assets	325		354		Other intangible assets	272		298
Other assets	Other assets	3,710		4,072		Other assets	3,598		3,542
Total assets	Total assets	$	87,908	$	84,209	Total assets	$	85,132	$	89,092

Liabilities	Liabilities					Liabilities
Noninterest-bearing deposits	Noninterest-bearing deposits	$	25,833	$	22,173	Noninterest-bearing deposits	$	27,114	$	27,883
Interest-bearing deposits	Interest-bearing deposits	47,447		47,809		Interest-bearing deposits	43,436		47,012
Total deposits	Total deposits	73,280		69,982		Total deposits	70,550		74,895
Trading liabilities	Trading liabilities	531		353		Trading liabilities	394		426
Short-term borrowings	Short-term borrowings	2,246		2,198		Short-term borrowings	1,953		2,124
Term borrowings	Term borrowings	1,672		1,670		Term borrowings	1,599		1,590
Other liabilities	Other liabilities	1,614		1,699		Other liabilities	2,085		1,563
Total liabilities	Total liabilities	79,343		75,902		Total liabilities	76,581		80,598

Equity	Equity					Equity
Preferred stock, Non-cumulative perpetual, no par value; authorized 5,000,000 shares; issued 26,750 and 26,250 shares, respectively		520		470
Common stock, $0.625 par value; authorized 700,000,000 shares; issued 550,865,126 and 555,030,652 shares, respectively		344		347
Preferred stock, Non-cumulative perpetual, no par value; authorized 5,000,000 shares; issued 31,686 and 26,750 shares, respectively						Preferred stock, Non-cumulative perpetual, no par value; authorized 5,000,000 shares; issued 31,686 and 26,750 shares, respectively	1,014		520
Common stock, $0.625 par value; authorized 700,000,000 shares; issued 536,332,507 and 533,576,766 shares, respectively						Common stock, $0.625 par value; authorized 700,000,000 shares; issued 536,332,507 and 533,576,766 shares, respectively	335		333
Capital surplus	Capital surplus	4,997		5,074		Capital surplus	4,791		4,743
Retained earnings	Retained earnings	2,612		2,261		Retained earnings	3,079		2,891
Accumulated other comprehensive loss, net	Accumulated other comprehensive loss, net	(203)		(140)		Accumulated other comprehensive loss, net	(963)		(288)
FHN shareholders' equity	FHN shareholders' equity	8,270		8,012		FHN shareholders' equity	8,256		8,199
Noncontrolling interest	Noncontrolling interest	295		295		Noncontrolling interest	295		295
Total equity	Total equity	8,565		8,307		Total equity	8,551		8,494
Total liabilities and equity	Total liabilities and equity	$	87,908	$	84,209	Total liabilities and equity	$	85,132	$	89,092




	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in millions, except per share data; shares in thousands) (Unaudited)	2022		2021		2022		2021
Interest income
Interest and fees on loans and leases	$	492	$	496	$	936	$	1,003
Interest and fees on loans held for sale	10		7		20		14
Interest on investment securities	45		29		83		58
Interest on trading securities	13		7		24		14
Interest on other earning assets	23		3		31		5
Total interest income	583		542		1,094		1,094
Interest expense
Interest on deposits	18		24		29		48
Interest on trading liabilities	4		2		6		3
Interest on short-term borrowings	2		1		3		2
Interest on term borrowings	17		18		35		37
Total interest expense	41		45		73		90
Net interest income	542		497		1,021		1,004
Provision for credit losses	30		(115)		(10)		(160)
Net interest income after provision for credit losses	512		612		1,031		1,164
Noninterest income
Fixed income	51		102		124		228
Deposit transactions and cash management	42		44		86		86
Mortgage banking and title income	34		38		56		91
Brokerage, management fees and commissions	24		21		48		41
Card and digital banking fees	23		21		43		38
Other service charges and fees	15		11		28		21
Trust services and investment management	12		14		25		26
Securities gains (losses), net	—		11		6		11
Deferred compensation income	(17)		7		(21)		9
Other income	17		16		35		32
Total noninterest income	201		285		430		583
Noninterest expense
Personnel expense	265		306		545		624
Net occupancy expense	33		33		64		71
Computer software	29		30		58		57
Operations services	23		19		43		35
Legal and professional fees	17		16		40		31
Amortization of intangible assets	13		14		26		28
Contract employment and outsourcing	12		13		31		27
Equipment expense	11		12		23		23
Advertising and public relations	10		5		21		9
Communications and delivery	9		10		19		19
Other expense	66		40		112		118
Total noninterest expense	488		498		982		1,042
Income before income taxes	225		399		479		705
Income tax expense	48		88		105		159
Net income	$	177	$	311	$	374	$	546
Net income attributable to noncontrolling interest	3		3		6		6
Net income attributable to controlling interest	$	174	$	308	$	368	$	540
Preferred stock dividends	8		13		16		21
Net income available to common shareholders	$	166	$	295	$	352	$	519
Basic earnings per common share	$	0.31	$	0.54	$	0.66	$	0.94


GLOSSARY OF ACRONYMS & TERMS
Table of Contents



	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in millions, except per share data; shares in thousands) (Unaudited)	2021		2020		2021		2020
Interest income
Interest and fees on loans and leases	$	496	$	306	$	1,003	$	633
Interest and fees on loans held for sale	7		7		14		13
Interest on securities available for sale	29		24		58		52


Interest on trading securities	7		9		14		23
Interest on other earning assets	3		0		5		4
Total interest income	542		346		1,094		725
Interest expense
Interest on deposits	24		25		48		79
Interest on trading liabilities	2		1		3		4
Interest on short-term borrowings	1		1		2		12
Interest on term borrowings	18		14		37		22
Total interest expense	45		41		90		117
Net interest income	497		305		1,004		608
Provision for credit losses	(115)		121		(160)		275
Net interest income after provision for credit losses	612		184		1,164		333
Noninterest income
Fixed income	102		112		228		208
Mortgage banking and title income	38		4		91		7
Deposit transactions and cash management	44		31		86		61
Brokerage, management fees and commissions	21		14		41		29
Trust services and investment management	14		8		26		15
Bankcard income	15		7		25		14
Securities gains (losses), net	11		(1)		11		(1)

Other income	40		31		75		48
Total noninterest income	285		206		583		381
Noninterest expense
Personnel expense	306		200		624		384
Net occupancy expense	33		21		71		41
Computer software	30		17		57		32
Operations services	19		12		35		23
Legal and professional fees	16		13		31		22

Equipment expense	12		9		23		17
Amortization of intangible assets	14		5		28		11
Other expense	68		43		173		93
Total noninterest expense	498		320		1,042		623
Income before income taxes	399		70		705		91
Income tax expense	88		13		159		18
Net income	$	311	$	57	$	546	$	73
Net income attributable to noncontrolling interest	3		3		6		6
Net income attributable to controlling interest	$	308	$	54	$	540	$	67
Preferred stock dividends	13		2		21		3
Net income available to common shareholders	$	295	$	52	$	519	$	64
Basic earnings per common share	$	0.54	$	0.17	$	0.94	$	0.21
Diluted earnings per common share	$	0.53	$	0.17	$	0.93	$	0.21
Weighted average common shares	550,297		312,090		551,268		311,843
Diluted average common shares	556,763		312,936		557,146		312,792


Six Months Ended June 30, 2021
Six Months Ended June 30, 2022																		Six Months Ended June 30, 2022
		Preferred Stock			Common Stock														Preferred Stock			Common Stock
(Dollars in millions, except per share data; shares in thousands) (unaudited)	(Dollars in millions, except per share data; shares in thousands) (unaudited)	Shares	Amount		Shares	Amount		Capital Surplus		Retained Earnings		Accumulated Other Comprehensive Income (Loss) (a)		Noncontrolling Interest		Total		(Dollars in millions, except per share data; shares in thousands) (unaudited)	Shares	Amount		Shares	Amount		Capital Surplus		Retained Earnings		Accumulated Other Comprehensive Income (Loss) (a)		Noncontrolling Interest		Total
Balance, December 31, 2020		26,250	$	470	555,031	$	347	$	5,074	$	2,261	$	(140)	$	295	$	8,307
Balance, December 31, 2021																		Balance, December 31, 2021	26,750	$	520	533,577	$	333	$	4,743	$	2,891	$	(288)	$	295	$	8,494

Net income	Net income	—	—		—	—		—		233		—		3		236		Net income	—	—		—	—		—		195		—		3		198
Other comprehensive income (loss)	Other comprehensive income (loss)	—	—		—	—		—		—		(101)		—		(101)		Other comprehensive income (loss)	—	—		—	—		—		—		(423)		—		(423)
Comprehensive income (loss)	Comprehensive income (loss)	—	—		—	—		—		233		(101)		3		135		Comprehensive income (loss)	—	—		—	—		—		195		(423)		3		(225)
Cash dividends declared:	Cash dividends declared:																	Cash dividends declared:
Preferred stock	Preferred stock	—	—		—	—		—		(8)		—		—		(8)		Preferred stock	—	—		—	—		—		(8)		—		—		(8)
Common stock ($0.15 per share)	Common stock ($0.15 per share)	—	—		—	—		—		(84)		—		—		(84)		Common stock ($0.15 per share)	—	—		—	—		—		(82)		—		—		(82)
Common stock repurchased (b)		—	—		(3,864)	(2)		(60)		—		—		—		(62)
Preferred stock issuance (4,936 shares issued at $100,000 per share)																		Preferred stock issuance (4,936 shares issued at $100,000 per share)	4,936	494		—	—		—		—		—		—		494
Common stock repurchased																		Common stock repurchased	—	—		(120)	—		(2)		—		—		—		(2)
Common stock issued for:	Common stock issued for:																	Common stock issued for:
Stock options and restricted stock - equity awards		—	—		1,208	0		12		—		—		—		12
Stock options exercised and restricted stock awards																		Stock options exercised and restricted stock awards	—	—		1,130	1		14		—		—		—		15
Stock-based compensation expense	Stock-based compensation expense	—	—		—	—		10		—		—		—		10		Stock-based compensation expense	—	—		—	—		14		—		—		—		14
Dividends declared - noncontrolling interest of subsidiary preferred stock	Dividends declared - noncontrolling interest of subsidiary preferred stock	—	—		—	—		—		—		—		(3)		(3)		Dividends declared - noncontrolling interest of subsidiary preferred stock	—	—		—	—		—		—		—		(3)		(3)

Balance, March 31, 2021		26,250	470		552,375	345		5,036		2,402		(241)		295		8,307
Balance, March 31, 2022																		Balance, March 31, 2022	31,686	1,014		534,587	334		4,769		2,996		(711)		295		8,697

Net income	Net income	—	—		—	—		—		308		—		3		311		Net income	—	—		—	—		—		174		—		3		177
Other comprehensive income (loss)	Other comprehensive income (loss)	—	—		—	—		—		—		38		—		38		Other comprehensive income (loss)	—	—		—	—		—		—		(252)		—		(252)
Comprehensive income (loss)	Comprehensive income (loss)	—	—		—	—		—		308		38		3		349		Comprehensive income (loss)	—	—		—	—		—		174		(252)		3		(75)
Cash dividends declared:	Cash dividends declared:																	Cash dividends declared:
Preferred stock	Preferred stock	—	—		—	—		—		(8)		—		—		(8)		Preferred stock	—	—		—	—		—		(8)		—		—		(8)
Common stock ($0.15 per share)	Common stock ($0.15 per share)	—	—		—	—		—		(85)		—		—		(85)		Common stock ($0.15 per share)	—	—		—	—		—		(83)		—		—		(83)
Preferred stock issuance (1,500 shares issued at $100,000 per share net of offering costs)		1,500	145		—	—		—		—		—		—		145
Call of preferred stock		(1,000)	(95)		—	—		—		(5)		—		—		(100)
Common stock repurchased (b)		—	—		(3,435)	(3)		(61)		—		—		—		(64)

Common stock repurchased																		Common stock repurchased	—	—		(334)	(1)		(7)		—		—		—		(8)
Common stock issued for:	Common stock issued for:																	Common stock issued for:
Stock options and restricted stock - equity awards	Stock options and restricted stock - equity awards	—	—		1,925	2		11		—		—		—		13		Stock options and restricted stock - equity awards	—	—		2,080	2		11		—		—		—		13
Stock-based compensation expense	Stock-based compensation expense	—	—		—	—		11		—		—		—		11		Stock-based compensation expense	—	—		—	—		18		—		—		—		18
Dividends declared - noncontrolling interest of subsidiary preferred stock	Dividends declared - noncontrolling interest of subsidiary preferred stock	—	—		—	—		—		—		—		(3)		(3)		Dividends declared - noncontrolling interest of subsidiary preferred stock	—	—		—	—		—		—		—		(3)		(3)

Balance, June 30, 2021		26,750	$	520	550,865	$	344	$	4,997	$	2,612	$	(203)	$	295	$	8,565
Balance, June 30, 2022																		Balance, June 30, 2022	31,686	$	1,014	536,333	$	335	$	4,791	$	3,079	$	(963)	$	295	$	8,551



	Six Months Ended June 30,
(Dollars in millions) (Unaudited)	2022		2021
Operating Activities
Net income	$	374	$	546
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Provision for credit losses	(10)		(160)
Deferred income tax expense (benefit)	157		23
Depreciation and amortization of premises and equipment	30		31
Amortization of intangible assets	26		28
Net other amortization and accretion	(15)		(32)
Net (increase) decrease in trading securities	1,343		1,013
Net (increase) decrease in derivatives	558		253




Stock-based compensation expense	32		21
Securities (gains) losses, net	(6)		(11)


(Gain) loss on BOLI	(3)		(2)

Net (gains) losses on sale/disposal of fixed assets	(1)		33
Loans held for sale:
Purchases and originations	(2,467)		(2,804)
Gross proceeds from settlements and sales	1,594		2,050

(Gain) loss due to fair value adjustments and other	42		(69)










Other operating activities, net	(136)		95
Total adjustments	1,144		469
Net cash provided by (used in) operating activities	1,518		1,015
Investing Activities

Proceeds from sales of securities available for sale	—		33
Proceeds from maturities of securities available for sale	760		1,175
Purchases of securities available for sale	(1,863)		(1,647)

Proceeds from prepayments of securities held to maturity	25		—
Proceeds from sales of premises and equipment	15		4
Purchases of premises and equipment	(19)		(26)



Proceeds from BOLI	6		6

Net (increase) decrease in loans and leases	(1,640)		1,601

Net (increase) decrease in interest-bearing deposits with banks	5,432		(5,100)


Other investing activities, net	4		8
Net cash provided by (used in) investing activities	2,720		(3,946)
Financing Activities
Common stock:
Stock options exercised	26		25
Cash dividends paid	(162)		(167)
Repurchase of shares	(10)		(126)

Preferred stock:
Preferred stock issuance	494		145

Cash dividends paid - preferred stock - noncontrolling interest	(6)		(6)
Cash dividends paid - preferred stock	(16)		(16)




Net increase (decrease) in deposits	(4,345)		3,304
Net increase (decrease) in short-term borrowings	(171)		48


Increases (decreases) in term borrowings	9		1
Net cash provided by (used in) financing activities	(4,181)		3,208
Net increase (decrease) in cash and cash equivalents	57		277
Cash and cash equivalents at beginning of period	1,788		1,648
Cash and cash equivalents at end of period	$	1,845	$	1,925
Supplemental Disclosures
Total interest paid	$	71	$	98
Total taxes paid	10		173
Total taxes refunded	2		4
Transfer from loans to OREO	—		2
Transfer from loans HFS to trading securities	1,133		871
Transfer from loans to loans HFS	—		(31)


Six Months Ended June 30, 2020
	Preferred Stock			Common Stock
(Dollars in millions, except per share data; shares in thousands) (unaudited)	Shares	Amount		Shares	Amount		Capital Surplus		Retained Earnings		Accumulated Other Comprehensive Income (Loss) (a)		Noncontrolling Interest		Total
Balance, December 31, 2019	1,000	$	96	311,469	$	195	$	2,931	$	1,798	$	(239)	$	295	$	5,076
Adjustment to reflect adoption of ASU 2016-13	—	—		—	—		—		(96)		—		—		(96)
Beginning balance, as adjusted	1,000	96		311,469	195		2,931		1,702		(239)		295		4,980
Net income	—	—		—	—		—		13		—		3		16
Other comprehensive income (loss)	—	—		—	—		—		—		104		—		104
Comprehensive income (loss)	—	—		—	—		—		13		104		3		120
Cash dividends declared:
Preferred stock ($1,550 per share)	—	—		—	—		—		(1)		—		—		(1)
Common stock ($0.15 per share)	—	—		—	—		—		(48)		—		—		(48)
Common stock repurchased	—	—		(141)	0		(2)		—		—		—		(2)
Common stock issued for:
Stock options and restricted stock - equity awards	—	—		652	0		4		—		—		—		4
Stock-based compensation expense	—	—		—	—		7		—		—		—		7
Dividends declared - noncontrolling interest of subsidiary preferred stock	—	—		—	—		—		—		—		(3)		(3)
Other (b)	—	—		(117)	0		(1)		—		—		—		(1)
Balance, March 31, 2020	1,000	96		311,863	195		2,939		1,666		(135)		295		5,056
Net income	—	—		—	—		—		54		—		3		57
Other comprehensive income (loss)	—	—		—	—		—		—		1		—		1
Comprehensive income (loss)	—	—		—	—		—		54		1		3		58
Cash dividends declared:
Preferred stock ($1,550 per share)	—	—		—	—		—		(2)		—		—		(2)
Common stock ($0.15 per share)	—	—		—	—		—		(47)		—		—		(47)
Preferred stock issuance (1,500 shares issued at 100,000 per share net of offering costs)	1,500	144		—	—		—		—		—		—		144
Common stock repurchased	—	—		(183)	0		(1)		—		—		—		(1)
Common stock issued for:
Stock options and restricted stock - equity awards	—	—		679	0		0		—		—		—		0

Stock-based compensation expense	—	—		—	—		3		—		—		—		3
Dividends declared - noncontrolling interest of subsidiary preferred stock	—	—		—	—		—		—		—		(3)		(3)
Balance, June 30, 2020	2,500	$	240	312,359	$	195	$	2,941	$	1,671	$	(134)	$	295	$	5,208


~~FIRST HORIZON CORPORATION~~PART I, ITEM 1. FINANCIAL STATEMENTS
10 Table of Contents			~~2Q21 FORM 10-Q REPORT~~NOTE 1—BASIS OF PRESENTATION & ACCOUNTING POLICIES


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents			NOTE 1—BASIS OF PRESENTATION & ACCOUNTING POLICIES


~~FIRST HORIZON CORPORATION~~			1215			~~2Q21~~2Q22 FORM 10-Q REPORT


~~FIRST HORIZON CORPORATION~~Table of Contents			NOTE 2—INVESTMENT SECURITIES			14			~~2Q21 FORM 10-Q REPORT~~


INVESTMENT SECURITIES AT JUNE 30, 2022										INVESTMENT SECURITIES AT JUNE 30, 2022
		June 30, 2021									June 30, 2022
(Dollars in millions)	(Dollars in millions)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		(Dollars in millions)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities available for sale:	Securities available for sale:									Securities available for sale:
U.S. treasuries		$	607	$	0	$	0	$	607

Government agency issued MBS	Government agency issued MBS	4,120		66		(19)		4,167		Government agency issued MBS	$	5,268	$	2	$	(491)	$	4,779
Government agency issued CMO	Government agency issued CMO	2,330		18		(25)		2,323		Government agency issued CMO	2,867		—		(241)		2,626
Other U.S. government agencies	Other U.S. government agencies	737		10		(4)		743		Other U.S. government agencies	1,071		1		(98)		974

States and municipalities	States and municipalities	506		12		0		518		States and municipalities	623		—		(61)		562
Total securities available for sale (a)										Total securities available for sale (a)	$	9,829	$	3	$	(891)	$	8,941
		$	8,300	$	106	$	(48)	8,358
AFS securities recorded at fair value through earnings:
SBA-interest only strips (a)								30
Total securities available for sale (b)								$	8,388
Securities held to maturity:										Securities held to maturity:
Government agency issued MBS										Government agency issued MBS	486		—		(62)		424
Government agency issued CMO										Government agency issued CMO	201		—		(24)		177
Total securities held to maturity										Total securities held to maturity	$	687	$	—	$	(86)	$	601


INVESTMENT SECURITIES AT YE 2021										INVESTMENT SECURITIES AT YE 2021
		December 31, 2020									December 31, 2021
(Dollars in millions)	(Dollars in millions)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		(Dollars in millions)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities available for sale:	Securities available for sale:									Securities available for sale:
U.S. treasuries		$	613	$	0	$	0	$	613

Government agency issued MBS	Government agency issued MBS	3,722		92		(2)		3,812		Government agency issued MBS	$	5,062	$	42	$	(49)	$	5,055
Government agency issued CMO	Government agency issued CMO	2,380		29		(3)		2,406		Government agency issued CMO	2,296		8		(47)		2,257
Other U.S. government agencies	Other U.S. government agencies	672		12		0		684		Other U.S. government agencies	861		4		(15)		850
Corporate and other debt		40		1		(1)		40

States and municipalities	States and municipalities	445		15		0		460		States and municipalities	535		11		(1)		545
Total securities available for sale (a)										Total securities available for sale (a)	$	8,754	$	65	$	(112)	$	8,707
		$	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:										Securities held to maturity:
Government agency issued MBS										Government agency issued MBS	$	509	$	—	$	(5)	$	504
Government agency issued CMO										Government agency issued CMO	203		—		(2)		201
Total securities held to maturity										Total securities held to maturity	$	712	$	—	$	(7)	$	705


~~FIRST HORIZON CORPORATION~~			1516			~~2Q21~~2Q22 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents ~~Note 3 – Investment Securities (Continued)~~			NOTE 2—INVESTMENT SECURITIES


DEBT SECURITIES PORTFOLIO MATURITIES						DEBT SECURITIES PORTFOLIO MATURITIES
		Available for Sale					Held to Maturity				Available for Sale
(Dollars in millions)	(Dollars in millions)	Amortized Cost		Fair Value		(Dollars in millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Within 1 year	Within 1 year	$	680	$	681	Within 1 year	$	—	$	—	$	50	$	50
After 1 year through 5 years	After 1 year through 5 years	148		150		After 1 year through 5 years	—		—		122		117
After 5 years through 10 years	After 5 years through 10 years	346		355		After 5 years through 10 years	—		—		347		319
After 10 years	After 10 years	676		712		After 10 years	—		—		1,176		1,050
Subtotal	Subtotal	1,850		1,898		Subtotal	—		—		1,695		1,536
Government agency issued MBS and CMO (a)	Government agency issued MBS and CMO (a)	6,450		6,490		Government agency issued MBS and CMO (a)	687		601		8,135		7,405
Total	Total	$	8,300	$	8,388	Total	$	687	$	601	$	9,830	$	8,941


	As of June 30, 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	$	3,887	$	(362)	$	787	$	(129)	$	4,674	$	(491)
Government agency issued CMO	1,695		(115)		819		(126)		2,514		(241)
Other U.S. government agencies	664		(65)		203		(33)		867		(98)

States and municipalities	510		(59)		7		(2)		517		(61)
Total	$	6,756	$	(601)	$	1,816	$	(290)	$	8,572	$	(891)


~~FIRST HORIZON CORPORATION~~			1718			~~2Q21~~2Q22 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents			NOTE 3—LOANS & LEASES


LOANS AND LEASES BY PORTFOLIO SEGMENT						LOANS AND LEASES BY PORTFOLIO SEGMENT
(Dollars in millions)	(Dollars in millions)	June 30, 2021		December 31, 2020		(Dollars in millions)	June 30, 2022		December 31, 2021
Commercial:	Commercial:					Commercial:
Commercial and industrial (a) (b)	Commercial and industrial (a) (b)	$	27,652	$	27,700	Commercial and industrial (a) (b)	$	27,835	$	26,550
Loans to mortgage companies	Loans to mortgage companies	4,876		5,404		Loans to mortgage companies	3,441		4,518
Total commercial, financial, and industrial	Total commercial, financial, and industrial	32,528		33,104		Total commercial, financial, and industrial	31,276		31,068
Commercial real estate	Commercial real estate	12,292		12,275		Commercial real estate	12,942		12,109
Consumer:	Consumer:					Consumer:
HELOC	HELOC	2,151		2,420		HELOC	1,917		1,964
Real estate installment loans	Real estate installment loans	8,714		9,305		Real estate installment loans	9,524		8,808
Total consumer real estate	Total consumer real estate	10,865		11,725		Total consumer real estate	11,441		10,772
Credit card and other	Credit card and other	1,002		1,128		Credit card and other	870		910
Loans and leases	Loans and leases	$	56,687	$	58,232	Loans and leases	$	56,529	$	54,859
Allowance for loan and lease losses	Allowance for loan and lease losses	(815)		(963)		Allowance for loan and lease losses	(624)		(670)
Net loans and leases	Net loans and leases	$	55,872	$	57,269	Net loans and leases	$	55,905	$	54,189


C&I PORTFOLIO																						C&I PORTFOLIO
		June 30, 2021																					June 30, 2022
		C&I
(Dollars in millions)	(Dollars in millions)	2021		2020		2019		2018		2017		Prior to 2017		LMC (a)		Revolving Loans		Revolving Loans Converted to Term Loans (b)		Total		(Dollars in millions)	2022		2021		2020		2019		2018		Prior to 2018		LMC (a)		Revolving Loans		Revolving Loans Converted to Term Loans (b)		Total
Credit Quality Indicator:	Credit Quality Indicator:																					Credit Quality Indicator:
Pass (PD grades 1 through 12) (c)	Pass (PD grades 1 through 12) (c)	$	4,191	$	6,164	$	4,163	$	1,958	$	1,448	$	2,758	$	4,876	$	5,827	$	13	$	31,398	Pass (PD grades 1 through 12) (c)	$	2,945	$	5,229	$	2,354	$	2,613	$	1,268	$	3,611	$	3,441	$	8,670	$	498	$	30,629

Special Mention (PD grade 13)	Special Mention (PD grade 13)	22		50		56		75		24		75		0		155		5		462		Special Mention (PD grade 13)	—		18		8		35		23		72		—		80		24		260
Substandard, Doubtful, or Loss (PD grades 14,15, and 16)	Substandard, Doubtful, or Loss (PD grades 14,15, and 16)	52		122		77		118		24		111		0		117		47		668		Substandard, Doubtful, or Loss (PD grades 14,15, and 16)	4		13		27		4		58		103		—		93		85		387

Total C&I loans	Total C&I loans	$	4,265	$	6,336	$	4,296	$	2,151	$	1,496	$	2,944	$	4,876	$	6,099	$	65	$	32,528	Total C&I loans	$	2,949	$	5,260	$	2,389	$	2,652	$	1,349	$	3,786	$	3,441	$	8,843	$	607	$	31,276


CRE PORTFOLIO
	June 30, 2022

(Dollars in millions)	2022		2021		2020		2019		2018		Prior to 2018		Revolving Loans		Revolving Loans Converted to Term Loans		Total

Credit Quality Indicator:
Pass (PD grades 1 through 12)	$	1,531	$	3,065	$	1,651	$	2,300	$	1,071	$	3,035	$	243	$	15	$	12,911
Special Mention (PD grade 13)	—		—		—		—		—		19		—		—		19
Substandard, Doubtful, or Loss (PD grades 14,15, and 16)	—		—		—		—		1		—		11		—		12







Total CRE loans	$	1,531	$	3,065	$	1,651	$	2,300	$	1,072	$	3,054	$	254	$	15	$	12,942


~~FIRST HORIZON CORPORATION~~			1920			~~2Q21~~2Q22 FORM 10-Q REPORT