~~0000036966us-gaap:~~0000036966srt:MaximumMemberfhn:OtherAssetsTaxCreditInvestmentsMemberfhn:MeasurementInputAdjustmentsToCurrentSalesYieldsForSpecificPropertiesMemberus-gaap:FairValueInputsLevel3Memberus-gaap:~~InterestOnlyStripMember2021-01-012021-09-30~~ValuationTechniqueDiscountedCashFlowMember2022-12-31

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________________

FORM 10-Q

(Mark One)


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

For the quarterly period ended ~~September 30, 2022~~March 31, 2023


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

For the transition period from to

Commission File Number 001-15185

____________________________________

(Exact name of registrant as specified in its charter)

______________________________________


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)

(Registrant’s telephone number, including area code) (901) 523-4444

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol(s)

Name of Exchange on which Registered

$.625 Par Value Common Capital Stock

FHN

New York Stock Exchange LLC

Depositary Shares, each representing a 1/400th interest in
a share of Non-Cumulative Perpetual Preferred Stock, Series B

FHN PR B

New York Stock Exchange LLC

Depositary Shares, each representing a 1/400th interest in
a share of Non-Cumulative Perpetual Preferred Stock, Series C

FHN PR C

New York Stock Exchange LLC

Depositary Shares, each representing a 1/400th interest in
a share of Non-Cumulative Perpetual Preferred Stock, Series D

FHN PR D

New York Stock Exchange LLC

Depositary Shares, each representing a 1/4,000th interest in
a share of Non-Cumulative Perpetual Preferred Stock, Series E

FHN PR E

New York Stock Exchange LLC

Depositary Shares, each representing a 1/4,000th interest in
a share of Non-Cumulative Perpetual Preferred Stock, Series F

FHN PR F

New York Stock Exchange LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging Growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Class						Outstanding on ~~October 31, 2022~~April 28, 2023
Common Stock, $.625 par value						~~536,803,802~~537,811,498


10-Q REPORT TABLE OF CONTENTS

Table of Contents


GLOSSARY OF ACRONYMS & TERMS
Table of Contents

Glossary of Acronyms and Terms

The following is a list of common acronyms and terms used throughout this report:


ACL			Allowance for credit losses
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
CECL			Current expected credit loss
CEO			Chief Executive Officer
CMO			Collateralized mortgage obligations
Company			First Horizon Corporation
Corporation			First Horizon Corporation
CRE			Commercial Real Estate ~~loan portfolio~~
CRMC			Credit Risk Management Committee
DTA			Deferred tax asset
DTL			Deferred tax liability
EAD			Exposure as default
EPS			Earnings per share
Fannie Mae			Federal National Mortgage Association
FASB			Financial Accounting Standards Board
FDIC			Federal Deposit Insurance Corporation
Federal Reserve			Federal Reserve Board
FHA			Federal Housing Administration
FHLB			Federal Home Loan Bank
FHN			First Horizon Corporation
FHNF			FHN Financial; FHN's fixed income division
FICO			Fair Isaac Corporation
First Horizon			First Horizon Corporation


FRB			Federal Reserve Bank or the Federal Reserve Board
Freddie Mac			Federal Home Loan Mortgage Corporation
FTE			Fully taxable equivalent
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
IBKC			IBERIABANK Corporation
IBKC merger			FHN's merger of equals with IBKC that closed July 2020
ISDA			International Swap and Derivatives Association
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
NAICS			North American Industry Classification System
NII			Net interest income
NM			Not meaningful
NMTC			New Market Tax Credit
NPA			Nonperforming asset
Non-PCD			Non-Purchased Credit Deteriorated Financial Assets
NPL			Nonperforming loan
OREO			Other Real Estate Owned
~~PCAOB~~			~~Public Company Accounting Oversight Board~~


			1			~~3Q22~~1Q23 FORM 10-Q REPORT


GLOSSARY OF ACRONYMS & TERMS
Table of Contents


PCAOB			Public Company Accounting Oversight Board
PCD			Purchased 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
RPL			Reasonably ~~Possible~~possible Loss
SBA			Small Business Administration
SEC			Securities and Exchange Commission
SOFR			Secure Overnight Funding Rate
SVaR			Stressed Value-at-Risk
TD			The Toronto-Dominion Bank
~~TDBNA~~			~~TD Bank, N.A.~~
~~TD-US~~			~~TD Bank US Holding Company~~
TD Merger Agreement			Merger agreement between FHN, TD, TD-US, and a TD-US subsidiary which the parties mutually terminated on May 4, 2023
~~Pending~~ TD ~~Merger~~Transaction			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


			2			~~3Q22~~1Q23 FORM 10-Q REPORT


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

Forward-Looking Statements

This report, including material incorporated into it, contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements pertain to FHN's beliefs, plans, goals, expectations, and estimates. Forward-looking statements are not a representation of historical information, but instead pertain to future operations, strategies, financial results, or other developments. Forward-looking statements can be identified by the words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “should,” “is likely,” “will,” “going forward,” and other expressions that indicate future events and trends.

Forward-looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, operational, economic, and competitive uncertainties and contingencies, many of which are beyond FHN’s control, and many of which, with respect to future business decisions and actions (including acquisitions and divestitures), are subject to change and could cause FHN’s actual future results and outcomes to differ materially from those contemplated or implied by forward-looking statements or historical performance. Examples of uncertainties and contingencies include, among other important factors:

•the possibility that the anticipated benefits of the IBKC merger will not be realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in any or all of FHN’s market areas;

•~~potential adverse reactions or changes to business or associate relationships resulting from the IBKC merger;~~

•global, general and local economic and business conditions, including economic recession or depression;

•the potential impacts on FHN’s businesses of the COVID-19 pandemic, including negative impacts from quarantines, market declines, and volatility, and changes in client behavior related to the COVID-19 pandemic;

•the stability or volatility of values and activity in the residential housing and commercial real estate markets;

•potential requirements for FHN to repurchase, or compensate for losses from, previously sold or

securitized mortgages or securities based on such mortgages;

•potential claims alleging mortgage servicing failures, individually, on a class basis, or as master servicer of securitized loans;

•potential claims relating to participation in government programs, especially lending or other financial services programs;

•expectations of and actual timing and amount of interest rate movements, including the slope and

shape of the yield curve, which can have a significant impact on a financial services institution;

•market and monetary fluctuations, including fluctuations in mortgage markets;

•the financial condition of borrowers and other counterparties;

•competition within and outside the financial services industry;

•the occurrence of natural or man-made disasters, global pandemics, conflicts, or terrorist attacks, or other adverse external events;

•effectiveness and cost-efficiency of FHN’s hedging practices;

•fraud, theft, or other incursions through conventional, electronic, or other means directly or indirectly affecting FHN or its clients, business counterparties, or competitors;

•the ability to adapt products and services to changing industry standards and client preferences;

•risks inherent in originating, selling, servicing, and holding loans and loan-based assets, including prepayment risks, pricing concessions, fluctuation in U.S. housing and other real estate prices, fluctuation of collateral values, and changes in client profiles;

•~~the~~ changes in the regulation of the U.S. financial services industry;

•changes in laws, regulations, and administrative actions, including executive orders, whether or not specific to the financial services industry;

•changes in accounting policies, standards, and interpretations;

•evolving capital and liquidity standards under applicable regulatory rules;

•accounting policies and processes require management to make estimates about matters that are uncertain;

•any adverse effect on FHN resulting from the termination of the TD Transaction;

•the outcome of any legal proceedings that may be instituted against FHN, including potential litigation that may be instituted against FHN or its directors or officers related to the TD Transaction or the TD Merger Agreement;

•reputational risk and potential adverse reactions or changes to business or employee relationships, including those resulting from the termination of the TD Transaction; and


			3			~~3Q22~~1Q23 FORM 10-Q REPORT


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

•~~the occurrence of any event, change or other circumstances that could give rise to the right of one or both of the parties to terminate the TD Merger Agreement;~~

•the outcome of any legal proceedings that have been or may be instituted against FHN, TD, or TD-US, including potential litigation that has been or may be instituted against FHN or its directors or officers related to the Pending TD Merger or the TD Merger Agreement;

•the timing and completion of the Pending TD Merger, including the possibility that the Pending TD Merger will not close when expected or at all because required regulatory, shareholder, or other approvals are not received or other conditions to the closing are not satisfied on a timely basis or at all, or are obtained subject to conditions that are not anticipated;

•the extent, timing, and results of governmental actions, examinations, reviews, reforms, regulations, and interpretations of the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Tennessee Department of Financial Institutions, and other regulators;

•~~the risk that any announcements relating to the Pending TD Merger could have adverse effects on the market price of the common stock of FHN;~~

•~~certain restrictions during the pendency of the Pending TD Merger that may impact FHN’s ability to pursue certain business opportunities or strategic transactions;~~

•~~the possibility that the Pending TD Merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events;~~

•~~the diversion of management’s attention from ongoing business operations and opportunities caused by the Pending TD Merger;~~

•~~reputational risk and potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement of the Pending TD Merger; and~~

•other factors that may affect the future results of FHN.

~~FHN cautions readers of this report that the list above is not exhaustive as of the date of this report. Further,~~ FHN assumes no obligation to update or revise any forward-looking statements that are made in this report or in any other statement, release, report, or filing from time to time. Actual results could differ and FHN’s estimates and expectations could change, possibly materially, because of one or more factors, including those factors listed above or presented elsewhere in this report or those factors listed in material incorporated by reference into this report. In evaluating forward-looking statements and assessing FHN’s prospects, readers of this report should carefully consider the factors mentioned above along with the additional risk and uncertainty factors discussed in Item 1A of Part II of this report and in the forepart, and in Items 1, 1A, and 7, of FHN’s most recent Annual Report on Form 10-K, ~~as amended, along with any additional factors which might materially affect future results and outcomes.~~among others.


			4			~~3Q22~~1Q23 FORM 10-Q REPORT


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

Non-GAAP Information

Certain measures included in this report are “non-GAAP,” meaning they are not presented in accordance with U.S. GAAP and also are not codified in U.S. banking regulations currently applicable to FHN. Although other entities may use calculation methods that differ from those used by FHN for non-GAAP measures, FHN’s management believes such measures are relevant to understanding the financial condition, capital position, and financial results of FHN and its business segments. Non-GAAP measures are reported to FHN’s management and Board of Directors through various internal reports.

The non-GAAP measures presented in this report are: pre-provision net revenue, return on average tangible common equity, tangible common equity to tangible assets, adjusted tangible common equity to risk-weighted assets, and tangible book value per common ~~share, and loans and leases excluding PPP loans.~~share. Table ~~I.1.26~~I.2.22 appearing in the MD&A (Item 2 of Part I) of this report provides a reconciliation of non-GAAP items presented in this report to the most comparable GAAP presentation.

Presentation of regulatory measures, even those which are not GAAP, provide a meaningful base for comparability to other financial institutions subject to the same regulations as FHN, as demonstrated by their use by banking regulators in reviewing capital adequacy of financial institutions. Although not GAAP terms, these regulatory measures are not considered “non-GAAP” under U.S. financial reporting rules as long as their presentation conforms to regulatory standards. Regulatory measures used in this report include: common equity tier 1 capital, generally defined as common equity less goodwill, other intangibles, and certain other required regulatory deductions; tier 1 capital, generally defined as the sum of core capital (including common equity and instruments that cannot be redeemed at the option of the holder) adjusted for certain items under risk based capital regulations; and risk-weighted assets, which is a measure of total on- and off-balance sheet assets adjusted for credit and market risk, used to determine regulatory capital ratios.


			5			~~3Q22~~1Q23 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents



PART I. FINANCIAL INFORMATION

Item 1. Financial Statements


Consolidated Balance Sheets (unaudited)			7

Consolidated Statements of Income (unaudited)			8

Consolidated Statements of Comprehensive Income (Loss) (unaudited)			10

Consolidated Statements of Changes in Equity (unaudited)			11

Consolidated Statements of Cash Flows (unaudited)			1312

Notes to the Consolidated Financial Statements (unaudited)			1513
Note 1 Basis of Presentation and Accounting Policies			1513

Note 2 Investment Securities			1715
Note 3 Loans and Leases			2018
Note 4 Allowance for Credit Losses			2827
Note 5 Mortgage Banking Activity			3129
Note 6 Goodwill and Other Intangible Assets			3230

Note 7 Preferred Stock			3331
Note 8 Components of Other Comprehensive Income (Loss)			3432
Note 9 Earnings Per Share			3633
Note 10 Contingencies and Other Disclosures			3734
Note 11 Retirement Plans			3936
Note 12 Business Segment Information			4037
Note 13 Variable Interest Entities			4540
Note 14 Derivatives			4843
Note 15 Master Netting and Similar Agreements - Repurchase, Reverse Repurchase, and Securities Borrowing Transactions			5550
Note 16 Fair Value of Assets and Liabilities			5752
Note 17 Other Events			68


			6			~~3Q22~~1Q23 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents

CONSOLIDATED BALANCE SHEETS


		(Unaudited)		December 31,			(Unaudited)		December 31,
		September 30,					March 31,
(Dollars in millions, except per share amounts)	(Dollars in millions, except per share amounts)	2022		2021		(Dollars in millions, except per share amounts)	2023		2022
Assets	Assets					Assets
Cash and due from banks	Cash and due from banks	$	1,193	$	1,147	Cash and due from banks	$	987	$	1,061
Interest-bearing deposits with banks	Interest-bearing deposits with banks	3,241		14,907		Interest-bearing deposits with banks	2,488		1,384
Federal funds sold and securities purchased under agreements to resell	Federal funds sold and securities purchased under agreements to resell	690		641		Federal funds sold and securities purchased under agreements to resell	309		482
Trading securities	Trading securities	1,421		1,601		Trading securities	1,122		1,375
Securities available for sale at fair value	Securities available for sale at fair value	8,718		8,707		Securities available for sale at fair value	8,954		8,836
Securities held to maturity (fair value of $1,222 and $705, respectively)		1,385		712
Loans held for sale (including $89 and $258 at fair value, respectively)		680		1,172
Securities held to maturity (fair value of $1,214 and $1,209, respectively)						Securities held to maturity (fair value of $1,214 and $1,209, respectively)	1,362		1,371
Loans held for sale (including $68 and $51 at fair value, respectively)						Loans held for sale (including $68 and $51 at fair value, respectively)	650		590
Loans and leases	Loans and leases	57,354		54,859		Loans and leases	59,045		58,102
Allowance for loan and lease losses	Allowance for loan and lease losses	(664)		(670)		Allowance for loan and lease losses	(715)		(685)
Net loans and leases	Net loans and leases	56,690		54,189		Net loans and leases	58,330		57,417
Premises and equipment	Premises and equipment	622		665		Premises and equipment	603		612
Goodwill	Goodwill	1,511		1,511		Goodwill	1,511		1,511
Other intangible assets	Other intangible assets	246		298		Other intangible assets	222		234
Other assets	Other assets	3,902		3,542		Other assets	4,191		4,080
Total assets	Total assets	$	80,299	$	89,092	Total assets	$	80,729	$	78,953

Liabilities	Liabilities					Liabilities
Noninterest-bearing deposits	Noninterest-bearing deposits	$	25,813	$	27,883	Noninterest-bearing deposits	$	21,134	$	23,466
Interest-bearing deposits	Interest-bearing deposits	40,202		47,012		Interest-bearing deposits	40,306		40,023
Total deposits	Total deposits	66,015		74,895		Total deposits	61,440		63,489
Trading liabilities	Trading liabilities	383		426		Trading liabilities	144		335
Short-term borrowings	Short-term borrowings	1,416		2,124		Short-term borrowings	6,484		2,506
Term borrowings	Term borrowings	1,597		1,590		Term borrowings	1,605		1,597
Other liabilities	Other liabilities	2,605		1,563		Other liabilities	2,161		2,479
Total liabilities	Total liabilities	72,016		80,598		Total liabilities	71,834		70,406

Equity	Equity					Equity
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 536,736,705 and 533,576,766 shares, respectively		335		333
Preferred stock, Non-cumulative perpetual, no par value; authorized 5,000,000 shares; issued 31,686 shares						Preferred stock, Non-cumulative perpetual, no par value; authorized 5,000,000 shares; issued 31,686 shares	1,014		1,014
Common stock, $0.625 par value; authorized 700,000,000 shares; issued 537,618,507 and 537,100,615 shares, respectively						Common stock, $0.625 par value; authorized 700,000,000 shares; issued 537,618,507 and 537,100,615 shares, respectively	336		336
Capital surplus	Capital surplus	4,812		4,743		Capital surplus	4,863		4,840
Retained earnings	Retained earnings	3,254		2,891		Retained earnings	3,595		3,430
Accumulated other comprehensive loss, net	Accumulated other comprehensive loss, net	(1,427)		(288)		Accumulated other comprehensive loss, net	(1,208)		(1,368)
FHN shareholders' equity	FHN shareholders' equity	7,988		8,199		FHN shareholders' equity	8,600		8,252
Noncontrolling interest	Noncontrolling interest	295		295		Noncontrolling interest	295		295
Total equity	Total equity	8,283		8,494		Total equity	8,895		8,547
Total liabilities and equity	Total liabilities and equity	$	80,299	$	89,092	Total liabilities and equity	$	80,729	$	78,953

See accompanying notes to consolidated financial statements.


			7			~~3Q22~~1Q23 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents

CONSOLIDATED STATEMENTS OF INCOME


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
(Dollars in millions, except per share data; shares in thousands) (Unaudited)	(Dollars in millions, except per share data; shares in thousands) (Unaudited)	2022		2021		2022		2021		(Dollars in millions, except per share data; shares in thousands) (Unaudited)	2023		2022
Interest income	Interest income									Interest income
Interest and fees on loans and leases	Interest and fees on loans and leases	$	617	$	482	$	1,553	$	1,485	Interest and fees on loans and leases	$	806	$	444
Interest and fees on loans held for sale	Interest and fees on loans held for sale	9		8		30		22		Interest and fees on loans held for sale	11		10
Interest on investment securities	Interest on investment securities	46		31		123		88		Interest on investment securities	62		38
Interest on trading securities	Interest on trading securities	15		6		39		20		Interest on trading securities	20		11
Interest on other earning assets	Interest on other earning assets	46		6		82		11		Interest on other earning assets	21		7
Total interest income	Total interest income	733		533		1,827		1,626		Total interest income	920		510
Interest expense	Interest expense									Interest expense
Interest on deposits	Interest on deposits	43		20		72		67		Interest on deposits	171		11
Interest on trading liabilities	Interest on trading liabilities	3		1		9		4		Interest on trading liabilities	3		2
Interest on short-term borrowings	Interest on short-term borrowings	7		2		10		4		Interest on short-term borrowings	38		1
Interest on term borrowings	Interest on term borrowings	18		18		53		55		Interest on term borrowings	20		17
Total interest expense	Total interest expense	71		41		144		130		Total interest expense	232		31
Net interest income	Net interest income	662		492		1,683		1,496		Net interest income	688		479
Provision for credit losses	Provision for credit losses	60		(85)		50		(245)		Provision for credit losses	50		(40)
Net interest income after provision for credit losses	Net interest income after provision for credit losses	602		577		1,633		1,741		Net interest income after provision for credit losses	638		519
Noninterest income	Noninterest income									Noninterest income
Deposit transactions and cash management										Deposit transactions and cash management	42		44
Fixed income	Fixed income	46		96		170		324		Fixed income	39		73
Deposit transactions and cash management		43		44		129		130
Brokerage, management fees and commissions	Brokerage, management fees and commissions	23		24		71		65		Brokerage, management fees and commissions	22		24
Mortgage banking and title income		9		34		65		126
Card and digital banking fees	Card and digital banking fees	21		21		64		59		Card and digital banking fees	20		20
Other service charges and fees	Other service charges and fees	13		12		41		32		Other service charges and fees	13		13
Trust services and investment management	Trust services and investment management	11		13		36		39		Trust services and investment management	11		13
Mortgage banking and title income										Mortgage banking and title income	5		22
Securities gains (losses), net	Securities gains (losses), net	12		1		18		12		Securities gains (losses), net	—		6
Deferred compensation income		(3)		3		(24)		12
Loss on debt extinguishment		—		(23)		—		(23)

Other income	Other income	38		22		72		53		Other income	19		14
Total noninterest income	Total noninterest income	213		247		642		829		Total noninterest income	171		229
Noninterest expense	Noninterest expense									Noninterest expense
Personnel expense	Personnel expense	275		296		820		920		Personnel expense	271		280
Net occupancy expense	Net occupancy expense	32		33		96		103		Net occupancy expense	31		32
Computer software	Computer software	28		30		85		87		Computer software	28		29
Operations services	Operations services	22		24		65		59		Operations services	22		20
Legal and professional fees		10		21		50		52
Advertising and public relations										Advertising and public relations	14		11
Contract employment and outsourcing	Contract employment and outsourcing	12		21		43		47		Contract employment and outsourcing	12		19
Amortization of intangible assets	Amortization of intangible assets	13		14		39		42		Amortization of intangible assets	12		13
Advertising and public relations		12		14		34		23
Equipment expense	Equipment expense	11		12		34		35		Equipment expense	11		11
Communications and delivery	Communications and delivery	10		9		28		28		Communications and delivery	9		10
Legal and professional fees										Legal and professional fees	8		23
Other expense	Other expense	44		52		156		171		Other expense	60		45
Total noninterest expense	Total noninterest expense	469		526		1,450		1,567		Total noninterest expense	478		493
Income before income taxes	Income before income taxes	346		298		825		1,003		Income before income taxes	331		255
Income tax expense	Income tax expense	78		63		183		222		Income tax expense	76		57
Net income	Net income	$	268	$	235	$	642	$	781	Net income	$	255	$	198
Net income attributable to noncontrolling interest	Net income attributable to noncontrolling interest	3		3		8		9		Net income attributable to noncontrolling interest	4		3
Net income attributable to controlling interest	Net income attributable to controlling interest	$	265	$	232	$	634	$	772	Net income attributable to controlling interest	$	251	$	195
Preferred stock dividends	Preferred stock dividends	8		8		24		29		Preferred stock dividends	8		8
Net income available to common shareholders	Net income available to common shareholders	$	257	$	224	$	610	$	743	Net income available to common shareholders	$	243	$	187


			8			~~3Q22~~1Q23 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents


Basic earnings per common share	Basic earnings per common share	$	0.48	$	0.41	$	1.14	$	1.35	Basic earnings per common share	$	0.45	$	0.35
Diluted earnings per common share	Diluted earnings per common share	$	0.45	$	0.41	$	1.08	$	1.34	Diluted earnings per common share	$	0.43	$	0.34
Weighted average common shares	Weighted average common shares	535,986		545,818		534,613		549,434		Weighted average common shares	536,938		533,218
Diluted average common shares	Diluted average common shares	570,153		549,819		563,538		554,199		Diluted average common shares	571,991		549,809

See accompanying notes to consolidated financial statements.


			9			~~3Q22~~1Q23 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
(Dollars in millions) (Unaudited)	(Dollars in millions) (Unaudited)	2022		2021		2022		2021		(Dollars in millions) (Unaudited)	2023		2022
Net income	Net income	$	268	$	235	$	642	$	781	Net income	$	255	$	198
Other comprehensive income (loss), net of tax:	Other comprehensive income (loss), net of tax:									Other comprehensive income (loss), net of tax:
Net unrealized gains (losses) on securities available for sale	Net unrealized gains (losses) on securities available for sale	(368)		(38)		(1,003)		(103)		Net unrealized gains (losses) on securities available for sale	114		(404)
Net unrealized gains (losses) on cash flow hedges	Net unrealized gains (losses) on cash flow hedges	(99)		(1)		(142)		(5)		Net unrealized gains (losses) on cash flow hedges	44		(21)
Net unrealized gains (losses) on pension and other postretirement plans	Net unrealized gains (losses) on pension and other postretirement plans	3		1		6		7		Net unrealized gains (losses) on pension and other postretirement plans	2		1
Other comprehensive income (loss)	Other comprehensive income (loss)	(464)		(38)		(1,139)		(101)		Other comprehensive income (loss)	160		(424)
Comprehensive income (loss)	Comprehensive income (loss)	(196)		197		(497)		680		Comprehensive income (loss)	415		(226)
Comprehensive income attributable to noncontrolling interest	Comprehensive income attributable to noncontrolling interest	3		3		8		9		Comprehensive income attributable to noncontrolling interest	4		3
Comprehensive income (loss) attributable to controlling interest	Comprehensive income (loss) attributable to controlling interest	$	(199)	$	194	$	(505)	$	671	Comprehensive income (loss) attributable to controlling interest	$	411	$	(229)
Income tax expense (benefit) of items included in other comprehensive income:	Income tax expense (benefit) of items included in other comprehensive income:									Income tax expense (benefit) of items included in other comprehensive income:
Net unrealized gains (losses) on securities available for sale	Net unrealized gains (losses) on securities available for sale	$	(119)	$	(12)	$	(324)	$	(33)	Net unrealized gains (losses) on securities available for sale	$	36	$	(130)
Net unrealized gains (losses) on cash flow hedges	Net unrealized gains (losses) on cash flow hedges	(32)		—		(46)		(2)		Net unrealized gains (losses) on cash flow hedges	14		(7)
Net unrealized gains (losses) on pension and other postretirement plans	Net unrealized gains (losses) on pension and other postretirement plans	1		1		2		2		Net unrealized gains (losses) on pension and other postretirement plans	1		1

See accompanying notes to consolidated financial ~~statements.~~

statements


			10			~~3Q22~~1Q23 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY


Nine Months Ended September 30, 2022
Three Months Ended March 31, 2023																		Three Months Ended March 31, 2023
		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, 2021		26,750	$	520	533,577	$	333	$	4,743	$	2,891	$	(288)	$	295	$	8,494

Balance, December 31, 2022																		Balance, December 31, 2022	31,686	$	1,014	537,101	$	336	$	4,840	$	3,430	$	(1,368)	$	295	$	8,547
Adjustment to reflect adoption of ASU 2022-02																		Adjustment to reflect adoption of ASU 2022-02	—	—		—	—		—		4		—		—		4

Net income	Net income	—	—		—	—		—		195		—		3		198		Net income	—	—		—	—		—		251		—		4		255
Other comprehensive income (loss)		—	—		—	—		—		—		(423)		—		(423)
Comprehensive income (loss)		—	—		—	—		—		195		(423)		3		(225)
Other comprehensive income																		Other comprehensive income	—	—		—	—		—		—		160		—		160

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)	—	—		—	—		—		(82)		—		—		(82)		Common stock ($0.15 per share)	—	—		—	—		—		(82)		—		—		(82)
Preferred stock issuance (4,936 shares issued at $100,000 per share)		4,936	494		—	—		—		—		—		—		494
Common stock repurchased		—	—		(120)	—		(2)		—		—		—		(2)
Common stock issued for:
Stock options exercised and restricted stock awards		—	—		1,130	1		14		—		—		—		15
Stock-based compensation expense		—	—		—	—		14		—		—		—		14
Dividends declared - noncontrolling interest of subsidiary preferred stock		—	—		—	—		—		—		—		(3)		(3)

Balance, March 31, 2022		31,686	1,014		534,587	334		4,769		2,996		(711)		295		8,697

Net income		—	—		—	—		—		174		—		3		177
Other comprehensive income (loss)		—	—		—	—		—		—		(252)		—		(252)
Comprehensive income (loss)		—	—		—	—		—		174		(252)		3		(75)
Cash dividends declared:
Preferred stock		—	—		—	—		—		(8)		—		—		(8)
Common stock ($0.15 per share)		—	—		—	—		—		(83)		—		—		(83)

Common stock repurchased	Common stock repurchased	—	—		(334)	(1)		(7)		—		—		—		(8)		Common stock repurchased	—	—		(159)	—		(4)		—		—		—		(4)
Common stock issued for:	Common stock issued for:																	Common stock issued for:
Stock options exercised and restricted stock awards	Stock options exercised and restricted stock awards	—	—		2,080	2		11		—		—		—		13		Stock options exercised and restricted stock awards	—	—		677	—		5		—		—		—		5
Stock-based compensation expense	Stock-based compensation expense	—	—		—	—		18		—		—		—		18		Stock-based compensation expense	—	—		—	—		22		—		—		—		22
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	—	—		—	—		—		—		—		(4)		(4)

Balance, June 30, 2022		31,686	1,014		536,333	335		4,791		3,079		(963)		295		8,551
Net income		—	—		—	—		—		265		—		3		268
Other comprehensive income (loss)		—	—		—	—		—		—		(464)		—		(464)
Comprehensive income (loss)		—	—		—	—		—		265		(464)		3		(196)
Cash dividends declared:
Preferred stock		—	—		—	—		—		(8)		—		—		(8)
Common stock ($0.15 per share)		—	—		—	—		—		(82)		—		—		(82)

Common stock repurchased		—	—		(103)	—		(3)		—		—		—		(3)
Common stock issued for:
Stock options exercised and restricted stock awards		—	—		507	—		3		—		—		—		3

Stock-based compensation expense		—	—		—	—		21		—		—		—		21
Dividends declared - noncontrolling interest of subsidiary preferred stock		—	—		—	—		—		—		—		(3)		(3)
Balance, September 30, 2022		31,686	$	1,014	536,737	$	335	$	4,812	$	3,254	$	(1,427)	$	295	$	8,283
Balance, March 31, 2023																		Balance, March 31, 2023	31,686	$	1,014	537,619	$	336	$	4,863	$	3,595	$	(1,208)	$	295	$	8,895

(a)Due to the nature of the preferred stock issued by FHN and its subsidiaries, all components of other comprehensive income (loss) have been attributed solely to FHN as the controlling interest holder.


Three Months Ended March 31, 2022
	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, 2021	26,750	$	520	533,577	$	333	$	4,743	$	2,891	$	(288)	$	295	$	8,494


Net income	—	—		—	—		—		195		—		3		198
Other comprehensive income (loss)	—	—		—	—		—		—		(424)		—		(424)

Cash dividends declared:
Preferred stock	—	—		—	—		—		(8)		—		—		(8)
Common stock ($0.15 per share)	—	—		—	—		—		(82)		—		—		(82)
Preferred stock issuance (4,936 shares issued at $100,000 per share)	4,936	494													494
Common stock repurchased	—	—		(120)	—		(2)		—		—		—		(2)
Common stock issued for:
Stock options exercised and restricted stock awards	—	—		1,130	1		14		—		—		—		15
Stock-based compensation expense	—	—		—	—		14		—		—		—		14
Dividends declared - noncontrolling interest of subsidiary preferred stock	—	—		—	—		—		—		—		(3)		(3)

Balance, March 31, 2022	31,686	$	1,014	534,587	$	334	$	4,769	$	2,996	$	(712)	$	295	$	8,696

See accompanying notes to consolidated financial statements.


			11			~~3Q22 FORM 10-Q REPORT~~


~~PART I, ITEM 1. FINANCIAL STATEMENTS~~
~~Table of Contents~~

~~CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (continued)~~

Nine Months Ended September 30, 2021
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, 2020 26,250 $ 470 555,031 $ 347 $ 5,074 $ 2,261 $ (140) $ 295 $ 8,307
Net income — — — — — 233 — 3 236
Other comprehensive income (loss) — — — — — — (101) — (101)
Comprehensive income (loss) — — — — — 233 (101) 3 135
Cash dividends declared:
Preferred stock — — — — — (8) — — (8)
Common stock ($0.15 per share) — — — — — (84) — — (84)
Common stock repurchased (b) — — (3,864) (2) (60) — — — (62)
Common stock issued for:
Stock options exercised and restricted stock awards — — 1,208 — 12 — — — 12
Stock-based compensation expense — — — — 10 — — — 10
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
Net income — — — — — 308 — 3 311
Other comprehensive income (loss) — — — — — — 38 — 38
Comprehensive income (loss) — — — — — 308 38 3 349
Cash dividends declared:
Preferred stock — — — — — (8) — — (8)
Common stock ($0.15 per share) — — — — — (85) — — (85)
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 issued for:
Stock options exercised and restricted stock awards — — 1,925 2 11 — — — 13
Stock-based compensation expense — — — — 11 — — — 11
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
Net income — — — — — 232 — 3 235
Other comprehensive income (loss) — — — — — — (38) — (38)
Comprehensive income (loss) — — — — — 232 (38) 3 197
Cash dividends declared:
Preferred stock — — — — — (8) — — (8)
Common stock ($0.15 per share) — — — — — (83) — — (83)
Common stock repurchased (b) — — (9,235) (5) (141) — — — (146)
Common stock issued for:
Stock options exercised and restricted stock awards — — 230 — — — — — —
Stock-based compensation expense — — — — 10 — — — 10
Dividends declared - noncontrolling interest of subsidiary preferred stock — — — — — — — (3) (3)
Balance, September 30, 2021 26,750 $ 520 541,860 $ 339 $ 4,866 $ 2,753 $ (241) $ 295 $ 8,532

~~(a)Due to the nature of the preferred stock issued by FHN and its subsidiaries, all components of other comprehensive income (loss) have been attributed solely to FHN as the controlling interest holder.~~

~~(b)Includes $59 million, $57 million and $141 million repurchased under share repurchase programs for the three months ended March 31, 2021, June 30, 2021, and September 30, 2021, respectively.~~

~~See accompanying notes to consolidated financial statements.~~


			12			~~3Q22~~1Q23 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents

CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine months ended September 30,
(Dollars in millions) (Unaudited) 2022 2021
Operating Activities
Net income $ 642 $ 781
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Provision for credit losses 50 (245)
Deferred income tax expense (benefit) 167 (28)
Depreciation and amortization of premises and equipment 45 46
Amortization of intangible assets 39 42
Net other amortization and accretion (3) (50)
Net (increase) decrease in trading securities 1,728 1,347
Net (increase) decrease in derivatives 822 309
Stock-based compensation expense 53 31
Securities (gains) losses, net (18) (12)
(Gain) loss on BOLI (4) (5)
Net (gains) losses on sale/disposal of fixed assets (1) 32
Gain on sale of mortgage servicing rights (12) —
Gain on sale of title services business (21) —
Loans held for sale:
Purchases and originations (3,184) (4,682)
Gross proceeds from settlements and sales 2,050 3,288
(Gain) loss due to fair value adjustments and other 78 (142)
Other operating activities, net (145) (144)
Total adjustments 1,644 (213)
Net cash provided by (used in) operating activities 2,286 568
Investing Activities
Proceeds from sales of securities available for sale — 68
Proceeds from maturities of securities available for sale 1,080 1,680
Purchases of securities available for sale (2,457) (2,343)
Purchases of securities held to maturity (712) (304)
Proceeds from prepayments of securities held to maturity 40 10
Proceeds from sales of premises and equipment 17 22
Purchases of premises and equipment (22) (46)
Proceeds from BOLI 9 12
Net (increase) decrease in loans and leases (2,471) 2,891
Net (increase) decrease in interest-bearing deposits with banks 11,666 (6,478)
Other investing activities, net 5 15
Net cash provided by (used in) investing activities 7,155 (4,473)
Financing Activities
Common stock:
  Stock options exercised 30 25
  Cash dividends paid (243) (252)
  Repurchase of shares (12) (272)
Preferred stock:
  Preferred stock issuance 494 145
  Cash dividends paid - preferred stock - noncontrolling interest (9) (9)
  Cash dividends paid - preferred stock (24) (24)
Net increase (decrease) in deposits (8,880) 4,287
Net increase (decrease) in short-term borrowings (707) 27
Increases (decreases) in term borrowings 5 (112)
Net cash provided by (used in) financing activities (9,346) 3,815
Net increase (decrease) in cash and cash equivalents 95 (90)
Cash and cash equivalents at beginning of period 1,788 1,648
Cash and cash equivalents at end of period $ 1,883 $ 1,558


			13			~~3Q22 FORM 10-Q REPORT~~


~~PART I, ITEM 1. FINANCIAL STATEMENTS~~
~~Table of Contents~~


							Three months ended March 31,
(Dollars in millions) (Unaudited)						(Dollars in millions) (Unaudited)	2023		2022
Operating Activities						Operating Activities
Net income						Net income	$	255	$	198
Adjustments to reconcile net income to net cash provided by (used in) operating activities:						Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Provision for credit losses						Provision for credit losses	50		(40)
Deferred income tax expense (benefit)						Deferred income tax expense (benefit)	6		38
Depreciation and amortization of premises and equipment						Depreciation and amortization of premises and equipment	14		15
Amortization of intangible assets						Amortization of intangible assets	12		13
Net other amortization and accretion						Net other amortization and accretion	4		(10)
Net (increase) decrease in trading securities						Net (increase) decrease in trading securities	375		514
Net (increase) decrease in derivatives						Net (increase) decrease in derivatives	(266)		395

Stock-based compensation expense						Stock-based compensation expense	22		14
Securities (gains) losses, net						Securities (gains) losses, net	—		(6)

Loans held for sale:						Loans held for sale:
Purchases and originations						Purchases and originations	(477)		(1,511)
Gross proceeds from settlements and sales						Gross proceeds from settlements and sales	293		920

(Gain) loss due to fair value adjustments and other						(Gain) loss due to fair value adjustments and other	2		13

Other operating activities, net						Other operating activities, net	(359)		141
Total adjustments						Total adjustments	(324)		496
Net cash provided by (used in) operating activities						Net cash provided by (used in) operating activities	(69)		694
Investing Activities						Investing Activities

Proceeds from maturities of securities available for sale						Proceeds from maturities of securities available for sale	244		408
Purchases of securities available for sale						Purchases of securities available for sale	(221)		(1,492)

Proceeds from prepayments of securities held to maturity						Proceeds from prepayments of securities held to maturity	10		11
Proceeds from sales of premises and equipment						Proceeds from sales of premises and equipment	—		4
Purchases of premises and equipment						Purchases of premises and equipment	(5)		(10)

Net (increase) decrease in loans and leases						Net (increase) decrease in loans and leases	(949)		(134)

Net (increase) decrease in interest-bearing deposits with banks						Net (increase) decrease in interest-bearing deposits with banks	(1,103)		1,359

Other investing activities, net						Other investing activities, net	2		8
Net cash provided by (used in) investing activities						Net cash provided by (used in) investing activities	(2,022)		154
Financing Activities						Financing Activities
Common stock:						Common stock:
Stock options exercised						Stock options exercised	5		15
Cash dividends paid						Cash dividends paid	(83)		(82)
Repurchase of shares						Repurchase of shares	(4)		(2)

Preferred stock:						Preferred stock:
Preferred stock issuance						Preferred stock issuance	—		494

Cash dividends paid - preferred stock - noncontrolling interest						Cash dividends paid - preferred stock - noncontrolling interest	(4)		(3)
Cash dividends paid - preferred stock						Cash dividends paid - preferred stock	(8)		(8)

Net increase (decrease) in deposits						Net increase (decrease) in deposits	(2,049)		(781)
Net increase (decrease) in short-term borrowings						Net increase (decrease) in short-term borrowings	3,979		(405)

Increases (decreases) in term borrowings						Increases (decreases) in term borrowings	8		1
Net cash provided by (used in) financing activities						Net cash provided by (used in) financing activities	1,844		(771)
Net increase (decrease) in cash and cash equivalents						Net increase (decrease) in cash and cash equivalents	(247)		77
Cash and cash equivalents at beginning of period						Cash and cash equivalents at beginning of period	1,543		1,788
Cash and cash equivalents at end of period						Cash and cash equivalents at end of period	$	1,296	$	1,865

Supplemental Disclosures	Supplemental Disclosures					Supplemental Disclosures
Total interest paid	Total interest paid	$	127	$	128	Total interest paid	$	200	$	19
Total taxes paid	Total taxes paid	11		254		Total taxes paid	3		2
Total taxes refunded	Total taxes refunded	4		28		Total taxes refunded	2		1
Transfer from loans to OREO	Transfer from loans to OREO	3		3		Transfer from loans to OREO	2		—
Transfer from loans HFS to trading securities	Transfer from loans HFS to trading securities	1,548		1,490		Transfer from loans HFS to trading securities	122		736
Transfer from loans to loans HFS		—		31

See accompanying notes to consolidated financial statements.


			1412			~~3Q22~~1Q23 FORM 10-Q REPORT


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

Notes to the Consolidated Financial Statements (Unaudited)

Note 1—Basis of Presentation and Accounting Policies

The accompanying unaudited consolidated financial statements have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all information and notes necessary for complete financial statements in accordance with GAAP. In the opinion of management, the accompanying unaudited consolidated financial statements contain all significant adjustments, consisting of normal and recurring items, considered necessary for fair presentation. These interim financial statements should be read in conjunction with FHN's audited consolidated financial statements and notes in FHN's Annual Report on Form 10-K ~~as amended,~~ for the year ended December 31, ~~2021.~~2022. Operating results for the interim period are not necessarily indicative of the results that may be expected for the full year.

All significant intercompany balances and transactions have been eliminated in consolidation. Certain amounts reported in prior years have been reclassified to conform to the current period presentation. See the Glossary of Acronyms and Terms included in this Report for terms used herein.

~~Pending Merger~~TD Transaction

As previously disclosed, on February 27, 2022, FHN entered into an Agreement and Plan of Merger (the “TD Merger Agreement”) with The Toronto-Dominion Bank, a Canadian chartered bank (“TD”), and certain TD ~~Bank US Holding Company, a Delaware corporation~~subsidiaries. On May 4, 2023, FHN and ~~indirect, wholly owned subsidiary of~~ TD ~~(“TD-US”), and Falcon Holdings Acquisition Co., a Delaware corporation and wholly owned subsidiary of TD-US (“Merger Sub”).~~

~~Pursuant to~~mutually terminated the TD Merger Agreement, FHN and Merger Sub will merge (the “First Holding Company Merger”), with FHN continuing as the surviving entity in the merger. Following the First Holding Company Merger, at the election of TD, FHN and TD-US will merge (the “Second Holding Company Merger” and, together with the First Holding Company Merger, the “Holding Company Mergers”), with TD-US continuing as the surviving entity in the merger.

~~share of Company Common Stock on an annualized basis (or approximately 5.4 cents per month) for the period from November 28, 2022 through the day immediately prior to the closing.~~

Each outstanding share of FHN’s preferred stock, series B, C, D, E and F, will remain issued and outstanding in connection with the First Holding Company Merger. If TD elects to effect the Second Holding Company Merger, at the effective time of the Second Holding Company Merger, each outstanding share of FHN’s preferred stock will be converted into a share of a newly created, corresponding series of preferred stock of TD-US having terms as described in the Merger Agreement.

Following the completion of the First Holding Company Merger, at such time as determined by TD, First Horizon Bank and TD Bank, N.A., a national banking association (“TDBNA”) will merge, with TDBNA surviving as a subsidiary of TD-US (the “Bank Merger” and together with the Holding Company Mergers, the “Pending TD Merger”).

The Pending TD Merger is expected to be completed in the first quarter of TD's 2023 fiscal year, and is subject to customary closing conditions, including approvals from U.S. and Canadian regulatory authorities. FHN's shareholders approved the merger on May 31, 2022. Merger and integration planning expenses related to the ~~Pending~~transactions associated with the TD Merger Agreement are recorded in FHN’s Corporate segment. Expenses recognized during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 were ~~approximately~~ $21 million and ~~$55~~$9 million, respectively.

Accounting Changes With Extended Transition Periods

In March 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 (or recognizing the effects of) reference rate reform on financial reporting. The provisions of ASU 2020-04 primarily affect 1) contract modifications (e.g., loans, leases, debt, and derivatives) made in anticipation that a reference rate (e.g., LIBOR) will be discontinued and 2) the application of hedge accounting for existing relationships affected by those modifications. The provisions of ASU

2020-04 are effective upon release and apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. ~~The~~Including the adoption of ASU 2022-06 (discussed below), the expedients and exceptions provided by ASU 2020-04 do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, ~~2022,~~2024, except for hedging relationships existing as of


			15			~~3Q22 FORM 10-Q REPORT~~


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

December 31, ~~2022,~~2024, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship.

FHN has identified contracts affected by reference rate reform and developed modification plans for those contracts. FHN has elected to utilize the optional expedients and exceptions provided by ASU 2020-04 for certain contract modifications that have already been implemented. For cash flow hedges that reference 1-Month USD LIBOR, FHN has applied expedients related to 1) the assumption of probability of cash flows when reference rates are changed on hedged items 2) avoiding de-designation when critical terms (i.e., reference rates) change and 3) the allowed assumption of shared risk exposure for hedged items. For its 2022 and 2023 cash flow hedges that reference 1-Month Term SOFR, FHN has applied expedients related to 1) the allowed assumption of shared risk exposure for hedged items and 2) multiple allowed assumptions of conformity between hedged items and the hedging instrument when assessing effectiveness. FHN anticipates that it will continue to utilize the expedients and exceptions for future modifications in situations where they mitigate potential accounting outcomes that do not faithfully represent management’s intent or risk management activities, consistent with the purpose of the standard.

~~The~~In December 2022, the FASB ~~has proposed an extension~~issued ASU 2022-06, "Deferral of the Sunset Date of Topic 848" which extends the transition window for ASU 2020-04 ~~until~~from December 31, 2022 to December 31, 2024, consistent with key USD LIBOR tenors continuing to be published through June 30, 2023.

In January 2021, the FASB issued ASU 2021-01, "Scope" to expand the scope of ASU 2020-04 to apply to certain contract modifications that were implemented in October 2020 by derivative clearinghouses for the use of Secure Overnight Funding Rate (SOFR) in discounting, margining and price alignment for centrally cleared derivatives, including derivatives utilized in hedging relationships. ASU 2021-01 also applies to derivative contracts affected by the change in discounting convention regardless of whether they are centrally cleared (i.e., bi-lateral


			13			1Q23 FORM 10-Q REPORT


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

contracts can also be modified) and regardless of whether they reference LIBOR. ASU 2021-01 was effective immediately upon issuance with retroactive application permitted. FHN elected to retroactively apply the provisions of ASU 2021-01 because FHN's centrally cleared derivatives were affected by the change in discounting convention and because FHN has other bi-lateral derivative contracts that may be modified to conform to the use of SOFR for discounting. Adoption did not have a significant effect on FHN's reported financial condition or results of operations.

Summary of Accounting Changes

~~Accounting Changes Issued But Not Currently Effective~~

ASU 2022-01

In March 2022, the FASB issued ASU 2022-01, "Fair Value Hedging - Portfolio Layer Method", which will expand FHN's ability to hedge the benchmark interest rate risk of portfolios of financial interests (or beneficial interests) in a fair value hedge. The provisions of ASU 2022-01 also permit FHN to apply the same portfolio hedging method to both prepayable and non-prepayable financial assets, namely by expanding the use of the "portfolio layer" method to non-prepayable financial assets. ASU 2022-01 also permits multiple hedged layers to be designated as a single closed portfolio to achieve hedge accounting. Additionally, the ASU requires that basis adjustments must be maintained on the closed portfolio of assets as a whole, and not allocated to individual assets for active portfolio layer method hedges.

ASU 2022-01 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. ~~Early adoption is permitted.~~ FHN ~~is evaluating~~may utilize the ~~impact~~provisions of ASU 2022-01 onin its future hedging strategies.

ASU 2022-02

~~Also in~~

In March 2022, the FASB issued ASU 2022-02, “Troubled Debt Restructurings and Vintage ~~Disclosures”~~Disclosures” that eliminates current TDR recognition and measurement guidance and instead requires the Company to evaluate whether the modification represents a new loan or a continuation of an existing loan (which is consistent with the accounting for other loan modifications). The provisions of ASU 2022-02 also enhance existing disclosure requirements and introduces new disclosures related to certain modifications made to borrowers experiencing financial difficulty. The provisions of this ASU also require FHN to disclose current period gross write-offs of loans and leases by year of origination.

ASU 2022-02 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. ~~Early adoption is permitted.~~ For the transition method related to the recognition and measurement of TDRs, FHN ~~has the option~~elected to apply athe modified retrospective transition effective January 1, 2023, resulting in a cumulative-effect ~~adjustment~~reduction in ALLL of $6 million and an increase to retained earnings of $4 million, net of tax. The disclosure provisions of ASU

2022-02 are applied prospectively and presented in Note 3 – Loans and Leases and Note 4 – Allowance for Credit Losses.

Accounting Changes Issued But Not Currently Effective

ASU 2023-02

In March 2023, the FASB issued ASU 2023-02, “Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method” which permits investors to elect to account for their tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method if certain conditions are met. The proportional amortization method results in the ~~period~~cost of ~~adoption. Otherwise, provisions~~the investment being amortized in ~~this~~proportion to the income tax credits and other income tax benefits received, with the amortization of the investment and the income tax credits being presented net in the income statement as a component of income tax provision (benefit). Prior to ASU ~~will~~2023-02, the proportional amortization method was only available to qualifying low income housing equity investments. An investor is required to make an accounting policy election to apply the proportional amortization method on a tax-credit-program-by-tax-credit-program basis. An investor that applies the proportional amortization method to qualifying tax equity investments must account for the receipt of the investment tax credits using the flow-through method, even if the entity applies the deferral method for other investment tax credits received. ASU 2023-02 also requires specific disclosures that must be applied ~~prospectively.~~to all investments that generate income tax credits and other income tax benefits from a tax credit program for which the entity has elected to apply the proportional amortization method.

ASU 2023-02 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted for all entities in any interim period. If ASU 2023-02 is adopted in an interim period, it must be adopted as of the beginning of the fiscal year that includes that interim period. Adoption of ASU 2023-02 is applied on either a modified retrospective (cumulative catch up) or a retrospective (representment of prior years) basis. FHN is ~~evaluating~~assessing 1) the ~~impact~~applicability of ASU ~~2022-02,~~2023-02 to its tax credit investments and ~~is not currently able~~2) whether to ~~reasonably estimate~~elect the ~~impact the adoption will have on its consolidated financial position, results of operations, or cash flows.~~proportional amortization method for qualifying investments.


			1614			~~3Q22~~1Q23 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents			NOTE 2—INVESTMENT SECURITIES

Note 2—Investment Securities

The following tables summarize FHN’s investment securities as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021:~~2022:


INVESTMENT SECURITIES AT SEPTEMBER 30, 2022
INVESTMENT SECURITIES AT MARCH 31, 2023										INVESTMENT SECURITIES AT MARCH 31, 2023
		September 30, 2022									March 31, 2023
(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:

Government agency issued MBS	Government agency issued MBS	$	5,457	$	—	$	(767)	$	4,690	Government agency issued MBS	$	5,416	$	2	$	(622)	$	4,796
Government agency issued CMO	Government agency issued CMO	2,775		—		(360)		2,415		Government agency issued CMO	2,650		—		(336)		2,314
Other U.S. government agencies	Other U.S. government agencies	1,212		—		(156)		1,056		Other U.S. government agencies	1,374		6		(141)		1,239

States and municipalities	States and municipalities	648		—		(91)		557		States and municipalities	650		2		(47)		605
Total securities available for sale (a)	Total securities available for sale (a)	$	10,092	$	—	$	(1,374)	$	8,718	Total securities available for sale (a)	$	10,090	$	10	$	(1,146)	$	8,954

Securities held to maturity:	Securities held to maturity:									Securities held to maturity:
Government agency issued MBS	Government agency issued MBS	$	908	$	—	$	(116)	$	792	Government agency issued MBS	$	889	$	—	$	(95)	$	794
Government agency issued CMO	Government agency issued CMO	477		—		(47)		430		Government agency issued CMO	473		—		(53)		420
Total securities held to maturity	Total securities held to maturity	$	1,385	$	—	$	(163)	$	1,222	Total securities held to maturity	$	1,362	$	—	$	(148)	$	1,214

(a)Includes ~~$6.4~~$6.9 billion of securities pledged to secure public deposits, securities sold under agreements to repurchase, and for other purposes.


INVESTMENT SECURITIES AT YE 2021
INVESTMENT SECURITIES AT YE 2022										INVESTMENT SECURITIES AT YE 2022
		December 31, 2021									December 31, 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:

Government agency issued MBS	Government agency issued MBS	$	5,062	$	42	$	(49)	$	5,055	Government agency issued MBS	$	5,457	$	1	$	(695)	$	4,763
Government agency issued CMO	Government agency issued CMO	2,296		8		(47)		2,257		Government agency issued CMO	2,682		—		(369)		2,313
Other U.S. government agencies	Other U.S. government agencies	861		4		(15)		850		Other U.S. government agencies	1,325		—		(162)		1,163

States and municipalities	States and municipalities	535		11		(1)		545		States and municipalities	658		1		(62)		597
Total securities available for sale (a)	Total securities available for sale (a)	$	8,754	$	65	$	(112)	$	8,707	Total securities available for sale (a)	$	10,122	$	2	$	(1,288)	$	8,836

Securities held to maturity:	Securities held to maturity:									Securities held to maturity:
Government agency issued MBS	Government agency issued MBS	$	509	$	—	$	(5)	$	504	Government agency issued MBS	$	897	$	—	$	(109)	$	788
Government agency issued CMO	Government agency issued CMO	203		—		(2)		201		Government agency issued CMO	474		—		(53)		421
Total securities held to maturity	Total securities held to maturity	$	712	$	—	$	(7)	$	705	Total securities held to maturity	$	1,371	$	—	$	(162)	$	1,209

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


			1715			~~3Q22~~1Q23 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents			NOTE 2—INVESTMENT SECURITIES

The amortized cost and fair value by contractual maturity for the debt securities portfolio as of ~~September 30, 2022~~March 31, 2023 is provided below:


DEBT SECURITIES PORTFOLIO MATURITIES	DEBT SECURITIES PORTFOLIO MATURITIES									DEBT SECURITIES PORTFOLIO MATURITIES
		Held to Maturity				Available for Sale					Held to Maturity				Available for Sale
(Dollars in millions)	(Dollars in millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value		(Dollars in millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Within 1 year	Within 1 year	$	—	$	—	$	45	$	45	Within 1 year	$	—	$	—	$	9	$	9
After 1 year through 5 years	After 1 year through 5 years	—		—		117		110		After 1 year through 5 years	—		—		127		123
After 5 years through 10 years	After 5 years through 10 years	—		—		397		351		After 5 years through 10 years	—		—		391		357
After 10 years	After 10 years	—		—		1,301		1,107		After 10 years	—		—		1,497		1,355
Subtotal	Subtotal	—		—		1,860		1,613		Subtotal	—		—		2,024		1,844
Government agency issued MBS and CMO (a)	Government agency issued MBS and CMO (a)	1,385		1,222		8,232		7,105		Government agency issued MBS and CMO (a)	1,362		1,214		8,066		7,110
Total	Total	$	1,385	$	1,222	$	10,092	$	8,718	Total	$	1,362	$	1,214	$	10,090	$	8,954

(a)Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

Gross gains and losses on sales of AFS securities for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ were insignificant. Cash proceeds from sales of AFS securities were insignificant for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and March 31, 2022. ~~Cash proceeds from sales of AFS securities for the three and nine months ended September 30, 2021 were $35 million and $68 million.~~

The following tables provide information on investments within the available-for-sale portfolio that had unrealized losses as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021:~~2022:

AFS INVESTMENT SECURITIES WITH UNREALIZED LOSSES


		As of September 30, 2022													As of March 31, 2023
		Less than 12 months				12 months or longer				Total					Less than 12 months				12 months or longer				Total
(Dollars in millions)	(Dollars in millions)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		(Dollars in millions)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses

Government agency issued MBS	Government agency issued MBS	$	3,168	$	(429)	$	1,517	$	(338)	$	4,685	$	(767)	Government agency issued MBS	$	700	$	(20)	$	3,996	$	(602)	$	4,696	$	(622)
Government agency issued CMO	Government agency issued CMO	1,398		(155)		992		(205)		2,390		(360)		Government agency issued CMO	309		(15)		2,006		(321)		2,315		(336)
Other U.S. government agencies	Other U.S. government agencies	669		(71)		386		(85)		1,055		(156)		Other U.S. government agencies	265		(10)		733		(131)		998		(141)

States and municipalities	States and municipalities	507		(74)		48		(17)		555		(91)		States and municipalities	53		(2)		451		(45)		504		(47)
Total	Total	$	5,742	$	(729)	$	2,943	$	(645)	$	8,685	$	(1,374)	Total	$	1,327	$	(47)	$	7,186	$	(1,099)	$	8,513	$	(1,146)


		As of December 31, 2021													As of December 31, 2022
		Less than 12 months				12 months or longer				Total					Less than 12 months				12 months or longer				Total
(Dollars in millions)	(Dollars in millions)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		(Dollars in millions)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses

Government agency issued MBS	Government agency issued MBS	$	2,973	$	(41)	$	184	$	(8)	$	3,157	$	(49)	Government agency issued MBS	$	2,314	$	(249)	$	2,350	$	(446)	$	4,664	$	(695)
Government agency issued CMO	Government agency issued CMO	1,436		(37)		248		(10)		1,684		(47)		Government agency issued CMO	1,104		(123)		1,209		(246)		2,313		(369)
Other U.S. government agencies	Other U.S. government agencies	459		(11)		90		(4)		549		(15)		Other U.S. government agencies	643		(67)		424		(95)		1,067		(162)

States and municipalities	States and municipalities	68		(1)		—		—		68		(1)		States and municipalities	493		(48)		54		(14)		547		(62)
Total	Total	$	4,936	$	(90)	$	522	$	(22)	$	5,458	$	(112)	Total	$	4,554	$	(487)	$	4,037	$	(801)	$	8,591	$	(1,288)


			1816			~~3Q22~~1Q23 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents			NOTE 2—INVESTMENT SECURITIES

FHN has evaluated all AFS debt securities that were in unrealized loss positions in accordance with its accounting policy for recognition of credit losses. No AFS debt securities were determined to have credit losses. Total AIR not included in the fair value or amortized cost basis of AFS debt securities was ~~$27~~$30 million and ~~$23~~$32 million as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021.~~2022, respectively. Consistent with FHN's review of the related securities, there were no credit-related write downs of AIR for AFS debt securities during the reporting ~~period.~~periods. Additionally, for AFS debt securities with unrealized losses, FHN does not intend to sell them, and it is more likely than not that FHN will not be required to sell them prior to recovery. Therefore, no write downs of these investments to fair value occurred during the reporting ~~period.~~periods.

For HTM securities, an allowance for credit losses is required to absorb estimated lifetime credit losses. Total AIR not included in the fair value or amortized cost basis of HTM debt securities was $3 million ~~and $1 million~~ as of ~~September 30, 2022~~both March 31, 2023 and December 31, ~~2021.~~2022. FHN has assessed the risk of credit loss and has determined that ~~zero~~no allowance for credit losses for HTM securities was necessary as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021.~~2022. The evaluation of credit risk includes consideration of third-party and government guarantees (both explicit and implicit), senior or subordinated status, credit ratings of the issuer, the effects of interest rate changes since purchase and observable market information such as issuer-specific credit spreads.

The carrying amount of equity investments without a readily determinable fair value was ~~$78~~$80 million and ~~$70~~$79 million at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively. The year-to-date ~~2022~~2023 and ~~2021~~2022 gross amounts of upward and downward valuation adjustments were not significant.

Unrealized ~~losses~~gains of $2 million and ~~unrealized gains of $1~~$4 million were recognized in the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021, respectively, and unrealized losses of $15 million and unrealized gains $7 million were recognized for the nine months ended September 30, 2022 and 2021,~~ respectively, for equity investments with readily determinable fair values.


			1917			~~3Q22~~1Q23 FORM 10-Q REPORT


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

Note 3—Loans and Leases

The loans and ~~lease~~leases portfolio is disaggregated into portfolio segments and then further disaggregated into classes for certain disclosures. GAAP defines a portfolio segment as the level at which an entity develops and documents a systematic method for determining its allowance for credit losses. A class is generally a disaggregation of a portfolio segment and is generally determined based on risk characteristics of the loan and FHN’s method for monitoring and assessing credit risk and performance. FHN's loan and lease portfolio segments are commercial and consumer. The classes of loans and leases are: (1) commercial, financial, and industrial, which

includes commercial and industrial loans and leases and loans to mortgage companies, (2) commercial real estate, (3) consumer real estate, which includes both real estate installment and home equity lines of credit, and (4) credit card and other.

The following table provides the amortized cost basis of loans and leases by portfolio segment and class as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, excluding accrued interest of ~~$180~~$227 million and ~~$134~~$226 million, respectively, which is included in other assets in the Consolidated Balance Sheets.


LOANS AND LEASES BY PORTFOLIO SEGMENT	LOANS AND LEASES BY PORTFOLIO SEGMENT					LOANS AND LEASES BY PORTFOLIO SEGMENT
(Dollars in millions)	(Dollars in millions)	September 30, 2022		December 31, 2021		(Dollars in millions)	March 31, 2023		December 31, 2022
Commercial:	Commercial:					Commercial:
Commercial and industrial (a) (b)	Commercial and industrial (a) (b)	$	28,910	$	26,550	Commercial and industrial (a) (b)	$	30,132	$	29,523
Loans to mortgage companies	Loans to mortgage companies	2,710		4,518		Loans to mortgage companies	2,040		2,258
Total commercial, financial, and industrial	Total commercial, financial, and industrial	31,620		31,068		Total commercial, financial, and industrial	32,172		31,781
Commercial real estate	Commercial real estate	13,021		12,109		Commercial real estate	13,398		13,228
Consumer:	Consumer:					Consumer:
HELOC	HELOC	1,977		1,964		HELOC	2,114		2,028
Real estate installment loans	Real estate installment loans	9,887		8,808		Real estate installment loans	10,554		10,225
Total consumer real estate	Total consumer real estate	11,864		10,772		Total consumer real estate	12,668		12,253
Credit card and other	Credit card and other	849		910		Credit card and other	807		840
Loans and leases	Loans and leases	$	57,354	$	54,859	Loans and leases	$	59,045	$	58,102
Allowance for loan and lease losses	Allowance for loan and lease losses	(664)		(670)		Allowance for loan and lease losses	(715)		(685)
Net loans and leases	Net loans and leases	$	56,690	$	54,189	Net loans and leases	$	58,330	$	57,417

(a)Includes equipment financing leases of ~~$962 million and $792 million as of September 30, 2022~~$1.1 billion for March 31, 2023 and December 31, ~~2021, respectively.~~2022.

(b)Includes PPP loans fully guaranteed by the SBA of ~~$129~~$53 million and ~~$1.0 billion~~$76 million as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively.

Restrictions

Loans and leases with carrying values of ~~$37.4~~$39.6 billion and ~~$36.6~~$38.3 billion were pledged as collateral for borrowings at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively.

Concentrations of Credit Risk

Most of FHN’s business activity is with clients located in the southern United States. FHN’s lending activity is concentrated in its market areas within those states. As of ~~September 30, 2022,~~March 31, 2023, FHN had loans to mortgage companies of ~~$2.7~~$2.0 billion and loans to finance and insurance companies of ~~$4.1~~$4.2 billion. As a result, ~~22%~~19% of the C&I portfolio is sensitive to impacts on the financial services industry.

Credit Quality Indicators

FHN employs a dual grade commercial risk grading methodology to assign an estimate for the probability of default and the loss given default for each commercial loan using factors specific to various industry, portfolio, or

product segments that result in a rank ordering of risk and

the assignment of grades PD 1 to PD 16. This credit grading system is intended to identify and measure the credit quality of the loan and lease portfolio by analyzing the migration between grading categories. It is also integral to the estimation methodology utilized in determining the ALLL since an allowance is established for pools of commercial loans based on the credit grade assigned. Each PD grade corresponds to an estimated one-year default probability percentage. PD grades are continually evaluated but require a formal scorecard annually.

PD 1 through PD 12 are “pass” grades. PD grades 13-16 correspond to the regulatory-defined categories of special mention (13), substandard (14), doubtful (15), and loss (16). Special mention loans and leases have potential weaknesses that, if left uncorrected, may result in deterioration of FHN's credit position at some future date. Substandard commercial loans and leases have well-defined weaknesses and are characterized by the distinct possibility that FHN will sustain some loss if the


			2018			~~3Q22~~1Q23 FORM 10-Q REPORT


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

~~possibility that FHN will sustain some loss if the~~ deficiencies are not corrected. Doubtful commercial loans and leases have the same weaknesses as substandard loans and leases with the added characteristics that the probability of loss is high, and collection of the full amount is improbable.

The following tables provide the amortized cost basis of the commercial loan portfolio by year of origination and credit quality indicator as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021:~~2022:


C&I PORTFOLIO	C&I PORTFOLIO																					C&I PORTFOLIO
		September 30, 2022																					March 31, 2023

(Dollars in millions)	(Dollars in millions)	2022		2021		2020		2019		2018		Prior to 2018		LMC (a)		Revolving Loans		Revolving Loans Converted to Term Loans		Total		(Dollars in millions)	2023		2022		2021		2020		2019		Prior to 2019		LMC (a)		Revolving Loans		Revolving Loans Converted to Term Loans		Total
Credit Quality Indicator:	Credit Quality Indicator:																					Credit Quality Indicator:
Pass (PD grades 1 through 12) (b)	Pass (PD grades 1 through 12) (b)	$	4,518	$	4,415	$	2,051	$	2,357	$	1,300	$	3,947	$	2,710	$	9,006	$	399	$	30,703	Pass (PD grades 1 through 12) (b)	$	893	$	5,814	$	3,977	$	1,800	$	1,995	$	4,717	$	2,040	$	9,411	$	351	$	30,998

Special Mention (PD grade 13)	Special Mention (PD grade 13)	29		24		11		73		9		68		—		96		3		313		Special Mention (PD grade 13)	1		24		59		17		128		87		—		177		1		494
Substandard, Doubtful, or Loss (PD grades 14,15, and 16)	Substandard, Doubtful, or Loss (PD grades 14,15, and 16)	36		32		71		34		78		130		—		126		97		604		Substandard, Doubtful, or Loss (PD grades 14,15, and 16)	36		34		57		132		43		189		—		104		85		680

Total C&I loans	Total C&I loans	$	4,583	$	4,471	$	2,133	$	2,464	$	1,387	$	4,145	$	2,710	$	9,228	$	499	$	31,620	Total C&I loans	$	930	$	5,872	$	4,093	$	1,949	$	2,166	$	4,993	$	2,040	$	9,692	$	437	$	32,172


		December 31, 2021																					December 31, 2022

(Dollars in millions)	(Dollars in millions)	2021		2020		2019		2018		2017		Prior to 2017		LMC (a)		Revolving Loans		Revolving Loans Converted to Term Loans		Total		(Dollars in millions)	2022		2021		2020		2019		2018		Prior to 2018		LMC (a)		Revolving Loans		Revolving Loans Converted to Term Loans		Total

Credit Quality Indicator:	Credit Quality Indicator:																					Credit Quality Indicator:
Pass (PD grades 1 through 12) (b)	Pass (PD grades 1 through 12) (b)	$	7,372	$	3,576	$	3,439	$	1,455	$	1,193	$	2,267	$	4,518	$	6,386	$	13	$	30,219	Pass (PD grades 1 through 12) (b)	$	5,856	$	4,040	$	1,980	$	2,099	$	1,229	$	3,710	$	2,258	$	9,165	$	371	$	30,708

Special Mention (PD grade 13)	Special Mention (PD grade 13)	25		39		50		48		36		43		—		100		4		345		Special Mention (PD grade 13)	19		63		19		141		9		90		—		126		—		467
Substandard, Doubtful, or Loss (PD grades 14,15, and 16)	Substandard, Doubtful, or Loss (PD grades 14,15, and 16)	24		61		67		103		24		48		—		129		48		504		Substandard, Doubtful, or Loss (PD grades 14,15, and 16)	41		54		51		38		67		124		—		134		97		606

Total C&I loans	Total C&I loans	$	7,421	$	3,676	$	3,556	$	1,606	$	1,253	$	2,358	$	4,518	$	6,615	$	65	$	31,068	Total C&I loans	$	5,916	$	4,157	$	2,050	$	2,278	$	1,305	$	3,924	$	2,258	$	9,425	$	468	$	31,781

(a) LMC includes non-revolving commercial lines of credit to qualified mortgage companies primarily for the temporary warehousing of eligible mortgage loans prior to the borrower's sale of those mortgage loans to ~~third party~~third-party investors. The loans are of short duration with maturities less than one year.

(b) Balances include PPP loans.


CRE PORTFOLIO	CRE PORTFOLIO																			CRE PORTFOLIO
		September 30, 2022																			March 31, 2023

(Dollars in millions)	(Dollars in millions)	2022		2021		2020		2019		2018		Prior to 2018		Revolving Loans		Revolving Loans Converted to Term Loans		Total		(Dollars in millions)	2023		2022		2021		2020		2019		Prior to 2019		Revolving Loans		Revolving Loans Converted to Term Loans		Total

Credit Quality Indicator:	Credit Quality Indicator:																			Credit Quality Indicator:
Pass (PD grades 1 through 12)	Pass (PD grades 1 through 12)	$	2,099	$	3,260	$	1,547	$	1,969	$	881	$	2,687	$	251	$	20	$	12,714	Pass (PD grades 1 through 12)	$	240	$	2,846	$	3,442	$	1,386	$	1,704	$	3,251	$	233	$	19	$	13,121
Special Mention (PD grade 13)	Special Mention (PD grade 13)	1		1		2		45		98		9		—		—		156		Special Mention (PD grade 13)	—		—		1		2		85		57		—		—		145
Substandard, Doubtful, or Loss (PD grades 14,15, and 16)	Substandard, Doubtful, or Loss (PD grades 14,15, and 16)	—		3		12		62		26		36		12		—		151		Substandard, Doubtful, or Loss (PD grades 14,15, and 16)	—		1		4		11		48		59		9		—		132

Total CRE loans	Total CRE loans	$	2,100	$	3,264	$	1,561	$	2,076	$	1,005	$	2,732	$	263	$	20	$	13,021	Total CRE loans	$	240	$	2,847	$	3,447	$	1,399	$	1,837	$	3,367	$	242	$	19	$	13,398


			2119			~~3Q22~~1Q23 FORM 10-Q REPORT


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


		December 31, 2021																			December 31, 2022

(Dollars in millions)	(Dollars in millions)	2021		2020		2019		2018		2017		Prior to 2017		Revolving Loans		Revolving Loans Converted to Term Loans		Total		(Dollars in millions)	2022		2021		2020		2019		2018		Prior to 2018		Revolving Loans		Revolving Loans Converted to Term Loans		Total

Credit Quality Indicator:	Credit Quality Indicator:																			Credit Quality Indicator:
Pass (PD grades 1 through 12)	Pass (PD grades 1 through 12)	$	3,441	$	2,065	$	2,514	$	929	$	691	$	1,822	$	204	$	—	$	11,666	Pass (PD grades 1 through 12)	$	2,637	$	3,324	$	1,488	$	1,855	$	808	$	2,565	$	274	$	20	$	12,971

Special Mention (PD grade 13)	Special Mention (PD grade 13)	4		26		52		125		20		65		—		—		292		Special Mention (PD grade 13)	—		3		3		37		68		5		1		—		117
Substandard, Doubtful, or Loss (PD grades 14,15, and 16)	Substandard, Doubtful, or Loss (PD grades 14,15, and 16)	47		—		24		3		33		32		12		—		151		Substandard, Doubtful, or Loss (PD grades 14,15, and 16)	1		4		12		50		31		31		11		—		140

Total CRE loans	Total CRE loans	$	3,492	$	2,091	$	2,590	$	1,057	$	744	$	1,919	$	216	$	—	$	12,109	Total CRE loans	$	2,638	$	3,331	$	1,503	$	1,942	$	907	$	2,601	$	286	$	20	$	13,228

The consumer portfolio is comprised primarily of smaller-balance loans which are very similar in nature in that most are standard products and are backed by residential real estate. Because of the similarities of consumer loan types, FHN is able to utilize the FICO score, among other attributes, to assess the credit quality of consumer borrowers. FICO scores are refreshed on a quarterly basis in an attempt to reflect the recent risk profile of the borrowers. Accruing delinquency amounts are indicators of asset quality within the credit card and other consumer portfolio.

The following table reflects the amortized cost basis by year of origination and refreshed FICO scores for

consumer real estate loans as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021.~~2022. Within consumer real estate, classes include HELOC and real estate installment loans. HELOCs are loans which during their draw period are classified as revolving loans. Once the draw period ends and the loan enters its repayment period, the loan converts to a term loan and is classified as a revolving loan converted to a term loan. All loans classified in the following tables as revolving loans or revolving loans converted to term loans are HELOCs. Real estate installment loans are originated as fixed term loans and are classified below in their vintage year. All loans in the following tables classified in a vintage year are real estate installment loans.


CONSUMER REAL ESTATE PORTFOLIO	CONSUMER REAL ESTATE PORTFOLIO																			CONSUMER REAL ESTATE PORTFOLIO
		September 30, 2022																			March 31, 2023

(Dollars in millions)	(Dollars in millions)	2022		2021		2020		2019		2018		Prior to 2018		Revolving Loans		Revolving Loans Converted to Term Loans (a)		Total		(Dollars in millions)	2023		2022		2021		2020		2019		Prior to 2019		Revolving Loans		Revolving Loans Converted to Term Loans		Total
FICO score 740 or greater	FICO score 740 or greater	$	1,743	$	1,873	$	833	$	541	$	284	$	1,354	$	1,208	$	68	$	7,904	FICO score 740 or greater	$	397	$	2,157	$	1,822	$	800	$	512	$	1,516	$	1,383	$	60	$	8,647
FICO score 720-739	FICO score 720-739	235		254		118		100		35		247		174		19		1,182		FICO score 720-739	45		292		245		114		97		258		184		17		1,252
FICO score 700-719	FICO score 700-719	209		210		94		58		38		234		140		23		1,006		FICO score 700-719	34		241		202		92		54		249		151		21		1,044
FICO score 660-699	FICO score 660-699	175		138		91		57		63		296		195		25		1,040		FICO score 660-699	42		207		136		88		55		328		192		21		1,069
FICO score 620-659	FICO score 620-659	15		25		26		42		20		110		50		10		298		FICO score 620-659	1		21		24		25		40		120		45		8		284
FICO score less than 620	FICO score less than 620	15		18		31		12		24		269		49		16		434		FICO score less than 620	2		15		19		31		12		261		18		14		372
Total	Total	$	2,392	$	2,518	$	1,193	$	810	$	464	$	2,510	$	1,816	$	161	$	11,864	Total	$	521	$	2,933	$	2,448	$	1,150	$	770	$	2,732	$	1,973	$	141	$	12,668


			2220			~~3Q22~~1Q23 FORM 10-Q REPORT


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


		December 31, 2021																			December 31, 2022

(Dollars in millions)	(Dollars in millions)	2021		2020		2019		2018		2017		Prior to 2017		Revolving Loans		Revolving Loans Converted to Term Loans (a)		Total		(Dollars in millions)	2022		2021		2020		2019		2018		Prior to 2018		Revolving Loans		Revolving Loans Converted to Term Loans		Total
FICO score 740 or greater	FICO score 740 or greater	$	1,594	$	1,156	$	825	$	473	$	394	$	1,335	$	1,086	$	115	$	6,978	FICO score 740 or greater	$	2,154	$	1,847	$	819	$	523	$	278	$	1,294	$	1,297	$	63	$	8,275
FICO score 720-739	FICO score 720-739	236		171		109		61		44		209		162		21		1,013		FICO score 720-739	292		246		116		98		34		238		183		18		1,225
FICO score 700-719	FICO score 700-719	143		112		81		68		45		153		141		23		766		FICO score 700-719	242		206		93		55		35		226		142		22		1,021
FICO score 660-699	FICO score 660-699	164		131		120		106		44		246		204		44		1,059		FICO score 660-699	214		137		90		55		62		278		192		23		1,051
FICO score 620-659	FICO score 620-659	42		36		55		23		13		118		66		27		380		FICO score 620-659	21		24		25		41		20		105		47		9		292
FICO score less than 620	FICO score less than 620	26		84		42		32		45		272		42		33		576		FICO score less than 620	15		19		32		12		23		256		16		16		389
Total	Total	$	2,205	$	1,690	$	1,232	$	763	$	585	$	2,333	$	1,701	$	263	$	10,772	Total	$	2,938	$	2,479	$	1,175	$	784	$	452	$	2,397	$	1,877	$	151	$	12,253

The following tables reflect the amortized cost basis by year of origination and refreshed FICO scores for credit card and other loans as of March 31, 2023 and December 31, 2022.


CREDIT CARD & OTHER PORTFOLIO
	March 31, 2023

(Dollars in millions)	2023		2022		2021		2020		2019		Prior to 2019		Revolving Loans		Revolving Loans Converted to Term Loans		Total
FICO score 740 or greater	$	8	$	31	$	14	$	6	$	7	$	28	$	252	$	8	$	354
FICO score 720-739	1		3		2		2		1		4		33		1		47
FICO score 700-719	1		3		3		1		1		4		28		—		41
FICO score 660-699	—		3		1		1		1		8		31		1		46
FICO score 620-659	—		1		2		—		—		2		14		—		19
FICO score less than 620	2		7		6		6		10		85		183		1		300
Total	$	12	$	48	$	28	$	16	$	20	$	131	$	541	$	11	$	807


	December 31, 2022

(Dollars in millions)	2022		2021		2020		2019		2018		Prior to 2018		Revolving Loans		Revolving Loans Converted to Term Loans		Total
FICO score 740 or greater	$	36	$	14	$	10	$	10	$	4	$	25	$	291	$	6	$	396
FICO score 720-739	3		2		2		1		—		4		30		1		43
FICO score 700-719	3		3		1		1		—		4		33		1		46
FICO score 660-699	3		2		1		1		2		7		30		1		47
FICO score 620-659	1		3		1		—		—		3		18		—		26
FICO score less than 620	7		6		6		10		7		71		174		1		282
Total	$	53	$	30	$	21	$	23	$	13	$	114	$	576	$	10	$	840


			2321			~~3Q22~~1Q23 FORM 10-Q REPORT


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

~~The following tables reflect the amortized cost basis by year of origination and refreshed FICO scores for credit card and other loans as of September 30, 2022 and December 31, 2021.~~

CREDIT CARD & OTHER PORTFOLIO
September 30, 2022
(Dollars in millions) 2022 2021 2020 2019 2018 Prior to 2018 Revolving
Loans Revolving
Loans Converted
to Term Loans (a) Total
FICO score 740 or greater $ 25 $ 17 $ 12 $ 10 $ 4 $ 25 $ 290 $ 7 $ 390
FICO score 720-739 3 2 2 1 1 5 33 1 48
FICO score 700-719 2 4 1 1 — 4 37 — 49
FICO score 660-699 2 2 2 1 2 7 35 1 52
FICO score 620-659 1 2 1 — 1 3 21 — 29
FICO score less than 620 7 7 6 10 7 68 175 1 281
Total $ 40 $ 34 $ 24 $ 23 $ 15 $ 112 $ 591 $ 10 $ 849

December 31, 2021
(Dollars in millions) 2021 2020 2019 2018 2017 Prior to 2017 Revolving
Loans Revolving Loans Converted to Term Loans (a) Total
FICO score 740 or greater $ 56 $ 35 $ 29 $ 23 $ 13 $ 56 $ 200 $ 11 $ 423
FICO score 720-739 14 5 4 3 4 17 46 3 96
FICO score 700-719 8 5 4 4 3 17 42 1 84
FICO score 660-699 25 6 5 6 4 31 98 2 177
FICO score 620-659 4 3 2 4 3 18 22 1 57
FICO score less than 620 24 3 3 4 4 16 18 1 73
Total $ 131 $ 57 $ 47 $ 44 $ 31 $ 155 $ 426 $ 19 $ 910

Nonaccrual and Past Due Loans and Leases

Loans and leases are placed on nonaccrual if it becomes evident that full collection of principal and interest is at risk, impairment has been recognized as a partial charge-off of principal balance due to insufficient collateral value and past due status, or on a case-by-case basis if FHN continues to receive payments but there are other borrower-specific issues. Included in nonaccrual are loans

for which FHN continues to receive payments including residential real estate loans where the borrower has been discharged of personal obligation through bankruptcy.

Past due loans are loans contractually past due as to interest or principal payments, but which have not yet been put on nonaccrual status. ~~In accordance~~

The following table reflects accruing and non-accruing loans and leases by class on March 31, 2023 and December 31, 2022:


ACCRUING & NON-ACCRUING LOANS AND LEASES
	March 31, 2023
	Accruing								Non-Accruing
(Dollars in millions)	Current		30-89 Days Past Due		90+ Days Past Due		Total Accruing		Current		30-89 Days Past Due		90+ Days Past Due		Total Non- Accruing		Total Loans and Leases
Commercial, financial, and industrial:
C&I (a)	$	29,902	$	26	$	—	$	29,928	$	127	$	6	$	71	$	204	$	30,132

Loans to mortgage companies	2,040		—		—		2,040		—		—		—		—		2,040

Total commercial, financial, and industrial	31,942		26		—		31,968		127		6		71		204		32,172
Commercial real estate:
CRE (b)	13,330		5		—		13,335		19		26		18		63		13,398



Consumer real estate:
HELOC (c)	2,049		15		5		2,069		33		5		7		45		2,114
Real estate installment loans (d)	10,415		27		2		10,444		56		12		42		110		10,554
Total consumer real estate	12,464		42		7		12,513		89		17		49		155		12,668
Credit card and other:
Credit card	286		4		5		295		—		—		—		—		295
Other	508		2		—		510		1		1		—		2		512
Total credit card and other	794		6		5		805		1		1		—		2		807
Total loans and leases	$	58,530	$	79	$	12	$	58,621	$	236	$	50	$	138	$	424	$	59,045


	December 31, 2022
	Accruing								Non-Accruing
(Dollars in millions)	Current		30-89 Days Past Due		90+ Days Past Due		Total Accruing		Current		30-89 Days Past Due		90+ Days Past Due		Total Non- Accruing		Total Loans and Leases
Commercial, financial, and industrial:
C&I (a)	$	29,309	$	50	$	11	$	29,370	$	64	$	10	$	79	$	153	$	29,523

Loans to mortgage companies	2,258		—		—		2,258		—		—		—		—		2,258


Total commercial, financial, and industrial	31,567		50		11		31,628		64		10		79		153		31,781
Commercial real estate:
CRE (b)	13,208		11		—		13,219		7		—		2		9		13,228




Consumer real estate:
HELOC (c)	1,967		12		5		1,984		32		4		8		44		2,028
Real estate installment loans (d)	10,079		25		13		10,117		56		5		47		108		10,225

Total consumer real estate	12,046		37		18		12,101		88		9		55		152		12,253
Credit card and other:
Credit card	287		5		4		296		—		—		—		—		296
Other	540		2		—		542		1		—		1		2		544

Total credit card and other	827		7		4		838		1		—		1		2		840
Total loans and leases	$	57,648	$	105	$	33	$	57,786	$	160	$	19	$	137	$	316	$	58,102

(a) $204 million and $147 million of C&I loans are nonaccrual loans that have been specifically reviewed for impairment with ~~revised Interagency Guidance issued~~no related allowance in ~~2020, FHN was not required to designate~~2023 and 2022, respectively.

(b) $55 million and $5 million of CRE loans are nonaccrual loans that have been specifically reviewed for impairment with ~~deferrals granted~~no related allowance in ~~response to COVID-19 as past due because of such deferrals. If a borrower defers payment, this may result in no contractual payments being past due,~~2023 and ~~as such, loans would not be considered past due during the period of deferral, and as a result, are excluded from loans past due 30-89 days and loans 90+ days past due in the tables below.~~

2022, respectively.


			2422			~~3Q22~~1Q23 FORM 10-Q REPORT


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

~~The following table reflects accruing and non-accruing loans and leases by class on September 30, 2022 and December 31, 2021:~~

ACCRUING & NON-ACCRUING LOANS AND LEASES
September 30, 2022
Accruing Non-Accruing
(Dollars in millions) Current 30-89
Days
Past Due 90+
Days
Past Due Total
Accruing Current 30-89
Days
Past Due 90+
Days
Past Due Total
Non-
Accruing Total
Loans and Leases
Commercial, financial, and industrial:
C&I (a) $ 28,728 $ 65 $ 1 $ 28,794 $ 49 $ 21 $ 46 $ 116 $ 28,910
Loans to mortgage companies 2,710 — — 2,710 — — — — 2,710
Total commercial, financial, and industrial 31,438 65 1 31,504 49 21 46 116 31,620
Commercial real estate:
CRE (b) 13,006 5 — 13,011 7 — 3 10 13,021
Consumer real estate:
HELOC (c) 1,917 10 5 1,932 35 2 8 45 1,977
Real estate installment loans (d) 9,736 21 12 9,769 58 7 53 118 9,887
Total consumer real estate 11,653 31 17 11,701 93 9 61 163 11,864
Credit card and other:
Credit card 256 5 6 267 — — — — 267
Other 577 2 — 579 1 1 1 3 582
Total credit card and other 833 7 6 846 1 1 1 3 849
Total loans and leases $ 56,930 $ 108 $ 24 $ 57,062 $ 150 $ 31 $ 111 $ 292 $ 57,354

December 31, 2021
Accruing Non-Accruing
(Dollars in millions) Current 30-89
Days
Past Due 90+
Days
Past Due Total
Accruing Current 30-89
Days
Past Due 90+
Days
Past Due Total
Non-
Accruing Total
Loans and Leases
Commercial, financial, and industrial:
C&I (a) $ 26,367 $ 53 $ 5 $ 26,425 $ 97 $ 1 $ 27 $ 125 $ 26,550
Loans to mortgage companies 4,518 — — 4,518 — — — — 4,518
Total commercial, financial, and industrial 30,885 53 5 30,943 97 1 27 125 31,068
Commercial real estate:
CRE (b) 12,087 13 — 12,100 6 1 2 9 12,109
Consumer real estate:
HELOC (c) 1,906 7 6 1,919 34 2 9 45 1,964
Real estate installment loans (d) 8,658 30 27 8,715 44 3 46 93 8,808
Total consumer real estate 10,564 37 33 10,634 78 5 55 138 10,772
Credit card and other:
Credit card 292 2 2 296 — — — — 296
Other 608 3 — 611 1 — 2 3 614
Total credit card and other 900 5 2 907 1 — 2 3 910
Total loans and leases $ 54,436 $ 108 $ 40 $ 54,584 $ 182 $ 7 $ 86 $ 275 $ 54,859

~~(a)~~ ~~$113~~(c) $7 million and ~~$99 million of C&I loans are nonaccrual loans that have been specifically reviewed for impairment with no related allowance in 2022 and 2021, respectively.~~

~~(b)~~ $5 ~~million and $5 million of CRE loans are nonaccrual loans that have been specifically reviewed for impairment with no related allowance in 2022 and 2021, respectively.~~

~~(c) $5 million and $7~~ million of HELOC loans are nonaccrual loans that have been specifically reviewed for impairment with no related allowance in ~~2022~~2023 and ~~2021,~~2022, respectively.

(d) $7$10 million and ~~$50~~$7 million of real estate installment loans are nonaccrual loans that have been specifically reviewed for impairment with no related allowance in ~~2022~~2023 and ~~2021,~~2022, respectively.


			25			~~3Q22 FORM 10-Q REPORT~~


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

Collateral-Dependent Loans

Collateral-dependent loans are defined as loans for which repayment is expected to be derived substantially through the operation or sale of the collateral and where the borrower is experiencing financial difficulty. At a minimum, the estimated value of the collateral for each loan equals the current book value.

As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, FHN had commercial loans with amortized cost of approximately ~~$116~~$256 million and ~~$120~~$124 million, respectively, that were based on the value of underlying collateral. Collateral-dependent C&I and CRE loans totaled ~~$108~~$199 million and $8$57 million, respectively, at ~~September 30, 2022.~~March 31, 2023. The collateral for these loans generally consists of business assets including land, buildings, equipment and financial assets. During the three ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2023, FHN recognized charge-offs of $5$12 million ~~and $9 million, respectively,~~ on these loans related to reductions in estimated collateral values.

Consumer HELOC and real estate installment loans with amortized cost based on the value of underlying real estate collateral were approximately $7 million and ~~$28~~$29 million, respectively, as of ~~September 30, 2022~~March 31, 2023 and $7 million and ~~$20~~$26 million, respectively, as of December 31, ~~2021.~~2022. Charge-offs during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and March 31, 2022 ~~were $2 million for collateral-dependent consumer loans and~~ were not significant for collateral-dependent consumer loans.

Loan Modifications to Troubled Borrowers

As part of FHN’s ongoing risk management practices, FHN attempts to work with borrowers when necessary to extend or modify loan terms to better align with their current ability to repay. Modifications could include extension of the ~~three~~maturity date, reductions of the interest rate, reduction or forgiveness of accrued interest, or principal forgiveness. Combinations of these modifications may also be made for individual loans. Extensions and ~~nine~~modifications to loans are made in accordance with internal policies and guidelines which conform to regulatory guidance. Principal reductions may be made in limited circumstances, typically for specific commercial loan workouts, and in the event of borrower bankruptcy. Each occurrence is unique to the borrower and is evaluated separately.

Troubled loans are considered those in which the borrower is experiencing financial difficulty. The assessment of whether a borrower is experiencing financial difficulty can be subjective in nature and management’s judgment may be required in making this determination. FHN may determine that a borrower is experiencing financial difficulty if the borrower is currently in default on any of its debt, or if it is probable that a borrower may default in the foreseeable future absent a

modification. Many aspects of a borrower’s financial situation are assessed when determining whether they are experiencing financial difficulty.

Troubled commercial loans are typically modified through forbearance agreements which could include reduced interest rates, reduced payments, term extension, or entering into short sale agreements. Principal reductions may occur in specific circumstances.

Modifications for troubled consumer loans are generally structured using parameters of U.S. government-sponsored programs. For HELOC and real estate installment loans, troubled loans are typically modified by an interest rate reduction and a possible maturity date extension to reach an affordable housing debt-to-income ratio. Despite the absence of a loan modification by FHN, the discharge of personal liability through bankruptcy proceedings is considered a court-imposed modification.

For the credit card portfolio, troubled loan modifications are typically enacted through either a short-term credit card hardship program or a longer-term credit card workout program. In the credit card hardship program, borrowers may be granted rate and payment reductions for six months ~~ended September 30, 2021.~~to one year. In the credit card workout program, borrowers are granted a rate reduction to 0% and a term extension for up to five years.

Modifications to Borrowers Experiencing Financial Difficulty

For periods subsequent to December 31, 2022, information regarding loans modified when a borrower is experiencing financial difficulty are included in the tables below.

The following tables present the amortized cost basis at the end of the reporting period of loans modified to borrowers experiencing financial difficulty, disaggregated by class of financing receivable and type of modification made, as well as the financial effect of the modifications made as of March 31, 2023.


			23			1Q23 FORM 10-Q REPORT


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

LOAN MODIFICATIONS TO BORROWERS EXPERIENCING FINANCIAL DIFFICULTY


	March 31, 2023
		Term Extension
(Dollars in millions)					Balance			% of Total Class		Financial Effect
C&I			$	63		0.2	%		Added a weighted-average 1 year to the life of loans, which reduced monthly payment amounts for the borrowers
CRE			32			0.2			Added a weighted-average 0.6 years to the life of loans, which reduced monthly payment amounts for the borrowers
Consumer Real Estate			1			—			Added a weighted-average 14.9 years to the life of loans, which reduced monthly payment amounts for the borrowers
Credit Card and Other			—			—			N/A
Total			$	96		0.2	%


	March 31, 2023
		Payment Deferrals
(Dollars in millions)			Balance		% of Total Class		Financial Effect
C&I			$	—	—	%	N/A
CRE			—		—		N/A
Consumer Real Estate			4		—		Payment deferral for 11 months, with a balloon payment at the end of the term
Credit Card and Other			—		—		N/A
Total			$	4	—	%


	March 31, 2023
	Combination - Term Extension and Interest Rate Reduction
(Dollars in millions)	Balance		% of Total Class		Financial Effect
C&I	$	—	—	%	N/A
CRE	—		—		N/A
Consumer Real Estate	2		—		Added a weighted-average 8.8 years to the life of loans and reduced weighted-average contractual interest rate from 5.0% to 4.9%
Credit Card and Other	—		—		N/A
Total	$	2	—	%


	March 31, 2023
	Combination - Principal Forgiveness and Term Extension
(Dollars in millions)	Balance		% of Total Class		Financial Effect
C&I	$	18	0.1	%	Reduced the balance of the loans by $2 million and added a weighted-average 6.2 years to the life of loans
CRE	—		—		N/A
Consumer Real Estate	—		—		N/A
Credit Card and Other	—		—		N/A
Total	$	18	—	%


			24			1Q23 FORM 10-Q REPORT


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

Loan modifications to borrowers experiencing financial difficulty that had a payment default during the period were insignificant as of March 31, 2023. FHN closely monitors the performance of the loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts.

The following table depicts the performance of loans that have been modified in the last 12 months:


PERFORMANCE OF LOANS THAT HAVE BEEN MODIFIED IN THE LAST 12 MONTHS
	March 31, 2023

(Dollars in millions)	Current		30-89 Days Past Due		90+ Days Past Due		Non-Accruing
C&I	$	63	$	—	$	—	$	18
CRE	32		—		—		—
Consumer Real Estate	1		—		—		6
Credit Card and Other	—		—		—		—
Total	$	96	$	—	$	—	$	24


			25			1Q23 FORM 10-Q REPORT


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

Troubled Debt Restructurings

~~As part of FHN’s ongoing risk management practices, FHN attempts~~

Prior to work with borrowers when necessary to extend or modify loan terms to better align with their current ability to repay. Extensions and modifications to loans are made in accordance with internal policies and guidelines which conform to regulatory guidance. Each occurrence is unique to the borrower and is evaluated separately.

AJanuary 1, 2023, a modification iswas classified as a TDR if the borrower iswas experiencing financial difficulty and it iswas determined that FHN ~~has~~ granted a concession to the borrower. Concessions represented modifications that FHN ~~may determine that~~would not otherwise consider if a borrower is experiencing financial difficulty if the borrower is currently in default on any of its debt, or if it is probable that a borrower may default in the foreseeable future. Many aspects of a borrower’s financial situation are assessed when determining whether they arehad not been experiencing financial difficulty. Concessions could include extension of the maturity date, reductions of the interest rate (which may make the rate lower than current market for a new loan with similar risk), reduction or forgiveness of accrued interest, or principal forgiveness. The assessmentsEvaluation of whether a ~~borrower is experiencing (or is likely to experience) financial difficulty, and whether a~~ concession ~~has been~~was granted, ~~are~~was subjective in nature and management’s judgment iswas required ~~when determining~~in making the determination of whether a modification is was

classified as a TDR. ~~In accordance with regulatory guidance, certain loan modifications that might ordinarily have qualified~~All non-reaffirmed residential real estate loans discharged in Chapter 7 bankruptcy were considered concessions and classified as ~~TDRs were not accounted for as TDRs and have been excluded from the disclosures below. For loan modifications that were made during the year ended~~nonaccruing TDRs.

On December 31, 2021 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 TDRs, and has excluded loans with these qualifying modifications from designation as TDRs in the information and discussion that follows.

~~On September 30,~~ 2022, ~~and December 31, 2021,~~ FHN had ~~$204~~$180 million ~~and $206 million, respectively,~~ of portfolio loans classified as TDRs. Additionally, ~~$31 million and $35~~$30 million of loans held for sale as of ~~September 30, 2022 and~~ December 31, ~~2021, respectively,~~ 2022were classified as TDRs.

The following table presents the end of period balance for loans modified in a TDR during the ~~periods indicated:~~

year ended December 31, 2022:


LOANS MODIFIED IN A TDR
	Year Ended December 31, 2022
(Dollars in millions)		Number	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment

C&I		6	$	30	$	24





CRE		1	1		1


HELOC		98	7		7
Real estate installment loans		181	41		41

Credit card and other		81	12		12
Total TDRs		367	$	91	$	85


			26			~~3Q22 FORM 10-Q REPORT~~


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

LOANS MODIFIED IN A TDR
Three Months Ended September 30, 2022 Three Months Ended September 30, 2021
(Dollars in millions) Number Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment Number Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment
C&I 3 $ 30 $ 24 5 $ 8 $ 7
CRE — — — — — —
HELOC 30 2 2 2 — —
Real estate installment loans — — — 6 — —
Credit card and other 51 10 10 8 — —
Total TDRs 84 $ 42 $ 36 21 $ 8 $ 7
Nine Months Ended September 30, 2022 Nine Months Ended September 30, 2021
(Dollars in millions) Number Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment Number Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment
C&I 6 $ 30 $ 24 32 $ 37 $ 34
CRE — — — 1 12 10
HELOC 86 6 6 21 2 2
Real estate installment loans 181 41 41 41 8 8
Credit card and other 60 10 10 36 — —
Total TDRs 333 $ 87 $ 81 131 $ 59 $ 54

The following table presents TDRs which re-defaulted during ~~the three and nine months ended September 30,~~ 2022 and ~~2021, a~~nd as to which the modification occurred 12 months or less prior to the re-default. For purposes of this disclosure, FHN generally defines payment default as 30 or more days past due.

LOANS MODIFIED IN A TDR THAT RE-DEFAULTED
Three Months Ended September 30, 2022 Three Months Ended September 30, 2021
(Dollars in millions) Number Recorded
Investment Number Recorded
Investment
C&I — $ — 6 $ 3
CRE — — 4 10
HELOC 8 — — —
Real estate installment loans 21 7 1 1
Credit card and other 3 — 1 —
Total TDRs 32 $ 7 12 $ 14
Nine Months Ended September 30, 2022 Nine Months Ended September 30, 2021
(Dollars in millions) Number Recorded
Investment Number Recorded
Investment
C&I 5 $ — 18 $ 5
CRE — — 6 19
HELOC 8 — 1 —
Real estate installment loans 27 8 8 4
Credit card and other 12 — 2 —
Total TDRs 52 $ 8 35 $ 28


LOANS MODIFIED IN A TDR THAT RE-DEFAULTED
	Year Ended December 31, 2022
(Dollars in millions)		Number	Recorded Investment

C&I		5	$	—


CRE		—	—


HELOC		22	1
Real estate installment loans		54	15

Credit card and other		17	—
Total TDRs		98	$	16


			2726			~~3Q22~~1Q23 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents			NOTE 4—ALLOWANCE FOR CREDIT LOSSES

Note 4—Allowance for Credit Losses

Management's estimate of expected credit losses in the loan and lease portfolios is recorded in the ALLL and the reserve for unfunded lending commitments, collectively referred to as the Allowance for Credit Losses, or the ACL. The ALLL and the reserve for unfunded lending commitments are reported on the Consolidated Balance Sheets in the allowance for loan and lease losses and in other liabilities, respectively. Provision for credit losses related to the loans and leases portfolio and the unfunded lending commitments are reported in the Consolidated Statements of Income as provision for credit losses.

The ACL is maintained at a level management believes to be appropriate to absorb expected lifetime credit losses over the contractual life of the loan and lease portfolio and unfunded lending commitments. The determination of the ACL is based on periodic evaluation of the loan and lease portfolios and unfunded lending commitments considering a number of relevant underlying factors, including key assumptions and evaluation of quantitative and qualitative information.

The expected loan losses are the product of multiplying FHN’s estimates of probability of default (PD), loss given default (LGD), and individual loan level exposure asat default (EAD), including amortization and prepayment assumptions, on an undiscounted basis. FHN uses models or assumptions to develop the expected loss forecasts, which incorporate multiple macroeconomic forecasts over a four-year reasonable and supportable forecast period. After the reasonable and supportable forecast period, the Company immediately reverts to its historical loss averages, evaluated over the historical observation period, for the remaining estimated life of the loans. In order to capture the unique risks of the loan portfolio within the PD, LGD, and prepayment models, FHN segments the portfolio into pools, generally incorporating loan grades for commercial loans. As there can be no certainty that actual economic performance will precisely follow any specific macroeconomic forecast, FHN uses qualitative adjustments ~~to adjust historical loss information in situations~~ where current loan characteristics or current or forecasted economic conditions differ from ~~those in the~~ historical ~~loss information and for differences in economic conditions and other factors.~~periods.

The evaluation of quantitative and qualitative information is performed through assessments of groups of assets that share similar risk characteristics and certain individual loans and leases that do not share similar risk characteristics with the collective group. As described in Note 3 - Loans and Leases, loans are grouped generally by product type and significant loan portfolios are assessed for credit losses using analytical or statistical models. The quantitative ~~evaluation of the adequacy of the ACL~~component utilizes ~~a weighting approach for multiple~~ economic forecast ~~scenarios~~information as its foundation and is primarily based on

analytical models that use known or estimated data as of the balance sheet date and forecasted data over the reasonable and supportable period. The ACL ~~may~~is also be

affected by ~~a variety of~~ qualitative factors that FHN considers to reflect current judgment of various events and risks that are not measured in the quantitative ~~calculations.~~calculations, including alternative economic forecasts.

In accordance with its accounting policy elections, FHN does not recognize a separate allowance for expected credit losses for AIR and records reversals of AIR as reductions of interest income. FHN reverses previously accrued but uncollected interest when an asset is placed on nonaccrual status. As of September 30, 2022 and December 31, 2021, FHN recognized less than $1 million in allowance for expected credit losses on COVID-19 deferrals that do not qualify for the election which is not reflected in the table below. AIR and the related allowance for expected credit losses is included as a component of other assets. The total amount of interest reversals from loans placed on nonaccrual status and the amount of income recognized on nonaccrual loans during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ were not material.

Expected credit losses for unfunded commitments are estimated for periods where the commitment is not unconditionally cancellable. The measurement of expected credit losses for unfunded commitments mirrors that of loans and leases with the additional estimate of future draw rates (timing and amount).

Prior to January 1, 2023, TDRs were reflected in FHN’s estimate of expected credit losses as described in Note 1 - Significant Accounting Policies, in its 2022 Form 10-K. Subsequent to December 31, 2022, in accordance with the provisions of ASU 2022-02, FHN has ceased recognition of TDRs and no longer performs discounted cash flow calculations for these loans to estimate expected credit losses. As described in Note 3 – Loans and Leases, FHN now monitors and discloses information associated with modifications to borrowers experiencing financial difficulty. For both commercial and consumer portfolio segments, an adjustment to the ACL is generally not recorded at the time of modification because FHN includes these modified loans in its quantitative loss estimation processes. In the event of principal forgiveness, which primarily occurs for commercial loan workouts and consumer loans experiencing bankruptcy, FHN records the reduction in expected collectible principal balance as a charge-off against the ALLL.

The increase in the ACL balance as of ~~September 30,~~March 31, 2023 as compared to December 31, 2022 largely reflects ~~the impact of loan growth, deterioration~~potential economic instability projected in the macroeconomic ~~forecast~~forecasts resulting from inflation and ~~a preliminary estimate of potential losses related to Hurricane Ian.~~interest rate increases. In developing credit loss estimates for its loan and lease portfolios, FHN utilized ~~multiple~~two Moody’s forecast scenarios for its macroeconomic inputs. ~~During the three and nine months ended September 30, 2022,~~As of March 31, 2023, FHN's scenario selection process focused on key economic drivers such as unemployment and economic activity including recession risk. Risks considered include: the effects of inflation, rising interest rates, supply chain disruptions, labor/wage constraints, and international ~~conflict, and the ongoing impact of COVID-19.~~conflict. FHN selected one scenario as its base case, which ~~was the Moody's baseline scenario. The heaviest weight was placed on the base case forecast, which assumed positive real GDP growth over the forecast horizon.~~

During the year ended December 31, 2021, FHN considered stressed loan portfolios or industries that are most exposed to the effects of the COVID-19 pandemic, and added qualitative adjustments, where needed, to account for the risks not captured in modeled results. Management also made qualitative adjustments to reflect estimated recoveries based on a review of prior charge off


			2827			~~3Q22~~1Q23 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents			NOTE 4—ALLOWANCE FOR CREDIT LOSSES

was the Moody's baseline growth scenario. The heaviest weight was placed on the FHN-selected downside scenario. A smaller weight was placed on the baseline forecast which assumed positive real GDP growth over the forecast horizon. No weighting was applied to the more positive macroeconomic scenario.

Management also made qualitative adjustments to reflect estimated recoveries based on a review of prior charge-off and recovery levels, for default risk associated with large

balances with individual borrowers, for estimated loss amounts not reflected in historical factors due to specific portfolio risk, and for instances where limited data for acquired loans is considered to affect modeled results.

The following table provides a rollforward of the ALLL and the reserve for unfunded lending commitments by portfolio type for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021:~~2022:

ROLLFORWARD OF ALLL & RESERVE FOR UNFUNDED LENDING COMMITMENTS
(Dollars in millions) Commercial, Financial, and Industrial (a) Commercial Real Estate Consumer Real Estate Credit Card and Other Total
Three Months Ended September 30, 2022
Allowance for loan and lease losses:
Balance as of July 1, 2022 $ 274 $ 141 $ 183 $ 26 $ 624
Charge-offs (13) (1) (1) (6) (21)
Recoveries 2 — 6 1 9
Provision for loan and lease losses 32 8 5 7 52
Balance as of September 30, 2022 $ 295 $ 148 $ 193 $ 28 $ 664
Reserve for remaining unfunded commitments:
Balance as of July 1, 2022 53 17 10 — 80
Provision for remaining unfunded commitments 5 2 1 — 8
Balance as of September 30, 2022 58 19 11 — 88
Allowance for credit losses as of September 30, 2022 $ 353 $ 167 $ 204 $ 28 $ 752
Three Months Ended September 30, 2021
Allowance for loan and lease losses:
Balance as of July 1, 2021 $ 385 $ 210 $ 203 $ 17 $ 815
Charge-offs (11) (2) (1) (5) (19)
Recoveries 7 2 7 — 16
Provision for loan losses (7) (48) (30) 7 (78)
Balance as of September 30, 2021 $ 374 $ 162 $ 179 $ 19 $ 734
Reserve for remaining unfunded commitments:
Balance as of July 1, 2021 $ 57 $ 9 $ 9 $ — $ 75
Provision for remaining unfunded commitments (8) 1 — — (7)
Balance as of September 30, 2021 49 10 9 — 68
Allowance for credit losses as of September 30, 2021 $ 423 $ 172 $ 188 $ 19 $ 802


			29			~~3Q22 FORM 10-Q REPORT~~


~~PART I, ITEM 1. FINANCIAL STATEMENTS~~
~~Table of Contents~~			~~NOTE 4—ALLOWANCE FOR CREDIT LOSSES~~


ROLLFORWARD OF ALLL & RESERVE FOR UNFUNDED LENDING COMMITMENTS											ROLLFORWARD OF ALLL & RESERVE FOR UNFUNDED LENDING COMMITMENTS
(Dollars in millions)											(Dollars in millions)	Commercial, Financial, and Industrial (a)		Commercial Real Estate		Consumer Real Estate		Credit Card and Other		Total

Allowance for loan and lease losses:											Allowance for loan and lease losses:
Balance as of January 1, 2023											Balance as of January 1, 2023	$	308	$	146	$	200	$	31	$	685
Adoption of ASU 2022-02											Adoption of ASU 2022-02	1		—		(7)		—		(6)

Charge-offs											Charge-offs	(14)		(2)		(1)		(5)		(22)
Recoveries											Recoveries	3		—		2		1		6

Provision for loan and lease losses											Provision for loan and lease losses	27		6		15		4		52
Balance as of March 31, 2023											Balance as of March 31, 2023	$	325	$	150	$	209	$	31	$	715

Reserve for remaining unfunded commitments:											Reserve for remaining unfunded commitments:
Balance as of January 1, 2023											Balance as of January 1, 2023	55		22		10		—		87

Provision for remaining unfunded commitments											Provision for remaining unfunded commitments	(2)		(1)		1		—		(2)
Balance as of March 31, 2023											Balance as of March 31, 2023	53		21		11		—		85
Allowance for credit losses as of March 31, 2023											Allowance for credit losses as of March 31, 2023	$	378	$	171	$	220	$	31	$	800

Allowance for loan and lease losses:											Allowance for loan and lease losses:
Balance as of January 1, 2022											Balance as of January 1, 2022	$	334	$	154	$	163	$	19	$	670

Charge-offs											Charge-offs	(13)		—		(1)		(5)		(19)
Recoveries											Recoveries	3		—		5		1		9
Provision for loan and lease losses											Provision for loan and lease losses	(37)		(3)		(3)		5		(38)
Balance as of March 31, 2022											Balance as of March 31, 2022	$	287	$	151	$	164	$	20	$	622

Reserve for remaining unfunded commitments:											Reserve for remaining unfunded commitments:
Balance as of January 1, 2022											Balance as of January 1, 2022	$	46	$	12	$	8	$	—	$	66

Provision for remaining unfunded commitments											Provision for remaining unfunded commitments	(3)		—		1		—		(2)
Balance as of March 31, 2022											Balance as of March 31, 2022	43		12		9		—		64
Allowance for credit losses as of March 31, 2022											Allowance for credit losses as of March 31, 2022	$	330	$	163	$	173	$	20	$	686

	Nine Months Ended September 30, 2022
Allowance for loan and lease losses:
Balance as of January 1, 2022	$	334	$	154	$	163	$	19	$	670
Charge-offs	(38)		(1)		(4)		(18)		(61)
Recoveries	6		1		17		3		27

Provision for loan and lease losses	(7)		(6)		17		24		28
Balance as of September 30, 2022	$	295	$	148	$	193	$	28	$	664

Reserve for remaining unfunded commitments:
Balance as of January 1, 2022	$	46	$	12	$	8	$	—	$	66

Provision for remaining unfunded commitments	12		7		3		—		22
Balance as of September 30, 2022	58		19		11		—		88
Allowance for credit losses as of September 30, 2022	$	353	$	167	$	204	$	28	$	752

	Nine Months Ended September 30, 2021
Allowance for loan and lease losses:
Balance as of January 1, 2021	$	453	$	242	$	242	$	26	$	963

Charge-offs	(27)		(5)		(5)		(11)		(48)
Recoveries	18		5		21		3		47
Provision for loan and lease losses	(70)		(80)		(79)		1		(228)
Balance as of September 30, 2021	$	374	$	162	$	179	$	19	$	734

Reserve for remaining unfunded commitments:
Balance as of January 1, 2021	$	65	$	10	$	10	$	—	$	85

Provision for remaining unfunded commitments	(16)		—		(1)		—		(17)
Balance as of September 30, 2021	49		10		9		—		68
Allowance for credit losses as of September 30, 2021	$	423	$	172	$	188	$	19	$	802

(a) C&I loans as of ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ include ~~$129~~$53 million and ~~$2.0 billion~~$642 million in PPP loans, respectively, which due to the government guarantee and forgiveness provisions are considered to have no credit risk and therefore have no allowance for loan and lease losses.

The table below presents gross charge-offs by year of origination as of March 31, 2023:


GROSS CHARGE-OFFS

(Dollars in millions)	2023		2022		2021		2020		2019		Prior to 2019		Revolving Loans		Total
C&I	$	—	$	5	$	—	$	1	$	—	$	6	$	2	$	14
CRE	—		—		—		—		2		—		—		2
Consumer Real Estate	—		—		—		—		—		1		—		1
Credit Card and Other	—		—		—		—		—		3		2		5
Total	$	—	$	5	$	—	$	1	$	2	$	10	$	4	$	22


			3028			~~3Q22~~1Q23 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents			NOTE 5—MORTGAGE BANKING ACTIVITY

Note 5—Mortgage Banking Activity

FHN originates mortgage loans for sale into the secondary market. These loans primarily consist of residential first lien 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 sold to private companies that are unaffiliated with the GSEs on a servicing-released basis. Gains and losses on these mortgage loans are included in mortgage banking and title income on the Consolidated Statements of Income.

Prior to the IBKC merger, FHN’s mortgage banking operations were not significant. At ~~September 30, 2022,~~March 31, 2023, FHN

~~FHN~~ had approximately ~~$40~~$38 million of loans that remained from pre-2009 mortgage business operations of legacy First Horizon. Activity related to the pre-2009 mortgage loans was primarily limited to payments and write-offs in ~~2022~~2023 and ~~2021,~~2022, with no new originations or loan sales, and only an insignificant amount of repurchases. These loans are excluded from the disclosure below.

The following table summarizes activity relating to residential mortgage loans held for sale as of and for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 and the year ended December 31, ~~2021.~~2022.


MORTGAGE LOANS HELD FOR SALE
MORTGAGE LOAN ACTIVITY						MORTGAGE LOAN ACTIVITY
(Dollars in millions)	(Dollars in millions)	September 30, 2022		December 31, 2021		(Dollars in millions)	March 31, 2023		December 31, 2022
Balance at beginning of period	Balance at beginning of period	$	250	$	409	Balance at beginning of period	$	44	$	250

Originations and purchases	Originations and purchases	1,158		2,836		Originations and purchases	120		1,275
Sales, net of gains	Sales, net of gains	(1,326)		(3,025)		Sales, net of gains	(103)		(1,481)
Mortgage loans transferred from (to) held for investment	Mortgage loans transferred from (to) held for investment	—		30		Mortgage loans transferred from (to) held for investment	—		—
Balance at end of period	Balance at end of period	$	82	$	250	Balance at end of period	$	61	$	44

Mortgage Servicing Rights

FHN records mortgage servicing rights at the lower of cost or market value and amortizes them over the remaining servicing life of the loans, with consideration given to prepayment assumptions.

Mortgage servicing rights are included in other assets on the Consolidated Balance Sheets. Mortgage servicing rights had the following carrying values as of the periods indicated.


MORTGAGE SERVICING RIGHTS	MORTGAGE SERVICING RIGHTS												MORTGAGE SERVICING RIGHTS
		September 30, 2022						December 31, 2021							March 31, 2023		December 31, 2022
(Dollars in millions)	(Dollars in millions)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount			Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount			(Dollars in millions)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Mortgage servicing rights	Mortgage servicing rights	$	19	$	(4)	$	15		$	39	$	(9)	$	30		Mortgage servicing rights	$	21	$	(5)	$	16	$	21	$	(5)	$	16

In addition, there was an insignificant amount of non-mortgage and commercial servicing rights as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021.~~2022. Total mortgage servicing fees included in mortgage banking and title income were $1 million and $2 million for the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively. Total mortgage servicing fees included in mortgage banking and title income were $4 million and $2 million for the nine months ended September 30, 2022 and 2021, respectively. Mortgage servicing rights with a net carrying amount of $21 million were sold during the second quarter of 2022 resulting in a gain of $12 million for the nine months ended September 30, 2022 which is included in mortgage banking and title income on the Consolidated Statements of Income.


			3129			~~3Q22~~1Q23 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents			NOTE 6—GOODWILL & OTHER INTANGIBLE ASSETS

Note 6—Goodwill and Other Intangible Assets

Goodwill

The following is a summary of goodwill by reportable segment included in the Consolidated Balance Sheets as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021.~~2022.


GOODWILL	GOODWILL							GOODWILL
(Dollars in millions)	(Dollars in millions)	Regional Banking		Specialty Banking		Total		(Dollars in millions)	Regional Banking		Specialty Banking		Total
December 31, 2020		$	880	$	631	$	1,511
December 31, 2021								December 31, 2021	$	880	$	631	$	1,511
Additions	Additions	—		—		—		Additions	—		—		—
December 31, 2021		$	880	$	631	$	1,511
December 31, 2022								December 31, 2022	$	880	$	631	$	1,511

Additions	Additions	—		—		—		Additions	—		—		—
September 30, 2022		$	880	$	631	$	1,511
March 31, 2023								March 31, 2023	$	880	$	631	$	1,511

FHN performed the required annual goodwill impairment test as of October 1, ~~2021.~~2022. The annual impairment test did not indicate impairment in any of FHN’s reporting units as of the testing date. Following the testing date, management evaluated the events and circumstances that could indicate that goodwill might be impaired and concluded that ~~a subsequent interim test~~it is not more likely than not that goodwill was ~~not necessary. FHN is currently in the process of performing its annual impairment test as of October 1, 2022.~~impaired.

Accounting estimates and assumptions were made about FHN's future performance and cash flows, as well as other prevailing market factors (e.g., interest rates, economic trends, etc.) when determining fair value as part of the

goodwill impairment test. While management used the best information available to estimate future performance for each reporting unit, future adjustments to management's projections may be necessary if conditions differ substantially from the assumptions used in making the estimates.

Other intangible assets

The following table, which excludes fully amortized intangibles, presents other intangible assets included in the Consolidated Balance Sheets:


OTHER INTANGIBLE ASSETS	OTHER INTANGIBLE ASSETS													OTHER INTANGIBLE ASSETS
		September 30, 2022						December 31, 2021							March 31, 2023						December 31, 2022
(Dollars in millions)	(Dollars in millions)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Value		Gross Carrying Amount		Accumulated Amortization		Net Carrying Value		(Dollars in millions)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Value		Gross Carrying Amount		Accumulated Amortization		Net Carrying Value
Core deposit intangibles	Core deposit intangibles	$	371	$	(161)	$	210	$	371	$	(128)	$	243	Core deposit intangibles	$	371	$	(181)	$	190	$	371	$	(171)	$	200
Client relationships	Client relationships	32		(12)		20		37		(11)		26		Client relationships	32		(14)		18		32		(13)		19
Other (a)	Other (a)	27		(11)		16		41		(12)		29		Other (a)	27		(13)		14		27		(12)		15
Total	Total	$	430	$	(184)	$	246	$	449	$	(151)	$	298	Total	$	430	$	(208)	$	222	$	430	$	(196)	$	234

(a)Includes non-compete covenants and purchased credit card intangible assets. Also includes ~~title plant intangible assets and~~ state banking licenses which are not subject to amortization.


			3230			~~3Q22~~1Q23 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents			NOTE 7—PREFERRED STOCK

Note 7—Preferred Stock

The following table presents a summary of FHN's non-cumulative perpetual preferred stock:


PREFERRED STOCK	PREFERRED STOCK									PREFERRED STOCK
(Dollars in millions)	(Dollars in millions)										September 30, 2022		December 31, 2021		(Dollars in millions)									March 31, 2023		December 31, 2022
		Issuance Date	Earliest Redemption Date (a)	Annual Dividend Rate		Dividend Payments	Shares Outstanding	Liquidation Amount			Carrying Amount		Carrying Amount			Issuance Date	Earliest Redemption Date (a)	Annual Dividend Rate		Dividend Payments	Shares Outstanding	Liquidation Amount		Carrying Amount		Carrying Amount

Series B	Series B	7/2/2020	8/1/2025	6.625%	(b)	Semi-annually	8,000	$	80		$	77	$	77	Series B	7/2/2020	8/1/2025	6.625%	(b)	Semi-annually	8,000	$	80	$	77	$	77
Series C	Series C	7/2/2020	5/1/2026	6.600%	(c)	Quarterly	5,750	58			59		59		Series C	7/2/2020	5/1/2026	6.600%	(c)	Quarterly	5,750	58		59		59
Series D	Series D	7/2/2020	5/1/2024	6.100%	(d)	Semi-annually	10,000	100			94		94		Series D	7/2/2020	5/1/2024	6.100%	(d)	Semi-annually	10,000	100		94		94
Series E	Series E	5/28/2020	10/10/2025	6.500%		Quarterly	1,500	150			145		145		Series E	5/28/2020	10/10/2025	6.500%		Quarterly	1,500	150		145		145
Series F	Series F	5/3/2021	7/10/2026	4.700%		Quarterly	1,500	150			145		145		Series F	5/3/2021	7/10/2026	4.700%		Quarterly	1,500	150		145		145
Series G	Series G	2/28/2022	2/28/2027	N/A		N/A	4,936	494			494		—		Series G	2/28/2022	2/28/2027	N/A		N/A	4,936	494		494		494
							31,686	$	1,032		$	1,014	$	520							31,686	$	1,032	$	1,014	$	1,014

N/A - not applicable

(a) Denotes earliest optional redemption date. Earlier redemption is possible, at FHN's election, if certain regulatory capital events occur.

(b) Fixed dividend rate will reset on August 1, 2025 to three-month ~~LIBOR~~CME Term SOFR plus 4.52361% (0.26161% plus 4.262%).

(c) Fixed dividend rate will reset on May 1, 2026 to three-month ~~LIBOR~~CME Term SOFR plus 5.18161% (0.26161% plus 4.920%).

(d) Fixed dividend rate will reset on May 1, 2024 to three-month ~~LIBOR~~CME Term SOFR plus 4.12061% (0.26161% plus 3.859%).

On February 28, 2022, in connection with the execution of the TD Merger Agreement, FHN issued $494 million of Series G Perpetual Convertible Preferred Stock (the Series G Convertible Preferred Stock). The Series G Convertible Preferred Stock iswas convertible into up to 4.9% of the outstanding shares of FHN common stock in certain circumstances, including ~~closing of the Pending TD Merger or~~ termination of the TD Merger Agreement. ~~Conversion occurs~~Because regulatory approval of the TD Transaction was not obtained, conversion will occur at a fixed rate of ~~5,574.136~~4,000 shares of common stock for each share of Series G Convertible Preferred ~~Stock, or 4,000 shares of common stock if regulatory approval of the Pending TD Merger is not obtained.~~Stock. For more information on the impact of the convertible features on diluted earnings per share, see Note 9 - Earnings Per Share.

The Series G Convertible Preferred Stock is redeemable at FHN's option, in whole or in part, on or after February 28, 2027. Earlier redemption is possible, at FHN's election, if certain regulatory capital events occur. The $494 million

carrying value of the Series G Convertible Preferred Stock ~~currently qualifies~~qualified as Tier 1 ~~Capital. Dividends are payable only in certain circumstances if~~Capital as of March 31, 2023. When conversion occurs, the ~~TD Merger Agreement is terminated before the shares are converted into common stock.~~Series G Convertible Preferred Stock will also qualify for Common Equity Tier 1 Capital.

Subsidiary Preferred Stock

First Horizon Bank has issued 300,000 shares of Class A Non-Cumulative Perpetual Preferred Stock (Class A Preferred Stock) with a liquidation preference of $1,000 per share. Dividends on the Class A Preferred Stock, if declared, accrue and are payable each quarter, in arrears, at a floating rate equal to the greater of ~~the three month~~three-month LIBOR plus 0.85% or 3.75% per annum. After June 30, 2023, that floating rate will be the greater of three-month CME Term SOFR plus 1.11161% (0.26161% plus 0.85%) or 3.75% per annum. These securities qualify fully as Tier 1 capital for both First Horizon Bank and FHN. On ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, $295 million of Class A

Preferred Stock was recognized as noncontrolling interest on the Consolidated Balance Sheets.

LIBOR Change to SOFR

On March 5, 2021, the U.K.'s Financial Conduct Authority announced that all tenors of LIBOR would cease publication or no longer be representative after June 30, 2023. On March 15, 2022, the Adjustable Interest Rate (LIBOR) Act was enacted in the U.S. The LIBOR Act provides that LIBOR will transition to a replacement benchmark based on the Secured Overnight Financing Rate (SOFR), plus a spread adjustment, in such covered contracts. Subsequently, the FRB adopted Regulation ZZ that identified CME Term SOFR, a forward term rate based on SOFR administered by CME Group Benchmark Administration, Ltd., plus a spread adjustment, as the replacement rate for securities for any interest rate calculations after June 30, 2023.

On April 25, 2023, FHN announced that each reference to LIBOR in each applicable securities contract (which term includes preferred stock and related depositary shares) will transition to CME Term SOFR, plus a tenor-based spread adjustment, on the first business day after June 30, 2023 pursuant to the LIBOR Act and the implementing regulations. The information presented in this Note reflects that transition.


			3331			~~3Q22~~1Q23 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents			NOTE 8—COMPONENTS OF OTHER COMPREHENSIVE INCOME (LOSS)

Note 8—Components of Other Comprehensive Income (Loss)

The following table provides the changes in accumulated other comprehensive income (loss) by component, net of tax, for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021:~~2022:

ACCUMULATED OTHER COMPREHENSIVE INCOME
(Dollars in millions) Securities AFS Cash Flow Hedges Pension and
Post-retirement
Plans Total
Balance as of July 1, 2022 $ (671) $ (40) $ (252) $ (963)
Net unrealized gains (losses) (368) (103) — (471)
Amounts reclassified from AOCI — 4 3 7
Other comprehensive income (loss) (368) (99) 3 (464)
Balance as of September 30, 2022 $ (1,039) $ (139) $ (249) $ (1,427)

ACCUMULATED OTHER COMPREHENSIVE INCOME

(Dollars in millions) Securities AFS Cash Flow Hedges Pension and
Post-retirement
Plans Total
Balance as of January 1, 2022 $ (36) $ 3 $ (255) $ (288)
Net unrealized gains (losses) (1,003) (149) — (1,152)
Amounts reclassified from AOCI — 7 6 13
Other comprehensive income (loss) (1,003) (142) 6 (1,139)
Balance as of September 30, 2022 $ (1,039) $ (139) $ (249) $ (1,427)


(Dollars in millions)	(Dollars in millions)	Securities AFS		Cash Flow Hedges		Pension and Post-retirement Plans		Total		(Dollars in millions)	Securities AFS		Cash Flow Hedges		Pension and Post-retirement Plans		Total
Balance as of July 1, 2021		$	43	$	8	$	(254)	$	(203)
Balance as of January 1, 2023										Balance as of January 1, 2023	$	(973)	$	(127)	$	(268)	$	(1,368)
Net unrealized gains (losses)	Net unrealized gains (losses)	(38)		—		(1)		(39)		Net unrealized gains (losses)	114		33		—		147
Amounts reclassified from AOCI	Amounts reclassified from AOCI	—		(1)		2		1		Amounts reclassified from AOCI	—		11		2		13
Other comprehensive income (loss)	Other comprehensive income (loss)	(38)		(1)		1		(38)		Other comprehensive income (loss)	114		44		2		160
Balance as of September 30, 2021		$	5	$	7	$	(253)	$	(241)
Balance as of March 31, 2023										Balance as of March 31, 2023	$	(859)	$	(83)	$	(266)	$	(1,208)


(Dollars in millions)	(Dollars in millions)	Securities AFS		Cash Flow Hedges		Pension and Post-retirement Plans		Total		(Dollars in millions)	Securities AFS		Cash Flow Hedges		Pension and Post-retirement Plans		Total
Balance as of January 1, 2021		$	108	$	12	$	(260)	$	(140)
Balance as of January 1, 2022										Balance as of January 1, 2022	$	(36)	$	3	$	(255)	$	(288)
Net unrealized gains (losses)	Net unrealized gains (losses)	(103)		(1)		1		(103)		Net unrealized gains (losses)	(404)		(20)		—		(424)
Amounts reclassified from AOCI	Amounts reclassified from AOCI	—		(4)		6		2		Amounts reclassified from AOCI	—		(1)		1		—
Other comprehensive income (loss)	Other comprehensive income (loss)	(103)		(5)		7		(101)		Other comprehensive income (loss)	(404)		(21)		1		(424)
Balance as of September 30, 2021		$	5	$	7	$	(253)	$	(241)
Balance as of March 31, 2022										Balance as of March 31, 2022	$	(440)	$	(18)	$	(254)	$	(712)

Reclassifications from AOCI, and related tax effects, were as follows:


RECLASSIFICATIONS FROM AOCI
(Dollars in millions)	Three Months Ended March 31,
Details about AOCI	2023		2022		Affected line item in the statement where net income is presented




Cash Flow Hedges:
Realized (gains) losses on cash flow hedges	$	15	$	(1)	Interest and fees on loans and leases
Tax expense (benefit)	(4)		—		Income tax expense
	11		(1)
Pension and Postretirement Plans:
Amortization of prior service cost and net actuarial (gain) loss	3		1		Other expense
Tax expense (benefit)	(1)		—		Income tax expense
	2		1
Total reclassification from AOCI	$	13	$	—


			3432			~~3Q22 FORM 10-Q REPORT~~


~~PART I, ITEM 1. FINANCIAL STATEMENTS~~
~~Table of Contents~~			~~NOTE 8—COMPONENTS OF OTHER COMPREHENSIVE INCOME (LOSS)~~

~~Reclassifications from AOCI, and related tax effects, were as follows:~~

RECLASSIFICATIONS FROM AOCI
(Dollars in millions) Three Months Ended
September 30, Nine Months Ended
September 30,
Details about AOCI 2022 2021 2022 2021 Affected line item in the statement where net
income is presented
Cash Flow Hedges:
Realized (gains) losses on cash flow hedges $ 5 $ (2) $ 9 $ (6) Interest and fees on loans and leases
Tax expense (benefit) (1) 1 (2) 2 Income tax expense
4 (1) 7 (4)
Pension and Postretirement Plans:
Amortization of prior service cost and net actuarial (gain) loss 4 3 8 8 Other expense
Tax expense (benefit) (1) (1) (2) (2) Income tax expense
3 2 6 6
Total reclassification from AOCI $ 7 $ 1 $ 13 $ 2


			35			~~3Q22~~1Q23 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents			NOTE 9—EARNINGS PER SHARE

Note 9—Earnings Per Share

The computations of basic and diluted earnings per common share were as follows:


EARNINGS PER SHARE COMPUTATIONS	EARNINGS PER SHARE COMPUTATIONS									EARNINGS PER SHARE COMPUTATIONS
		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
(Dollars in millions, except per share data; shares in thousands)	(Dollars in millions, except per share data; shares in thousands)	2022		2021		2022		2021		(Dollars in millions, except per share data; shares in thousands)	2023		2022
Net income	Net income	$	268	$	235	$	642	$	781	Net income	$	255	$	198
Net income attributable to noncontrolling interest	Net income attributable to noncontrolling interest	3		3		8		9		Net income attributable to noncontrolling interest	4		3
Net income attributable to controlling interest	Net income attributable to controlling interest	265		232		634		772		Net income attributable to controlling interest	251		195
Preferred stock dividends	Preferred stock dividends	8		8		24		29		Preferred stock dividends	8		8
Net income available to common shareholders	Net income available to common shareholders	$	257	$	224	$	610	$	743	Net income available to common shareholders	$	243	$	187

Weighted average common shares outstanding—basic	Weighted average common shares outstanding—basic	535,986		545,818		534,613		549,434		Weighted average common shares outstanding—basic	536,938		533,218
Effect of dilutive restricted stock, performance equity awards and options	Effect of dilutive restricted stock, performance equity awards and options	6,655		4,001		7,258		4,765		Effect of dilutive restricted stock, performance equity awards and options	7,541		6,809
Effect of dilutive convertible preferred stock (a)	Effect of dilutive convertible preferred stock (a)	27,512		—		21,667		—		Effect of dilutive convertible preferred stock (a)	27,512		9,782
Weighted average common shares outstanding—diluted	Weighted average common shares outstanding—diluted	570,153		549,819		563,538		554,199		Weighted average common shares outstanding—diluted	571,991		549,809

Basic earnings per common share	Basic earnings per common share	$	0.48	$	0.41	$	1.14	$	1.35	Basic earnings per common share	$	0.45	$	0.35
Diluted earnings per common share	Diluted earnings per common share	$	0.45	$	0.41	$	1.08	$	1.34	Diluted earnings per common share	$	0.43	$	0.34

(a) ~~During the first quarter of~~On February 28, 2022, FHN issued $494 million of Series G Convertible Preferred Stock, which ~~is convertible~~will be converted into common stock ~~upon completion of the Pending TD Merger or~~following the termination of the TD Merger Agreement. For more information on the convertible features, including the conversion rate, see Note 7 - Preferred Stock.

The following table presents average outstanding options and other equity awards that were excluded from the calculation of diluted earnings per share because they were either anti-dilutive (the exercise price was higher

than the weighted-average market price for the period) or the performance conditions have not been met:


ANTI-DILUTIVE EQUITY AWARDS	ANTI-DILUTIVE EQUITY AWARDS									ANTI-DILUTIVE EQUITY AWARDS
		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
(Shares in thousands)	(Shares in thousands)	2022		2021		2022		2021		(Shares in thousands)	2023		2022
Stock options excluded from the calculation of diluted EPS	Stock options excluded from the calculation of diluted EPS	11		2,901		35		1,431		Stock options excluded from the calculation of diluted EPS	—		72
Weighted average exercise price of stock options excluded from the calculation of diluted EPS	Weighted average exercise price of stock options excluded from the calculation of diluted EPS	$	26.03	$	17.75	$	25.65	$	20.64	Weighted average exercise price of stock options excluded from the calculation of diluted EPS	$	24.36	$	24.86
Other equity awards excluded from the calculation of diluted EPS	Other equity awards excluded from the calculation of diluted EPS	493		2,464		199		1,394		Other equity awards excluded from the calculation of diluted EPS	3,803		791


			3633			~~3Q22~~1Q23 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents			NOTE 10—CONTINGENCIES & OTHER DISCLOSURES

Note 10—Contingencies and Other Disclosures

Contingencies

Contingent Liabilities Overview

Contingent liabilities arise in the ordinary course of business. Often, they are related to lawsuits, arbitration, mediation, and other forms of litigation. Various litigation matters currently are threatened or pending against FHN and its subsidiaries. Also, FHN at times receives requests for information, subpoenas, or other inquiries from federal, state, and local regulators, from other government authorities, and from other parties concerning various matters relating to FHN’s current or former businesses. Certain matters of that sort are pending at most times, and FHN generally cooperates when those matters arise. Pending and threatened litigation matters sometimes are settled by the parties, and sometimes pending matters are resolved in court or before an arbitrator, or are withdrawn. Regardless of the manner of resolution, frequently the most significant changes in status of a matter occur over a short time period, often following a lengthy period of little substantive activity. In view of the inherent difficulty of predicting the outcome of these matters, particularly where the claimants seek very large or indeterminate damages, or where the cases present novel legal theories or involve a large number of parties, or where claims or other actions may be possible but have not been brought, FHN cannot reasonably determine what the eventual outcome of the matters will be, what the timing of the ultimate resolution of these matters may be, or what the eventual loss or impact related to each matter may be. FHN establishes a loss contingency liability for a litigation matter when loss is both probable and reasonably estimable as prescribed by applicable financial accounting guidance. If loss for a matter is probable and a range of possible loss outcomes is the best estimate available, accounting guidance requires a liability to be established at the low end of the range.

Based on current knowledge, and after consultation with counsel, management is of the opinion that loss contingencies related to threatened or pending litigation matters should not have a material adverse effect on the consolidated financial condition of FHN but may be material to FHN’s operating results for any particular reporting period depending, in part, on the results from that period.

Material Loss Contingency Matters

As used in this Note, except for matters that are reported as having been substantially settled or otherwise substantially resolved, FHN's “material loss contingency matters” generally fall into at least one of the following categories: (i) FHN has determined material loss to be probable and has established a material loss liability in accordance with applicable financial accounting guidance;

(ii) FHN has determined material loss to be probable but is not reasonably able to estimate an amount or range of material loss liability; or (iii) FHN has determined that material loss is not probable but is reasonably possible, and the amount or range of that reasonably possible material loss is estimable. As defined in applicable accounting guidance, loss is reasonably possible if there is more than a remote chance of a material loss outcome for FHN. FHN provides contingencies note disclosures for certain pending or threatened litigation matters each quarter, including all matters mentioned in categories (i) or (ii) and, occasionally, certain matters mentioned in category (iii). In addition, in this Note, certain other matters, or groups of matters, are discussed relating to FHN’s pre-2009 mortgage origination and servicing businesses. In all litigation matters discussed in this Note, unless settled or otherwise resolved, FHN believes it has meritorious defenses and intends to pursue those defenses vigorously.

FHN reassesses the liability for litigation matters each quarter as the matters progress. At ~~September 30, 2022,~~March 31, 2023, the aggregate amount of liabilities established for all such loss contingency matters was $2$3 million. These liabilities are separate from those discussed under the heading Mortgage Loan Repurchase and Foreclosure Liability below.

In each material loss contingency matter, except as otherwise noted, there is more than a remote chance that any of the following outcomes will occur: the plaintiff will substantially prevail; the defense will substantially prevail; the plaintiff will prevail in part; or the matter will be settled by the parties. At ~~September 30, 2022,~~March 31, 2023, FHN estimates that for all material loss contingency matters, estimable reasonably possible losses in future periods in excess of currently established liabilities could aggregate in a range from zero to less than $1 million.

As a result of the general uncertainties discussed above and the specific uncertainties discussed for each matter mentioned below, it is possible that the ultimate future loss experienced by FHN for any particular matter may materially exceed the amount, if any, of currently established liability for that matter.

Exposures from pre-2009 Mortgage Business

FHN is contending with indemnification claims related to "other whole loans sold," which were mortgage loans originated by FHN before 2009 and sold outside of a securitization organized by FHN. These claims generally assert that FHN-originated loans contributed to losses in connection with mortgage loans securitized by the buyer of the loans. The claims generally do not include specific deficiencies for specific loans sold by FHN. Instead, the claims generally assert that FHN is liable for a share of the claimant's loss estimated by assessing the totality of the


			3734			~~3Q22~~1Q23 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents			NOTE 10—CONTINGENCIES & OTHER DISCLOSURES

other whole loans sold by FHN to claimant in relation to the totality of the larger number of loans securitized by claimant. FHN is unable to estimate an RPL range for these matters due to significant uncertainties regarding: the number of, and the facts underlying, the loan originations which claimants assert are indemnifiable; the applicability of FHN’s contractual indemnity covenants to those facts and originations; and, in those cases where an indemnity claim may be supported, whether any legal defenses, counterclaims, other counter-positions, or third-party claims might eliminate or reduce claims against FHN or their impact on FHN.

FHN also has indemnification claims related to servicing obligations. The most significant is from Nationstar Mortgage LLC, currently doing business as “Mr. Cooper.” Nationstar was the purchaser of FHN’s mortgage servicing obligations and assets in 2013 and 2014 and, was FHN’s subservicer. Nationstar asserts several categories of indemnity obligations in connection with mortgage loans under the subservicing arrangement and under the purchase transaction. This matter currently is not in litigation, but litigation in the future is possible. FHN is unable to estimate an RPL range for this matter due to significant uncertainties regarding: the exact nature of each of Nationstar’s claims and its position in respect of each; the number of, and the facts underlying, the claimed instances of indemnifiable events; the applicability of FHN’s contractual indemnity covenants to those facts and events; and, in those cases where the facts and events might support an indemnity claim, whether any legal defenses, counterclaims, other counter-positions, or third-party claims might eliminate or reduce claims against FHN or their impact on FHN.

FHN has additional potential exposures related to its pre-2009 mortgage businesses. A few of those matters have become litigation which FHN currently estimates are immaterial, some are non-litigation claims or threats, some are mere subpoenas or other requests for information, and in some areas FHN has no indication of any active or threatened dispute. Some of those matters might eventually result in settlements, and some might eventually result in adverse litigation outcomes, but none are included in the material loss contingency liabilities mentioned above or in the RPL range mentioned above.

Mortgage Loan Repurchase and Foreclosure Liability

FHN’s repurchase and foreclosure liability, primarily related to its pre-2009 mortgage businesses, 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. 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.

Based on currently available information and experience to date, FHN has evaluated its loan repurchase, make-whole, foreclosure, and certain related exposures and has accrued for losses of ~~$16~~$15 million and ~~$17~~$16 million as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively. Accrued liabilities for FHN’s estimate of these obligations are reflected in other liabilities on the Consolidated Balance Sheets. Charges/expense reversals to increase/decrease the liability are included within other income on the Consolidated Statements of Income. The estimates are based upon currently available information and fact patterns that exist as of each balance sheet date and could be subject to future changes. Changes to any one of these factors could significantly impact the estimate of FHN’s liability.

Other Disclosures

Indemnification Agreements and Guarantees

In the ordinary course of business, FHN enters into indemnification agreements for legal proceedings against its directors and officers and standard representations and warranties for underwriting agreements, merger and acquisition agreements, loan sales, contractual commitments, and various other business transactions or arrangements.

The extent of FHN’s obligations under these agreements depends upon the occurrence of future events; therefore, it is not possible to estimate a maximum potential amount of payouts that could be required by such agreements.


			3835			~~3Q22~~1Q23 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents			NOTE 11—RETIREMENT PLANS

Note 11—Retirement Plans

FHN sponsors a noncontributory, qualified defined benefit pension plan to employees hired or re-hired on or before September 1, 2007. Pension benefits are based on years of service, average compensation near retirement or other termination, and estimated social security benefits at age 65. Benefits under the plan are “frozen” so that years of service and compensation changes after 2012 do not affect the benefit owed. Minimum contributions are based upon actuarially determined amounts necessary to fund the total benefit obligation. Decisions to contribute to the plan are based upon pension funding requirements under the Pension Protection Act, the maximum amount deductible under the Internal Revenue Code, the actual performance of plan assets, and trends in the regulatory environment. FHN made ~~a contribution of $6 million~~no contributions to the qualified pension plan in ~~2021.~~2022. Management does not currently anticipate that FHN will make a contribution to the qualified pension plan in ~~2022.~~2023.

FHN also maintains non-qualified plans including a supplemental retirement plan that covers certain

employees whose benefits under the qualified pension plan have been limited by tax rules. These other non-qualified plans are unfunded, and contributions to these plans cover all benefits paid under the non-qualified plans. Payments made under the non-qualified plans were $5 million for ~~2021.~~2022. FHN anticipates making benefit payments under the non-qualified plans of $5 million in ~~2022.~~

2023. Service cost is included in personnel expense in the Consolidated Statements of Income. All other components of net periodic benefit cost are included in other expense.

For more information on FHN's pension plan and other postretirement benefit plans, see Note 1817 - Retirement Plans and Other Employee Benefits in FHN's ~~2021~~2022 Annual Report on Form ~~10-K, as amended.~~10-K.

The components of net periodic benefit cost for the three ~~and nine~~ months ended ~~September 30~~March 31 were as follows:


COMPONENTS OF NET PERIODIC BENEFIT COST	COMPONENTS OF NET PERIODIC BENEFIT COST									COMPONENTS OF NET PERIODIC BENEFIT COST

		Three months ended September 30,				Nine months ended September 30,
(Dollars in millions)	(Dollars in millions)	2022		2021		2022		2021		(Dollars in millions)	2023		2022
Components of net periodic benefit cost	Components of net periodic benefit cost									Components of net periodic benefit cost

Interest cost	Interest cost	$	5	$	4	$	15	$	12	Interest cost	$	8	$	5
Expected return on plan assets	Expected return on plan assets	(6)		(7)		(18)		(15)		Expected return on plan assets	(8)		(6)
Amortization of unrecognized:	Amortization of unrecognized:									Amortization of unrecognized:

Actuarial (gain) loss	Actuarial (gain) loss	4		2		8		6		Actuarial (gain) loss	3		2
Other		—		—		—		2

Net periodic benefit cost	Net periodic benefit cost	$	3	$	(1)	$	5	$	5	Net periodic benefit cost	$	3	$	1


			3936			~~3Q22~~1Q23 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents			NOTE 12—BUSINESS SEGMENT INFORMATION

Note 12—Business Segment Information

FHN's operating segments are composed of the following:

•Regional Banking segment offers financial products and services, including traditional lending and deposit taking, to consumer and commercial clients primarily in the southern U.S. and other selected markets. Regional Banking also provides investment, wealth management, financial planning, trust and asset management services for consumer clients.

•Specialty Banking segment consists of lines of business that deliver product offerings and services with specialized industry knowledge. Specialty Banking’s lines of business include asset-based lending, mortgage warehouse lending, commercial real estate, franchise finance, correspondent banking, equipment finance, mortgage, and title insurance. In addition to traditional lending and deposit taking, Specialty Banking also delivers treasury management solutions, loan syndications, and international banking. Additionally, Specialty Banking has a line of business focused on fixed income securities sales, trading, underwriting, and strategies for institutional clients in the U.S. and abroad, as well as loan sales, portfolio advisory services, and derivative sales.

•Corporate segment consists primarily of corporate support functions including risk management, audit, accounting, finance, executive office, and corporate

communications. Shared support services such as human resources, properties, technology, credit risk and bank operations are allocated to the activities of Regional Banking, Specialty Banking and Corporate. Additionally, the Corporate segment includes centralized management of capital and funding to support the business activities of the company including management of wholesale funding, liquidity, and capital management and allocation. The Corporate segment also includes the revenue and expense associated with run-off businesses such as pre-2009 mortgage banking elements, run-off consumer and trust preferred loan portfolios, and other exited businesses.

Periodically, FHN adapts its segments to reflect managerial or strategic changes. FHN may also modify its methodology of allocating expenses and equity among segments which could change historical segment results. Business segment revenue, expense, asset, and equity levels reflect those which are specifically identifiable or which are allocated based on an internal allocation method. Because the allocations are based on internally developed assignments and allocations, to an extent they are subjective. Generally, all assignments and allocations have been consistently applied for all periods presented.


			4037			~~3Q22~~1Q23 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents			NOTE 12—BUSINESS SEGMENT INFORMATION

The following tables present financial information for each reportable business segment for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021:~~2022:


SEGMENT FINANCIAL INFORMATION	SEGMENT FINANCIAL INFORMATION									SEGMENT FINANCIAL INFORMATION
		Three Months Ended September 30, 2022									Three Months Ended March 31, 2023
(Dollars in millions)	(Dollars in millions)	Regional Banking		Specialty Banking		Corporate		Consolidated		(Dollars in millions)	Regional Banking		Specialty Banking		Corporate		Consolidated
Net interest income (expense)	Net interest income (expense)	$	517	$	138	$	7	$	662	Net interest income (expense)	$	586	$	126	$	(24)	$	688
Provision for credit losses	Provision for credit losses	43		17		—		60		Provision for credit losses	41		10		(1)		50
Noninterest income ~~(a)~~	Noninterest income ~~(a)~~	110		64		39		213		Noninterest income ~~(a)~~	107		53		11		171
Noninterest expense ~~(b)~~(a)	Noninterest expense ~~(b)~~(a)	304		104		61		469		Noninterest expense ~~(b)~~(a)	322		91		65		478
Income (loss) before income taxes	Income (loss) before income taxes	280		81		(15)		346		Income (loss) before income taxes	330		78		(77)		331
Income tax expense (benefit)	Income tax expense (benefit)	65		20		(7)		78		Income tax expense (benefit)	78		19		(21)		76
Net income (loss)	Net income (loss)	$	215	$	61	$	(8)	$	268	Net income (loss)	$	252	$	59	$	(56)	$	255
Average assets	Average assets	$	42,815	$	19,749	$	19,986	$	82,550	Average assets	$	44,487	$	19,436	$	14,918	$	78,841


		Three Months Ended September 30, 2021									Three Months Ended March 31, 2022
(Dollars in millions)	(Dollars in millions)	Regional Banking		Specialty Banking		Corporate		Consolidated		(Dollars in millions)	Regional Banking		Specialty Banking		Corporate		Consolidated
Net interest income (expense)	Net interest income (expense)	$	444	$	154	$	(106)	$	492	Net interest income (expense)	$	427	$	144	$	(92)	$	479
Provision for credit losses	Provision for credit losses	(52)		(33)		—		(85)		Provision for credit losses	(30)		(3)		(7)		(40)
Noninterest income	Noninterest income	113		142		(8)		247		Noninterest income	114		105		10		229
Noninterest expense ~~(b)~~(a)	Noninterest expense ~~(b)~~(a)	292		139		95		526		Noninterest expense ~~(b)~~(a)	306		132		55		493
Income (loss) before income taxes	Income (loss) before income taxes	317		190		(209)		298		Income (loss) before income taxes	265		120		(130)		255
Income tax expense (benefit)	Income tax expense (benefit)	74		46		(57)		63		Income tax expense (benefit)	62		29		(34)		57
Net income (loss)	Net income (loss)	$	243	$	144	$	(152)	$	235	Net income (loss)	$	203	$	91	$	(96)	$	198
Average assets	Average assets	$	40,908	$	20,505	$	26,988	$	88,401	Average assets	$	40,544	$	20,246	$	27,797	$	88,587

(a) ~~2022~~2023 includes a $21 million ~~gain~~in merger and integration expenses related to the ~~sale of the title insurance business in the Corporate segment.~~

~~(b)~~TD Transaction and 2022 ~~and 2021~~ includes ~~$24~~$37 million ~~and $46 million, respectively,~~ in merger and integration expenses related to the IBKC merger and ~~Pending~~ TD ~~Merger~~Transaction in the Corporate segment.

Nine Months Ended September 30, 2022
(Dollars in millions) Regional Banking Specialty Banking Corporate Consolidated
Net interest income (expense) $ 1,410 $ 424 $ (151) $ 1,683
Provision for credit losses 64 (4) (10) 50
Noninterest income (a) 337 265 40 642
Noninterest expense (b) 911 349 190 1,450
Income (loss) before income taxes 772 344 (291) 825
Income tax expense (benefit) 181 84 (82) 183
Net income (loss) $ 591 $ 260 $ (209) $ 642
Average assets $ 41,779 $ 20,071 $ 23,949 $ 85,799


			4138			~~3Q22~~1Q23 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents			NOTE 12—BUSINESS SEGMENT INFORMATION

Nine Months Ended September 30, 2021
(Dollars in millions) Regional Banking Specialty Banking Corporate Consolidated
Net interest income (expense) $ 1,319 $ 466 $ (289) $ 1,496
Provision for credit losses (169) (60) (16) (245)
Noninterest income 323 477 29 829
Noninterest expense (b) 837 441 289 1,567
Income (loss) before income taxes 974 562 (533) 1,003
Income tax expense (benefit) 228 136 (142) 222
Net income (loss) $ 746 $ 426 $ (391) $ 781
Average assets $ 41,931 $ 20,717 $ 24,483 $ 87,131

~~(a) 2022 includes a $21 million gain related to the sale of the title insurance business in the Corporate segment.~~

~~(b) 2022 and 2021 includes $99 million and $148 million, respectively, in merger and integration expenses related to the IBKC merger and Pending TD Merger in the Corporate segment.~~

The following tables reflect a disaggregation of FHN’s noninterest income by major product line and reportable segment for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021:~~2022:


NONINTEREST INCOME DETAIL BY SEGMENT	NONINTEREST INCOME DETAIL BY SEGMENT									NONINTEREST INCOME DETAIL BY SEGMENT
		Three months ended September 30, 2022									Three months ended March 31, 2023
(Dollars in millions)	(Dollars in millions)	Regional Banking		Specialty Banking		Corporate		Consolidated		(Dollars in millions)	Regional Banking		Specialty Banking		Corporate		Consolidated
Noninterest income:	Noninterest income:									Noninterest income:
Deposit transactions and cash management										Deposit transactions and cash management	$	38	$	2	$	2	$	42
Fixed income (a)	Fixed income (a)	$	—	$	46	$	—	$	46	Fixed income (a)	—		39		—		39
Deposit transactions and cash management		39		2		2		43
Brokerage, management fees and commissions	Brokerage, management fees and commissions	23		—		—		23		Brokerage, management fees and commissions	22		—		—		22
Mortgage banking and title income		—		9		—		9
Card and digital banking fees	Card and digital banking fees	19		—		2		21		Card and digital banking fees	17		1		2		20
Other service charges and fees	Other service charges and fees	8		5		—		13		Other service charges and fees	8		5		—		13
Trust services and investment management	Trust services and investment management	11		—		—		11		Trust services and investment management	11		—		—		11
Securities gains (losses), net (b)		—		—		12		12
Deferred compensation income		—		—		(3)		(3)

Mortgage banking and title income										Mortgage banking and title income	—		5		—		5
Other income (c)	Other income (c)	10		2		26		38		Other income (c)	11		1		7		19
Total noninterest income	Total noninterest income	$	110	$	64	$	39	$	213	Total noninterest income	$	107	$	53	$	11	$	171


			42			~~3Q22 FORM 10-Q REPORT~~


~~PART I, ITEM 1. FINANCIAL STATEMENTS~~
~~Table of Contents~~			~~NOTE 12—BUSINESS SEGMENT INFORMATION~~


		Three months ended September 30, 2021									Three months ended March 31, 2022
(Dollars in millions)	(Dollars in millions)	Regional Banking		Specialty Banking		Corporate		Consolidated		(Dollars in millions)	Regional Banking		Specialty Banking		Corporate		Consolidated
Noninterest income:	Noninterest income:									Noninterest income:
Deposit transactions and cash management										Deposit transactions and cash management	$	39	$	3	$	2	$	44
Fixed income (a)	Fixed income (a)	$	—	$	96	$	—	$	96	Fixed income (a)	—		73		—		73
Deposit transactions and cash management		40		3		1		44
Brokerage, management fees and commissions	Brokerage, management fees and commissions	24		—		—		24		Brokerage, management fees and commissions	24		—		—		24
Mortgage banking and title income		—		34		—		34
Card and digital banking fees	Card and digital banking fees	18		1		2		21		Card and digital banking fees	17		1		2		20
Other service charges and fees	Other service charges and fees	6		5		1		12		Other service charges and fees	8		5		—		13
Trust services and investment management	Trust services and investment management	13		—		—		13		Trust services and investment management	13		—		—		13
Mortgage banking and title income										Mortgage banking and title income	—		22		—		22
Securities gains (losses), net (b)	Securities gains (losses), net (b)	—		—		1		1		Securities gains (losses), net (b)	—		—		6		6
Deferred compensation income		—		—		3		3
Loss on debt extinguishment		—		—		(23)		(23)

Other income (c)	Other income (c)	12		3		7		22		Other income (c)	13		1		—		14
Total noninterest income	Total noninterest income	$	113	$	142	$	(8)	$	247	Total noninterest income	$	114	$	105	$	10	$	229

(a)2023 and 2022 ~~and 2021~~ includes ~~$13~~$10 million ~~and $12 million, respectively,~~ of underwriting, portfolio advisory, and other noninterest income in scope of ASC 606, "Revenue From Contracts With Customers."

(b)Represents noninterest income excluded from the scope of ASC 606. Amount is presented for informational purposes to reconcile total noninterest income.

(c)Includes letter of credit fees and insurance commissions in scope of ASC 606.

Nine Months Ended September 30, 2022
(Dollars in millions) Regional Banking Specialty Banking Corporate Consolidated
Noninterest income:
Fixed income (a) $ — $ 170 $ — $ 170
Deposit transactions and cash management 115 7 7 129
Brokerage, management fees and commissions 71 — — 71
Mortgage banking and title income — 65 — 65
Card and digital banking fees 57 2 5 64
Other service charges and fees 24 17 — 41
Trust services and investment management 36 — — 36
Securities gains (losses), net (b) — — 18 18
Deferred compensation income — — (24) (24)
Other income (c) 34 4 34 72
Total noninterest income $ 337 $ 265 $ 40 $ 642


			4339			~~3Q22 FORM 10-Q REPORT~~


~~PART I, ITEM 1. FINANCIAL STATEMENTS~~
~~Table of Contents~~			~~NOTE 12—BUSINESS SEGMENT INFORMATION~~

Nine Months Ended September 30, 2021
(Dollars in millions) Regional Banking Specialty Banking Corporate Consolidated
Noninterest income:
Fixed income (a) $ 1 $ 323 $ — $ 324
Deposit transactions and cash management 117 8 5 130
Brokerage, management fees and commissions 65 — — 65
Mortgage banking and title income — 124 2 126
Card and digital banking fees 51 2 6 59
Other service charges and fees 18 12 2 32
Trust services and investment management 39 — — 39
Securities gains (losses), net (b) — — 12 12
Deferred compensation income — — 12 12
Loss on debt extinguishment — — (23) (23)
Other income (c) 32 8 13 53
Total noninterest income $ 323 $ 477 $ 29 $ 829

~~(a)~~2022 and 2021 includes $33 million and $35 million for 2022 and 2021, respectively, of underwriting, portfolio advisory, and other noninterest income in scope of ASC 606, "Revenue From Contracts With Customers."

~~(b)Represents noninterest income excluded from the scope of ASC 606. Amount is presented for informational purposes to reconcile total noninterest income.~~

~~(c)Includes letter of credit fees and insurance commissions in scope of ASC 606.~~


			44			~~3Q22~~1Q23 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents			NOTE 13—VARIABLE INTEREST ENTITIES

Note 13—Variable Interest Entities

FHN makes equity investments in various entities that are considered VIEs, as defined by GAAP. A VIE typically does not have sufficient equity at risk to finance its activities without additional subordinated financial support from other parties. The Company’s variable interest arises from contractual, ownership or other monetary interests in the entity, which change with fluctuations in the fair value of the entity's net assets. FHN consolidates a VIE if FHN is the primary beneficiary of the entity. FHN is the primary beneficiary of a VIE if FHN's variable interest provides it with the power to direct the activities that most significantly impact the VIE and the right to receive benefits (or the obligation to absorb losses) that could potentially be significant to the VIE. To determine whether or not a variable interest held could potentially be significant to the VIE, FHN considers both qualitative and quantitative factors regarding the nature, size and form of its involvement with the VIE. FHN assesses whether or not it is the primary beneficiary of a VIE on an ongoing basis.

Consolidated Variable Interest Entities

FHN has established certain rabbi trusts related to deferred compensation plans offered to its employees.

FHN contributes employee cash compensation deferrals to the trusts and directs the underlying investments made by the trusts. The assets of these trusts are available to FHN’s creditors only in the event that FHN becomes insolvent. These trusts are considered VIEs as there is no equity at risk in the trusts since FHN provided the equity interest to its employees in exchange for services rendered. FHN is considered the primary beneficiary of the rabbi trusts as it has the power to direct the activities that most significantly impact the economic performance of the rabbi trusts through its ability to direct the underlying investments made by the trusts. Additionally, FHN could potentially receive benefits or absorb losses that are significant to the trusts due to its right to receive any asset values in excess of liability payoffs and its obligation to fund any liabilities to employees that are in excess of a rabbi trust’s assets.

The following table summarizes the carrying value of assets and liabilities associated with rabbi trusts used for deferred compensation plans which are consolidated by FHN as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021:~~2022:


CONSOLIDATED VIEs	CONSOLIDATED VIEs			CONSOLIDATED VIEs
(Dollars in millions)	(Dollars in millions)	September 30, 2022			December 31, 2021		(Dollars in millions)	March 31, 2023		December 31, 2022
Assets:	Assets:						Assets:

Other assets	Other assets	$	173		$	205	Other assets	$	168	$	181

Liabilities:	Liabilities:						Liabilities:

Other liabilities	Other liabilities	$	146		$	179	Other liabilities	$	139	$	150

Nonconsolidated Variable Interest Entities

Low Income Housing Tax Credit Partnerships

Through designated wholly-owned subsidiaries, First Horizon Bank makes equity investments as a limited partner in various partnerships that sponsor affordable housing projects utilizing the LIHTC. The purpose of these investments is to achieve a satisfactory return on capital and to support FHN’s community reinvestment initiatives. LIHTC partnerships are managed by unrelated general partners that have the power to direct the activities which most significantly affect the performance of the partnerships. FHN is therefore not the primary beneficiary of any LIHTC partnerships. Accordingly, FHN does not

consolidate these VIEs and accounts for these investments in other assets on the Consolidated Balance Sheets.

FHN accounts for all qualifying LIHTC investments under the proportional amortization method. Under this method an entity amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received and recognizes the net investment performance as a component of income tax expense. LIHTC investments that do not qualify for the proportional amortization method are accounted for using the equity method. Expenses associated with non-qualifying LIHTC investments were not material for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021.~~2022.


			4540			~~3Q22~~1Q23 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents			NOTE 13—VARIABLE INTEREST ENTITIES

The following table summarizes the impact to income tax expense on the Consolidated Statements of Income for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ for LIHTC investments accounted for under the proportional amortization method.


LIHTC IMPACTS ON TAX EXPENSE	LIHTC IMPACTS ON TAX EXPENSE									LIHTC IMPACTS ON TAX EXPENSE
		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
(Dollars in millions)	(Dollars in millions)	2022		2021		2022		2021		(Dollars in millions)	2023		2022
Income tax expense (benefit):	Income tax expense (benefit):									Income tax expense (benefit):
Amortization of qualifying LIHTC investments	Amortization of qualifying LIHTC investments	$	11	$	9	$	33	$	26	Amortization of qualifying LIHTC investments	$	13	$	12
Low income housing tax credits	Low income housing tax credits	(11)		(8)		(35)		(25)		Low income housing tax credits	(14)		(12)
Other tax benefits related to qualifying LIHTC investments	Other tax benefits related to qualifying LIHTC investments	(3)		(2)		(9)		(7)		Other tax benefits related to qualifying LIHTC investments	(3)		(2)

Other Tax Credit Investments

Through designated subsidiaries, First Horizon Bank periodically makes equity investments as a non-managing member in various LLCs that sponsor community development projects utilizing the NMTC. First Horizon Bank also makes equity investments as a limited partner or non-managing member in entities that receive solar and historic tax credits. The purposes of these investments are to achieve a satisfactory return on capital and to support FHN’s community reinvestment initiatives. These entities are considered VIEs as First Horizon Bank's subsidiaries represent the holders of the equity investment at risk, but do not have the ability to direct the activities that most significantly affect the performance of the entities.

Small Issuer Trust Preferred Holdings

First Horizon Bank holds variable interests in trusts which have issued mandatorily redeemable preferred capital securities (“trust preferreds”) for smaller banking and insurance enterprises. First Horizon Bank has no voting rights for the trusts’ activities. The trusts’ only assets are junior subordinated debentures of the issuing enterprises. The creditors of the trusts hold no recourse to the assets of First Horizon Bank. Since First Horizon Bank is solely a holder of the trusts’ securities, it has no rights which would give it the power to direct the activities that most significantly impact the trusts’ economic performance and thus it is not considered the primary beneficiary of the trusts. First Horizon Bank has no contractual requirements to provide financial support to the trusts.

On-Balance Sheet Trust Preferred Securitization

In 2007, First Horizon Bank executed a securitization of certain small issuer trust preferreds for which the underlying trust meets the definition of a VIE as the holders of the equity investment at risk do not have the power through voting rights, or similar rights, to direct the activities that most significantly impact the entity’s economic performance. Since First Horizon Bank did not retain servicing or other decision-making rights, First Horizon Bank is not the primary beneficiary as it does not

have the power to direct the activities that most

significantly impact the trust’s economic performance. Accordingly, First Horizon Bank has accounted for the funds received through the securitization as a term borrowing in its Consolidated Balance Sheets. First Horizon Bank has no contractual requirements to provide financial support to the trust.

Holdings in Agency Mortgage-Backed Securities

FHN holds securities issued by various Agency securitization trusts. Based on their restrictive nature, the trusts meet the definition of a VIE since the holders of the equity investments at risk do not have the power through voting rights, or similar rights, to direct the activities that most significantly impact the entities’ economic performance. FHN could potentially receive benefits or absorb losses that are significant to the trusts based on the nature of the trusts’ activities and the size of FHN’s holdings. However, FHN is solely a holder of the trusts’ securities and does not have the power to direct the activities that most significantly impact the trusts’ economic performance and is not considered the primary beneficiary of the trusts. FHN has no contractual requirements to provide financial support to the trusts.

Commercial Loan ~~Troubled Debt Restructurings~~Modifications to Borrowers Experiencing Financial Difficulty

For certain troubled commercial loans, First Horizon Bank ~~restructures~~modifies the terms of the borrower’s debt in an effort to increase the probability of receipt of amounts contractually due. Following a ~~troubled debt restructuring,~~modification to borrowers experiencing financial difficulty, the borrower entity typically meets the definition of a VIE as the initial determination of whether an entity is a VIE must be reconsidered as events have proven that the entity’s equity is not sufficient to permit it to finance its activities without additional subordinated financial support or a restructuring of the terms of its financing. As First Horizon Bank does not have the power to direct the activities that most significantly impact such troubled commercial borrowers’ operations, it is not considered the primary beneficiary even in situations where, based on the size of the financing provided, First Horizon Bank is exposed to potentially significant benefits and losses of the borrowing


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PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents			NOTE 13—VARIABLE INTEREST ENTITIES

~~the borrowing~~ entity. First Horizon Bank has no contractual requirements to provide financial support to the borrowing entities beyond certain funding commitments established upon restructuring of the terms of the debt that allows for preparation of the underlying collateral for sale.

Proprietary Trust Preferred Issuances

In conjunction with its acquisitions, FHN acquired junior subordinated debt underlying multiple issuances of trust preferred debt. All of the trusts are considered VIEs because the ownership interests from the capital

contributions to these trusts are not considered “at risk”

in evaluating whether the holders of the equity investments at risk in the trusts have the ability to direct the activities that most significantly impact the entities’ economic performance. Thus, FHN cannot be the trusts’ primary beneficiary because its ownership interests in the trusts are not considered variable interests as they are not considered “at risk”. Consequently, none of the trusts are consolidated by FHN. The following tables summarize FHN’s nonconsolidated VIEs as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021:~~2022:

NONCONSOLIDATED VIEs AT SEPTEMBER 30, 2022

NONCONSOLIDATED VIEs AT MARCH 31, 2023

(Dollars in millions)

Maximum
Loss Exposure

Liability
Recognized

Classification

(Dollars in millions)

Maximum
Loss Exposure

Liability
Recognized

Classification

Type

Low income housing partnerships

445

160

(a)

Low income housing partnerships

462

150

(a)

Other tax credit investments (b)

Other assets

Other tax credit investments (b)

Other assets

Small issuer trust preferred holdings (c)

172

—

Loans and leases

Small issuer trust preferred holdings (c)

173

—

Loans and leases

On-balance sheet trust preferred securitization

(d)

On-balance sheet trust preferred securitization

(d)

Holdings of agency mortgage-backed securities (c)

8,785

—

(e)

Holdings of agency mortgage-backed securities (c)

8,724

—

(e)

Commercial loan troubled debt restructurings (f)

—

Loans and leases

Commercial loan modifications to borrowers experiencing financial difficulty (f)

113

—

Loans and leases

Proprietary trust preferred issuances (g)

—

167

Term borrowings

Proprietary trust preferred issuances (g)

—

167

Term borrowings

(a)Maximum loss exposure represents ~~$285~~$312 million of current investments and ~~$160~~$150 million of accrued contractual funding commitments. Accrued funding commitments represent unconditional contractual obligations for future funding events and are also recognized in other liabilities. FHN currently expects to be required to fund these accrued commitments by the end of 2024.

(b)Maximum loss exposure represents the value of current investments.

(c)Maximum loss exposure represents the value of current investments. A liability is not recognized as FHN is solely a holder of the trusts’ securities.

(d)Includes $112 million classified as loans and leases and $2 million classified as trading securities, which are offset by $87 million classified as term borrowings.

(e)Includes ~~$296~~$251 million classified as trading securities, $1.4 billion classified as held to maturity and $7.1 billion classified as securities available for sale.

(f)Maximum loss exposure represents ~~$55~~$113 million of current receivables with no additional contractual funding commitments on loans related to commercial loan modifications to borrowers ~~involved in a troubled debt restructuring.~~experiencing financial difficulty.

(g)No exposure to loss due to nature of FHN's involvement.

NONCONSOLIDATED VIEs AT DECEMBER 31, 2021

NONCONSOLIDATED VIEs AT DECEMBER 31, 2022

(Dollars in millions)

Maximum
Loss Exposure

Liability
Recognized

Classification

(Dollars in millions)

Maximum
Loss Exposure

Liability
Recognized

Classification

Type

Low income housing partnerships

382

129

(a)

Low income housing partnerships

463

154

(a)

Other tax credit investments (b)

Other assets

Other tax credit investments (b)

Other assets

Small issuer trust preferred holdings (c)

195

—

Loans and leases

Small issuer trust preferred holdings (c)

171

—

Loans and leases

On-balance sheet trust preferred securitization

(d)

On-balance sheet trust preferred securitization

(d)

Holdings of agency mortgage-backed securities (c)

8,550

—

(e)

Holdings of agency mortgage-backed securities (c)

8,652

—

(e)

Commercial loan troubled debt restructurings (f)

—

Loans and leases

Commercial loan troubled debt restructurings (f)

—

Loans and leases

Proprietary trust preferred issuances (g)

—

167

Term borrowings

Proprietary trust preferred issuances (g)

—

167

Term borrowings

(a)Maximum loss exposure represents ~~$253~~$309 million of current investments and ~~$129~~$154 million of accrued contractual funding commitments. Accrued funding commitments represent unconditional contractual obligations for future funding events and are also recognized in other liabilities. FHN currently expects to be required to fund these accrued commitments by the end of 2024.

(b)Maximum loss exposure represents current investments.

(c)Maximum loss exposure represents the value of current investments. A liability is not recognized as FHN is solely a holder of the trusts’ securities.

(d)Includes $112 million classified as loans and leases and $2 million classified as trading securities, which are offset by $87 million classified as term borrowings.

(e)Includes ~~$526~~$205 million classified as trading securities, ~~$712 million~~$1.4 billion classified as held to maturity and ~~$7.3~~$7.1 billion classified as securities available for sale.

(f)Maximum loss exposure represents ~~$94~~$53 million of current receivables ~~and $4 million of~~with no additional contractual funding commitments on loans related to commercial borrowers involved in a troubled debt restructuring.

(g)No exposure to loss due to nature of FHN's involvement.


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PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents			NOTE 14—DERIVATIVES

Note 14—Derivatives

In the normal course of business, FHN utilizes various financial instruments (including derivative contracts and credit-related agreements) through its fixed income and risk management operations, as part of its risk management strategy and as a means to meet clients’ needs. Derivative instruments are subject to credit and market risks in excess of the amount recorded on the balance sheet as required by GAAP. The contractual or notional amounts of these financial instruments do not necessarily represent the amount of credit or market risk. However, they can be used to measure the extent of involvement in various types of financial instruments. Controls and monitoring procedures for these instruments have been established and are routinely reevaluated. The ALCO controls, coordinates, and monitors the usage and effectiveness of these financial instruments.

Credit risk represents the potential loss that may occur if a party to a transaction fails to perform according to the terms of the contract. The measure of credit exposure is the replacement cost of contracts with a positive fair value. FHN manages credit risk by entering into financial instrument transactions through national exchanges, primary dealers or approved counterparties, and by using mutual margining and master netting agreements whenever possible to limit potential exposure. FHN also maintains collateral posting requirements with certain counterparties to limit credit risk. Daily margin posted or received with central clearinghouses is considered a legal settlement of the related derivative contracts which results in a net presentation for each contract in the Consolidated Balance Sheets. Treatment of daily margin as a settlement has no effect on hedge accounting or gains/losses for the applicable derivative contracts. On ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively, FHN had ~~$220~~$136 million and ~~$181~~$159 million of cash receivables and ~~$39~~$26 million and ~~$102~~$42 million of cash payables related to collateral posting under master netting arrangements, inclusive of collateral posted related to contracts with adjustable collateral posting thresholds and over-collateralized positions, with derivative counterparties. With exchange-traded contracts, the credit risk is limited to the clearinghouse used. For non-exchange traded instruments, credit risk may occur when there is a gain in the fair value of the financial instrument and the counterparty fails to perform according to the terms of the contract and/or when the collateral proves to be of insufficient value. See additional discussion regarding master netting agreements and collateral posting requirements later in this note under the heading “Master Netting and Similar Agreements.” Market risk represents the potential loss due to the decrease in the value of a financial instrument caused primarily by changes in interest rates or the prices of debt instruments. FHN manages market risk by establishing and monitoring limits on the types and degree of risk that may be undertaken.

FHN continually measures this risk through the use of models that measure value-at-risk and earnings-at-risk.

Derivative Instruments

FHN enters into various derivative contracts both to facilitate client transactions and as a risk management tool. Where contracts have been created for clients, FHN enters into upstream transactions with dealers to offset its risk exposure. Contracts with dealers that require central clearing are novated to a clearing agent who becomes FHN’s counterparty. Derivatives are also used as a risk management tool to hedge FHN’s exposure to changes in interest rates or other defined market risks.

Forward contracts are over-the-counter contracts where two parties agree to purchase and sell a specific quantity of a financial instrument at a specified price, with delivery or settlement at a specified date. Futures contracts are exchange-traded contracts where two parties agree to purchase and sell a specific quantity of a financial instrument at a specified price, with delivery or settlement at a specified date. Interest rate option contracts give the purchaser the right, but not the obligation, to buy or sell a specified quantity of a financial instrument, at a specified price, during a specified period of time. Caps and floors are options that are linked to a notional principal amount and an underlying indexed interest rate. Interest rate swaps involve the exchange of interest payments at specified intervals between two parties without the exchange of any underlying principal. Swaptions are options on interest rate swaps that give the purchaser the right, but not the obligation, to enter into an interest rate swap agreement during a specified period of time.

Trading Activities

FHNF trades U.S. Treasury, U.S. Agency, government-guaranteed loan, mortgage-backed, corporate and municipal fixed income securities, and other securities for distribution to clients. When these securities settle on a delayed basis, they are considered forward contracts. FHNF also enters into interest rate contracts, including caps, swaps, and floors, for its clients. In addition, FHNF enters into futures and option contracts to economically hedge interest rate risk associated with a portion of its securities inventory. These transactions are measured at fair value, with changes in fair value recognized in noninterest income. Related assets and liabilities are recorded on the Consolidated Balance Sheets as derivative assets and derivative liabilities within other assets and other liabilities. The FHNF Risk Committee and the Credit Risk Management Committee collaborate to mitigate credit risk related to these transactions. Credit risk is controlled through credit approvals, risk control limits, and ongoing monitoring procedures. Total trading revenues were ~~$34~~$27 million and ~~$85~~$61 million for the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021, $133 million~~respectively.


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PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents			NOTE 14—DERIVATIVES

~~and $291 million for the nine months ended September 30, 2022 and 2021, respectively.~~ Trading revenues are inclusive of both derivative and non-derivative financial instruments and are included in fixed income on the Consolidated Statements of Income.

The following ~~tables summarize~~table summarizes derivatives associated with FHNF's trading activities as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021:~~2022:


DERIVATIVES ASSOCIATED WITH TRADING	DERIVATIVES ASSOCIATED WITH TRADING							DERIVATIVES ASSOCIATED WITH TRADING
		September 30, 2022							March 31, 2023
(Dollars in millions)	(Dollars in millions)	Notional		Assets		Liabilities		(Dollars in millions)	Notional		Assets		Liabilities
Customer interest rate contracts	Customer interest rate contracts	$	3,112	$	3	$	291	Customer interest rate contracts	$	3,312	$	11	$	207
Offsetting upstream interest rate contracts	Offsetting upstream interest rate contracts	3,112		80		3		Offsetting upstream interest rate contracts	3,312		94		15
Option contracts purchased		10		—		—
Option contracts written								Option contracts written	110		—		1
Forwards and futures purchased	Forwards and futures purchased	2,089		4		36		Forwards and futures purchased	1,607		9		1
Forwards and futures sold	Forwards and futures sold	2,204		40		3		Forwards and futures sold	1,757		1		10


		December 31, 2021							December 31, 2022
(Dollars in millions)	(Dollars in millions)	Notional		Assets		Liabilities		(Dollars in millions)	Notional		Assets		Liabilities
Customer interest rate contracts	Customer interest rate contracts	$	3,587	$	84	$	41	Customer interest rate contracts	$	3,076	$	3	$	270
Offsetting upstream interest rate contracts	Offsetting upstream interest rate contracts	3,587		4		8		Offsetting upstream interest rate contracts	3,076		91		6
Option contracts purchased	Option contracts purchased	13		—		—		Option contracts purchased	40		—		—
Forwards and futures purchased	Forwards and futures purchased	4,430		2		9		Forwards and futures purchased	1,127		5		2
Forwards and futures sold	Forwards and futures sold	5,044		10		2		Forwards and futures sold	1,256		4		5

Interest Rate Risk Management

FHN’s ALCO focuses on managing market risk by controlling and limiting earnings volatility attributable to changes in interest rates. Interest rate risk exists to the extent that interest-earning assets and interest-bearing liabilities have different maturity or repricing characteristics. FHN uses derivatives, primarily swaps, that are designed to moderate the impact on earnings as interest rates change. Interest paid or received for swaps utilized by FHN to hedge the fair value of ~~long term~~long-term debt is recognized as an adjustment of the interest expense of the liabilities whose risk is being managed. FHN’s interest rate risk management policy is to use derivatives to hedge interest rate risk or market value of assets or liabilities,

not to speculate. In addition, FHN has entered into certain interest rate swaps and caps as a part of a product offering to commercial clients that includes customer derivatives paired with upstream offsetting market instruments that, when completed, are designed to mitigate interest rate risk. These contracts do not qualify for hedge accounting and are measured at fair value with gains or losses included in current earnings in noninterest expense on the Consolidated Statements of Income.

The following tables summarize FHN’s derivatives associated with interest rate risk management activities as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021:~~2022:


DERIVATIVES ASSOCIATED WITH INTEREST RATE RISK MANAGEMENT	DERIVATIVES ASSOCIATED WITH INTEREST RATE RISK MANAGEMENT							DERIVATIVES ASSOCIATED WITH INTEREST RATE RISK MANAGEMENT
		September 30, 2022							March 31, 2023
(Dollars in millions)	(Dollars in millions)	Notional		Assets		Liabilities		(Dollars in millions)	Notional		Assets		Liabilities
Customer Interest Rate Contracts Hedging	Customer Interest Rate Contracts Hedging							Customer Interest Rate Contracts Hedging
Hedging Instruments and Hedged Items:	Hedging Instruments and Hedged Items:							Hedging Instruments and Hedged Items:
Customer interest rate contracts	Customer interest rate contracts	$	8,315	$	—	$	611	Customer interest rate contracts	$	8,424	$	16	$	423
Offsetting upstream interest rate contracts	Offsetting upstream interest rate contracts	8,315		184		—		Offsetting upstream interest rate contracts	8,424		413		21


	December 31, 2022
(Dollars in millions)	Notional		Assets		Liabilities
Customer Interest Rate Contracts Hedging
Hedging Instruments and Hedged Items:
Customer interest rate contracts	$	8,377	$	3	$	570
Offsetting upstream interest rate contracts	8,377		351		5


			4944			~~3Q22~~1Q23 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents			NOTE 14—DERIVATIVES

December 31, 2021
(Dollars in millions) Notional Assets Liabilities
Customer Interest Rate Contracts Hedging
Hedging Instruments and Hedged Items:
Customer interest rate contracts $ 8,037 $ 202 $ 29
Offsetting upstream interest rate contracts 8,037 4 15

The following table summarizes gains (losses) on FHN’s derivatives associated with interest rate risk management activities for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021:~~2022:


DERIVATIVE GAINS (LOSSES) ASSOCIATED WITH INTEREST RATE RISK MANAGEMENT	DERIVATIVE GAINS (LOSSES) ASSOCIATED WITH INTEREST RATE RISK MANAGEMENT									DERIVATIVE GAINS (LOSSES) ASSOCIATED WITH INTEREST RATE RISK MANAGEMENT
		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
(Dollars in millions)	(Dollars in millions)	Gains (Losses)		Gains (Losses)		Gains (Losses)		Gains (Losses)		(Dollars in millions)	Gains (Losses)		Gains (Losses)
Customer Interest Rate Contracts Hedging	Customer Interest Rate Contracts Hedging									Customer Interest Rate Contracts Hedging
Hedging Instruments and Hedged Items:	Hedging Instruments and Hedged Items:									Hedging Instruments and Hedged Items:
Customer interest rate contracts (a)	Customer interest rate contracts (a)	$	271	$	(29)	$	788	$	(197)	Customer interest rate contracts (a)	$	160	$	353
Offsetting upstream interest rate contracts (a)	Offsetting upstream interest rate contracts (a)	(271)		29		(788)		197		Offsetting upstream interest rate contracts (a)	(160)		(353)

(a)Gains (losses) included in other expense within the Consolidated Statements of Income.

Cash Flow Hedges

Prior to 2021, FHN entered into pay floating, receive fixed interest rate swaps designed to manage its exposure to the variability in cash flows related to interest payments on debt instruments. In conjunction with the IBKC merger, FHN acquired interest rate contracts (floors and collars) which have been re-designated as cash flow hedges. The debt instruments primarily consist of held-to-maturity commercial loans that have variable interest payments based on 1-month LIBOR.

In 2022, FHN entered into interest rate contracts (floors and swaps) which have been designated as cash flow hedges. These hedges reference 1-month Term SOFR and FHN has made certain elections under ASU 2020-04 to

facilitate qualification for hedge accounting during the time that hedged items transition away from 1-Month LIBOR.

In a cash flow hedge, the entire change in the fair value of the interest rate derivatives included in the assessment of hedge effectiveness is initially recorded in OCI and is subsequently reclassified from OCI to current period earnings (interest income or interest expense) in the same period that the hedged item affects earnings.

The following tables summarize FHN’s derivative activities associated with cash flow hedges as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021:~~2022:

DERIVATIVES ASSOCIATED WITH CASH FLOW HEDGES

September 30, 2022

March 31, 2023

(Dollars in millions)

Notional

Assets

Liabilities

(Dollars in millions)

Notional

Assets

Liabilities

Cash Flow Hedges

Hedging Instruments:

Interest rate contracts

5,525

—

Interest rate contracts

5,350

—

Hedged Items:

Variability in cash flows related to debt instruments (primarily loans)

N/A

5,525

N/A

Variability in cash flows related to debt instruments (primarily loans)

N/A

5,350

N/A



	December 31, 2022
(Dollars in millions)	Notional		Assets		Liabilities
Cash Flow Hedges
Hedging Instruments:
Interest rate contracts	$	5,350	$	—	$	71
Hedged Items:
Variability in cash flows related to debt instruments (primarily loans)	N/A		$	5,350	N/A


			5045			~~3Q22~~1Q23 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents			NOTE 14—DERIVATIVES

December 31, 2021
(Dollars in millions) Notional Assets Liabilities
Cash Flow Hedges
Hedging Instruments:
Interest rate contracts $ 1,100 $ 13 $ —
Hedged Items:
Variability in cash flows related to debt instruments (primarily loans) N/A $ 1,100 N/A

The following table summarizes gains (losses) on FHN’s derivatives associated with cash flow hedges for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021:~~2022:


DERIVATIVE GAINS (LOSSES) ASSOCIATED WITH CASH FLOW HEDGES	DERIVATIVE GAINS (LOSSES) ASSOCIATED WITH CASH FLOW HEDGES									DERIVATIVE GAINS (LOSSES) ASSOCIATED WITH CASH FLOW HEDGES
		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
(Dollars in millions)	(Dollars in millions)	Gains (Losses)		Gains (Losses)		Gains (Losses)		Gains (Losses)		(Dollars in millions)	Gains (Losses)		Gains (Losses)
Cash Flow Hedges	Cash Flow Hedges									Cash Flow Hedges
Hedging Instruments:	Hedging Instruments:									Hedging Instruments:
Interest rate contracts (a)	Interest rate contracts (a)	$	(138)	$	(6)	$	(105)	$	(20)	Interest rate contracts (a)	$	53	$	(32)
Gain (loss) recognized in other comprehensive income (loss)	Gain (loss) recognized in other comprehensive income (loss)	(103)		—		(149)		(1)		Gain (loss) recognized in other comprehensive income (loss)	33		(20)
Gain (loss) reclassified from AOCI into interest income	Gain (loss) reclassified from AOCI into interest income	4		(1)		7		(4)		Gain (loss) reclassified from AOCI into interest income	11		(1)

(a)Approximately ~~$20~~$10 million of pre-tax losses are expected to be reclassified into earnings in the next twelve months.

Other Derivatives

FHN has mortgage banking operations that include the origination and sale of loans into the secondary market. As part of the origination of loans, FHN enters into interest rate lock commitments with borrowers. Additionally, FHN

enters into forward sales contracts with buyers for delivery of loans at a future date. Both of these contracts qualify as freestanding derivatives and are recognized at fair value through earnings. The notional and fair values of these contracts are presented in the table below.


DERIVATIVES ASSOCIATED WITH MORTGAGE BANKING HEDGES	DERIVATIVES ASSOCIATED WITH MORTGAGE BANKING HEDGES							DERIVATIVES ASSOCIATED WITH MORTGAGE BANKING HEDGES
		September 30, 2022							March 31, 2023
(Dollars in millions)	(Dollars in millions)	Notional		Assets		Liabilities		(Dollars in millions)	Notional		Assets		Liabilities
Mortgage Banking Hedges	Mortgage Banking Hedges							Mortgage Banking Hedges

Option contracts written	Option contracts written	$	92	$	—	$	1	Option contracts written	$	60	$	1	$	—
Forward contracts written	Forward contracts written	136		5		—		Forward contracts written	144		—		1

December 31, 2021
(Dollars in millions) Notional Assets Liabilities
Mortgage Banking Hedges
Option contracts written $ 241 $ 4 $ —
Forward contracts written 404 — —


	December 31, 2022
(Dollars in millions)	Notional		Assets		Liabilities
Mortgage Banking Hedges

Option contracts written	$	35	$	—	$	—

Forward contracts written	61		—		—


			5146			~~3Q22~~1Q23 FORM 10-Q REPORT


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Table of Contents			NOTE 14—DERIVATIVES

The following table summarizes gains (losses) on FHN's derivatives associated with mortgage banking activities for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021:~~2022:


DERIVATIVE GAINS (LOSSES) ASSOCIATED WITH MORTGAGE BANKING HEDGES	DERIVATIVE GAINS (LOSSES) ASSOCIATED WITH MORTGAGE BANKING HEDGES									DERIVATIVE GAINS (LOSSES) ASSOCIATED WITH MORTGAGE BANKING HEDGES
		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
(Dollars in millions)	(Dollars in millions)	Gains (Losses)		Gains (Losses)		Gains (Losses)		Gains (Losses)		(Dollars in millions)	Gains (Losses)		Gains (Losses)
Mortgage Banking Hedges	Mortgage Banking Hedges									Mortgage Banking Hedges

Option contracts written	Option contracts written	$	4	$	(3)	$	5	$	(12)	Option contracts written	$	(1)	$	(4)
Forward contracts written	Forward contracts written	6		—		33		—		Forward contracts written	(1)		18
Forward contracts purchased		—		(2)		—		10

In conjunction with pre-2020 sales of Visa Class B shares, FHN entered into derivative transactions whereby FHN will make or receive cash payments whenever the conversion ratio of the Visa Class B shares into Visa Class A shares is adjusted. As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, the derivative liabilities associated with the sales of Visa Class B shares were ~~$20~~$21 million and ~~$23~~$27 million, respectively. FHN recognized ~~$12~~$22 million in derivative valuation adjustments related to prior sales of Visa Class B shares for the ~~nine months ended September 30, 2022 and $19 million for the~~ year ended December 31, ~~2021.~~2022. See Note 16 - Fair Value of Assets and Liabilities for discussion of the valuation inputs and processes for these Visa-related derivatives.

FHN utilizes cross currency swaps and cross currency interest rate swaps to economically hedge its exposure to foreign currency risk and interest rate risk associated with non-U.S. dollar denominated loans. As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, these loans were valued at ~~$11~~$14 million and $7$9 million, respectively. The balance sheet amount and the gains/losses associated with these derivatives were not significant.

Related to its loan participation/syndication activities, FHN enters into risk participation agreements, under which it assumes exposure for, or receives indemnification for, borrowers’ performance on underlying interest rate derivative contracts. FHN's counterparties in these contracts are other lending institutions involved in the loan participation/syndication arrangements for which the underlying interest rate derivative contract is intended to hedge interest rate risk for the borrower. FHN will make (other institution is the lead bank) or receive (FHN is the lead bank) payments for risk participations if the borrower defaults on its obligation to perform under the terms of its interest rate derivative agreement with the lead bank in the participation.

As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, the notional values of FHN’s risk participations were ~~$217~~$312 million and ~~$257~~$242 million of derivative assets and ~~$738~~$831 million and ~~$500~~$742 million of derivative liabilities, respectively. The notional value for risk participation/

syndication agreements is consistent with the percentage of participation in the lending arrangement. FHN's

maximum exposure or benefit in the risk participation agreements is contingent on the fair value of the underlying interest rate derivative contracts for which the borrower is in a liability position at the time of default. FHN monitors the credit risk associated with the borrowers to which the risk participations relate through the same credit risk assessment process utilized for establishing credit loss estimates for its loan portfolio. These credit risk estimates are included in the determination of fair value for the risk participations. Assuming all underlying ~~third party~~third-party customers referenced in the swap contracts defaulted at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, the exposure from these agreements would not be material based on the fair value of the underlying swaps.

FHN holds certain certificates of deposit with the rate of return based on an equity index which is considered an embedded derivative as a written option that must be separately recognized. The risks of the written option are offset by purchasing an option with terms that mirror the written option, which is also carried at fair value on the Company’s Consolidated Balance Sheets. As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, FHN recognized an insignificant amount of assets and liabilities associated with these contracts.

Master Netting and Similar Agreements

FHN uses master netting agreements, mutual margining agreements and collateral posting requirements to minimize credit risk on derivative contracts. Master netting and similar agreements are used when counterparties have multiple derivatives contracts that allow for a “right of setoff,” meaning that a counterparty may net offsetting positions and collateral with the same counterparty under the contract to determine a net receivable or payable. The following discussion provides an overview of these arrangements which may vary due to the derivative type and market in which a derivative transaction is executed.


			5247			~~3Q22~~1Q23 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents			NOTE 14—DERIVATIVES

Interest rate derivatives are subject to agreements consistent with standard agreement forms of the ISDA. Currently, all interest rate derivative contracts are entered into as over-the-counter transactions and collateral posting requirements are based on the net asset or liability position with each respective counterparty. For contracts that require central clearing, novation to a counterparty with access to a clearinghouse occurs and initial margin is posted.

Cash margin received (posted) that is considered settlements for the derivative contracts is included in the respective derivative asset (liability) value. Cash margin that is considered collateral received (posted) for interest rate derivatives is recognized as a liability (asset) on FHN’s Consolidated Balance Sheets.

Interest rate derivatives with clients that are smaller financial institutions typically require posting of collateral by the counterparty to FHN. This collateral is subject to a threshold with daily adjustments based upon changes in the level or fair value of the derivative position. Positions and related collateral can be netted in the event of default. Collateral pledged by a counterparty is typically cash or securities. The securities pledged as collateral are not recognized within FHN’s Consolidated Balance Sheets. Interest rate derivatives associated with lending arrangements share the collateral with the related loan(s). The derivative and loan positions may be netted in the event of default. For disclosure purposes, the entire collateral amount is allocated to the loan.

Interest rate derivatives with larger financial institutions entered into prior to required central clearing typically contain provisions whereby the collateral posting thresholds under the agreements adjust based on the credit ratings of both counterparties. If the credit rating of FHN and/or First Horizon Bank is lowered, FHN could be required to post additional collateral with the counterparties. Conversely, if the credit rating of FHN and/or First Horizon Bank is increased, FHN could have collateral released and be required to post less collateral in the future. Also, if a counterparty’s credit ratings were to decrease, FHN and/or First Horizon Bank could require the posting of additional collateral; whereas if a counterparty’s credit ratings were to increase, the counterparty could require the release of excess collateral. Collateral for these arrangements is adjusted daily based on changes in the net fair value position with each counterparty.

The net fair value, determined by individual counterparty, of all derivative instruments with adjustable collateral

posting thresholds was $7 million of assets and $201 million of liabilities on March 31, 2023, and $5 million of assets and ~~$290 million of liabilities on September 30, 2022, and $67 million of assets and $26~~$268 million of liabilities on December 31, ~~2021.~~2022. As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, FHN had received collateral of ~~$110~~$94 million and ~~$205~~$106 million and posted collateral of ~~$61~~$94 million and ~~$14~~$61 million, respectively, in the normal course of business related to these agreements.

Certain agreements entered into prior to required central clearing also contain accelerated termination provisions, inclusive of the right of offset, if a counterparty’s credit rating falls below a specified level. If a counterparty’s debt rating (including FHN’s and First Horizon Bank’s) were to fall below these minimums, these provisions would be triggered, and the counterparties could terminate the agreements and require immediate settlement of all derivative contracts under the agreements. The net fair value, determined by individual counterparty, of all interest rate derivative instruments with credit-risk-related contingent accelerated termination provisions was ~~$194~~$476 million of assets and ~~$290~~$201 million of liabilities on ~~September 30, 2022,~~March 31, 2023, and ~~$74~~$378 million of assets and ~~$30~~$268 million of liabilities on December 31, ~~2021.~~2022. As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, FHN had received collateral of ~~$302~~$574 million and ~~$213~~$479 million and posted collateral of ~~$61~~$94 million and ~~$18~~$61 million, respectively, in the normal course of business related to these contracts.

FHNF buys and sells various types of securities for its clients. When these securities settle on a delayed basis, they are considered forward contracts, and are generally not subject to master netting agreements. For futures and options, FHN transacts through a third party, and the transactions are subject to margin and collateral maintenance requirements. In the event of default, open positions can be offset along with the associated collateral.

For this disclosure, FHN considers the impact of master netting and other similar agreements which allow FHN to settle all contracts with a single counterparty on a net basis and to offset the net derivative asset or liability position with the related securities and cash collateral. The application of the collateral cannot reduce the net derivative asset or liability position below zero, and therefore any excess collateral is not reflected in the following tables.


			5348			~~3Q22~~1Q23 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents			NOTE 14—DERIVATIVES

The following table provides details of derivative assets and collateral received as presented on the Consolidated Balance Sheets as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021:~~2022:


DERIVATIVE ASSETS & COLLATERAL RECEIVED	DERIVATIVE ASSETS & COLLATERAL RECEIVED													DERIVATIVE ASSETS & COLLATERAL RECEIVED
								Gross amounts not offset in the Balance Sheets													Gross amounts not offset in the Balance Sheets
(Dollars in millions)	(Dollars in millions)	Gross amounts of recognized assets		Gross amounts offset in the Balance Sheets		Net amounts of assets presented in the Balance Sheets (a)		Derivative liabilities available for offset		Collateral received		Net amount		(Dollars in millions)	Gross amounts of recognized assets		Gross amounts offset in the Balance Sheets		Net amounts of assets presented in the Balance Sheets (a)		Derivative liabilities available for offset		Collateral received		Net amount
Derivative assets:	Derivative assets:													Derivative assets:
September 30, 2022
March 31, 2023														March 31, 2023
Interest rate derivative contracts	Interest rate derivative contracts	$	267	$	—	$	267	$	(54)	$	(196)	$	17	Interest rate derivative contracts	$	535	$	—	$	535	$	(45)	$	(481)	$	9
Forward contracts	Forward contracts	44		—		44		(11)		(28)		5		Forward contracts	11		—		11		(7)		(2)		2
		$	311	$	—	$	311	$	(65)	$	(224)	$	22		$	546	$	—	$	546	$	(52)	$	(483)	$	11

December 31, 2021
December 31, 2022														December 31, 2022
Interest rate derivative contracts	Interest rate derivative contracts	$	311	$	—	$	311	$	(32)	$	(181)	$	98	Interest rate derivative contracts	$	449	$	—	$	449	$	(58)	$	(378)	$	13
Forward contracts	Forward contracts	12		—		12		(4)		(3)		5		Forward contracts	9		—		9		(6)		(2)		1
		$	323	$	—	$	323	$	(36)	$	(184)	$	103		$	458	$	—	$	458	$	(64)	$	(380)	$	14

(a)Included in other assets on the Consolidated Balance Sheets. As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021, $7~~2022, $2 million and $2 million, respectively, of derivative assets have been excluded from these tables because they are generally not subject to master netting or similar agreements.

The following table provides details of derivative liabilities and collateral pledged as presented on the Consolidated Balance Sheets as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021:~~2022:


DERIVATIVE LIABILITIES & COLLATERAL PLEDGED	DERIVATIVE LIABILITIES & COLLATERAL PLEDGED													DERIVATIVE LIABILITIES & COLLATERAL PLEDGED
								Gross amounts not offset in the Balance Sheets													Gross amounts not offset in the Balance Sheets
(Dollars in millions)	(Dollars in millions)	Gross amounts of recognized liabilities		Gross amounts offset in the Balance Sheets		Net amounts of liabilities presented in the Balance Sheets (a)		Derivative assets available for offset		Collateral pledged		Net amount		(Dollars in millions)	Gross amounts of recognized liabilities		Gross amounts offset in the Balance Sheets		Net amounts of liabilities presented in the Balance Sheets (a)		Derivative assets available for offset		Collateral pledged		Net amount
Derivative liabilities:	Derivative liabilities:													Derivative liabilities:
September 30, 2022
Interest rate derivative contracts		$	988	$	—	$	988	$	(54)	$	(180)	$	754
Forward contracts		39		—		39		(11)		(10)		18
		$	1,027	$	—	$	1,027	$	(65)	$	(190)	$	772
December 31, 2021
March 31, 2023														March 31, 2023
Interest rate derivative contracts	Interest rate derivative contracts	$	93	$	—	$	93	$	(32)	$	(38)	$	23	Interest rate derivative contracts	$	687	$	—	$	687	$	(45)	$	(194)	$	448
Forward contracts	Forward contracts	10		—		10		(4)		(1)		5		Forward contracts	11		—		11		(7)		(3)		1
		$	103	$	—	$	103	$	(36)	$	(39)	$	28		$	698	$	—	$	698	$	(52)	$	(197)	$	449

December 31, 2022														December 31, 2022
Interest rate derivative contracts														Interest rate derivative contracts	$	921	$	—	$	921	$	(58)	$	(175)	$	688
Forward contracts														Forward contracts	8		—		8		(6)		(1)		1
															$	929	$	—	$	929	$	(64)	$	(176)	$	689

(a)Included in other liabilities on the Consolidated Balance Sheets. As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021, $21~~2022, $24 million and ~~$24~~$29 million, respectively, of derivative liabilities (primarily Visa-related derivatives) have been excluded from these tables because they are generally not subject to master netting or similar agreements.


			5449			~~3Q22~~1Q23 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents			NOTE 15—MASTER NETTING & SIMILAR AGREEMENTS

Note 15—Master Netting and Similar Agreements—Repurchase, Reverse Repurchase, and Securities Borrowing Transactions

For repurchase, reverse repurchase and securities borrowing transactions, FHN and each counterparty have the ability to offset all open positions and related collateral in the event of default. Due to the nature of these transactions, the value of the collateral for each transaction approximates the value of the corresponding receivable or payable. For repurchase agreements through FHN’s fixed income business (securities purchased under agreements to resell and securities sold under agreements to repurchase), transactions are collateralized by securities and/or government guaranteed loans which are delivered on the settlement date and are maintained throughout the term of the transaction. For FHN’s repurchase agreements through banking activities (securities sold under agreements to repurchase), securities are typically pledged at settlement and not released until maturity. For asset positions, the collateral is not included on FHN’s Consolidated Balance Sheets. For liability positions, securities collateral pledged by FHN is generally represented within FHN’s trading or available-for-sale securities portfolios.

For this disclosure, FHN considers the impact of master netting and other similar agreements that allow FHN to settle all contracts with a single counterparty on a net basis and to offset the net asset or liability position with the related securities collateral. The application of the collateral cannot reduce the net asset or liability position below zero, and therefore any excess collateral is not reflected in the tables below.

Securities purchased under agreements to resell is included in federal funds sold and securities purchased under agreements to resell in the Consolidated Balance Sheets. Securities sold under agreements to repurchase is included in short-term borrowings.

The following table provides details of securities purchased under agreements to resell and collateral pledged by counterparties as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021:~~2022:


SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL	SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL													SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL
								Gross amounts not offset in the Balance Sheets													Gross amounts not offset in the Balance Sheets
(Dollars in millions)	(Dollars in millions)	Gross amounts of recognized assets		Gross amounts offset in the Balance Sheets		Net amounts of assets presented in the Balance Sheets		Offsetting securities sold under agreements to repurchase		Securities collateral (not recognized on FHN’s Balance Sheets)		Net amount		(Dollars in millions)	Gross amounts of recognized assets		Gross amounts offset in the Balance Sheets		Net amounts of assets presented in the Balance Sheets		Offsetting securities sold under agreements to repurchase		Securities collateral (not recognized on FHN’s Balance Sheets)		Net amount
Securities purchased under agreements to resell:	Securities purchased under agreements to resell:													Securities purchased under agreements to resell:
September 30, 2022		$	492	$	—	$	492	$	(11)	$	(479)	$	2
December 31, 2021		488		—		488		(10)		(476)		2
March 31, 2023														March 31, 2023	$	168	$	—	$	168	$	—	$	(166)	$	2
December 31, 2022														December 31, 2022	353		—		353		(10)		(340)		3

The following table provides details of securities sold under agreements to repurchase and collateral pledged by FHN as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021:~~2022:


SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE	SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE													SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
								Gross amounts not offset in the Balance Sheets													Gross amounts not offset in the Balance Sheets
(Dollars in millions)	(Dollars in millions)	Gross amounts of recognized liabilities		Gross amounts offset in the Balance Sheets		Net amounts of liabilities presented in the Balance Sheets		Offsetting securities purchased under agreements to resell		Securities/ government guaranteed loans collateral		Net amount		(Dollars in millions)	Gross amounts of recognized liabilities		Gross amounts offset in the Balance Sheets		Net amounts of liabilities presented in the Balance Sheets		Offsetting securities purchased under agreements to resell		Securities/ government guaranteed loans collateral		Net amount
Securities sold under agreements to repurchase:	Securities sold under agreements to repurchase:													Securities sold under agreements to repurchase:
September 30, 2022		$	658	$	—	$	658	$	(11)	$	(647)	$	—
December 31, 2021		1,247		—		1,247		(10)		(1,237)		—
March 31, 2023														March 31, 2023	$	1,174	$	—	$	1,174	$	—	$	(1,174)	$	—
December 31, 2022														December 31, 2022	1,013		—		1,013		(10)		(1,003)		—

Due to the short duration of securities sold under agreements to repurchase and the nature of collateral involved, the risks associated with these transactions are considered minimal.


			5550			~~3Q22~~1Q23 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents			NOTE 15—MASTER NETTING & SIMILAR AGREEMENTS

The following ~~tables provide~~table provides details, by collateral type, of the remaining contractual maturity of securities sold under agreements to repurchase as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021:~~2022:


MATURITIES OF SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE	MATURITIES OF SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE							MATURITIES OF SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
		September 30, 2022							March 31, 2023
(Dollars in millions)	(Dollars in millions)	Overnight and Continuous		Up to 30 Days		Total		(Dollars in millions)	Overnight and Continuous		Up to 30 Days		Total
Securities sold under agreements to repurchase:	Securities sold under agreements to repurchase:							Securities sold under agreements to repurchase:
U.S. treasuries		$	11	$	—	$	11

Government agency issued MBS	Government agency issued MBS	558		—		558		Government agency issued MBS	$	1,088	$	—	$	1,088
Government agency issued CMO	Government agency issued CMO	89		—		89		Government agency issued CMO	86		—		86

Total securities sold under agreements to repurchase	Total securities sold under agreements to repurchase	$	658	$	—	$	658	Total securities sold under agreements to repurchase	$	1,174	$	—	$	1,174

		December 31, 2021							December 31, 2022
(Dollars in millions)	(Dollars in millions)	Overnight and Continuous		Up to 30 Days		Total		(Dollars in millions)	Overnight and Continuous		Up to 30 Days		Total
Securities sold under agreements to repurchase:	Securities sold under agreements to repurchase:							Securities sold under agreements to repurchase:
U.S. treasuries	U.S. treasuries	$	33	$	—	$	33	U.S. treasuries	$	10	$	—	$	10
Government agency issued MBS	Government agency issued MBS	1,068		—		1,068		Government agency issued MBS	851		—		851
Government agency issued CMO								Government agency issued CMO	122		—		122
Other U.S. government agencies								Other U.S. government agencies	30		—		30

Other U.S. government agencies		31		—		31
Government guaranteed loans (SBA and USDA)		115		—		115
Total securities sold under agreements to repurchase	Total securities sold under agreements to repurchase	$	1,247	$	—	$	1,247	Total securities sold under agreements to repurchase	$	1,013	$	—	$	1,013


			5651			~~3Q22~~1Q23 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents			NOTE 16—FAIR VALUE OF ASSETS & LIABILITIES

Note 16—Fair Value of Assets and Liabilities

FHN groups its assets and liabilities measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. This hierarchy requires FHN to maximize the use of observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. Each fair value measurement is placed into the proper level based on the lowest level of significant input. These levels are:

•Level 1—Valuation is based upon quoted prices for identical instruments traded in active markets.

•Level 2—Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for

which all significant assumptions are observable in the market.

•Level 3—Valuation is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models, and similar techniques.

Recurring Fair Value Measurements

The following ~~tables present~~table presents the balances of assets and liabilities measured at fair value on a recurring basis as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021:~~2022:


			5752			~~3Q22~~1Q23 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents			NOTE 16—FAIR VALUE OF ASSETS & LIABILITIES


BALANCES OF ASSETS & LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS	BALANCES OF ASSETS & LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS									BALANCES OF ASSETS & LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS
		September 30, 2022									March 31, 2023
(Dollars in millions)	(Dollars in millions)	Level 1		Level 2		Level 3		Total		(Dollars in millions)	Level 1		Level 2		Level 3		Total
Trading securities:	Trading securities:									Trading securities:
U.S. treasuries	U.S. treasuries	$	—	$	53	$	—	$	53	U.S. treasuries	$	—	$	33	$	—	$	33
Government agency issued MBS	Government agency issued MBS	—		60		—		60		Government agency issued MBS	—		81		—		81
Government agency issued CMO	Government agency issued CMO	—		236		—		236		Government agency issued CMO	—		170		—		170
Other U.S. government agencies	Other U.S. government agencies	—		147		—		147		Other U.S. government agencies	—		128		—		128
States and municipalities	States and municipalities	—		31		—		31		States and municipalities	—		24		—		24
Corporate and other debt	Corporate and other debt	—		871		—		871		Corporate and other debt	—		658		—		658
Interest-only strips (elected fair value)	Interest-only strips (elected fair value)	—		—		23		23		Interest-only strips (elected fair value)	—		—		28		28
Total trading securities	Total trading securities	—		1,398		23		1,421		Total trading securities	—		1,094		28		1,122

Loans held for sale (elected fair value)	Loans held for sale (elected fair value)	—		69		20		89		Loans held for sale (elected fair value)	—		47		21		68

Securities available for sale:	Securities available for sale:									Securities available for sale:

Government agency issued MBS	Government agency issued MBS	—		4,690		—		4,690		Government agency issued MBS	—		4,796		—		4,796
Government agency issued CMO	Government agency issued CMO	—		2,415		—		2,415		Government agency issued CMO	—		2,314		—		2,314
Other U.S. government agencies	Other U.S. government agencies	—		1,056		—		1,056		Other U.S. government agencies	—		1,239		—		1,239
States and municipalities	States and municipalities	—		557		—		557		States and municipalities	—		605		—		605

Total securities available for sale	Total securities available for sale	—		8,718		—		8,718		Total securities available for sale	—		8,954		—		8,954
Other assets:	Other assets:									Other assets:
Deferred compensation mutual funds	Deferred compensation mutual funds	106		—		—		106		Deferred compensation mutual funds	98		—		—		98
Equity, mutual funds, and other	Equity, mutual funds, and other	22		—		—		22		Equity, mutual funds, and other	23		—		—		23
Derivatives, forwards and futures	Derivatives, forwards and futures	49		—		—		49		Derivatives, forwards and futures	11		—		—		11
Derivatives, interest rate contracts	Derivatives, interest rate contracts	—		267		—		267		Derivatives, interest rate contracts	—		536		—		536
Derivatives, other	Derivatives, other	—		2		—		2		Derivatives, other	—		1		—		1
Total other assets	Total other assets	177		269		—		446		Total other assets	132		537		—		669
Total assets	Total assets	$	177	$	10,454	$	43	$	10,674	Total assets	$	132	$	10,632	$	49	$	10,813
Trading liabilities:	Trading liabilities:									Trading liabilities:
U.S. treasuries	U.S. treasuries	$	—	$	326	$	—	$	326	U.S. treasuries	$	—	$	96	$	—	$	96

Corporate and other debt	Corporate and other debt	—		57		—		57		Corporate and other debt	—		48		—		48

Total trading liabilities	Total trading liabilities	—		383		—		383		Total trading liabilities	—		144		—		144
Other liabilities:	Other liabilities:									Other liabilities:
Derivatives, forwards and futures	Derivatives, forwards and futures	39		—		—		39		Derivatives, forwards and futures	12		—		—		12
Derivatives, interest rate contracts	Derivatives, interest rate contracts	—		988		—		988		Derivatives, interest rate contracts	—		687		—		687
Derivatives, other	Derivatives, other	—		2		20		22		Derivatives, other	—		2		21		23
Total other liabilities	Total other liabilities	39		990		20		1,049		Total other liabilities	12		689		21		722
Total liabilities	Total liabilities	$	39	$	1,373	$	20	$	1,432	Total liabilities	$	12	$	833	$	21	$	866


			5853			~~3Q22~~1Q23 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents			NOTE 16—FAIR VALUE OF ASSETS & LIABILITIES


		December 31, 2021									December 31, 2022
(Dollars in millions)	(Dollars in millions)	Level 1		Level 2		Level 3		Total		(Dollars in millions)	Level 1		Level 2		Level 3		Total
Trading securities:	Trading securities:									Trading securities:
U.S. treasuries	U.S. treasuries	$	—	$	85	$	—	$	85	U.S. treasuries	$	—	$	101	$	—	$	101
Government agency issued MBS	Government agency issued MBS	—		464		—		464		Government agency issued MBS	—		144		—		144
Government agency issued CMO	Government agency issued CMO	—		62		—		62		Government agency issued CMO	—		61		—		61
Other U.S. government agencies	Other U.S. government agencies	—		276		—		276		Other U.S. government agencies	—		115		—		115
States and municipalities	States and municipalities	—		34		—		34		States and municipalities	—		54		—		54
Corporate and other debt	Corporate and other debt	—		642		—		642		Corporate and other debt	—		875		—		875
Interest-only strips (elected fair value)	Interest-only strips (elected fair value)	—		—		38		38		Interest-only strips (elected fair value)	—		—		25		25
Total trading securities	Total trading securities	—		1,563		38		1,601		Total trading securities	—		1,350		25		1,375

Loans held for sale (elected fair value)	Loans held for sale (elected fair value)	—		230		28		258		Loans held for sale (elected fair value)	—		29		22		51

Securities available for sale:	Securities available for sale:									Securities available for sale:

Government agency issued MBS	Government agency issued MBS	—		5,055		—		5,055		Government agency issued MBS	—		4,763		—		4,763
Government agency issued CMO	Government agency issued CMO	—		2,257		—		2,257		Government agency issued CMO	—		2,313		—		2,313
Other U.S. government agencies	Other U.S. government agencies	—		850		—		850		Other U.S. government agencies	—		1,163		—		1,163
States and municipalities	States and municipalities	—		545		—		545		States and municipalities	—		597		—		597

Total securities available for sale	Total securities available for sale	—		8,707		—		8,707		Total securities available for sale	—		8,836		—		8,836
Other assets:	Other assets:									Other assets:
Deferred compensation mutual funds	Deferred compensation mutual funds	125		—		—		125		Deferred compensation mutual funds	112		—		—		112
Equity, mutual funds, and other	Equity, mutual funds, and other	25		—		—		25		Equity, mutual funds, and other	22		—		—		22
Derivatives, forwards and futures	Derivatives, forwards and futures	12		—		—		12		Derivatives, forwards and futures	9		—		—		9
Derivatives, interest rate contracts	Derivatives, interest rate contracts	—		311		—		311		Derivatives, interest rate contracts	—		449		—		449
Derivatives, other	Derivatives, other	—		1		—		1		Derivatives, other	—		2		—		2
Total other assets	Total other assets	162		312		—		474		Total other assets	143		451		—		594
Total assets	Total assets	$	162	$	10,812	$	66	$	11,040	Total assets	$	143	$	10,666	$	47	$	10,856
Trading liabilities:	Trading liabilities:									Trading liabilities:
U.S. treasuries	U.S. treasuries	$	—	$	334	$	—	$	334	U.S. treasuries	$	—	$	275	$	—	$	275

Government agency issued MBS	Government agency issued MBS	—		1		—		1		Government agency issued MBS	—		2		—		2
Corporate and other debt	Corporate and other debt	—		91		—		91		Corporate and other debt	—		58		—		58
Total trading liabilities	Total trading liabilities	—		426		—		426		Total trading liabilities	—		335		—		335
Other liabilities:	Other liabilities:									Other liabilities:
Derivatives, forwards and futures	Derivatives, forwards and futures	11		—		—		11		Derivatives, forwards and futures	8		—		—		8
Derivatives, interest rate contracts	Derivatives, interest rate contracts	—		93		—		93		Derivatives, interest rate contracts	—		922		—		922
Derivatives, other	Derivatives, other	—		1		23		24		Derivatives, other	—		1		27		28
Total other liabilities	Total other liabilities	11		94		23		128		Total other liabilities	8		923		27		958
Total liabilities	Total liabilities	$	11	$	520	$	23	$	554	Total liabilities	$	8	$	1,258	$	27	$	1,293


			5954			~~3Q22~~1Q23 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents			NOTE 16—FAIR VALUE OF ASSETS & LIABILITIES

Changes in Recurring Level 3 Fair Value Measurements

The changes in Level 3 assets and liabilities measured at fair value for the three months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ on a recurring basis are summarized as follows:


CHANGES IN LEVEL 3 ASSETS & LIABILITIES MEASURED AT FAIR VALUE	CHANGES IN LEVEL 3 ASSETS & LIABILITIES MEASURED AT FAIR VALUE							CHANGES IN LEVEL 3 ASSETS & LIABILITIES MEASURED AT FAIR VALUE
		Three Months Ended September 30, 2022											Three Months Ended March 31, 2023
(Dollars in millions)	(Dollars in millions)	Interest-only strips			Loans held for sale				Net derivative liabilities			(Dollars in millions)		Interest-only strips			Loans held for sale			Net derivative liabilities
Balance on July 1, 2022		$	26		$	34			$	(28)
Balance on January 1, 2023												Balance on January 1, 2023		$	25		$	22		$	(27)

Total net gains (losses) included in net income	Total net gains (losses) included in net income	(2)			—				(1)			Total net gains (losses) included in net income		(3)			—			—

Purchases												Purchases		—			1			—
Sales	Sales	(23)			(14)				—			Sales		(3)			(2)			—
Settlements	Settlements	—			—				9			Settlements		—			—			6
Repayments	Repayments	—			(1)				—			Repayments		—			—			—
Net transfers into (out of) Level 3	Net transfers into (out of) Level 3	22		(b)	1				—			Net transfers into (out of) Level 3		9		(b)	—			—
Balance on September 30, 2022		$	23		$	20			$	(20)
Balance on March 31, 2023												Balance on March 31, 2023		$	28		$	21		$	(21)
Net unrealized gains (losses) included in net income	Net unrealized gains (losses) included in net income	$	(1)	(c)	$	—	(a)		$	(1)	(d)	Net unrealized gains (losses) included in net income		$	(1)	(c)	$	—	(a)	$	—	(d)


		Three Months Ended September 30, 2021										Three Months Ended March 31, 2022
(Dollars in millions)	(Dollars in millions)	Interest-only strips-AFS			Loans held for sale			Net derivative liabilities			(Dollars in millions)		Interest-only strips			Loans held for sale			Net derivative liabilities
Balance on July 1, 2021		$	30		$	25		$	(18)
Balance on January 1, 2022											Balance on January 1, 2022		$	38		$	28		$	(23)

Total net gains (losses) included in net income		1			—			—

Purchases	Purchases	—			3			—			Purchases		—			1			—
Sales	Sales	(35)			(8)			—			Sales		(37)			—			—
Settlements	Settlements	—			—			2			Settlements		—			(1)			5
Net transfers into (out of) Level 3	Net transfers into (out of) Level 3	20		(b)	4			—			Net transfers into (out of) Level 3		11		(b)	4			—
Balance on September 30, 2021		$	16		$	24		$	(16)
Balance on March 31, 2022											Balance on March 31, 2022		$	12		$	32		$	(18)
Net unrealized gains (losses) included in net income	Net unrealized gains (losses) included in net income	$	—	(c)	$	—	(a)	$	—	(d)	Net unrealized gains (losses) included in net income		$	(1)	(c)	$	—	(a)	$	—	(d)

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

(b)Transfers into interest-only strips level 3 measured on a recurring basis reflect movements from loans held for sale (Level 2 nonrecurring).

(c)Primarily included in fixed income on the Consolidated Statements of Income.

(d)Included in other expense.


			60			~~3Q22 FORM 10-Q REPORT~~


~~PART I, ITEM 1. FINANCIAL STATEMENTS~~
~~Table of Contents~~			~~NOTE 16—FAIR VALUE OF ASSETS & LIABILITIES~~

~~The changes in Level 3 assets and liabilities measured at fair value for the nine months ended September 30, 2022 and 2021, on a recurring basis are summarized as follows:~~

CHANGES IN LEVEL 3 ASSETS & LIABILITIES MEASURED AT FAIR VALUE
Nine Months Ended September 30, 2022
(Dollars in millions) Interest-only strips Loans held
for sale Net derivative
liabilities
Balance on January 1, 2022 $ 38 $ 28 $ (23)
Total net gains (losses) included in net income (5) — (13)
Purchases — 1 —
Sales (61) (14) —
Settlements — (1) 16
Repayments — (1) —
Net transfers into (out of) Level 3 51 (b) 7 —
Balance on September 30, 2022 $ 23 $ 20 $ (20)
Net unrealized gains (losses) included in net income $ (2) (c) $ — (a) $ (13) (d)

Nine Months Ended September 30, 2021
(Dollars in millions) Interest-only strips-AFS Loans held for sale Loans held for investment Net derivative
liabilities
Balance on January 1, 2021 $ 32 $ 12 $ 16 $ (14)
Total net gains (losses) included in net income 5 2 — (9)
Purchases — 8 — —
Sales (68) (18) — —
Settlements — (2) (2) 7
Net transfers into (out of) Level 3 47 (b) 22 (e) (14) (e) —
Balance on September 30, 2021 $ 16 $ 24 $ — $ (16)
Net unrealized gains (losses) included in net income $ — (c) $ 2 (a) $ — $ (9) (d)

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

~~(b)Transfers into interest-only strips level 3 measured on a recurring basis reflect movements from loans held for sale (Level 2 nonrecurring).~~

~~(c)Primarily included in fixed income on the Consolidated Statements of Income.~~

~~(d)Included in other expense.~~

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

There were no net unrealized gains (losses) for Level 3 assets and liabilities included in other comprehensive income as of ~~September 30, 2022~~March 31, 2023 and ~~2021.~~2022.


			6155			~~3Q22~~1Q23 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents			NOTE 16—FAIR VALUE OF ASSETS & LIABILITIES

Nonrecurring Fair Value Measurements

From time to time, FHN may be required to measure certain other financial assets at fair value on a nonrecurring basis in accordance with GAAP. These adjustments to fair value usually result from the application of lower of cost or market (LOCOM) accounting or write-downs of individual assets. For assets

measured at fair value on a nonrecurring basis which were still held on the Consolidated Balance Sheets at ~~September 30, 2022,~~March 31, 2023, and December 31, ~~2021,~~2022, respectively, the following tables provide the level of valuation assumptions used to determine each adjustment and the related carrying value.


LEVEL OF VALUATION ASSUMPTIONS FOR ASSETS MEASURED AT FAIR VALUE ON A NON-RECURRING BASIS	LEVEL OF VALUATION ASSUMPTIONS FOR ASSETS MEASURED AT FAIR VALUE ON A NON-RECURRING BASIS									LEVEL OF VALUATION ASSUMPTIONS FOR ASSETS MEASURED AT FAIR VALUE ON A NON-RECURRING BASIS
		Carrying value at September 30, 2022									Carrying value at March 31, 2023
(Dollars in millions)	(Dollars in millions)	Level 1		Level 2		Level 3		Total		(Dollars in millions)	Level 1		Level 2		Level 3		Total

Loans held for sale—SBAs and USDA	Loans held for sale—SBAs and USDA	$	—	$	556	$	—	$	556	Loans held for sale—SBAs and USDA	$	—	$	551	$	—	$	551

Loans and leases (a)	Loans and leases (a)	—		—		122		122		Loans and leases (a)	—		—		252		252
OREO (b)	OREO (b)	—		—		3		3		OREO (b)	—		—		4		4
Other assets (c)	Other assets (c)	—		—		40		40		Other assets (c)	—		—		43		43


		Carrying value at December 31, 2021									Carrying value at December 31, 2022
(Dollars in millions)	(Dollars in millions)	Level 1		Level 2		Level 3		Total		(Dollars in millions)	Level 1		Level 2		Level 3		Total

Loans held for sale—SBAs and USDA	Loans held for sale—SBAs and USDA	$	—	$	852	$	1	$	853	Loans held for sale—SBAs and USDA	$	—	$	506	$	—	$	506
Loans held for sale—first mortgages		—		—		1		1

Loans and leases (a)	Loans and leases (a)	—		—		84		84		Loans and leases (a)	—		—		135		135
OREO (b)	OREO (b)	—		—		3		3		OREO (b)	—		—		3		3
Other assets (c)	Other assets (c)	—		—		30		30		Other assets (c)	—		—		43		43

(a)Represents carrying value of loans for which adjustments are required to be based on the appraised value of the collateral less estimated costs to sell. Write-downs on these loans are recognized as part of provision for credit losses.

(b)Represents the fair value and related losses of foreclosed properties that were measured subsequent to their initial classification as OREO. Balance excludes OREO related to government insured mortgages.

(c)Represents tax credit investments accounted for under the equity method.

For assets measured on a nonrecurring basis which were still held on the Consolidated Balance Sheets at period end, the following table provides information about the fair value adjustments recorded during the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021:~~2022:


FAIR VALUE ADJUSTMENTS ON ASSETS MEASURED ON A NONRECURRING BASIS	FAIR VALUE ADJUSTMENTS ON ASSETS MEASURED ON A NONRECURRING BASIS									FAIR VALUE ADJUSTMENTS ON ASSETS MEASURED ON A NONRECURRING BASIS
		Net gains (losses) Three Months Ended September 30,				Net gains (losses) Nine Months Ended September 30,					Net gains (losses) Three Months Ended March 31,
(Dollars in millions)	(Dollars in millions)	2022		2021		2022		2021		(Dollars in millions)	2023		2022

Loans held for sale—SBAs and USDA	Loans held for sale—SBAs and USDA	$	(2)	$	(2)	$	(4)	$	(3)	Loans held for sale—SBAs and USDA	$	(2)	$	(3)

Loans and leases (a)	Loans and leases (a)	(6)		(9)		(7)		(12)		Loans and leases (a)	(12)		(2)
OREO (b)		—		—		—		(1)

Other assets ~~(c)~~(b)	Other assets ~~(c)~~(b)	(3)		(2)		(5)		(2)		Other assets ~~(c)~~(b)	(1)		(1)
		$	(11)	$	(13)	$	(16)	$	(18)		$	(15)	$	(6)

(a)Write-downs on these loans are recognized as part of provision for credit losses.

~~(c)~~Represents tax credit investments accounted for under the equity method.


			6256			~~3Q22~~1Q23 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents			NOTE 16—FAIR VALUE OF ASSETS & LIABILITIES

For the three ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2023, FHN recognized ~~less than $1 million of~~no fixed asset ~~and leased asset impairments~~impairment and less than $1 million of ~~fixed~~leased asset ~~recoveries for both periods.~~impairments. These amounts were primarily recognized in the Corporate segment.

For the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022, FHN recognized less than $1 million of fixed asset ~~recoveries~~impairments and ~~$33 million of fixed asset impairments, respectively, and less than $1 million of leased asset recoveries and $3 million of~~ leased asset impairments ~~respectively,~~ primarily related to continuing merger and acquisition integration efforts associated with reduction of leased office space and banking center optimization. These amounts were primarily recognized in the Corporate segment.

Lease asset impairments recognized represent the reduction in value of the right-of-use assets associated with leases that are being exited in advance of the contractual lease expiration.

Impairments are measured using a discounted cash flow methodology, which is considered a Level 3 valuation.

Impairments of long-lived tangible assets reflect locations where the associated land and building are either owned

or leased. The fair values of owned sites were determined using estimated sales prices from appraisals and broker opinions less estimated costs to sell with adjustments upon final disposition. The fair values of owned assets in leased sites (e.g., leasehold improvements) were determined using a discounted cash flow approach, based on the revised estimated useful lives of the related assets. Both measurement methodologies are considered Level 3 valuations. Impairment adjustments recognized upon disposition of a location are considered Level 2 valuations.

Level 3 Measurements

The following ~~tables provide~~table provides information regarding the unobservable inputs utilized in determining the fair value of Level 3 recurring and non-recurring measurements as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021:~~2022:


			6357			~~3Q22~~1Q23 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents			NOTE 16—FAIR VALUE OF ASSETS & LIABILITIES

UNOBSERVABLE INPUTS USED IN LEVEL 3 FAIR VALUE MEASUREMENTS

(Dollars in millions)

Values Utilized

(Dollars in millions)

Values Utilized

Level 3 Class

Fair Value at September 30, 2022

Valuation Techniques

Unobservable Input

Range

Weighted Average (d)

Level 3 Class

Fair Value at March 31, 2023

Valuation Techniques

Unobservable Input

Range

Weighted Average (d)

Trading securities - SBA interest-only strips

Discounted cash flow

Constant prepayment rate

12% - 13%

12%

Trading securities - SBA interest-only strips

Discounted cash flow

Constant prepayment rate

12% - 13%

12%

Bond equivalent yield

15% - 17%

15%

Bond equivalent yield

15% - 16%

16%

Loans held for sale - residential real estate

Discounted cash flow

Prepayment speeds - First mortgage

2% - 9%

Loans held for sale - residential real estate

Discounted cash flow

Prepayment speeds - First mortgage

2% - 8%

Foreclosure losses

63% - 77%

65%

Foreclosure losses

63% - 76%

65%

Loss severity trends - First mortgage

0% - 10%

of UPB

Loss severity trends - First mortgage

0% - 10%

of UPB

Derivative liabilities, other

Discounted cash flow

Visa covered litigation resolution amount

$5.4 billion - $6.2 billion

$5.9 billion

Derivative liabilities, other

Discounted cash flow

Visa covered litigation resolution amount

$5.6 billion - $6.1 billion

$5.9 billion

Probability of resolution scenarios

10% - 30%

24%

Probability of resolution scenarios

5% - 25%

20%

Time until resolution

3 - 33 months

22 months

Time until resolution

9 - 39 months

25 months

Loans and leases (a)

122

Appraisals from comparable properties

Marketability adjustments for specific properties

0% - 10%

of appraisal

Loans and leases (a)

252

Appraisals from comparable properties

Marketability adjustments for specific properties

0% - 10%

of appraisal

Other collateral valuations

Borrowing base certificates adjustment

20% - 50% of gross value

Other collateral valuations

Borrowing base certificates adjustment

20% - 50% of gross value

Financial Statements/Auction values adjustment

0% - 25%

of reported value

Financial Statements/Auction values adjustment

0% - 25%

of reported value

OREO (b)

Appraisals from comparable properties

Adjustment for value changes since appraisal

0% - 10%

of appraisal

OREO (b)

Appraisals from comparable properties

Adjustment for value changes since appraisal

0% - 10%

of appraisal

Other assets (c)

Discounted cash flow

Adjustments to current sales yields for specific properties

0% - 15% adjustment to yield

Other assets (c)

Discounted cash flow

Adjustments to current sales yields for specific properties

0% - 15% adjustment to yield

Appraisals from comparable properties

Marketability adjustments for specific properties

0% - 25%

of appraisal

Appraisals from comparable properties

Marketability adjustments for specific properties

0% - 25%

of appraisal

NM - Not meaningful

(b)Represents the fair value of foreclosed properties that were measured subsequent to their initial classification as OREO. Balance excludes OREO related to government insured mortgages.

(c)Represents tax credit investments accounted for under the equity method.

(d)Weighted averages are determined by the relative fair value of the instruments or the relative contribution to an instrument's fair value.


			6458			~~3Q22~~1Q23 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents			NOTE 16—FAIR VALUE OF ASSETS & LIABILITIES

(Dollars in millions)

Values Utilized

(Dollars in millions)

Values Utilized

Level 3 Class

Fair Value at December 31, 2021

Valuation Techniques

Unobservable Input

Range

Weighted Average (d)

Level 3 Class

Fair Value at December 31, 2022

Valuation Techniques

Unobservable Input

Range

Weighted Average (d)

Trading securities - SBA interest-only strips

Discounted cash flow

Constant prepayment rate

11% - 12%

11%

Trading securities - SBA interest-only strips

Discounted cash flow

Constant prepayment rate

12% - 13%

12%

Bond equivalent yield

11% - 14%

11%

Bond equivalent yield

17%

Loans held for sale - residential real estate

Discounted cash flow

Prepayment speeds - First mortgage

4% - 12%

Loans held for sale - residential real estate

Discounted cash flow

Prepayment speeds - First mortgage

2% - 8%

Foreclosure losses

54% - 66%

65%

Foreclosure losses

63% - 75%

65%

Loss severity trends - First mortgage

1% - 14%

of UPB

Loss severity trends - First mortgage

0% - 11%

of UPB

Loans held for sale - unguaranteed interest in SBA loans

Discounted cash flow

Constant prepayment rate

8% - 12%

10%

Bond equivalent yield

11%

Derivative liabilities, other

Discounted cash flow

Visa covered litigation resolution amount

$5.8 billion - $6.2 billion

$6.0 billion

Derivative liabilities, other

Discounted cash flow

Visa covered litigation resolution amount

$5.6 billion - $6.0 billion

$5.9 billion

Probability of resolution scenarios

15% - 35%

24%

Probability of resolution scenarios

5% - 25%

20%

Time until resolution

12 - 36 months

25 months

Time until resolution

12 - 42 months

28 months

Loans and leases (a)

Appraisals from comparable properties

Marketability adjustments for specific properties

0% - 10%

of appraisal

Loans and leases (a)

135

Appraisals from comparable properties

Marketability adjustments for specific properties

0% - 10%

of appraisal

Other collateral valuations

Borrowing base certificates adjustment

20% - 50% of gross value

Other collateral valuations

Borrowing base certificates adjustment

20% - 50% of gross value

Financial Statements/Auction values adjustment

0% - 25%

of reported value

Financial Statements/Auction values adjustment

0% - 25%

of reported value

OREO (b)

Appraisals from comparable properties

Adjustment for value changes since appraisal

0% - 10%

of appraisal

OREO (b)

Appraisals from comparable properties

Adjustment for value changes since appraisal

0% - 10%

of appraisal

Other assets (c)

Discounted cash flow

Adjustments to current sales yields for specific properties

0% - 15% adjustment to yield

Other assets (c)

Discounted cash flow

Adjustments to current sales yields for specific properties

0% - 15% adjustment to yield

Appraisals from comparable properties

Marketability adjustments for specific properties

0% - 25%

of appraisal

Appraisals from comparable properties

Marketability adjustments for specific properties

0% - 25%

of appraisal

NM - Not meaningful

(b)Represents the fair value of foreclosed properties that were measured subsequent to their initial classification as OREO. Balance excludes OREO related to government insured mortgages.

(c)Represents tax credit investments accounted for under the equity method.

(d)Weighted averages are determined by the relative fair value of the instruments or the relative contribution to an instrument's fair value.

Trading Securities - SBA interest-only strips

Increases (decreases) in estimated prepayment rates and bond equivalent yields negatively (positively) affect the value of SBA interest-only strips. Management additionally considers whether the loans underlying related SBA interest-only strips are delinquent, in default or prepaying, and adjusts the fair value down 20 - 100% depending on the length of time in default. ~~SBA interest-only strips were transferred from AFS to trading securities on October 1, 2021.~~

Loans held for sale

Foreclosure losses and prepayment rates are significant unobservable inputs used in the fair value measurement of FHN’s residential real estate loans held for sale. Loss severity trends are also assessed to evaluate the reasonableness of fair value estimates resulting from

discounted cash flows methodologies as well as to estimate fair value for newly repurchased loans and loans that are near foreclosure. Significant increases (decreases) in any of these inputs in isolation would result in significantly lower (higher) fair value measurements. All


			65			~~3Q22 FORM 10-Q REPORT~~


~~PART I, ITEM 1. FINANCIAL STATEMENTS~~
~~Table of Contents~~			~~NOTE 16—FAIR VALUE OF ASSETS & LIABILITIES~~

observable and unobservable inputs are re-assessed quarterly.

Increases (decreases) in estimated prepayment rates and bond equivalent yields negatively (positively) affect the value of unguaranteed interests in SBA loans. Unguaranteed interest in SBA loans held for sale are carried at less than the outstanding balance due to credit risk estimates. Credit risk adjustments may be reduced if prepayment is likely or as consistent payment history is realized. Management also considers other factors such as


			59			1Q23 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents			NOTE 16—FAIR VALUE OF ASSETS & LIABILITIES

delinquency or default and adjusts the fair value accordingly.

Loans held for investment

Constant prepayment rate, constant default rate and loss severity trends are significant unobservable inputs used in the fair value measurement of loans held for investment. Increases (decreases) in each of these inputs in isolation result in negative (positive) effects on the valuation of the associated loans.

Derivative liabilities

In conjunction with pre-2020 sales of Visa Class B shares, FHN and the purchasers entered into derivative transactions whereby FHN will make, or receive, cash payments whenever the conversion ratio of the Visa Class B shares into Visa Class A shares is adjusted. FHN uses a discounted cash flow methodology in order to estimate the fair value of FHN’s derivative liabilities associated with its prior sales of Visa Class B shares. The methodology includes estimation of both the resolution amount for Visa’s Covered Litigation matters as well as the length of time until the resolution occurs. Significant increases (decreases) in either of these inputs in isolation would result in significantly higher (lower) fair value measurements for the derivative liabilities. Additionally, FHN performs a probability weighted multiple resolution scenario to calculate the estimated fair value of these derivative liabilities. Assignment of higher (lower) probabilities to the larger potential resolution scenarios would result in an increase (decrease) in the estimated fair value of the derivative liabilities. Since this estimation process requires application of judgment in developing significant unobservable inputs used to determine the possible outcomes and the probability weighting assigned to each scenario, these derivatives have been classified within Level 3 in fair value measurements disclosures.

Loans and leases and Other Real Estate Owned

Collateral-dependent loans and OREO are primarily valued using appraisals based on sales of comparable properties in the same or similar markets. Other collateral (receivables, inventory, equipment, etc.) is valued through borrowing base certificates, financial statements and/or auction valuations. These valuations are discounted based on the quality of reporting, knowledge of the

marketability/collectability of the collateral and historical disposition rates.

Other assets – tax credit investments

The estimated fair value of tax credit investments accounted for under the equity method is generally

determined in relation to the yield (i.e., future tax credits to be received) an acquirer of these investments would expect in relation to the yields experienced on current new issue and/or secondary market transactions. Thus, as tax credits are recognized, the future yield to a market participant is reduced, resulting in consistent impairment of the individual investments. Individual investments are reviewed for impairment quarterly, which may include the consideration of additional marketability discounts related to specific investments which typically includes consideration of the underlying property’s appraised value.

Fair Value Option

FHN ~~has~~previously elected the fair value option on a prospective basis for substantially all types of mortgage loans originated for sale purposes except for mortgage origination operations which utilize the platform acquired from CBF. FHN determined that the election reduces certain timing differences and better matches changes in the value of such loans with changes in the value of derivatives and forward delivery commitments used as economic hedges for these assets at the time of election.

Repurchased loans relating to mortgage banking operations conducted prior to the IBKC merger are recognized within loans held for sale at fair value at the time of repurchase, which includes consideration of the credit status of the loans and the estimated liquidation value. FHN has elected to continue recognition of these loans at fair value in periods subsequent to reacquisition. Due to the credit-distressed nature of the vast majority of repurchased loans and the related loss severities experienced upon repurchase, FHN believes that the fair value election provides a more timely recognition of changes in value for these loans that occur subsequent to repurchase. Absent the fair value election, these loans would be subject to valuation at the LOCOM value, which would prevent subsequent values from exceeding the initial fair value, determined at the time of repurchase, but would require recognition of subsequent declines in value. Thus, the fair value election provides for a more timely recognition of any potential future recoveries in asset values while not affecting the requirement to recognize subsequent declines in value.

FHN also had a portion of mortgage loans held for investment for which the fair value option was elected upon origination and which were accounted for at fair value. This portion of mortgage loans held for investment at fair value option was transferred to the loans held for sale portfolio on April 1, 2021.


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Table of Contents			NOTE 16—FAIR VALUE OF ASSETS & LIABILITIES

The following ~~tables reflect~~table reflects the differences between the fair value carrying amount of residential real estate loans held for sale and held for investment measured at fair value in accordance with management’s election and the aggregate unpaid principal amount FHN is contractually entitled to receive at maturity.


DIFFERENCES BETWEEN FAIR VALUE CARRYING AMOUNTS AND CONTRACTUAL AMOUNTS OF RESIDENTIAL REAL ESTATE LOANS REPORTED AT FAIR VALUE	DIFFERENCES BETWEEN FAIR VALUE CARRYING AMOUNTS AND CONTRACTUAL AMOUNTS OF RESIDENTIAL REAL ESTATE LOANS REPORTED AT FAIR VALUE							DIFFERENCES BETWEEN FAIR VALUE CARRYING AMOUNTS AND CONTRACTUAL AMOUNTS OF RESIDENTIAL REAL ESTATE LOANS REPORTED AT FAIR VALUE
		September 30, 2022							March 31, 2023
(Dollars in millions)	(Dollars in millions)	Fair value carrying amount		Aggregate unpaid principal		Fair value carrying amount less aggregate unpaid principal		(Dollars in millions)	Fair value carrying amount		Aggregate unpaid principal		Fair value carrying amount less aggregate unpaid principal
Residential real estate loans held for sale reported at fair value:	Residential real estate loans held for sale reported at fair value:							Residential real estate loans held for sale reported at fair value:
Total loans	Total loans	$	89	$	96	$	(7)	Total loans	$	68	$	76	$	(8)
Nonaccrual loans	Nonaccrual loans	4		8		(4)		Nonaccrual loans	3		7		(4)

		December 31, 2021							December 31, 2022
(Dollars in millions)	(Dollars in millions)	Fair value carrying amount		Aggregate unpaid principal		Fair value carrying amount less aggregate unpaid principal		(Dollars in millions)	Fair value carrying amount		Aggregate unpaid principal		Fair value carrying amount less aggregate unpaid principal
Residential real estate loans held for sale reported at fair value:	Residential real estate loans held for sale reported at fair value:							Residential real estate loans held for sale reported at fair value:
Total loans	Total loans	$	258	$	264	$	(6)	Total loans	$	51	$	58	$	(7)
Nonaccrual loans	Nonaccrual loans	4		7		(3)		Nonaccrual loans	5		8		(3)
Loans 90 days or more past due and still accruing								Loans 90 days or more past due and still accruing	1		1		—

Assets and liabilities accounted for under the fair value election are initially measured at fair value with subsequent changes in fair value recognized in earnings. Such changes in the fair value of assets and liabilities for which FHN elected the fair value option are included in current period earnings with classification in the income statement line item reflected in the following table:


CHANGES IN FAIR VALUE RECOGNIZED IN NET INCOME	CHANGES IN FAIR VALUE RECOGNIZED IN NET INCOME									CHANGES IN FAIR VALUE RECOGNIZED IN NET INCOME
		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
(Dollars in millions)	(Dollars in millions)	2022		2021		2022		2021		(Dollars in millions)	2023		2022
Changes in fair value included in net income:	Changes in fair value included in net income:									Changes in fair value included in net income:
Mortgage banking and title noninterest income	Mortgage banking and title noninterest income									Mortgage banking and title noninterest income
Loans held for sale	Loans held for sale	$	(4)	$	(3)	$	(10)	$	(8)	Loans held for sale	$	1	$	(8)

For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ the amount for residential real estate loans held for sale included an insignificant amount of gains in pretax earnings that are attributable to changes in instrument-specific credit risk. The portion of the fair value adjustments related to credit risk was determined based on estimated default rates and estimated loss severities. Interest income on residential real estate loans held for sale measured at fair value is calculated based on the note rate of the loan and is recorded in the interest income section of the Consolidated Statements of Income as interest on loans held for sale.

Determination of Fair Value

Fair values are based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following describes the

assumptions and methodologies used to estimate the fair value of financial instruments recorded at fair value in the

Consolidated Balance Sheets and for estimating the fair value of financial instruments for which fair value is disclosed.

Short-term financial assets

Federal funds sold, securities purchased under agreements to resell, and interest-bearing deposits with other financial institutions and the Federal Reserve are carried at historical cost. The carrying amount is a reasonable estimate of fair value because of the relatively short time between the origination of the instrument and its expected realization.

Trading securities and trading liabilities

Trading securities and trading liabilities are recognized at fair value through current earnings. Trading inventory held for broker-dealer operations is included in trading ~~securities and trading liabilities. Broker-dealer long positions are valued at bid price in the bid-ask spread. Short positions are valued at the ask price. Inventory~~


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Table of Contents			NOTE 16—FAIR VALUE OF ASSETS & LIABILITIES

securities and trading liabilities. Broker-dealer long positions are valued at bid price in the bid-ask spread. Short positions are valued at the ask price. Inventory positions are valued using observable inputs including current market transactions, benchmark yields, credit spreads, and consensus prepayment speeds. Trading loans are valued using observable inputs including current market transactions, swap rates, mortgage rates, and consensus prepayment speeds.

Trading Securities - SBA interest-only strips

Interest-only strips are valued at elected fair value based on an income approach using an internal valuation model. The internal valuation model includes assumptions regarding projections of future cash flows, prepayment rates, default rates and interest-only strip terms. These securities bear the risk of loan prepayment or default that may result in FHN not recovering all or a portion of its recorded investment. When appropriate, valuations are adjusted for various factors including default or prepayment status of the underlying SBA loans. Because of the inherent uncertainty of valuation, those estimated values may be higher or lower than the values that would have been used had a ready market for the securities existed, and may change in the near term. ~~SBA interest-only strips were transferred from AFS to trading on October 1, 2021.~~

Securities available for sale and held to maturity

Valuations of debt securities are performed using observable inputs obtained from market transactions in similar securities. Typical inputs include benchmark yields, consensus prepayment speeds, and credit spreads. Trades from similar securities and broker quotes are used to support these valuations.

Loans held for sale

FHN determines the fair value of loans held for sale using either current transaction prices or discounted cash flow models. Fair values are determined using current transaction prices and/or values on similar assets when available, including committed bids for specific loans or loan portfolios. Uncommitted bids may be adjusted based on other available market information.

Fair value of residential real estate loans held for sale determined using a discounted cash flow model incorporates both observable and unobservable inputs. Inputs in the discounted cash flow model include current mortgage rates for similar products, estimated prepayment rates, foreclosure losses, and various loan performance measures (delinquency, LTV, credit score). Adjustments for delinquency and other differences in loan characteristics are typically reflected in the model’s discount rates. Loss severity trends and the value of underlying collateral are also considered in assessing the appropriate fair value for severely delinquent loans and loans in foreclosure. The valuation of HELOCs also incorporates estimated cancellation rates for loans expected to become delinquent.

Non-mortgage consumer loans held for sale are valued using committed bids for specific loans or loan portfolios or current market pricing for similar assets with adjustments for differences in credit standing (delinquency, historical default rates for similar loans), yield, collateral values and prepayment rates. If pricing for similar assets is not available, a discounted cash flow methodology is utilized, which incorporates all of these factors into an estimate of investor required yield for the discount rate.

FHN utilizes quoted market prices of similar instruments or broker and dealer quotations to value the SBA and USDA guaranteed loans. FHN values SBA-unguaranteed interests in loans held for sale based on individual loan characteristics, such as industry type and pay history which generally follows an income approach. Furthermore, these valuations are adjusted for changes in prepayment estimates and are reduced due to restrictions on trading. The fair value of other non-residential real estate loans held for sale is approximated by their carrying values based on current transaction values.

Mortgage loans held for investment at fair value option

The fair value of mortgage loans held for investment at fair value option is determined by a third party using a discounted cash flow model using various assumptions about future loan performance (constant prepayment rate, constant default rate and loss severity trends) and market discount rates.

Loans held for investment

The fair values of mortgage loans are estimated using an exit price methodology that is based on present values using the interest rate that would be charged for a similar loan to a borrower with similar risk, weighted for varying maturity dates and adjusted for a liquidity discount based on the estimated time period to complete a sale transaction with a market participant.

Other loans and leases are valued based on present values using the interest rate that would be charged for a similar instrument to a borrower with similar risk, applicable to each category of instruments, and adjusted for a liquidity discount based on the estimated time period to complete a sale transaction with a market participant.

For loans measured using the estimated fair value of collateral less costs to sell, fair value is estimated using appraisals of the collateral. Collateral values are monitored and additional write-downs are recognized if it is determined that the estimated collateral values have declined further. Estimated costs to sell are based on current amounts of disposal costs for similar assets. Carrying value is considered to reflect fair value for these loans.


			6862			~~3Q22~~1Q23 FORM 10-Q REPORT


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Table of Contents			NOTE 16—FAIR VALUE OF ASSETS & LIABILITIES

Derivative assets and liabilities

The fair value for forwards and futures contracts is based on current transactions involving identical securities. Futures contracts are exchange-traded and thus have no credit risk factor assigned as the risk of non-performance is limited to the clearinghouse used.

Valuations of other derivatives (primarily interest rate contracts) are based on inputs observed in active markets for similar instruments. Typical inputs include benchmark yields, option volatility and option skew. Starting in October 2020, centrally cleared derivatives are discounted using SOFR as required by clearinghouses. In measuring the fair value of these derivative assets and liabilities, FHN has elected to consider credit risk based on the net exposure to individual counterparties. Credit risk is mitigated for these instruments through the use of mutual margining and master netting agreements as well as collateral posting requirements. For derivative contracts with daily cash margin requirements that are considered settlements, the daily margin amount is netted within derivative assets or liabilities. Any remaining credit risk related to interest rate derivatives is considered in determining fair value through evaluation of additional factors such as client loan grades and debt ratings. Foreign currency related derivatives also utilize observable exchange rates in the determination of fair value. The determination of fair value for FHN’s derivative liabilities associated with its prior sales of Visa Class B shares are classified within Level 3 in the fair value measurements disclosure as previously discussed in the unobservable inputs discussion.

The fair value of risk participations is determined in reference to the fair value of the related derivative contract between the borrower and the lead bank in the participation structure, which is determined consistent with the valuation process discussed above. This value is adjusted for the pro rata portion of the reference derivative’s notional value and an assessment of credit risk for the referenced borrower.

OREO

OREO primarily consists of properties that have been acquired in satisfaction of debt. These properties are carried at the lower of the outstanding loan amount or estimated fair value less estimated costs to sell the real estate. Estimated fair value is determined using appraised values with subsequent adjustments for deterioration in values that are not reflected in the most recent appraisal.

Other assets

For disclosure purposes, other assets consist of tax credit investments, FRB and FHLB Stock, deferred compensation mutual funds and equity investments (including other mutual funds) with readily determinable fair values. Tax credit investments accounted for under the equity method are written down to estimated fair value quarterly

based on the estimated value of the associated tax credits which incorporates estimates of required yield for hypothetical investors. The fair value of all other tax credit investments is estimated using recent transaction information with adjustments for differences in individual investments. Deferred compensation mutual funds are recognized at fair value, which is based on quoted prices in active markets.

Investments in the stock of the Federal Reserve Bank and Federal Home Loan Banks are recognized at historical cost in the Consolidated Balance Sheets which is considered to approximate fair value. Investments in mutual funds are measured at the funds’ reported closing net asset values. Investments in equity securities are valued using quoted market prices when available.

Defined maturity deposits

The fair value of these deposits is estimated by discounting future cash flows to their present value. Future cash flows are discounted by using the current market rates of similar instruments applicable to the remaining maturity. For disclosure purposes, defined maturity deposits include all time deposits.

Short-term financial liabilities

The fair value of federal funds purchased, securities sold under agreements to repurchase, and other short-term borrowings are approximated by the book value. The carrying amount is a reasonable estimate of fair value because of the relatively short time between the origination of the instrument and its expected realization.

Loan commitments

Fair values of these commitments are based on fees charged to enter into similar agreements taking into account the remaining terms of the agreements and the counterparties’ credit standing.

Other commitments

Fair values of these commitments are based on fees charged to enter into similar agreements.

The following fair value estimates are determined as of a specific point in time utilizing various assumptions and estimates. The use of assumptions and various valuation techniques, as well as the absence of secondary markets for certain financial instruments, reduces the comparability of fair value disclosures between financial institutions. Due to market illiquidity, the fair values for loans and leases, loans held for sale, and term borrowings as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, involve the use of significant internally-developed pricing assumptions for certain components of these line items. The assumptions and valuations utilized for this disclosure are considered to reflect inputs that market participants would use in transactions involving these instruments as of the measurement date. The valuations of legacy assets,


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Table of Contents			NOTE 16—FAIR VALUE OF ASSETS & LIABILITIES

particularly consumer loans and TRUPS loans within the Corporate segment, are influenced by changes in economic conditions since origination and risk perceptions of the financial sector. These considerations affect the estimate of a potential acquirer’s cost of capital and cash flow volatility assumptions from these assets and the resulting fair value measurements may depart significantly from FHN’s internal estimates of the intrinsic value of these assets.

Assets and liabilities that are not financial instruments have not been included in the following table such as the value of long-term relationships with deposit and trust clients, premises and equipment, goodwill and other

intangibles, deferred taxes, and certain other assets and other liabilities. Additionally, these measurements are solely for financial instruments as of the measurement date and do not consider the earnings potential of our various business lines. Accordingly, the total of the fair value amounts does not represent, and should not be construed to represent, the underlying value of FHN.

The following ~~tables summarize~~table summarizes the book value and estimated fair value of financial instruments recorded in the Consolidated Balance Sheets as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021:~~2022:


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Table of Contents			NOTE 16—FAIR VALUE OF ASSETS & LIABILITIES


BOOK VALUE AND ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS	BOOK VALUE AND ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS															BOOK VALUE AND ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
		September 30, 2022																March 31, 2023
		Book Value			Fair Value													Book Value			Fair Value
(Dollars in millions)	(Dollars in millions)			Level 1			Level 2			Level 3			Total	(Dollars in millions)						Level 1			Level 2			Level 3			Total
Assets:	Assets:																Assets:
Loans and leases, net of allowance for loan and lease losses	Loans and leases, net of allowance for loan and lease losses															Loans and leases, net of allowance for loan and lease losses
Commercial:	Commercial:															Commercial:
Commercial, financial and industrial	Commercial, financial and industrial	$	31,325		$	—		$	—		$	31,084		$	31,084	Commercial, financial and industrial		$	31,847		$	—		$	—		$	31,880		$	31,880
Commercial real estate	Commercial real estate	12,873			—			—			12,735			12,735		Commercial real estate		13,248			—			—			13,109			13,109
Consumer:	Consumer:															Consumer:
Consumer real estate	Consumer real estate	11,671			—			—			11,550			11,550		Consumer real estate		12,459			—			—			12,330			12,330

Credit card and other	Credit card and other	821			—			—			825			825		Credit card and other		776			—			—			776			776
Total loans and leases, net of allowance for loan and lease losses	Total loans and leases, net of allowance for loan and lease losses	56,690			—			—			56,194			56,194		Total loans and leases, net of allowance for loan and lease losses		58,330			—			—			58,095			58,095
Short-term financial assets:	Short-term financial assets:															Short-term financial assets:
Interest-bearing deposits with banks	Interest-bearing deposits with banks	3,241			3,241			—			—			3,241		Interest-bearing deposits with banks		2,488			2,488			—			—			2,488
Federal funds sold	Federal funds sold	198			—			198			—			198		Federal funds sold		141			—			141			—			141
Securities purchased under agreements to resell	Securities purchased under agreements to resell	492			—			492			—			492		Securities purchased under agreements to resell		168			—			168			—			168
Total short-term financial assets	Total short-term financial assets	3,931			3,241			690			—			3,931		Total short-term financial assets		2,797			2,488			309			—			2,797
Trading securities (a)	Trading securities (a)	1,421			—			1,398			23			1,421		Trading securities (a)		1,122			—			1,094			28			1,122
Loans held for sale:	Loans held for sale:															Loans held for sale:
Mortgage loans (elected fair value) (a)	Mortgage loans (elected fair value) (a)	89			—			69			20			89		Mortgage loans (elected fair value) (a)		68			—			47			21			68
USDA & SBA loans - LOCOM	USDA & SBA loans - LOCOM	557			—			559			—			559		USDA & SBA loans - LOCOM		551			—			555			—			555

Mortgage loans - LOCOM	Mortgage loans - LOCOM	34			—			—			34			34		Mortgage loans - LOCOM		31			—			—			31			31
Total loans held for sale	Total loans held for sale	680			—			628			54			682		Total loans held for sale		650			—			602			52			654
Securities available for sale (a)	Securities available for sale (a)	8,718			—			8,718			—			8,718		Securities available for sale (a)		8,954			—			8,954			—			8,954
Securities held to maturity	Securities held to maturity	1,385			—			1,222			—			1,222		Securities held to maturity		1,362			—			1,214			—			1,214
Derivative assets (a)	Derivative assets (a)	318			49			269			—			318		Derivative assets (a)		548			11			537			—			548
Other assets:	Other assets:															Other assets:
Tax credit investments	Tax credit investments	530			—			—			530			530		Tax credit investments		545			—			—			541			541
Deferred compensation mutual funds	Deferred compensation mutual funds	106			106			—			—			106		Deferred compensation mutual funds		98			98			—			—			98
Equity, mutual funds, and other (b)	Equity, mutual funds, and other (b)	251			22			—			229			251		Equity, mutual funds, and other (b)		458			23			—			435			458
Total other assets	Total other assets	887			128			—			759			887		Total other assets		1,101			121			—			976			1,097
Total assets	Total assets	$	74,030		$	3,418		$	12,925		$	57,030		$	73,373	Total assets		$	74,864		$	2,620		$	12,710		$	59,151		$	74,481
Liabilities:	Liabilities:															Liabilities:
Defined maturity deposits	Defined maturity deposits	$	2,671		$	—		$	2,668		$	—		$	2,668	Defined maturity deposits		$	3,777		$	—		$	3,793		$	—		$	3,793
Trading liabilities (a)	Trading liabilities (a)	383			—			383			—			383		Trading liabilities (a)		144			—			144			—			144
Short-term financial liabilities:	Short-term financial liabilities:															Short-term financial liabilities:
Federal funds purchased	Federal funds purchased	496			—			496			—			496		Federal funds purchased		447			—			447			—			447
Securities sold under agreements to repurchase	Securities sold under agreements to repurchase	657			—			657			—			657		Securities sold under agreements to repurchase		1,174			—			1,174			—			1,174
Other short-term borrowings	Other short-term borrowings	263			—			263			—			263		Other short-term borrowings		4,863			—			4,863			—			4,863
Total short-term financial liabilities	Total short-term financial liabilities	1,416			—			1,416			—			1,416		Total short-term financial liabilities		6,484			—			6,484			—			6,484
Term borrowings:	Term borrowings:															Term borrowings:
Real estate investment trust-preferred	Real estate investment trust-preferred	46			—			—			47			47		Real estate investment trust-preferred		46			—			—			47			47
Term borrowings—new market tax credit investment	Term borrowings—new market tax credit investment	66			—			—			59			59		Term borrowings—new market tax credit investment		65			—			—			60			60
Secured borrowings	Secured borrowings	4			—			—			4			4		Secured borrowings		11			—			—			11			11
Junior subordinated debentures	Junior subordinated debentures	148			—			—			150			150		Junior subordinated debentures		149			—			—			150			150
Other long term borrowings		1,333			—			1,331			—			1,331
Other long-term borrowings																Other long-term borrowings		1,334			—			1,300			—			1,300
Total term borrowings	Total term borrowings	1,597			—			1,331			260			1,591		Total term borrowings		1,605			—			1,300			268			1,568
Derivative liabilities (a)	Derivative liabilities (a)	1,049			39			990			20			1,049		Derivative liabilities (a)		722			12			689			21			722
Total liabilities	Total liabilities	$	7,116		$	39		$	6,788		$	280		$	7,107	Total liabilities		$	12,732		$	12		$	12,410		$	289		$	12,711

(a)Classes are detailed in the recurring and nonrecurring measurement tables.

(b)Level 1 primarily consists of mutual funds with readily determinable fair values. Level 3 includes restricted investments in FHLB-Cincinnati stock of ~~$26~~$232 million and FRB stock of $203 million.


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Table of Contents			NOTE 16—FAIR VALUE OF ASSETS & LIABILITIES


		December 31, 2021																December 31, 2022
		Book Value			Fair Value													Book Value			Fair Value
(Dollars in millions)	(Dollars in millions)			Level 1			Level 2			Level 3			Total	(Dollars in millions)						Level 1			Level 2			Level 3			Total
Assets:	Assets:																Assets:
Loans and leases and allowance for loan and lease losses	Loans and leases and allowance for loan and lease losses															Loans and leases and allowance for loan and lease losses
Commercial:	Commercial:															Commercial:
Commercial, financial and industrial	Commercial, financial and industrial	$	30,734		$	—		$	—		$	31,020		$	31,020	Commercial, financial and industrial		$	31,473		$	—		$	—		$	31,329		$	31,329
Commercial real estate	Commercial real estate	11,955			—			—			11,986			11,986		Commercial real estate		13,082			—			—			12,909			12,909
Consumer:	Consumer:															Consumer:
Consumer real estate	Consumer real estate	10,609			—			—			11,111			11,111		Consumer real estate		12,053			—			—			11,934			11,934
Credit card and other	Credit card and other	891			—			—			906			906		Credit card and other		809			—			—			810			810
Total loans and leases, net of allowance for loan and lease losses	Total loans and leases, net of allowance for loan and lease losses	54,189			—			—			55,023			55,023		Total loans and leases, net of allowance for loan and lease losses		57,417			—			—			56,982			56,982
Short-term financial assets:	Short-term financial assets:															Short-term financial assets:
Interest-bearing deposits with banks	Interest-bearing deposits with banks	14,907			14,907			—			—			14,907		Interest-bearing deposits with banks		1,384			1,384			—			—			1,384
Federal funds sold	Federal funds sold	153			—			153			—			153		Federal funds sold		129			—			129			—			129
Securities purchased under agreements to resell	Securities purchased under agreements to resell	488			—			488			—			488		Securities purchased under agreements to resell		353			—			353			—			353
Total short-term financial assets	Total short-term financial assets	15,548			14,907			641			—			15,548		Total short-term financial assets		1,866			1,384			482			—			1,866
Trading securities (a)	Trading securities (a)	1,601			—			1,563			38			1,601		Trading securities (a)		1,375			—			1,350			25			1,375
Loans held for sale:	Loans held for sale:															Loans held for sale:
Mortgage loans (elected fair value) (a)	Mortgage loans (elected fair value) (a)	258			—			230			28			258		Mortgage loans (elected fair value) (a)		51			—			29			22			51
USDA & SBA loans - LOCOM	USDA & SBA loans - LOCOM	853			—			855			1			856		USDA & SBA loans - LOCOM		506			—			512			—			512
Other loans - LOCOM		24			—			24			—			24

Mortgage loans - LOCOM	Mortgage loans - LOCOM	37			—			—			37			37		Mortgage loans - LOCOM		33			—			—			33			33
Total loans held for sale	Total loans held for sale	1,172			—			1,109			66			1,175		Total loans held for sale		590			—			541			55			596
Securities available for sale (a)	Securities available for sale (a)	8,707			—			8,707			—			8,707		Securities available for sale (a)		8,836			—			8,836			—			8,836
Securities held to maturity	Securities held to maturity	712			—			705			—			705		Securities held to maturity		1,371			—			1,209			—			1,209
Derivative assets (a)	Derivative assets (a)	324			12			312			—			324		Derivative assets (a)		460			9			451			—			460
Other assets:	Other assets:															Other assets:
Tax credit investments	Tax credit investments	456			—			—			450			450		Tax credit investments		547			—			—			542			542
Deferred compensation mutual funds	Deferred compensation mutual funds	125			125			—			—			125		Deferred compensation mutual funds		112			112			—			—			112
Equity, mutual funds, and other (b)	Equity, mutual funds, and other (b)	257			25			—			232			257		Equity, mutual funds, and other (b)		275			22			—			253			275
Total other assets	Total other assets	838			150			—			682			832		Total other assets		934			134			—			795			929
Total assets	Total assets	$	83,091		$	15,069		$	13,037		$	55,809		$	83,915	Total assets		$	72,849		$	1,527		$	12,869		$	57,857		$	72,253
Liabilities:	Liabilities:															Liabilities:
Defined maturity deposits	Defined maturity deposits	$	3,500		$	—		$	3,524		$	—		$	3,524	Defined maturity deposits		$	2,887		$	—		$	2,890		$	—		$	2,890
Trading liabilities (a)	Trading liabilities (a)	426			—			426			—			426		Trading liabilities (a)		335			—			335			—			335
Short-term financial liabilities:	Short-term financial liabilities:															Short-term financial liabilities:
Federal funds purchased	Federal funds purchased	775			—			775			—			775		Federal funds purchased		400			—			400			—			400
Securities sold under agreements to repurchase	Securities sold under agreements to repurchase	1,247			—			1,247			—			1,247		Securities sold under agreements to repurchase		1,013			—			1,013			—			1,013
Other short-term borrowings	Other short-term borrowings	102			—			102			—			102		Other short-term borrowings		1,093			—			1,093			—			1,093
Total short-term financial liabilities	Total short-term financial liabilities	2,124			—			2,124			—			2,124		Total short-term financial liabilities		2,506			—			2,506			—			2,506
Term borrowings:	Term borrowings:															Term borrowings:
Real estate investment trust-preferred	Real estate investment trust-preferred	46			—			—			47			47		Real estate investment trust-preferred		46			—			—			47			47
Term borrowings—new market tax credit investment	Term borrowings—new market tax credit investment	59			—			—			58			58		Term borrowings—new market tax credit investment		66			—			—			59			59
Secured borrowings	Secured borrowings	6			—			—			6			6		Secured borrowings		3			—			—			3			3
Junior subordinated debentures	Junior subordinated debentures	148			—			—			150			150		Junior subordinated debentures		148			—			—			150			150
Other long term borrowings		1,331			—			1,452			—			1,452
Other long-term borrowings																Other long-term borrowings		1,334			—			1,301			—			1,301
Total term borrowings	Total term borrowings	1,590			—			1,452			261			1,713		Total term borrowings		1,597			—			1,301			259			1,560
Derivative liabilities (a)	Derivative liabilities (a)	128			11			94			23			128		Derivative liabilities (a)		958			8			923			27			958
Total liabilities	Total liabilities	$	7,768		$	11		$	7,620		$	284		$	7,915	Total liabilities		$	8,283		$	8		$	7,955		$	286		$	8,249

(a)Classes are detailed in the recurring and nonrecurring measurement tables.

(b)Level 1 primarily consists of mutual funds with readily determinable fair values. Level 3 includes restricted investments in FHLB-Cincinnati stock of ~~$29~~$50 million and FRB stock of $203 million.


			7266			~~3Q22~~1Q23 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents			NOTE 16—FAIR VALUE OF ASSETS & LIABILITIES

The following table presents the contractual amount and fair value of unfunded loan commitments and standby and other commitments as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021:~~2022:


UNFUNDED COMMITMENTS	UNFUNDED COMMITMENTS									UNFUNDED COMMITMENTS
		Contractual Amount				Fair Value					Contractual Amount				Fair Value
(Dollars in millions)	(Dollars in millions)	September 30, 2022		December 31, 2021		September 30, 2022		December 31, 2021		(Dollars in millions)	March 31, 2023		December 31, 2022		March 31, 2023		December 31, 2022
Unfunded Commitments:	Unfunded Commitments:									Unfunded Commitments:
Loan commitments	Loan commitments	$	26,747	$	24,229	$	1	$	1	Loan commitments	$	24,964	$	25,953	$	1	$	1
Standby and other commitments	Standby and other commitments	716		810		7		6		Standby and other commitments	765		754		7		7


			7367			~~3Q22~~1Q23 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents			NOTE 17 - Other Events

Note 17 – Other Events

As previously disclosed, on February 27, 2022, FHN entered into an Agreement and Plan of Merger (the “TD Merger Agreement”) with The Toronto-Dominion Bank, a Canadian chartered bank (“TD”), and certain TD subsidiaries. On May 4, 2023, FHN and TD mutually terminated the TD Merger Agreement. Under the terms of the termination agreement, TD Bank made a $200 million cash payment to FHN in addition to the $25 million fee reimbursement due to FHN pursuant to the TD Merger Agreement.

On February 28, 2022, in connection with the execution of the TD Merger Agreement, FHN issued $494 million of Series G Perpetual Convertible Preferred Stock (the Series G Convertible Preferred Stock). The Series G Convertible Preferred Stock was convertible into up to 4.9% of the outstanding shares of FHN common stock in certain circumstances, including termination of the TD Merger Agreement. Because regulatory approval of the TD Transaction was not obtained, conversion will occur at a fixed rate of 4,000 shares of common stock for each share of Series G Convertible Preferred Stock which reflects a conversion price of $25 per share. Following conversion to common stock, the Series G will represent 3.5% of FHN's common shares outstanding. The $494 million carrying value of the Series G Convertible Preferred Stock qualified as Tier 1 Capital as of March 31, 2023. The Series G Convertible Preferred Stock will also qualify for Common Equity Tier 1 Capital upon conversion to common stock.


			68			1Q23 FORM 10-Q REPORT


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

Item 2. Management's Discussion and
Analysis of Financial Condition and Results of Operations

TABLE OF ITEM 2 TOPICS


			7469			~~3Q22~~1Q23 FORM 10-Q REPORT


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

Introduction

First Horizon Corporation (NYSE common stock trading symbol “FHN”) is a financial holding company headquartered in Memphis, Tennessee. FHN’s principal subsidiary, and only banking subsidiary, is First Horizon Bank. Through the Bank and other subsidiaries, FHN offers regional banking, mortgage lending, specialized commercial lending, commercial leasing and equipment financing, brokerage, wealth management, capital markets, and other financial services to commercial, consumer, and governmental clients throughout the U.S.

At ~~September 30, 2022,~~March 31, 2023, FHN had over ~~500~~450 business locations in 2224 states, including over 400 banking centers in 12 states, and employed ~~more than 7,500~~approximately 7,300 associates.

This MD&A should be read in conjunction with the accompanying unaudited Consolidated Financial Statements and Notes to Consolidated Financial Statements in Part I, Item 1, as well as other information contained in this document and FHN's ~~2021~~2022 Annual Report on Form ~~10-K, as amended.~~10-K.

Executive Overview

Merger Agreement with Toronto-Dominion Bank

On February 27, 2022, FHN entered into an Agreement and Plan of Merger (the “TD Merger Agreement”) with The Toronto-Dominion Bank, a Canadian chartered bank (“TD”), and certain TD ~~Bank US Holding Company, a Delaware corporation~~subsidiaries. On May 4, 2023, FHN and ~~indirect, wholly owned subsidiary of~~ TD ~~(“TD-US”), and Falcon Holdings Acquisition Co., a Delaware corporation and wholly owned subsidiary of TD-US (“Merger Sub”).~~

Upon the terms and subject to the conditions set forth in the TD Merger Agreement, each share of FHN common stock, par value $0.625 per share, (“Company Common Stock”), issued and outstanding immediately prior to the effective time of the First Holding Company Merger (the “First Effective Time”) will be converted into the right to receive $25.00 (USD) per share in cash, without interest. If the transaction does not close on or before November 27, 2022, shareholders will receive an additional $0.65 per share of Company Common Stock on an annualized basis (or approximately 5.4 cents per month) for the period from November 27, 2022 through the day immediately prior to the closing. Each outstanding share of FHN’s preferred stock, series B, C, D, E and F, will remain issued outstanding in connection with the First Holding Company Merger. If TD elects to effect the Second Holding Company Merger, at the effective time of the Second Holding Company Merger, each outstanding share of FHN’s preferred stock will be converted into a share of a newly created, corresponding series of TD-US having terms as described in the Merger Agreement.

~~Following~~

Financial Performance Summary

FHN reported first quarter 2023 net income available to common shareholders of $243 million, or $0.43 per diluted share, compared to $258 million, or $0.45 per diluted share, in fourth quarter 2022 and $187 million, or $0.34 per diluted share, in first quarter 2022.

Net interest income of $688 million declined $21 million from fourth quarter 2022 reflecting the ~~completion~~impact of a lower day count and higher funding costs, partially offset by the benefit of higher loan rates. Compared to first quarter 2022, net interest income increased $209 million, driven by higher earning asset yields, loan growth, and higher average investment portfolio balances, partially offset by higher funding costs.

Provision for credit losses was $50 million in first quarter 2023 compared to $45 million in fourth quarter 2022 largely reflecting the impact of an uncertain macroeconomic outlook and loan growth, partially offset by lower net charge-offs. The provision for credit losses increased $90 million compared to a benefit of $40 million in first quarter 2022, as the benefit in the prior year reflected a decrease in the unfavorable impact of the ~~First Holding Company~~pandemic on the macroeconomic forecast.

Noninterest income of $171 million decreased $3 million compared to fourth quarter 2022 as reductions in other noninterest income and deferred compensation were partially offset by higher fixed income and mortgage banking income. Noninterest income decreased $58 million compared to first quarter 2022 primarily reflecting lower fixed income and mortgage banking and title income.

Noninterest expense of $478 million decreased $25 million from fourth quarter 2022, largely reflecting lower personnel expense and the impact of $10 million in derivative valuation adjustments on prior Visa Class-B share sales in fourth quarter 2022. Compared with first quarter 2022, noninterest expense decreased $15 million largely reflecting decreases in personnel expense, legal and professional fees and contract employment and outsourcing. Merger ~~at such time as determined by TD, First Horizon Bank~~ and TD Bank, N.A., a national banking association (“TDBNA”) will merge, with TDBNA surviving as a subsidiary of TD-US (the “Bank Merger” and together with the Holding Company Mergers, the “Pending TD Merger”).

~~In connection with~~integration planning expenses related to the TD Transaction totaled $21 million for the first quarter of 2023. Merger Agreement, TD purchased from FHN shares of non-voting Perpetual Convertible Preferred Stock, Series G, a new series of preferred stock of FHN (the “Series G Convertible Preferred Stock”) in a private placement transaction having an aggregate liquidation preference and ~~purchase price of approximately $494 million, pursuant~~integration expenses related to ~~a securities purchase agreement between FHN and TD entered into concurrently with the execution and delivery of~~ the TD Transaction and the IBKC Merger ~~Agreement. The Series G Convertible Preferred Stock is convertible into up~~totaled $36 million in fourth quarter 2022 and $37 million in first quarter 2022.

Period-end loans and leases of $59.0 billion increased $943 million, or 2%, from December 31, 2022 driven by commercial loan growth of $561 million and consumer loan growth of $382 million. Average loans and leases of $58.1 billion in first quarter 2023 increased $4.0 billion from $54.1 billion in first quarter 2022 driven by an increase of $2.4 billion in average commercial loans and an increase of $1.6 billion in average consumer loans.

Period-end deposits of $61.4 billion decreased $2.0 billion, or 3%, from December 31, 2022 driven by a $2.3 billion decrease in noninterest-bearing deposits partially offset by a $283 million increase in interest-bearing deposits. Average deposits decreased $11.9 billion compared to ~~4.9% of~~first quarter 2022 from higher deposit balances in the ~~outstanding shares of Company Common Stock in certain circumstances, including~~prior year associated with elevated liquidity related to the ~~closing of the Pending TD Merger or the termination of the TD Merger Agreement.~~

COVID-19 pandemic.


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

Tier 1 risk-based capital and total risk-based capital ratios at March 31, 2023 were 12.11% and 13.61%, an improvement from 11.92% and 13.33% at December 31, 2022, respectively. The CET1 ratio was 10.36% at March 31, 2023 compared to 10.17% at December 31, 2022.

The following portions of this MD&A focus in more detail on the results of operations for the three months endedMarch 31, 2023, the three months ended December 31, 2022, and the three months endedMarch 31, 2022 and on information about FHN's financial condition, loan and lease portfolio, liquidity, funding sources, capital and other matters.


			71			1Q23 FORM 10-Q REPORT


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

~~Financial Performance Summary~~

~~Third Quarter 2022 Highlights~~

FHN reported third quarter 2022 net income available to common shareholders of $257 million, or $0.45 per diluted share, compared to $166 million, or $0.29 per diluted share, in second quarter 2022 and $224 million, or $0.41 per diluted share, in third quarter 2021.

Net interest income of $662 million increased $120 million from second quarter 2022 reflecting the benefit of higher rates, loan growth, and higher investment portfolio income, partially offset by higher funding costs. Compared to third quarter 2021, net interest income increased $170 million, driven by higher earning asset yields and higher average investment portfolio balances.

Provision for credit losses was $60 million in third quarter 2022 compared to $30 million in second quarter 2022 largely reflecting the impact of loan growth, deterioration in the macroeconomic forecast and a preliminary estimate for potential losses related to Hurricane Ian. The provision for credit losses increased $145 million compared to a benefit of $85 million in third quarter 2021, as the benefit in the prior year reflected an improved macroeconomic outlook and positive credit grade migration.

Noninterest income of $213 million increased $12 million compared to second quarter 2022 largely driven by a gain of $21 million on the sale of FHN's title services business. Results also reflect higher deferred compensation income and securities gains offset by decreases in mortgage banking and title income and fixed income. Noninterest income decreased $34 million compared to third quarter 2021 primarily reflecting lower fixed income and mortgage banking and title income. Results also reflect the impact of a $23 million loss on the retirement of legacy IBKC trust preferred securities in third quarter 2021 and higher securities gains in third quarter 2022

Noninterest expense of $469 million decreased $19 million from second quarter 2022, largely reflecting the impact of $12 million in derivative valuation adjustments on prior Visa Class-B share sales in second quarter 2022. Compared with third quarter 2021, noninterest expense decreased $57 million largely reflecting decreases in personnel expense, legal and professional fees and contract employment and outsourcing. Merger and integration expenses related to the IBKC and Pending TD Mergers totaled $24 million for the third quarter of 2022 compared to $38 million in second quarter 2022 and $46 million in third quarter 2021.

~~Year-to-Date and Period End Highlights~~

For the nine months ended September 30, 2022, net income available to common shareholders was $610 million, or $1.08 per diluted share, compared to $743 million, or $1.34 per diluted share, for the nine months ended September 30, 2021. The decrease was the result of a $295 million increase in the provision for credit losses and a $187 million decrease in noninterest income, offset by a $187 million increase in net interest income and a $117 million decrease in noninterest expense.

Period-end loans and leases of $57.4 billion increased $2.5 billion from December 31, 2021 despite a decrease of $909 million in PPP loans. Average loans and leases of $56.5 billion in third quarter 2022 increased $1.0 billion from $55.5 billion in third quarter 2021 driven by consumer loan growth of $730 million and commercial loan growth of $305 million.

Period-end deposits of $66.0 billion decreased $8.9 billion, or 12%, from December 31, 2021 driven by a $6.8 billion decrease in interest-bearing deposits and a $2.1 billion decrease in noninterest-bearing deposits. Average deposits decreased $5.6 billion from third quarter 2021 from higher deposit balances in the prior year associated with elevated liquidity related to the COVID-19 pandemic.

Tier 1 risk-based capital and total risk-based capital ratios at September 30, 2022 were 11.71% and 13.10%, an improvement from 11.04% and 12.34% at December 31, 2021, respectively. The CET1 ratio was 9.94% at September 30, 2022 compared to 9.92% at December 31, 2021.

~~The following portions of this MD&A focus in more detail on the results of operations for the three and~~ ~~nine months ended September 30, 2022, the three months ended June 30, 2022, and the three and~~ ~~nine months ended~~ ~~September 30, 2021 and on information about FHN's financial condition, loan and lease portfolio, liquidity, funding sources, capital and other matters.~~


			76			~~3Q22 FORM 10-Q REPORT~~


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

Table I.2.1

KEY PERFORMANCE INDICATORS


		As of or for the three months ended									As of or for the nine months ended							As of or for the three months ended
(Dollars in millions, except per share data)	(Dollars in millions, except per share data)	September 30, 2022			June 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021			(Dollars in millions, except per share data)	March 31, 2023			December 31, 2022			March 31, 2022
Pre-provision net revenue (a)	Pre-provision net revenue (a)	$	406		$	255		$	213		$	875		$	758		Pre-provision net revenue (a)	$	381		$	379		$	215
Diluted earnings per common share	Diluted earnings per common share	$	0.45		$	0.29		$	0.41		$	1.08		$	1.34		Diluted earnings per common share	$	0.43		$	0.45		$	0.34
Return on average assets (b)	Return on average assets (b)	1.29		%	0.82		%	1.05		%	1.00		%	1.20		%	Return on average assets (b)	1.32		%	1.35		%	0.90		%
Return on average common equity (c)	Return on average common equity (c)	13.85		%	9.12		%	11.43		%	10.97		%	12.96		%	Return on average common equity (c)	13.34		%	14.42		%	9.92		%
Return on average tangible common equity (a) (d)	Return on average tangible common equity (a) (d)	18.23		%	12.07		%	14.95		%	14.44		%	17.06		%	Return on average tangible common equity (a) (d)	17.43		%	19.14		%	12.98		%
Net interest margin (e)	Net interest margin (e)	3.49		%	2.74		%	2.41		%	2.85		%	2.50		%	Net interest margin (e)	3.87		%	3.89		%	2.37		%
Noninterest income to total revenue (f)	Noninterest income to total revenue (f)	23.27		%	27.06		%	33.34		%	27.07		%	35.33		%	Noninterest income to total revenue (f)	19.90		%	19.63		%	31.75		%
Efficiency ratio (g)	Efficiency ratio (g)	54.29		%	65.76		%	71.27		%	62.83		%	67.75		%	Efficiency ratio (g)	55.67		%	57.10		%	70.23		%
Allowance for loan and lease losses to total loans and leases	Allowance for loan and lease losses to total loans and leases	1.16		%	1.10		%	1.32		%	1.16		%	1.32		%	Allowance for loan and lease losses to total loans and leases	1.21		%	1.18		%	1.13		%
Net charge-offs (recoveries) to average loans and leases (annualized)	Net charge-offs (recoveries) to average loans and leases (annualized)	0.08		%	0.09		%	0.02		%	0.08		%	—		%	Net charge-offs (recoveries) to average loans and leases (annualized)	0.11		%	0.18		%	0.07		%
Total period-end equity to period-end assets	Total period-end equity to period-end assets	10.32		%	10.04		%	9.64		%	10.32		%	9.64		%	Total period-end equity to period-end assets	11.02		%	10.83		%	9.81		%
Tangible common equity to tangible assets (a)	Tangible common equity to tangible assets (a)	6.64		%	6.55		%	6.80		%	6.64		%	6.80		%	Tangible common equity to tangible assets (a)	7.41		%	7.12		%	6.44		%
Cash dividends declared per common share	Cash dividends declared per common share	$	0.15		$	0.15		$	0.15		$	0.45		$	0.45		Cash dividends declared per common share	$	0.15		$	0.15		$	0.15
Book value per common share	Book value per common share	$	12.99		$	13.50		$	14.24		$	12.99		$	14.24		Book value per common share	$	14.11		$	13.48		$	13.82
Tangible book value per common share (a)	Tangible book value per common share (a)	$	9.72		$	10.18		$	10.88		$	9.72		$	10.88		Tangible book value per common share (a)	$	10.89		$	10.23		$	10.46
Common equity Tier 1	Common equity Tier 1	9.94		%	9.81		%	10.09		%	9.94		%	10.09		%	Common equity Tier 1	10.36		%	10.17		%	9.97		%
Market capitalization	Market capitalization	$	12,291		$	11,724		$	8,827		$	12,291		$	8,827		Market capitalization	$	9,559		$	13,159		$	12,557

(a) Represents a non-GAAP measure which is reconciled in the non-GAAP to GAAP reconciliation in Table ~~I.2.26.~~I.2.22.

(b) Calculated using annualized net income divided by average assets.

(d) Calculated using annualized net income available to common shareholders divided by average tangible common equity.

(e) Net interest margin is computed using total net interest income adjusted to an FTE basis assuming a statutory federal income tax rate of 21% and, where applicable, state income taxes.

(f) Ratio is noninterest income excluding securities gains (losses) to total revenue excluding securities gains (losses).

(g) Ratio is noninterest expense to total revenue excluding securities gains (losses).

Results of Operations

Net Interest 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 following tables present the major components of net interest income and net interest margin:


			7772			~~3Q22~~1Q23 FORM 10-Q REPORT


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

Table I.2.2

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


		Three Months Ended																			Three Months Ended
(Dollars in millions)	(Dollars in millions)	September 30, 2022						June 30, 2022						September 30, 2021						(Dollars in millions)	March 31, 2023						December 31, 2022						March 31, 2022
		Average Balance		Interest Income/Expense		Yield/Rate		Average Balance		Interest Income/Expense		Yield/Rate		Average Balance		Interest Income/Expense		Yield/Rate			Average Balance		Interest Income/Expense		Yield/Rate		Average Balance		Interest Income/Expense		Yield/Rate		Average Balance		Interest Income/Expense		Yield/Rate
Assets:	Assets:																			Assets:
Loans and leases:	Loans and leases:																			Loans and leases:
Commercial loans and leases	Commercial loans and leases	$	44,046	$	496	4.47	%	$	43,589	$	382	3.52	%	$	43,741	$	372	3.37	%	Commercial loans and leases	$	44,848	$	668	6.04	%	$	44,657	$	608	5.40	%	$	42,444	$	339	3.24	%
Consumer loans	Consumer loans	12,497		124		3.94		11,987		112		3.74		11,767		112		3.81		Consumer loans	13,226		141		4.24		12,907		134		4.14		11,638		108		3.71
Total loans and leases	Total loans and leases	56,543		620		4.35		55,576		494		3.57		55,508		484		3.47		Total loans and leases	58,074		809		5.63		57,564		742		5.12		54,082		447		3.34
Loans held for sale	Loans held for sale	761		9		4.91		1,027		10		3.89		992		8		3.25		Loans held for sale	596		11		7.08		597		9		6.34		1,156		10		3.51

Investment securities	Investment securities	10,315		55		2.14		9,781		46		1.87		8,494		31		1.48		Investment securities	10,263		63		2.45		10,132		61		2.41		9,668		38		1.59
Trading securities	Trading securities	1,342		15		4.54		1,509		13		3.43		1,171		6		2.07		Trading securities	1,284		20		6.21		1,311		19		5.79		1,594		11		2.75

Federal funds sold	Federal funds sold	259		1		2.28		228		1		1.11		13		—		0.18		Federal funds sold	47		1		5.19		192		2		3.77		81		—		0.19
Securities purchased under agreements to resell (a)	Securities purchased under agreements to resell (a)	402		2		1.89		629		1		0.49		574		—		(0.04)		Securities purchased under agreements to resell (a)	344		3		4.23		391		3		3.33		672		—		(0.07)
Interest-bearing deposits with banks	Interest-bearing deposits with banks	6,341		35		2.15		10,989		21		0.79		15,023		6		0.16		Interest-bearing deposits with banks	1,468		17		4.60		2,618		24		3.61		14,902		7		0.19

Total earning assets / Total interest income	Total earning assets / Total interest income	$	75,963	$	737	3.86	%	$	79,739	$	586	2.95	%	$	81,775	$	535	2.61	%	Total earning assets / Total interest income	$	72,076	$	924	5.17	%	$	72,805	$	860	4.70	%	$	82,155	$	513	2.52	%

Cash and due from banks	Cash and due from banks	1,246						1,281						1,263						Cash and due from banks	1,035						1,118						1,226
Goodwill and other intangible assets, net	Goodwill and other intangible assets, net	1,767						1,789						1,829						Goodwill and other intangible assets, net	1,738						1,750						1,802

Allowance for loan and lease losses	Allowance for loan and lease losses	(639)						(621)						(793)						Allowance for loan and lease losses	(692)						(675)						(658)
Other assets	Other assets	4,214						4,138						4,327						Other assets	4,684						4,523						4,062
Total assets	Total assets	$	82,551					$	86,326					$	88,401					Total assets	$	78,841					$	79,521					$	88,587

Liabilities and Shareholders' Equity:	Liabilities and Shareholders' Equity:																			Liabilities and Shareholders' Equity:

Interest-bearing deposits:	Interest-bearing deposits:																			Interest-bearing deposits:
Savings	Savings	$	23,569	$	19	0.31	%	$	24,841	$	5	0.08	%	$	27,793	$	9	0.12	%	Savings	$	21,824	$	97	1.79	%	$	22,477	$	67	1.19	%	$	26,330	$	3	0.05	%
Other interest-bearing deposits	Other interest-bearing deposits	15,103		21		0.56		16,273		9		0.22		15,333		5		0.12		Other interest-bearing deposits	14,790		58		1.59		14,658		39		1.05		16,557		4		0.09
Time deposits	Time deposits	2,759		3		0.50		3,040		4		0.50		4,122		6		0.62		Time deposits	3,336		16		1.96		2,720		6		0.90		3,343		4		0.51
Total interest-bearing deposits	Total interest-bearing deposits	41,431		43		0.41		44,154		18		0.16		47,248		20		0.17		Total interest-bearing deposits	39,950		171		1.73		39,855		112		1.12		46,230		11		0.10
Federal funds purchased	Federal funds purchased	596		3		2.28		733		1		0.80		906		—		0.14		Federal funds purchased	460		5		4.65		586		6		3.76		884		—		0.20
Securities sold under agreements to repurchase	Securities sold under agreements to repurchase	877		2		0.82		770		1		0.32		1,422		1		0.32		Securities sold under agreements to repurchase	1,047		7		2.61		876		4		1.88		1,001		—		0.10
Trading liabilities	Trading liabilities	372		3		3.03		585		4		2.52		527		1		1.11		Trading liabilities	324		3		3.83		353		3		3.59		614		2		1.69
Other short-term borrowings	Other short-term borrowings	238		2		2.22		207		—		0.81		124		1		0.09		Other short-term borrowings	2,188		26		4.79		358		3		3.75		110		1		0.13
Term borrowings	Term borrowings	1,598		18		4.57		1,597		17		4.38		1,665		18		4.39		Term borrowings	1,602		20		4.98		1,598		20		4.81		1,591		17		4.29
Total interest-bearing liabilities / Total interest expense	Total interest-bearing liabilities / Total interest expense	$	45,112	$	71	0.63	%	$	48,046	$	41	0.34	%	$	51,892	$	41	0.31	%	Total interest-bearing liabilities / Total interest expense	$	45,571	$	232	2.06	%	$	43,626	$	148	1.35	%	$	50,430	$	31	0.25	%

Noninterest-bearing liabilities:	Noninterest-bearing liabilities:																			Noninterest-bearing liabilities:
Noninterest-bearing deposits	Noninterest-bearing deposits	26,701						27,791						26,485						Noninterest-bearing deposits	22,274						25,021						27,926
Other liabilities	Other liabilities	2,069						1,875						1,447						Other liabilities	2,289						2,459						1,613
Total liabilities	Total liabilities	73,882						77,712						79,824						Total liabilities	70,134						71,106						79,969

Shareholders' equity	Shareholders' equity	8,374						8,319						8,282						Shareholders' equity	8,412						8,120						8,323
Noncontrolling interest	Noncontrolling interest	295						295						295						Noncontrolling interest	295						295						295
Total shareholders' equity	Total shareholders' equity	8,669						8,614						8,577						Total shareholders' equity	8,707						8,415						8,618
Total liabilities and shareholders' equity	Total liabilities and shareholders' equity	$	82,551					$	86,326					$	88,401					Total liabilities and shareholders' equity	$	78,841					$	79,521					$	88,587

Net earnings assets / Net interest income (TE) / Net interest spread	Net earnings assets / Net interest income (TE) / Net interest spread	$	30,851	$	666	3.23	%	$	31,693	$	545	2.61	%	$	29,883	$	494	2.30	%	Net earnings assets / Net interest income (TE) / Net interest spread	$	26,505	$	692	3.11	%	$	29,179	$	712	3.35	%	$	31,725	$	482	2.27	%
Taxable equivalent adjustment	Taxable equivalent adjustment			(4)		0.26				(3)		0.13				(2)		0.11		Taxable equivalent adjustment			(4)		0.76				(3)		0.54				(3)		0.10
Net interest income / Net interest margin (b)	Net interest income / Net interest margin (b)			$	662	3.49	%			$	542	2.74	%			$	492	2.41	%	Net interest income / Net interest margin (b)			$	688	3.87	%			$	709	3.89	%			$	479	2.37	%

(a) 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.


			7873			~~3Q22~~1Q23 FORM 10-Q REPORT


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

~~Third~~First Quarter ~~2022~~2023 versus ~~Second~~Fourth Quarter 2022

Net interest income of ~~$662~~$688 million in ~~third~~first quarter 2023 decreased $21 million from fourth quarter 2022 and the net interest margin declined 2 basis points to 3.87%. A lower day count in first quarter 2023 contributed $11 million of the net interest income decline. In addition, the benefit of higher loan yields from higher short-term rates was more than offset by higher funding costs driven by lower deposit balances and continued migration from noninterest-bearing to interest-bearing accounts. Loan yield increased ~~$120~~51 basis points while the cost of interest-bearing deposits increased 61 basis points.

Average earning assets of $72.1 billion in first quarter 2023 decreased $729 million from ~~second~~fourth quarter 2022 largely due to a $1.2 billion decrease in average interest-bearing cash, offset by a $510 million increase in average loans and leases, driven by a $191 million increase in commercial loans and a $319 million increase in consumer loans.

First Quarter 2023 versus First Quarter 2022

Net interest income increased $209 million from first quarter 2022 driven by higher ~~interest rates, greater average~~earning asset yields, loan ~~balances,~~growth, and ~~additional~~higher investment portfolio ~~income,~~balances partially offset by higher funding costs.

~~The net interest margin of 3.49% in third~~First quarter 2022 improved 75 basis points from second quarter 2022 primarily due to the benefit of higher interest rates as well as loan and securities portfolio growth and lower excess cash balances, partially offset by an increase in funding costs.

Average earning assets of $76.0 billion in third quarter 2022 decreased $3.8 billion from second quarter 2022 largely due to a $4.6 billion decrease in interest-bearing cash, offset by a $1.0 billion increase in loans and leases, driven by a $457 million increase in commercial loans and a $510 million increase in consumer loans.

~~Third Quarter 2022 versus Third Quarter 2021~~

~~Net interest income increased $170 million from third quarter 2021 driven by both higher earning asset yields and higher investment portfolio balances.~~

~~Third quarter 2022~~2023 net interest margin increased ~~108~~150 basis points from ~~2.41%~~2.37% in ~~third~~first quarter ~~2021,~~2022, driven by the impact of higher yields on earning assets, partially offset by higher funding costs.

Average earning assets decreased ~~$5.8~~$10.1 billion from ~~third~~first quarter ~~2021~~2022 largely driven by a ~~$8.7~~$13.4 billion decrease in average interest-bearing deposits with banks, offset by a ~~$1.0~~$4.0 billion increase in loans and leases and a ~~$1.8 billion~~$595 million increase in investment securities.

~~3Q22 FORM 10-Q REPORT~~

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

~~Table of Contents~~

~~Table I.2.3~~

~~YEAR-TO-DATE AVERAGE BALANCES, NET INTEREST INCOME & YIELDS/RATES~~
Nine Months Ended
September 30, 2022 September 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 $ 43,366 $ 1,217 3.75 % $ 44,771 $ 1,135 3.38 %
Consumer loans 12,043 344 3.80 12,072 357 3.98
Total loans and leases 55,409 1,561 3.76 56,843 1,492 3.51
Loans held for sale 980 30 4.01 856 22 3.41
Investment securities 9,923 139 1.87 8,406 88 1.43
Trading securities 1,481 39 3.52 1,303 20 2.02
Federal funds sold 190 1 1.52 32 — 0.13
Securities purchased under agreements to resell (a) 567 2 0.61 580 — (0.08)
Interest-bearing deposits with banks 10,713 63 0.79 12,468 11 0.12
Total earning assets / Total interest income $ 79,263 $ 1,835 3.09 % $ 80,488 $ 1,633 2.72 %
Cash and due from banks 1,251 1,260
Goodwill and other intangible assets, net 1,786 1,843
Premises and equipment, net 643 724
Allowance for loan and lease losses (639) (875)
Other assets 3,495 3,691
Total assets $ 85,799 $ 87,131
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
Savings $ 24,903 $ 27 0.14 % $ 27,468 $ 31 0.15 %
Other interest-bearing deposits 15,972 34 0.28 15,617 17 0.14
Time deposits 3,046 11 0.51 4,479 19 0.58
Total interest-bearing deposits 43,921 72 0.22 47,564 67 0.19
Federal funds purchased 737 5 0.96 969 1 0.11
Securities sold under agreements to repurchase 882 3 0.40 1,229 2 0.33
Trading liabilities 523 9 2.32 535 4 1.01
Other short-term borrowings 185 2 1.29 130 1 0.08
Term borrowings 1,595 53 4.41 1,669 55 4.39
Total interest-bearing liabilities / Total interest expense $ 47,843 $ 144 0.40 % $ 52,096 $ 130 0.33 %
Noninterest-bearing liabilities:
Noninterest-bearing deposits 27,468 25,070
Other liabilities 1,854 1,503
Total liabilities 77,165 78,669
Shareholders' equity 8,339 8,167
Noncontrolling interest 295 295
Total shareholders' equity 8,634 8,462
Total liabilities and shareholders' equity $ 85,799 $ 87,131
Net earnings assets / Net interest income (TE) / Net interest spread $ 31,420 $ 1,691 2.69 % $ 28,392 $ 1,503 2.39 %
Taxable equivalent adjustment (8) 0.16 (7) 0.11
Net interest income / Net interest margin (b) $ 1,683 2.85 % $ 1,496 2.50 %

~~(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.~~

~~3Q22 FORM 10-Q REPORT~~

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

~~Table of Contents~~

~~For the nine months ended September 30, 2022, net interest income of $1.7 billion increased $187 million from the same period one year ago largely driven by higher earning asset yields.~~

Total average earning assets decreased $1.2 billion in the first nine months of 2022 largely from decreases in average loans and leases and interest-bearing cash partially offset by growth in investment securities.

The year-to-date net interest margin of 2.85% increased 35 basis points compared to the same period of 2021 as the increase in earning asset yields was partially offset by an increase in the cost of interest-bearing liabilities.

Provision for Credit Losses

~~The provision~~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.

For the ~~third~~first quarter ~~2022,~~2023, provision for credit losses was ~~$60~~$50 million compared to ~~$30~~$45 million in ~~second~~fourth quarter

2022, largely reflecting the impact of ~~loan growth, deterioration in the macroeconomic forecast, and a~~

preliminary estimate for potential losses related to Hurricane Ian. The third quarter 2022 provision increased $145 million from third quarter 2021 and increased $295 million on a year-to-date basis. The increase in provision during 2022 was reflective of non-PPP loan growth, deterioration in the macroeconomic forecast and a preliminary estimate of potential losses related to Hurricane Ian. The provision benefit in 2021 reflected an ~~improved~~uncertain macroeconomic outlook and ~~positive credit grade migration.~~loan growth, partially offset by lower net charge-offs. The first quarter 2023 provision increased $90 million from a benefit of $40 million in first quarter 2022 as the benefit in the prior year reflected a decrease in the unfavorable impact of the pandemic on the macroeconomic forecast.

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 I.2.4~~

~~NONINTEREST INCOME~~

Three Months Ended 3Q22 vs. 2Q22 3Q22 vs. 3Q21
(Dollars in millions) September 30, 2022 June 30, 2022 September 30, 2021 $ Change % Change $ Change % Change
Noninterest income:
Fixed income $ 46 $ 51 $ 96 $ (5) (10) % $ (50) (52) %
Deposit transactions and cash management 43 42 44 1 2 (1) (2)
Brokerage, management fees and commissions 23 24 24 (1) (4) (1) (4)
Card and digital banking fees 21 23 21 (2) (9) — —
Other service charges and fees 13 15 12 (2) (13) 1 8
Trust services and investment management 11 12 13 (1) (8) (2) (15)
Securities gains (losses), net 12 — 1 12 100 11 NM
Mortgage banking and title income 9 34 34 (25) (74) (25) (74)
Deferred compensation income (3) (17) 3 14 82 (6) (200)
Loss on debt extinguishment — — (23) — — 23 100
Other income 38 17 22 21 124 16 73
Total noninterest income $ 213 $ 201 $ 247 $ 12 6 % $ (34) (14) %

~~NM – Not meaningful~~


			8174			~~3Q22~~1Q23 FORM 10-Q REPORT


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

Noninterest Income

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

Table I.2.3

NONINTEREST INCOME


	Three Months Ended						1Q23 vs. 4Q22				1Q23 vs. 1Q22
(Dollars in millions)	March 31, 2023		December 31, 2022		March 31, 2022		$ Change		% Change		$ Change		% Change
Noninterest income:
Deposit transactions and cash management	$	42	$	42	$	44	$	—	—	%	$	(2)	(5)	%
Fixed income	39		35		73		4		11		(34)		(47)
Brokerage, management fees and commissions	22		21		24		1		5		(2)		(8)
Card and digital banking fees	20		20		20		—		—		—		—
Other service charges and fees	13		13		13		—		—		—		—
Trust services and investment management	11		12		13		(1)		(8)		(2)		(15)
Mortgage banking and title income	5		4		22		1		25		(17)		(77)
Securities gains (losses), net	—		—		6		—		—		(6)		(100)


Other income	19		27		14		(8)		(30)		5		36
Total noninterest income	$	171	$	174	$	229	$	(3)	(2)	%	$	(58)	(25)	%

NM – Not meaningful

~~Third~~

First Quarter ~~2022~~2023 versus ~~Second~~Fourth Quarter2022

Noninterest income of ~~$213~~$171 million decreased $3 million, or 2%, from fourth quarter 2022. Noninterest income results were impacted by lower bank-owned life insurance income and deferred compensation income offset by increases in fixed income and mortgage banking and title income.

Fixed income of $39 million increased ~~$12~~$4 million from the prior quarter. Fixed income average daily revenue of $437 thousand increased from $403 thousand in fourth quarter 2022, an increase of 8% despite continuing challenging market conditions.

Mortgage banking and title income of $5 million increased $1 million largely driven by higher gain on sale spreads.

First Quarter 2023 versus First Quarter 2022

Noninterest income of $171 million for first quarter 2023 decreased $58 million, or 6%25%, ~~from second quarter 2022. During third~~compared to first quarter 2022, ~~FHN sold its~~primarily reflecting lower fixed income and mortgage banking and title ~~services business for a gain of $21 million.~~income. Noninterest income results were also impacted by ~~higher deferred compensation income and~~lower securities gains ~~offset by decreases in mortgage banking and title income and fixed income.~~of $6 million.

Fixed income of ~~$46~~$39 million decreased $5$34 million from first quarter 2022, largely reflecting ~~the impact of higher long-term rates, macroeconomic uncertainty and~~less favorable market ~~volatility. Fixed income average daily revenue of $0.5 million compared with $0.6 million in second quarter 2022.~~conditions.

Mortgage banking and title income ~~of $9 million~~ decreased ~~$25~~$17 million largely driven by declines in mortgage sales volume and margin ~~compression as well as the divestiture of the title services business.~~

~~The increase in securities gains was largely attributable to a $10 million gain on an equity securities investment.~~

~~Deferred compensation income increased $14 million reflecting fluctuations in equity market valuations.~~

~~Third Quarter 2022 versus Third Quarter~~ ~~2021~~

Noninterest income of $213 million for third quarter 2022 decreased $34 million, or 14%, compared to third quarter 2021, primarily reflecting lower fixed income and mortgage banking and title income. Results also reflect the impact of a $23 million loss on the retirement of legacy IBKC trust preferred securities in third quarter 2021 and higher securities gains in third quarter 2022.

Fixed income of $46 million decreased $50 million from third quarter 2021. Fixed income product revenue decreased $51 million, reflecting less favorable market conditions, while revenue from other products increased $1 million, largely driven by higher loans sales partially offset by lower derivative fees.

~~Mortgage banking and title income decreased $25 million largely driven by declines in mortgage sales volume and margin compression as well as the divestiture of the title services business.~~

~~Deferred compensation income decreased $6 million reflecting fluctuations in equity market valuations relative to the prior year.~~

~~Table I.2.5~~

~~NONINTEREST INCOME~~

Nine Months Ended
(Dollars in millions) September 30, 2022 September 30, 2021 $ Change % Change
Noninterest income:
Fixed income $ 170 $ 324 $ (154) (48) %
Deposit transactions and cash management 129 130 (1) (1)
Brokerage, management fees and commissions 71 65 6 9
Mortgage banking and title income 65 126 (61) (48)
Card and digital banking fees 64 59 5 8
Other service charges and fees 41 32 9 28
Trust services and investment management 36 39 (3) (8)
Securities gains (losses), net 18 12 6 50
Deferred compensation income (24) 12 (36) NM
Loss on debt extinguishment — (23) 23 100
Other income 72 53 19 36
Total noninterest income $ 642 $ 829 $ (187) (23) %

~~NM – Not meaningful~~

For the nine months ended September 30, 2022, noninterest income of $642 million decreased $187 million, or 23%, compared to the same period in 2021, primarily due to lower fixed income, mortgage banking and title income and deferred compensation income.

~~Fixed income product revenue of $133 million decreased $158 million largely driven by less favorable market conditions. Revenue from other products of $38 million~~

~~increased $5 million primarily driven by higher fees from loan sales.~~

Mortgage banking and title income of $65 million decreased $61 million driven by lower origination volume given the impact of higher long-term rates as well as a continued mix shift toward portfolio loans, partially offset by a $12 million gain on sale of mortgage servicing rights.compression.


			8275			~~3Q22~~1Q23 FORM 10-Q REPORT


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

~~Deferred compensation income decreased $36 million for the year-to-date period of 2022 largely driven by equity market valuations relative to the prior year.~~

Noninterest Expense

The following tables present the significant components of noninterest expense for each of the periods presented:

Table ~~I.2.6~~I.2.4

NONINTEREST EXPENSE


		Three Months Ended						3Q22 vs. 2Q22				3Q22 vs. 3Q21					Three Months Ended						1Q23 vs. 4Q22				1Q23 vs. 1Q22
(Dollars in millions)	(Dollars in millions)	September 30, 2022		June 30, 2022		September 30, 2021		$ Change		% Change		$ Change		% Change		(Dollars in millions)	March 31, 2023		December 31, 2022		March 31, 2022		$ Change		% Change		$ Change		% Change
Noninterest expense:	Noninterest expense:															Noninterest expense:
Personnel expense	Personnel expense	$	275	$	265	$	296	$	10	4	%	$	(21)	(7)	%	Personnel expense	$	271	$	281	$	280	$	(10)	(4)	%	$	(9)	(3)	%
Net occupancy expense	Net occupancy expense	32		33		33		(1)		(3)		(1)		(3)		Net occupancy expense	31		31		32		—		—		(1)		(3)
Computer software	Computer software	28		29		30		(1)		(3)		(2)		(7)		Computer software	28		28		29		—		—		(1)		(3)
Operations services	Operations services	22		23		24		(1)		(4)		(2)		(8)		Operations services	22		22		20		—		—		2		10

Advertising and public relations																Advertising and public relations	14		16		11		(2)		(13)		3		27
Contract employment and outsourcing																Contract employment and outsourcing	12		10		19		2		20		(7)		(37)
Amortization of intangible assets	Amortization of intangible assets	13		13		14		—		—		(1)		(7)		Amortization of intangible assets	12		13		13		(1)		(8)		(1)		(8)
Contract employment and outsourcing		12		12		21		—		—		(9)		(43)
Advertising and public relations		12		10		14		2		20		(2)		(14)
Equipment expense	Equipment expense	11		11		12		—		—		(1)		(8)		Equipment expense	11		11		11		—		—		—		—
Communications and delivery																Communications and delivery	9		9		10		—		—		(1)		(10)
Legal and professional fees	Legal and professional fees	10		17		21		(7)		(41)		(11)		(52)		Legal and professional fees	8		12		23		(4)		(33)		(15)		(65)
Communications and delivery		10		9		9		1		11		1		11
Other expense	Other expense	44		66		52		(22)		(33)		(8)		(15)		Other expense	60		70		45		(10)		(14)		15		33
Total noninterest expense	Total noninterest expense	$	469	$	488	$	526	$	(19)	(4)	%	$	(57)	(11)	%	Total noninterest expense	$	478	$	503	$	493	$	(25)	(5)	%	$	(15)	(3)	%

~~Third~~First Quarter ~~2022~~2023 versus ~~Second~~Fourth Quarter 2022

Noninterest expense of ~~$469~~$478 million decreased ~~$19~~$25 million, or 4%5%, compared with ~~second~~fourth quarter 2022. ~~Other noninterest~~Personnel expense decreased ~~$22~~$10 million largely reflecting lower incentive-based compensation and deferred compensation expense. Other expense decreased $10 million, primarily from ~~$12 million in~~ derivative valuation adjustments onrelated to prior Visa ~~Class-B~~Class B share sales in ~~second~~fourth quarter ~~2022, as well as a decline in other losses.~~2022. Results also reflect a $7$4 million decrease in legal and professional fees largely attributable to lower merger and integration related costs. ~~Personnel expense increased $10 million largely reflecting higher deferred compensation expense.~~

~~Third~~

First Quarter ~~2022~~2023 versus ~~Third~~First Quarter ~~2021~~2022

Noninterest expense of ~~$469~~$478 million decreased ~~$57~~$15 million, or ~~11%~~3%, from ~~third~~first quarter ~~2021.~~2022. Personnel

expense decreased ~~$21~~$9 million largely attributable to lower incentive-based compensation ~~and~~partially offset by higher deferred compensation costs. Legal and professional fees decreased ~~$11~~$15 million and contract employment and outsourcing expense decreased $9$7 million from ~~third~~first quarter ~~2021~~2022 largely attributable to lower merger and integration related costs.


			83			~~3Q22 FORM 10-Q REPORT~~


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

~~Table I.2.7~~

~~NONINTEREST EXPENSE~~

Nine Months Ended
(Dollars in millions) September 30, 2022 September 30, 2021 $ Change % Change
Noninterest expense:
Personnel expense $ 820 $ 920 $ (100) (11) %
Net occupancy expense 96 103 (7) (7)
Computer software 85 87 (2) (2)
Operations services 65 59 6 10
Legal and professional fees 50 52 (2) (4)
Contract employment and outsourcing 43 47 (4) (9)
Amortization of intangible assets 39 42 (3) (7)
Equipment expense 34 35 (1) (3)
Advertising and public relations 34 23 11 48
Communications and delivery 28 28 — —
Other expense 156 171 (15) (9)
Total noninterest expense $ 1,450 $ 1,567 $ (117) (7) %

~~For~~ The increase in other expense compared to the ~~nine months ended September 30, 2022, noninterest expense decreased $117 million, or 7%,~~prior year was largely attributable to a $100 million decrease in personnel expense reflecting lower revenue-based incentives and commissions and deferred compensation expense. Occupancy expense decreased $7 million largely reflecting lower merger and integration expenses as well as the benefit of IBKC merger cost savings.

~~Year-to-date results also reflect~~ increases in ~~advertising~~FDIC assessment expense, contributions, and ~~public relations and operations services.~~

~~Total merger and integration expense was $99 million for the first nine months of 2022 compared to $148 million for the same period of 2021.~~pension expense.

Income Taxes

FHN recorded income tax expense of ~~$78~~$76 million in ~~third~~first quarter ~~2022~~2023 compared to $4864 million in ~~second~~fourth quarter 2022 and ~~$63~~$57 million in ~~third~~first quarter ~~2021. For the nine months ended September 30, 2022 and 2021, FHN recorded income tax expense of $183 million~~ ~~and~~ ~~$222 million, respectively.~~2022.

The effective tax rate was approximately ~~22.6%~~22.7%, ~~21.3%~~19.2%, and ~~21.1%~~22.4% for the three months ended ~~September 30, 2022, June 30,~~March 31, 2023, December 31, 2022 and ~~September 30, 2021,~~March 31, 2022, respectively. ~~The effective tax rate was approximately~~ ~~22.2%~~ ~~and~~ ~~22.1%~~ ~~for the nine months ended September 30, 2022 and 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 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 to these temporary differences in future years. As of ~~September 30, 2022,~~March 31, 2023, FHN’s gross DTA and gross DTL ~~were~~ wer~~$675~~e $702 million and ~~$421~~$448 million, respectively, resulting in a net DTA of $254 million at ~~September 30, 2022,~~March 31, 2023, compared with a net DTA of ~~$52~~$313 million at December 31, ~~2021.~~2022.

As of ~~September 30, 2022,~~March 31, 2023, FHN had deferred tax asset balances related to federal and state income tax ~~carryforwards of $61 million and $5 million, respectively, which will expire at various dates.~~

Based on current analysis, FHN believes that its ability to realize the DTA is 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.


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carryforwards of $30 million and $2 million, respectively, which will expire at various dates.

Based on current analysis, FHN believes that its ability to realize the DTA is 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 ~~$280~~$330 million for ~~third~~first quarter ~~2022,~~2023, an increase of ~~$51~~$31 million compared to ~~second~~fourth quarter 2022, largely driven by a ~~$49~~$43 million increase in revenue ~~and a $9~~partially offset by an $11 million ~~decrease~~increase in provision for credit ~~losses partially offset by a $7 million increase in noninterest expense.~~losses. Net interest income of ~~$517~~$586 million increased ~~$52~~$42 million reflecting the benefit of higher interest rates and average loan balances, partially offset by higher funding costs.

Pre-tax income for ~~third~~first quarter ~~2022 decreased $37~~2023 increased $65 million compared to ~~$317~~$265 million for ~~third~~first quarter ~~2021.~~2022. Net interest income increased $159 million from first quarter 2022 driven by higher earning asset yields and loan growth partially offset by higher funding costs. The provision for credit losses increased ~~$95~~$72 million ~~largely reflecting~~as the benefit in the prior year reflected a decrease in the unfavorable impact of ~~non-PPP loan growth, deterioration in~~the pandemic on the macroeconomic ~~forecast~~forecast. Noninterest income decreased $7 million and ~~a preliminary estimate of potential losses related to Hurricane Ian. Net interest income increased $73 million from third quarter 2021 driven by higher earning asset yields. Noninterest~~noninterest expense increased ~~$12~~$16 million compared to ~~third~~first quarter ~~2021.~~

Pre-tax income of $772 million for the nine months ended September 30, 2022 decreased $202 million compared to the same period of 2021, largely from a $233 million increase in provision for credit losses. The increase in provision during 2022 was the result of loan growth, deterioration in the macroeconomic forecast and a preliminary estimate of potential losses related to Hurricane Ian. Results also reflect a $105 million increase in revenue, largely from higher net interest income, and a $74 million increase in noninterest expense, largely tied to higher personnel expense and fraud losses.2022.

Specialty Banking

Pre-tax income in the Specialty Banking segment of ~~$81~~$78 million for ~~third~~first quarter ~~2022 decreased $58~~2023 increased $7 million compared to ~~second~~fourth quarter 2022, largely driven by ~~a $36~~an $8 million ~~increase~~decrease in provision for credit ~~losses and~~losses. Revenue in the Specialty Banking segment declined $2 million reflecting a ~~$35~~$9 million ~~decline~~decrease in ~~revenue,~~net interest income offset by a ~~$12~~$7 million ~~decline~~increase in noninterest ~~expense.~~ income.

Fixed income of ~~$46~~$39 million ~~decreased $5~~increased $4 million, ~~reflecting the impact of higher long-term rates, macroeconomic uncertainty and~~despite continuing challenging market ~~volatility.~~conditions. Mortgage banking and title income of $9$5 million ~~decreased $25~~increased $2 million largely driven by a decline in mortgage sales volume and margin compression as well as the divestiture of the title services business. The decline in noninterest expense was largely reflective of lower personnel expense of $12 million tied to a decrease in incentive-based compensation.reflecting higher gain on sale spreads.

Pre-tax income in the Specialty Banking segment decreased ~~$109~~$42 million compared to ~~third~~first quarter ~~2021~~

2022 largely driven by lower revenue and higher provision for credit losses, partially offset by lower noninterest expense. The decline in revenue was primarily attributable to lower fixed income and mortgage banking and title income.

~~Pre-tax income of $344 million for the nine months ended September 30, 2022 decreased $218 million from the same period of 2021 largely reflecting a $211 million decrease~~ The decline in noninterest ~~income tied to~~expense was largely driven by lower ~~fixed income and mortgage banking and title fees.~~incentive-based compensation expense.

Corporate

Pre-tax loss for the Corporate segment was ~~$15~~$77 million for ~~third~~first quarter 2023 compared to $35 million for fourth quarter 2022, ~~compared to $144 million for second quarter 2022, largely~~ reflecting a ~~$71~~$55 million ~~increase~~decrease in net interest income and a ~~$47~~$10 million ~~increase~~decrease in noninterest ~~income.~~income, offset by a $25 million decrease in noninterest expense. Merger and integration expenses were ~~$24~~$21 million compared to ~~$38~~$36 million in the prior quarter.

Pre-tax ~~income~~loss in the Corporate segment ~~increased $194~~improved $53 million compared to ~~third~~first quarter ~~2021.~~2022. Net interest income increased ~~$112~~$68 million from the impact of funds transfer pricing. Noninterest ~~income~~expense increased ~~$47~~$10 million compared to ~~third~~the first quarter 2021, largely the result of the gain on the sale of the title services business, a loss on the retirement of legacy IBKC trust preferred securities in third quarter 2021 and higher securities gains in the current quarter. Noninterest expense decreased $35 million from the third quarter 2021,2022, largely reflecting higher personnel expense from increased incentive-based compensation costs, partially offset by lower ~~merger~~legal and ~~integration expenses.~~professional fees. Merger and integration expenses were ~~$24~~$21 million compared to ~~$46~~$37 million in ~~third~~first quarter ~~2021.~~2022.

Pre-tax loss of $291 million for the nine months ended September 30, 2022 improved $242 million compared to the same period of 2021. Net interest expense decreased $138 million reflecting the impact of funds transfer pricing. Noninterest income of $40 million increased $11 million compared to the prior year. Noninterest income results reflect the impact of a $23 million loss on retirement of legacy IBKC trust preferred securities in third quarter 2021, the $21 million gain on sale of the title services business in third quarter 2022, and higher securities gains. These increases were partially offset by lower deferred compensation income of $36 million.

Noninterest expense of $190 million for the nine months ended September 30, 2022 decreased $99 million compared to the same period of 2021 largely reflecting lower deferred compensation expense in the current year, as well as the impact of impairments on long-lived assets related to acquisition integration efforts in 2021.


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Analysis of Financial Condition

Total period-end assets were ~~$80.3~~$80.7 billion as of ~~September 30, 2022~~March 31, 2023 compared to ~~$89.1~~$79.0 billion at December 31, ~~2021.~~2022. The ~~decrease~~increase in total assets ~~during 2022~~in first quarter 2023 was largely driven by a ~~$11.7~~$1.1 billion ~~decrease~~increase in interest-bearing deposits with banks from ~~lower customer deposits, offset by~~higher FHLB borrowings and a ~~$2.5 billion~~$943 million increase in loans and leases, ~~and~~offset by a ~~$684 million increase~~$2.0 billion decrease in ~~investment securities.~~deposits.

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.


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Loans and Leases

Period-end loans and leases of ~~$57.4 billion increased $2.5~~$59.0 billion as of ~~September 30, 2022~~March 31, 2023 increased $943 million, or 2%, compared to December 31, ~~2021. Year-to-date~~2022. First quarter loan growth included a ~~$1.5 billion~~$561 million increase in commercial loans and leases ~~primarily~~largely from ~~CRE~~C&I loan growth and a ~~$1.0 billion~~$382 million increase in consumer ~~loans. Total~~loans largely from consumer real estate loan ~~growth was tempered by a $909 million decrease in PPP loans.~~growth. Average loans and leases of ~~$56.5~~$58.1 billion

increased ~~$1.0 billion~~$510 million from ~~second~~fourth quarter 2022 from a ~~$510~~$319 million increase in average consumer loans and a ~~$457~~$191 million increase in average commercial loans.

Compared to third quarter 2021, average loans and leases increased $1.0 billion, reflecting consumer loan growth of $730 million and commercial loan growth of $305 million. Average commercial loan growth was tempered by a $2.7 billion decrease in average PPP loans compared to third quarter 2021.

The following table provides detail regarding FHN's loans and leases as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022.

Table ~~I.2.8~~I.2.5

LOANS & LEASES


		As of September 30, 2022				As of December 31, 2021							As of March 31, 2023				As of December 31, 2022
(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)	$	31,620	55	%	$	31,068	57	%	2	%	Commercial, financial, and industrial (a)	$	32,172	54	%	$	31,781	55	%	1	%
Commercial real estate	Commercial real estate	13,021		23		12,109		22		8		Commercial real estate	13,398		23		13,228		23		1
Total commercial	Total commercial	44,641		78		43,177		79		3		Total commercial	45,570		77		45,009		78		1
Consumer:	Consumer:											Consumer:
Consumer real estate	Consumer real estate	11,864		21		10,772		20		10		Consumer real estate	12,668		22		12,253		21		3
Credit card and other	Credit card and other	849		1		910		1		(7)		Credit card and other	807		1		840		1		(4)
Total consumer	Total consumer	12,713		22		11,682		21		9		Total consumer	13,475		23		13,093		22		3
Total loans and leases	Total loans and leases	$	57,354	100	%	$	54,859	100	%	5	%	Total loans and leases	$	59,045	100	%	$	58,102	100	%	2	%

(a)Includes equipment financing loans and leases.

C&I loans are the largest component of the loan portfolio, comprising 55% of total loans at the end of the third quarter 2022 and 57% at year-end 2021. C&I loans increased 2% from December 31, 2021, largely driven by Regional Banking growth partially offset by PPP loan run-off of $909 million. Commercial real estate loans increased $912 million in 2022 largely driven by growth in the Specialty Banking segment.

Co~~nsumer loans of $12.7 billion increased $1 billion from year-end 2021, largely driven by growth in real estate installment loans, 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 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 sold to private companies that are unaffiliated with the GSEs on a servicing-released basis. For further detail, see Note 5 - Mortgage Banking Activity.

The legacy FHN loans HFS portfolio consists of small business, other consumer loans, mortgage warehouse, USDA and home equity loans.


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On ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022, loans HFS were ~~$680~~$650 million and ~~$1.2 billion,~~$590 million, respectively. Held-for-sale consumer mortgage loans secured by residential

real estate in process of foreclosure totaled ~~$4 million at September 30, 2022 and~~ $3 million at March 31, 2023 and December 31, ~~2021~~2022.

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 ~~(21%~~(22% and ~~20%~~21% of total loans at ~~September 30, 2022~~

March 31, 2023 and December 31, ~~2021,~~2022, respectively). 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, ~~2021~~2022 in the Asset Quality Section within the Analysis of Financial Condition discussion. FHN’s credit underwriting guidelines and loan product offerings as of ~~September 30, 2022~~March 31, 2023 are generally consistent with those reported and disclosed in FHN’s Form 10-K ~~as amended,~~ for the year ended December 31, ~~2021.~~2022.


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Commercial Loan and Lease Portfolios

C&I

C&I loans are the largest component of the loan portfolio, comprising 54% of total loans at the end of the first quarter 2023 and 55% at year-end 2022. The C&I portfolio ~~totaled $31.6~~increased $391 million to $32.2 billion as of ~~September 30, 2022 and $31.1 billion as of~~March 31, 2023 compared to December 31, ~~2021~~2022 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 credit.

The increase in C&I loans from December 31, ~~2021~~2022 was largely driven by growth in ~~the Regional Banking segment which exceeded a $909 million decrease in PPP loans. Excluding PPP loans,~~Tennessee, asset-based lending and equipment and franchise finance. C&I loan ~~growth was $1.5 billion. The largest~~

growth was tempered by a $218 million decline in loans to mortgage companies and PPP loan run-off of $23 million. The largest geographical concentrations of balances in the C&I portfolio as of ~~September 30, 2022~~March 31, 2023 were in Tennessee (21%), Florida (13%), Texas (11%), North Carolina (7%), Louisiana (7%), California (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 ~~September 30, 2022,~~March 31, 2023, and December 31, ~~2021.~~2022. 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.


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Table ~~I.2.9~~I.2.6

C&I PORTFOLIO BY INDUSTRY


		September 30, 2022				December 31, 2021					March 31, 2023				December 31, 2022
(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	$	4,089	13	%	$	3,483	11	%	Finance and insurance	$	4,187	13	%	$	4,120	13	%
Real estate rental and leasing (a)	Real estate rental and leasing (a)	3,195		10		2,771		9		Real estate rental and leasing (a)	3,443		11		3,277		10
Loans to mortgage companies		2,710		9		4,518		15

Health care and social assistance	Health care and social assistance	2,635		8		2,413		8		Health care and social assistance	2,678		8		2,657		8

Accommodation and food service		2,231		7		2,221		7

Manufacturing	Manufacturing	2,149		7		1,950		6		Manufacturing	2,349		7		2,206		7
Wholesale trade	Wholesale trade	2,073		7		1,845		6		Wholesale trade	2,324		7		2,212		7

Accommodation and food service										Accommodation and food service	2,282		7		2,238		7
Loans to mortgage companies										Loans to mortgage companies	2,040		6		2,258		7
Retail trade	Retail trade	1,693		5		1,532		5		Retail trade	1,844		6		1,835		6
Transportation and warehousing										Transportation and warehousing	1,490		5		1,432		4
Energy	Energy	1,351		4		1,325		4		Energy	1,376		4		1,364		4

Other (professional, construction, transportation, etc.) (b)		9,494		30		9,010		29
Other (professional, construction, education, etc.) (b)										Other (professional, construction, education, etc.) (b)	8,159		26		8,182		27
Total C&I loan portfolio	Total C&I loan portfolio	$	31,620	100	%	$	31,068	100	%	Total C&I loan portfolio	$	32,172	100	%	$	31,781	100	%

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

(b)Industries in this category each comprise less than 5% as of ~~September 30, 2022.~~March 31, 2023.

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 in the finance and insurance industry were ~~22%~~19% and ~~26%~~20% of FHN’s C&I loan portfolio as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively, and as a result could be affected by items that uniquely impact the financial services industry. Loans to borrowers in the real estate rental and leasing industry were 11% and 10% of FHN's C&I portfolio as of March 31, 2023 and December 31, 2022, respectively. As of ~~September 30, 2022,~~March 31, 2023, 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 9%6% of the C&I portfolio as of ~~September 30, 2022~~March 31, 2023 and ~~15%~~7% as of December 31, ~~2021.~~2022. 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~~third-party investors. Generally, new loan originations to mortgage lenders increase when there is a decline in mortgage rates and decrease when rates rise; in the ~~third~~first quarter ~~2022,~~2023, rates rose. In periods of economic uncertainty, this trend may not occur even if interest rates are declining. In ~~third~~first quarter ~~2022, 82%~~2023, 91% of the loan originations were home purchases and ~~18%~~9% were refinance transactions. ~~On a year-to-date basis, home purchases were approximately 71% of total loan originations.~~


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Finance and Insurance

The finance and insurance component represented 13% of the C&I portfolio as of ~~September 30, 2022~~March 31, 2023 and ~~11% as of~~ December 31, ~~2021,~~2022, 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 ~~September 30, 2022,~~March 31, 2023, asset-based lending to consumer finance companies represented approximately ~~$1.9~~$2.0 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 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.

The C&I portfolio as of ~~September 30, 2022~~March 31, 2023 includes ~~924~~454 loans made under the PPP with an aggregate principal balance of ~~$129~~$53 million, which are fully government guaranteed with the SBA. Due to the government guarantee and forgiveness provisions, PPP loans are considered to have

no credit risk and do not affect the amount of provision and ALLL recorded. As a result, no ALLL is recorded for PPP loans as of ~~September 30, 2022,~~March 31, 2023, and FHN has assigned a risk weight of zero to PPP loans for regulatory capital purposes.

For these loans, ~~there are remaining~~an insignificant amount of net lender fees ~~of less than $1 million~~remains to be paid to FHN as of ~~September 30, 2022. During 2022,~~March 31, 2023. FHN continues to work with its clients that have applied for and received PPP loan forgiveness. ~~Through September 30, 2022, over $5 billion of the original $6 billion in PPP loans originated by FHN and~~


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~~IBERIABANK prior to acquisition~~ ~~have been forgiven by the SBA.~~

Commercial Real Estate

The CRE portfolio totaled ~~$13.0~~$13.4 billion as of ~~September 30, 2022~~March 31, 2023 and ~~$12.1~~$13.2 billion as of December 31, ~~2021.~~2022. The CRE portfolio reflects financings for both commercial construction and nonconstruction loans. The largest geographical concentrations of CRE loan balances as of ~~September 30, 2022~~March 31, 2023 were in Florida ~~(26%~~(25%), Texas ~~(12%~~(13%),

North Carolina (11%), Georgia (10%), Louisiana (9%), and Tennessee (9%). No other state represented more than 5% of the portfolio. This portfolio 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 ~~(27%~~(28%), retail (21%), office ~~(22%), retail (18%~~(17%), industrial ~~(15%~~(16%), hospitality (11%), land/land development (2%), and other (5%).

Consumer Loan Portfolios

Consumer Real Estate

The consumer real estate portfolio totaled ~~$11.9~~$12.7 billion and ~~$10.8~~$12.3 billion as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively, and is primarily composed of home equity lines and installment loans. The largest geographical concentrations of balances as of ~~September 30, 2022~~March 31, 2023 were in Florida (30%), Tennessee ~~(23%~~(22%), Texas (10%), Louisiana ~~(9%), Texas~~ (9%), North Carolina (7%), and New York (5%). No other state represented more than 5% of the portfolio.

As of ~~September 30, 2022,~~March 31, 2023, approximately 88% of the consumer real estate portfolio was in a first lien position. At origination, the weighted average FICO score of this portfolio was ~~756~~758 and the refreshed FICO scores averaged 754 as of ~~September 30, 2022,~~March 31, 2023, no significant change from FICO scores of ~~755~~757 and 754, respectively, as of December 31, ~~2021.~~2022. Generally, performance of this portfolio is affected by life events that affect borrowers’ finances, the level of unemployment, and home prices.

As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, FHN had held-for-investment consumer mortgage loans secured by real estate that were in the process of foreclosure totaling ~~$32~~$23 million and ~~$20~~$42 million, respectively.

HELOCs comprised $2.1 billion and $2.0 billion of the consumer real estate portfolio as of ~~both September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, 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 ~~September 30, 2022, approxima~~March 31, 2023, approx~~tely 91%~~imately 93% of FHN's HELOCs were in the draw period compared to ~~88%~~92% at December 31, ~~2021.~~2022. It is expected that ~~$499~~$527 million, or ~~28%~~27%, 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 nearing the end of the draw period are closely monitored.

The following table presents HELOCs currently in the draw period, broken down by months remaining in the draw period.

~~Table I.2.10~~

~~HELOC~~ ~~DRAW TO REPAYMENT SCHEDULE~~

September 30, 2022 December 31, 2021
(Dollars in millions) Repayment
Amount Percent Repayment
Amount Percent
Months remaining in draw period:
0-12 $ 36 2 % $ 43 2 %
13-24 41 2 42 2
25-36 100 6 50 3
37-48 125 7 136 8
49-60 197 11 160 9
>60 1,313 72 1,324 76
Total $ 1,812 100 % $ 1,755 100 %


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Table I.2.7

HELOC DRAW TO REPAYMENT SCHEDULE


	March 31, 2023				December 31, 2022
(Dollars in millions)	Repayment Amount		Percent		Repayment Amount		Percent
Months remaining in draw period:
0-12	$	29	2	%	$	31	2	%
13-24	48		2		40		2
25-36	108		6		109		6
37-48	138		7		135		7
49-60	204		10		204		11
>60	1,440		73		1,356		72
Total	$	1,967	100	%	$	1,875	100	%

Credit Card and Other

The credit card and other portfolio, which is primarily within the Regional Banking segment, totaled ~~$849~~$807 million as of ~~September 30, 2022~~March 31, 2023 and ~~$910~~$840 million as of December 31, ~~2021.~~2022. This portfolio primarily consists of consumer-related

~~consumer-related~~ credits, including home equity and other personal consumer loans, credit card receivables, and automobile loans. The ~~$61~~$33 million decrease was driven by net ~~repayments.~~repayments in other installment loans, partially offset by an increase in consumer construction loans.

Allowance for Credit Losses

The ACL is maintained at a level sufficient to provide appropriate reserves to absorb estimated future credit losses in accordance with GAAP. For additional information regarding the ACL, see Note 4 of this Report and "Critical Accounting Policies and Estimates" and Note 54 in FHN's ~~2021~~2022 Form ~~10-K, as amended.~~10-K.

The ALLL ~~decreased~~increased to ~~$664~~$715 million as of ~~September 30, 2022~~March 31, 2023 from ~~$670~~$685 million as of December 31, ~~2021.~~2022. The increase

in the ALLL balance as of ~~September 30, 2022~~March 31, 2023 reflects the impact of

loan growth ~~deterioration in the~~and an uncertain macroeconomic ~~forecast and a preliminary estimate of potential losses related to Hurricane Ian.~~forecast. The ALLL to total loans and leases ratio ~~decreased 6~~increased 3 basis points to ~~1.16%~~1.21%. The ACL to total loans and leases ratio ~~decreased~~increased to ~~1.31%~~1.35% as of ~~September 30, 2022~~March 31, 2023 from ~~1.34%~~1.33% as of December 31, ~~2021.~~2022.

Consolidated Net Charge-offs

Net charge-offs in ~~third~~first quarter ~~2022~~2023 were ~~$12~~$16 million, or an annualized 811 basis points of total loans and leases, compared to net charge-offs of $3$10 million, or 27 basis points of total loans and leases, in ~~third~~first quarter ~~2021.~~2022. The

~~Net charge-offs in the commercial portfolio in third quarter 2022 were $12 million compared to $4 million in~~

~~third quarter 2021, primarily the result~~increase in net charge-offs was driven by increases of ~~lower gross recoveries compared to the prior year. Net charge-offs in the consumer portfolio were less than $1~~$3 million in ~~third quarter 2022 compared to net recoveries of $1 million in third quarter 2021.~~both the commercial and consumer portfolios.

Table ~~I.2.11~~I.2.8

ANALYSIS OF ALLOWANCE FOR CREDIT LOSSES AND CHARGE-OFFS

(Dollars in millions) September 30, 2022 December 31, 2021 September 30, 2021
Allowance for loan and lease losses
C&I $ 295 $ 334 $ 374
CRE 148 154 162
Consumer real estate 193 163 179
Credit card and other 28 19 19
Total allowance for loan and lease losses $ 664 $ 670 $ 734
Reserve for remaining unfunded commitments
C&I $ 58 $ 46 $ 49
CRE 19 12 10
Consumer real estate 11 8 9
Credit card and other — — —
Total reserve for remaining unfunded commitments $ 88 $ 66 $ 68
Allowance for credit losses
C&I $ 353 $ 380 $ 423
CRE 167 166 172
Consumer real estate 204 171 188
Credit card and other 28 19 19
Total allowance for credit losses $ 752 $ 736 $ 802
Period-end loans and leases
C&I $ 31,620 $ 31,068 $ 31,516
CRE 13,021 12,109 12,194


(Dollars in millions)		March 31, 2023		December 31, 2022		March 31, 2022
Allowance for loan and lease losses
	C&I	$	325	$	308	$	287
	CRE	150		146		151
	Consumer real estate	209		200		164
	Credit card and other	31		31		20
	Total allowance for loan and lease losses	$	715	$	685	$	622


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Consumer real estate 11,864 10,772 10,787
Credit card and other 849 910 938
Total period-end loans and leases $ 57,354 $ 54,859 $ 55,435
ALLL / loans and leases %
C&I 0.93 % 1.07 % 1.19 %
CRE 1.14 1.27 1.33
Consumer real estate 1.63 1.51 1.65
Credit card and other 3.32 2.14 2.03
Total ALLL / loans and leases % 1.16 % 1.22 % 1.32 %
ACL / loans and leases %
C&I 1.11 % 1.22 % 1.34 %
CRE 1.28 1.37 1.41
Consumer real estate 1.72 1.59 1.74
Credit card and other 3.32 2.09 2.04
Total ACL / loans and leases % 1.31 % 1.34 % 1.45 %
Quarter-to-date net charge-offs (recoveries)
C&I $ 11 $ 1 $ 4
CRE 1 — —
Consumer real estate (5) (3) (6)
Credit card and other 5 3 5
Total net charge-offs (recoveries) $ 12 $ 1 $ 3
Average loans and leases
C&I $ 31,120 $ 30,780 $ 31,477
CRE 12,926 12,221 12,264
Consumer real estate 11,633 10,738 10,819
Credit card and other 864 943 948
Total average loans and leases $ 56,543 $ 54,682 $ 55,508
Charge-off % (annualized)
C&I 0.14 % 0.01 % 0.06 %
CRE 0.01 (0.01) 0.01
Consumer real estate (0.17) (0.10) (0.24)
Credit card and other 2.46 1.26 1.86
Total charge-off % 0.08 % 0.01 % 0.02 %
ALLL / annualized net charge-offs
C&I 676 % 7,238 % 2,169 %
CRE 6,931 NM 11,982
Consumer real estate NM NM NM
Credit card and other 133 164 104
Total ALLL / net charge-offs 1,428 % 17,374 % 6,855 %

~~NM - not meaningful~~


Reserve for remaining unfunded commitments
	C&I	$	53		$	55		$	43
	CRE	21			22			12
	Consumer real estate	11			10			9
	Credit card and other	—			—			—
	Total reserve for remaining unfunded commitments	$	85		$	87		$	64

Allowance for credit losses
	C&I	$	378		$	363		$	330
	CRE	171			168			163
	Consumer real estate	220			210			173
	Credit card and other	31			31			20
	Total allowance for credit losses	$	800		$	772		$	686

Period-end loans and leases
	C&I	$	32,172		$	31,781		$	30,798
	CRE	13,398			13,228			12,487
	Consumer real estate	12,668			12,253			10,874
	Credit card and other	807			840			853
	Total period-end loans and leases	$	59,045		$	58,102		$	55,012

ALLL / loans and leases %
	C&I	1.01		%	0.97		%	0.93		%
	CRE	1.12			1.10			1.21
	Consumer real estate	1.65			1.63			1.51
	Credit card and other	3.86			3.72			2.31
	Total ALLL / loans and leases %	1.21		%	1.18		%	1.13		%

ACL / loans and leases %
	C&I	1.17		%	1.14		%	1.07		%
	CRE	1.28			1.27			1.31
	Consumer real estate	1.74			1.71			1.59
	Credit card and other	3.86			3.72			2.31
	Total ACL / loans and leases %	1.35		%	1.33		%	1.25		%

Quarter-to-date net charge-offs (recoveries)
	C&I	$	11		$	21		$	10
	CRE	2			—			—
	Consumer real estate	(1)			(1)			(4)
	Credit card and other	4			6			4
	Total net charge-offs (recoveries)	$	16		$	26		$	10

Average loans and leases
	C&I	$	31,558		$	31,562		$	30,215
	CRE	13,290			13,095			12,229
	Consumer real estate	12,401			12,049			10,769
	Credit card and other	825			858			869
	Total average loans and leases	$	58,074		$	57,564		$	54,082


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Charge-off % (annualized)
	C&I	0.15	%	0.27	%	0.13	%
	CRE	0.05		—		(0.01)
	Consumer real estate	(0.05)		(0.05)		(0.15)
	Credit card and other	1.93		2.76		1.85
	Total charge-off %	0.11	%	0.18	%	0.07	%

ALLL / annualized net charge-offs
	C&I	683	%	365	%	713	%
	CRE	2,152		NM		NM
	Consumer real estate	NM		NM		NM
	Credit card and other	197		132		123
	Total ALLL / net charge-offs	1,115	%	675	%	1,595	%

NM - not meaningful

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).

Total NPAs (including NPLs HFS) increased to ~~$301~~$432 million as of ~~September 30, 2022~~March 31, 2023 from ~~$285~~$327 million as of December 31, ~~2021,~~2022, largely driven by ~~higher nonaccrual loans in the consumer real estate portfolio.~~two large commercial loan relationships. The nonperforming loans and leases ratio increased ~~one~~18 basis ~~point~~points to ~~0.51%~~0.72% as of ~~September 30, 2022.~~March 31, 2023.

~~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.


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Table ~~I.2.12~~I.2.9

NONACCRUAL/NONPERFORMING LOANS, FORECLOSED ASSETS, & OTHER DISCLOSURES


(Dollars in millions)	(Dollars in millions)								(Dollars in millions)

Nonperforming loans and leases	Nonperforming loans and leases		September 30, 2022			December 31, 2021			Nonperforming loans and leases		March 31, 2023			December 31, 2022
		C&I	$	116		$	125			C&I	$	204		$	153
		CRE	10			9				CRE	63			9
		Consumer real estate	163			138				Consumer real estate	155			152
		Credit card and other	3			3				Credit card and other	2			2
		Total nonperforming loans and leases (a)	$	292		$	275			Total nonperforming loans and leases (a)	$	424		$	316

Nonperforming loans held for sale (a)	Nonperforming loans held for sale (a)		$	6		$	7		Nonperforming loans held for sale (a)		$	4		$	8
Foreclosed real estate and other assets (b)	Foreclosed real estate and other assets (b)		3			3			Foreclosed real estate and other assets (b)		4			3
		Total nonperforming assets (a) (b)	$	301		$	285			Total nonperforming assets (a) (b)	$	432		$	327

Nonperforming loans and leases to total loans and leases	Nonperforming loans and leases to total loans and leases								Nonperforming loans and leases to total loans and leases
		C&I	0.37		%	0.40		%		C&I	0.63		%	0.48		%
		CRE	0.08			0.08				CRE	0.47			0.07
		Consumer real estate	1.37			1.29				Consumer real estate	1.22			1.24
		Credit card and other	0.31			0.31				Credit card and other	0.27			0.27
		Total NPL %	0.51		%	0.50		%		Total NPL %	0.72		%	0.54		%

ALLL / NPLs	ALLL / NPLs								ALLL / NPLs
		C&I	253		%	268		%		C&I	159		%	202		%
		CRE	1,422			1,671				CRE	238			1,554
		Consumer real estate	119			118				Consumer real estate	135			131
		Credit card and other	1,070			699				Credit card and other	1,439			1,364
		Total ALLL / NPLs	228		%	244		%		Total ALLL / NPLs	169		%	217		%

(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 less than $1 million as of both ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021.~~2022.


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The following table provides nonperforming assets by business segment:

Table ~~I.2.13~~I.2.10

NONPERFORMING ASSETS BY SEGMENT


(Dollars in millions)	(Dollars in millions)								(Dollars in millions)
Nonperforming loans and leases (a) (b)	Nonperforming loans and leases (a) (b)		September 30, 2022			December 31, 2021			Nonperforming loans and leases (a) (b)		March 31, 2023			December 31, 2022
		Regional Banking	$	204		$	163			Regional Banking	$	334		$	227
		Specialty Banking	56			78				Specialty Banking	62			60
		Corporate	32			34				Corporate	28			29
		Consolidated	$	292		$	275			Consolidated	$	424		$	316
Foreclosed real estate (c)	Foreclosed real estate (c)								Foreclosed real estate (c)
		Regional Banking	$	—		$	2			Regional Banking	$	—		$	—
		Specialty Banking	2			—				Specialty Banking	3			2
		Corporate	1			1				Corporate	1			1
		Consolidated	$	3		$	3			Consolidated	$	4		$	3
Nonperforming Assets (a) (b) (c)	Nonperforming Assets (a) (b) (c)								Nonperforming Assets (a) (b) (c)
		Regional Banking	$	204		$	165			Regional Banking	$	334		$	227
		Specialty Banking	58			78				Specialty Banking	65			62
		Corporate	33			35				Corporate	29			30
		Consolidated	$	295		$	278			Consolidated	$	428		$	319
Nonperforming loans and leases to loans and leases	Nonperforming loans and leases to loans and leases								Nonperforming loans and leases to loans and leases
		Regional Banking	0.50		%	0.43		%		Regional Banking	0.79		%	0.54		%
		Specialty Banking	0.34			0.48				Specialty Banking	0.38			0.37
		Corporate	6.19			5.39				Corporate	5.82			6.28
		Consolidated	0.51		%	0.50		%		Consolidated	0.72		%	0.54		%
NPA % (d)	NPA % (d)								NPA % (d)
		Regional Banking	0.50		%	0.44		%		Regional Banking	0.79		%	0.55		%
		Specialty Banking	0.36			0.48				Specialty Banking	0.40			0.39
		Corporate	6.48			5.51				Corporate	5.95			6.54
		Consolidated	0.51		%	0.51		%		Consolidated	0.72		%	0.55		%

(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 less than $1 million ~~as of~~for both ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021.~~2022.

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

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.

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. Customer deferrals were not material at September 30, 2022 and December 31, 2021. To the extent that loans were past due as of September 30, 2022 or December 31, 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.~~

Loans 90 days or more past due and still accruing were ~~$24~~$12 million as of ~~September 30, 2022~~March 31, 2023 compared to ~~$40~~$33 million as of December 31, ~~2021.~~2022. Loans 30 to 89 days past due

were ~~$108~~$79 million as of ~~both September 30, 2022 and~~March 31, 2023 compared to $105 as of December 31, ~~2021.~~2022. C&I loans past due 30 to 89 days ~~increased $12~~decreased $24 million ~~while~~and past due CRE loans decreased $8$6 million ~~and~~while past due consumer real estate loans ~~decreased $6~~increased $5 million.


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Table ~~I.2.14~~I.2.11

ACCRUING DELINQUENCIES & OTHER CREDIT DISCLOSURES


(Dollars in millions)	(Dollars in millions)								(Dollars in millions)
Accruing loans and leases 30+ days past due	Accruing loans and leases 30+ days past due		September 30, 2022			December 31, 2021			Accruing loans and leases 30+ days past due		March 31, 2023			December 31, 2022
		C&I	$	66		$	58			C&I	$	26		$	61
		CRE	5			13				CRE	5			11
		Consumer real estate	48			70				Consumer real estate	49			55
		Credit card and other	12			7				Credit card and other	11			11
		Total accruing loans and leases 30+ days past due	$	131		$	148			Total accruing loans and leases 30+ days past due	$	91		$	138

Accruing loans and leases 30+ days past due %	Accruing loans and leases 30+ days past due %								Accruing loans and leases 30+ days past due %
		C&I	0.21		%	0.19		%		C&I	0.08		%	0.19		%
		CRE	0.04			0.11				CRE	0.04			0.08
		Consumer real estate	0.40			0.65				Consumer real estate	0.39			0.44
		Credit card and other	1.43			0.76				Credit card and other	1.26			1.28
		Total accruing loans and leases 30+ days past due %	0.23		%	0.27		%		Total accruing loans and leases 30+ days past due %	0.15		%	0.24		%

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

		C&I	$	1		$	5			C&I	$	—		$	11

		Consumer real Estate	17			33				Consumer real Estate	7			18
		Credit card and other	6			2				Credit card and other	5			4

		Total accruing loans and leases 90+ days past due	$	24		$	40			Total accruing loans and leases 90+ days past due	$	12		$	33

Loans held for sale	Loans held for sale								Loans held for sale
30 to 89 days past due	30 to 89 days past due		$	4		$	7		30 to 89 days past due		$	9		$	10
30 to 89 days past due - guaranteed portion (d)	30 to 89 days past due - guaranteed portion (d)		2			2			30 to 89 days past due - guaranteed portion (d)		8			7
90+ days past due	90+ days past due		14			24			90+ days past due		14			16
90+ days past due - guaranteed portion (d)	90+ days past due - guaranteed portion (d)		6			12			90+ days past due - guaranteed portion (d)		6			6

(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. Potential problem assets in the loan portfolio were ~~$540~~$432 million on ~~September 30, 2022~~March 31, 2023 and ~~$597~~$492 million on December 31, ~~2021.~~2022. 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 to Borrowers Experiencing Financial Difficulty

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~~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. See

~~separately. In a situation where an economic concession has been granted to a borrower that is experiencing financial difficulty, FHN identifies~~Note 1 - Basis of Presentation and ~~reports that~~Accounting Policies, Note 3 - Loans and Leases and Note 4 - Allowance for Credit Losses for further discussion regarding troubled loan ~~as a TDR.~~modifications.

~~For loan modifications 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~~


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~~modifications from consideration as a TDR~~Commercial Loan Modifications

As part of FHN’s credit risk management governance processes, the Loan Rehab and Recovery Department (LRRD) is responsible for managing most commercial relationships with borrowers whose financial condition has ~~excluded loans with these qualifying modifications from designation as a TDR in~~deteriorated to such an extent that the ~~information and discussion that follows. See Note 3 – Loans and Leases~~credits are individually reviewed for ~~further discussion regarding TDRs and loan modifications.~~

~~On September 30, 2022 and December 31, 2021, FHN had $204 million and $206 million portfolio loans~~expected credit losses, classified as ~~held-for-investment TDRs, respectively. For~~substandard or worse, placed on nonaccrual status, foreclosed or in process of foreclosure, or in active or contemplated litigation. LRRD has the authority and responsibility to enter into workout and/or rehabilitation agreements with troubled commercial borrowers in order to mitigate and/or minimize the amount of credit losses recognized from these ~~TDRs, including~~problem assets. While every circumstance is different, LRRD will generally use forbearance agreements (generally 6-12 months) as an element of commercial loan workouts, which might include reduced interest rates, reduced payments, release of guarantor, term extensions or entering into short sale agreements. Principal forgiveness may be granted in specific ~~reserves, FHN had an allowance~~workout circumstances.

The individual expected credit loss assessments completed on commercial loans are used in evaluating the appropriateness of qualitative adjustments to quantitatively modeled loss expectations for loans that are not considered collateral dependent. If a loan is collateral dependent, the carrying amount of a loan is written down to the net realizable value of the collateral. Each assessment considers any modified terms and is comprehensive to ensure appropriate assessment of expected credit losses.

Consumer Loan Modifications

FHN does not currently participate in any of the loan modification programs sponsored by the U.S. government but does generally structure modified consumer loans

~~and lease losses~~using the parameters of $13 million, or 7% of TDR balances as of September 30, 2022, and $12 million, or 6% of TDR balances, as of December 31, 2021. Additionally, FHN had $31 million and $35 million of HFS loans classified as TDRs as of September 30, 2022the former Home Affordable Modification Program.

Within the HELOC and ~~December 31, 2021, respectively.~~

~~The following table provides~~real estate installment loans classes of the consumer portfolio segment, troubled loans are typically modified by reducing the interest rate (in increments of 25 basis points to a ~~summary~~minimum of ~~TDRs~~1% for up to 5 years) and a possible maturity date extension to reach an affordable housing debt-to-income ratio. After 5 years, the ~~periods ended September~~interest rate generally returns to the original interest rate prior to modification; for certain modifications, the modified interest rate increases 2% per year until the original interest rate prior to modification is achieved. Permanent mortgage troubled loans are typically modified by reducing the interest rate (in increments of 25 basis points to a minimum of 2% for up to 5 years) and a possible maturity date extension to reach an affordable housing debt-to-income ratio. After 5 years, the interest rate steps up 1 percent every year until it reaches the Federal Home Loan Mortgage Corporation Weekly Survey Rate cap. Contractual maturities may be extended to 40 years on permanent mortgages and to 30 ~~2022~~years for consumer real estate loans. Within the credit card class of the consumer portfolio segment, troubled loans are typically modified through either a short-term credit card hardship program or a longer-term credit card workout program. In the credit card hardship program, borrowers may be granted rate and ~~December 31, 2021:~~

payment reductions for 6 months to 1 year. In the credit card workout program, clients are granted a rate reduction to 0% and term extensions for up to 5 years to pay off the remaining balance. Consumer loans may also be modified through court-imposed principal reductions in bankruptcy proceedings, which FHN is required to honor unless a borrower reaffirms the related debt.

~~Table I.2.15~~

~~TROUBLED DEBT RESTRUCTURINGS~~

(Dollars in millions) September 30, 2022 December 31, 2021
Held for investment:
   Commercial loans:
      Current $ 15 $ 53
      Delinquent — —
      Non-accrual 40 35
   Total commercial loans $ 55 $ 88
   Consumer real estate:
      Current $ 76 $ 60
      Delinquent 9 4
      Non-accrual (a) 64 53
   Total consumer real estate $ 149 $ 117
   Credit card and other:
      Current $ — $ 1
      Delinquent — —
      Non-accrual — —
   Total credit card and other — 1
Total held for investment $ 204 $ 206
Held for sale:
      Current $ 24 $ 27
      Delinquent 6 7
      Non-accrual 1 1
Total held for sale 31 35
Total troubled debt restructurings $ 235 $ 241

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

Investment Securities

FHN’s investment securities portfolio consists principally of debt securities available for sale. FHN maintains a highly-rated securities portfolio consisting primarily of government agency issued mortgage-backed securities and collateralized mortgage obligations. 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 FHN is exposed. These evaluations may result in steps taken to adjust the overall balance sheet positioning.

Investment securities we~~re $10.1~~were $10.3 billion and ~~$9.4~~$10.2 billion on ~~September 30,~~March 31, 2023 and December 31, 2022, ~~and December 31, 2021, respectively,~~ representing approximately 13% ~~and 11%~~ of total assets ~~respectively.~~for both periods. See Note 2 - Investment Securities for more information about the securities portfolio.

Deposits

Total deposits of $61.4 billion as of March 31, 2023 decreased $2.0 billion from December 31, 2022 as a result of a $2.3 billion decrease in noninterest-bearing deposits partially offset by a $283 million increase in interest-bearing deposits. Average deposits of $62.2 billion decreased $2.7 billion, or 4%, from a $2.7 billion decrease

in noninterest-bearing deposits partially offset by a $95 million increase in interest-bearing deposits. The decline in deposit balances in first quarter 2023 reflects a continued downward trend from mid-2021 highs driven by excess liquidity associated with the COVID-19 pandemic.


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FHN continues to maintain a well-diversified and stable funding mix across its footprint:

~~Securities for more information ab~~•~~out the securities portfolio.~~At March 31, 2023, commercial deposits were $33.1 billion, or 54% of total deposits and consumer deposits were $28.3 billion, or 46% of total deposits.

•At March 31, 2023, 38% of deposits were associated with Tennessee, 19% with Florida, 12% with Louisiana, and 11% with North Carolina, with no other state above 10%.

~~Deposits~~

•Total de~~posits of $66.0~~estimated uninsured deposits were $27.8 billion and $30.3 billion as of ~~September 30, 2022 decreased $8.9 billion from December~~March 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 $6.8 billion~~2023 and ~~noninterest-bearing deposits decreased $2.1 billion.~~

December 31, 2022, representing 45% and 48% of total deposits, respectively.

•Of the uninsured deposits at March 31, 2023, $5.0 billion, or 8% of total deposits, were collateralized.

See ~~Tables~~Table 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 ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021.~~2022.

Table ~~I.2.16~~I.2.12

DEPOSITS


		September 30, 2022				December 31, 2021									March 31, 2023				December 31, 2022
(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	$	22,800	35	%	$	26,457	35	%	$	(3,657)	(14)	%	Savings	$	21,346	35	%	$	21,971	35	%	$	(625)	(3)	%
Time deposits	Time deposits	2,671		4		3,500		5		(829)		(24)		Time deposits	3,777		6		2,887		4		890		31
Other interest-bearing deposits	Other interest-bearing deposits	14,731		22		17,055		23		(2,324)		(14)		Other interest-bearing deposits	15,183		25		15,165		24		18		—

Total interest-bearing deposits	Total interest-bearing deposits	40,202		61		47,012		63		(6,810)		(14)		Total interest-bearing deposits	40,306		66		40,023		63		283		1
Noninterest-bearing deposits	Noninterest-bearing deposits	25,813		39		27,883		37		(2,070)		(7)		Noninterest-bearing deposits	21,134		34		23,466		37		(2,332)		(10)
Total deposits	Total deposits	$	66,015	100	%	$	74,895	100	%	$	(8,880)	(12)	%	Total deposits	$	61,440	100	%	$	63,489	100	%	$	(2,049)	(3)	%

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 $1.8 billion and $2.6~~increased to $6.6 billion as of ~~September 30, 2022 and~~March 31, 2023 compared to $2.8 billion as of December 31, ~~2021,~~2022, ~~respectively.~~largely from an increase in FHLB borrowings.

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 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. Total term borrowings were $1.6 billion as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021.~~2022.


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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 to the capital markets. Total equity was ~~$8.3~~$8.9 billion at ~~September 30, 2022~~March 31, 2023 and $8.5 billion at December 31, ~~2021.~~2022. Significant changes included net income of ~~$642~~$255 million and ~~the issuance~~an increase in AOCI of ~~$494~~$160 million, ~~in Series G preferred stock, which were~~ offset by ~~$271~~

$90 million in common and preferred ~~dividends and a decrease in AOCI of $1.1 billion.~~dividends.

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 ~~I.2.17~~I.2.13

REGULATORY CAPITAL DATA

(Dollars in millions) September 30, 2022 December 31, 2021
Shareholders’ equity $ 7,988 $ 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 $ 7,059 $ 7,793
Regulatory adjustments:
Disallowed goodwill and other intangibles (1,669) (1,711)
Net unrealized (gains) losses on securities available for sale 1,039 36
Net unrealized (gains) losses on pension and other postretirement plans 249 255
Net unrealized (gains) losses on cash flow hedges 139 (3)
Disallowed deferred tax assets — (2)
Other deductions from common equity tier 1 (1) (1)
Common equity tier 1 $ 6,816 $ 6,367
FHN non-cumulative perpetual preferred stock (b) 920 426
Qualifying noncontrolling interest— First Horizon Bank preferred stock 295 295
Tier 1 capital $ 8,031 $ 7,088
Tier 2 capital 956 830
Total regulatory capital $ 8,987 $ 7,918
Risk-Weighted Assets
First Horizon Corporation $ 68,580 $ 64,183
First Horizon Bank 68,065 63,601
Average Assets for Leverage
First Horizon Corporation 82,059 87,683
First Horizon Bank 81,368 86,953


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(Dollars in millions)	March 31, 2023		December 31, 2022
Shareholders’ equity	$	8,600	$	8,252
Modified CECL transitional amount (a)	57		85
FHN non-cumulative perpetual preferred stock	(1,014)		(1,014)
Common equity tier 1 before regulatory adjustments	$	7,643	$	7,323
Regulatory adjustments:
Disallowed goodwill and other intangibles	(1,649)		(1,658)
Net unrealized (gains) losses on securities available for sale	859		972
Net unrealized (gains) losses on pension and other postretirement plans	266		269
Net unrealized (gains) losses on cash flow hedges	83		126


Common equity tier 1	$	7,202	$	7,032
FHN non-cumulative perpetual preferred stock (b)	920		920
Qualifying noncontrolling interest— First Horizon Bank preferred stock	295		295

Tier 1 capital	$	8,417	$	8,247
Tier 2 capital	1,041		975
Total regulatory capital	$	9,458	$	9,222
Risk-Weighted Assets
First Horizon Corporation	$	69,510	$	69,163
First Horizon Bank	69,061		68,728
Average Assets for Leverage
First Horizon Corporation	78,737		79,583
First Horizon Bank	78,109		78,923

Table ~~I.2.18~~I.2.14

REGULATORY RATIOS & AMOUNTS


		September 30, 2022				December 31, 2021					March 31, 2023				December 31, 2022
		Ratio		Amount		Ratio		Amount			Ratio		Amount		Ratio		Amount
Common Equity Tier 1	Common Equity Tier 1									Common Equity Tier 1
First Horizon Corporation	First Horizon Corporation	9.94	%	$	6,816	9.92	%	$	6,367	First Horizon Corporation	10.36	%	$	7,202	10.17	%	$	7,032
First Horizon Bank	First Horizon Bank	10.55		7,182		10.75		6,838		First Horizon Bank	10.94		7,557		10.77		7,405
Tier 1	Tier 1									Tier 1
First Horizon Corporation	First Horizon Corporation	11.71		8,031		11.04		7,088		First Horizon Corporation	12.11		8,417		11.92		8,247
First Horizon Bank	First Horizon Bank	10.98		7,477		11.22		7,133		First Horizon Bank	11.37		7,852		11.20		7,700
Total	Total									Total
First Horizon Corporation	First Horizon Corporation	13.10		8,987		12.34		7,918		First Horizon Corporation	13.61		9,458		13.33		9,222
First Horizon Bank	First Horizon Bank	12.18		8,289		12.41		7,893		First Horizon Bank	12.67		8,748		12.41		8,532
Tier 1 Leverage	Tier 1 Leverage									Tier 1 Leverage
First Horizon Corporation	First Horizon Corporation	9.79		8,031		8.08		7,088		First Horizon Corporation	10.69		8,417		10.36		8,247
First Horizon Bank	First Horizon Bank	9.19		7,477		8.20		7,133		First Horizon Bank	10.05		7,852		9.76		7,700
Other Capital Ratios	Other Capital Ratios									Other Capital Ratios
Total period-end equity to period-end assets	Total period-end equity to period-end assets	10.32				9.53				Total period-end equity to period-end assets	11.02				10.83
Tangible common equity to tangible assets (c)	Tangible common equity to tangible assets (c)	6.64				6.73				Tangible common equity to tangible assets (c)	7.41				7.12
Adjusted tangible common equity to risk-weighted assets (c)	Adjusted tangible common equity to risk-weighted assets (c)	9.12				9.20				Adjusted tangible common equity to risk-weighted assets (c)	9.66				9.35

(a)The modified CECL transitional amount includes 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~~.2021. For ~~September 30,~~March 31, 2023 and December 31, 2022, 50% and 25%, respectively, of the full amount ~~at December 31, 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 ~~I.2.26.~~I.2.22.

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.


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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 ~~September 30, 2022,~~March 31, 2023, 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~~ FHN ~~the Tier 1~~ and ~~Total~~First Horizon Bank's risk-based regulatory capital ratios increased in ~~third~~first quarter ~~2022~~2023 relative to year-end ~~2021~~2022 primarily from the impact of net income less dividends during the first ~~nine~~three months of 2022. FHN's Tier 1 Capital and Tier 1 Leverage ratios as of September 30, 2022 further benefited from the issuance of its Series G preferred stock in February 2022. FHN and First Horizon Bank's risk-based regulatory capital ratios were negatively impacted in 2022 from an increase in risk-weighted assets from December 31, 2021.2023.

During ~~2022,~~2023, capital ratios are expected to remain above well-capitalized standards plus the required capital conservation ~~buffer.~~buffer. The Series G Convertible Preferred Stock will qualify for Common Equity Tier 1 Capital upon conversion to common stock following the termination of the TD Transaction. See Note 7 – Preferred Stock and Note 17 – Other Events for more information related to the Series G Convertible Preferred Stock.

Common Stock Purchase Programs

General 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 27, 2021, FHN announced that its Board of Directors approved a new $500 million common share purchase program that was to expire on January 31, ~~2023, replacing the 2018 program, which was terminated.~~2023. On


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October 26, 2021, FHN announced that the 2021 program had been increased by $500 million and extended to October 31, 2023. ~~Like the 2018 program, the~~The 2021 program is not tied to any compensation 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 ~~September 30, 2022,~~March 31, 2023, $401 million in purchases had been made life-to-date under the 2021 program at an average price per share of $16.60, or $16.58 excluding commissions. ~~At current price levels, which have been impacted by~~The pendency of the ~~Pending~~ TD ~~Merger~~Transaction resulted in no purchases under the 2021 program since itthe Transaction was announced ~~management does not currently anticipate purchasing additional shares under this authority.~~in 2022. With the Transaction terminated, FHN expects to utilize the program in a more normal fashion.

Table ~~I.2.19~~I.2.15

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~~2023
~~July~~January 1 to ~~July~~January 31	—	N/A	—	$	598,646
~~August~~February 1 to ~~August 31~~February 28	—	N/A	—	598,646
~~September~~March 1 to ~~September 30~~March 31	—	N/A	—	598,646
Total	—	N/A	—

(a) Represents total costs including commissions paid.

Compensation 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


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been reduced for that portion which relates to

compensation plans for which no stock option awards remain outstanding. The shares may be purchased over the option exercise 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.~~considerations. As of ~~September 30, 2022,~~March 31, 2023, the maximum number of shares that may be purchased under the program was ~~22.5~~22.3 million shares. Management currently does not anticipate purchasing a material number of shares under this authority during ~~2022.~~2023.

Table ~~I.2.20~~I.2.16

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
July 1 to July 31 31 $ 21.98 31 22,598
August 1 to August 31 71 22.07 71 22,527
September 1 to September 30 1 22.89 1 22,526
Total 103 $ 22.05 103


(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
2023
January 1 to January 31	107	$	24.57	107	22,399
February 1 to February 28	2	24.75		2	22,397
March 1 to March 31	50	21.82		50	22,348
Total	159	$	23.71	159


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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 ~~2021~~2022 Annual Report on Form ~~10-K, as amended.~~10-K.

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 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 ~~the~~our 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:

Table ~~I.2.21~~I.2.17

VaR & SVaR MEASURES


		Three Months Ended September 30, 2022						Nine Months Ended September 30, 2022						As of September 30, 2022			Three Months Ended March 31, 2023						As of March 31, 2023
(Dollars in millions)	(Dollars in millions)	Mean		High		Low		Mean		High		Low				(Dollars in millions)	Mean		High		Low
1-day	1-day															1-day
VaR	VaR	$	2	$	3	$	2	$	2	$	3	$	2	$	3	VaR	$	3	$	4	$	3		$	3
SVaR	SVaR	5		6		4		5		7		4		5		SVaR	5		7		4			4
10-day	10-day															10-day
VaR	VaR	9		10		8		7		11		3		10		VaR	9		11		8			9
SVaR	SVaR	24		27		18		24		34		18		25		SVaR	25		30		20			20

		Three Months Ended September 30, 2021						Nine Months Ended September 30, 2021						As of September 30, 2021			Three Months Ended March 31, 2022						As of March 31, 2022
(Dollars in millions)	(Dollars in millions)	Mean		High		Low		Mean		High		Low				(Dollars in millions)	Mean		High		Low
1-day	1-day															1-day
VaR	VaR	$	1	$	1	$	1	$	2	$	4	$	1	$	1	VaR	$	2	$	2	$	2		$	2
SVaR	SVaR	5		6		4		4		6		2		5		SVaR	5		7		4			5
10-day	10-day															10-day
VaR	VaR	3		5		2		6		21		1		4		VaR	4		5		3			4
SVaR	SVaR	19		24		14		17		24		11		21		SVaR	23		34		18			24


		Year Ended December 31, 2021						As of December 31, 2021			Year Ended December 31, 2022						As of December 31, 2022
(Dollars in millions)	(Dollars in millions)	Mean		High		Low				(Dollars in millions)	Mean		High		Low
1-day	1-day									1-day
VaR	VaR	$	1	$	4	$	1	$	2	VaR	$	2	$	4	$	2	$	3
SVaR	SVaR	4		7		2		5		SVaR	5		7		4		6
10-day	10-day									10-day
VaR	VaR	5		21		1		5		VaR	8		11		3		10
SVaR	SVaR	18		27		11		22		SVaR	24		34		18		29


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

Table ~~I.2.22~~I.2.18

SCHEDULE OF RISKS INCLUDED IN VaR


		As of September 30, 2022				As of September 30, 2021				As of December 31, 2021					As of March 31, 2023				As of March 31, 2022				As of December 31, 2022
(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	$	1	$	3	$	1	$	3	$	1	$	1	Interest rate risk	$	1	$	4	$	—	$	1	$	1	$	3
Credit spread risk	Credit spread risk	1		1		—		1		1		1		Credit spread risk	1		1		1		1		1		2

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 at the levels indicated by its VaR 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 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.

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 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

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


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~~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 ~~September 30, 2022,~~March 31, 2023, NII exposures over the next 12 months assuming rate shocks of plus/minus 25 basis points, plus/minus 50 basis points, plus/minus 100 basis points, and plus 200 basis points are estimated to have variances as shown in the table below.

Table ~~I.2.23~~I.2.19

INTEREST RATE SENSITIVITY

Shifts in Interest Rates
(in bps)

% Change in Projected
Net Interest Income

Shifts in Interest Rates
(in bps)

% Change in Projected
Net Interest Income

-100

-9.1%

-100

(6.2)%

-50

-4.4%

-50

(3.0)%

-25

-2.2%

-25

(1.5)%

+25

+2.1%

+25

+1.5%

+50

+4.2%

+50

+2.9%

+100

+8.3%

+100

+5.7%

+200

+13.9%

+200

+9.0%

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 0.3%. 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 ~~0.3%~~0.4%. These hypothetical 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~~Short-term interest ~~income had been impacted by the~~rates have reached their highest levels in 15 years, which coupled with market disruption from recent high profile bank failures, has increased competitive pressures on deposit costs.

The yield curve was inverted for much of the ~~COVID-19 pandemic~~last half of 2022, which has continued into early 2023. The inverted yield curve indicates market expectations that short-term rates are likely to peak and ~~its variants as well as~~then decline in future periods. Market participants are divided in their opinions regarding the ~~low-rate environment. The impact~~timing and magnitude of ~~government stimulus programs and other developments continue to influence net interest income results, although the impacts from these programs have abated.~~

~~Interest rates have been increasing over the past three quarters as the Federal Reserve has pivoted its monetary policy actions to curb inflation, with the expectation that rates will increase~~ further ~~in the future.~~short-term rate increases or subsequent rate cuts. FHN continues to monitor current economic trends and potential exposures closely.

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 FHLB ($~~14.3~~10.1 billion was available as of ~~September 30, 2022)~~March 31, 2023), 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 client base which provides inexpensive, predictable pricing. The ratio of average loans, excluding loans HFS and restricted real estate loans, to average core deposits was ~~79%~~96% for ~~September 30, 2022~~March 31, 2023 and ~~80%~~82% for December 31, ~~2021.~~2022.

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


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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 February 2022, FHN issued and sold to TD 4,936 shares of Series G Perpetual Convertible Preferred Stock in a private placement transaction for $494 million. As of ~~September 30, 2022~~March 31, 2023, FHN had outstanding $1.3 billion in senior and subordinated unsecured debt and $1.0 billion in non-cumulative perpetual preferred stock. As of ~~September 30, 2022,~~March 31, 2023, 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 ~~$1.4~~$1.1 billion as of ~~October~~April 1, ~~2022.~~2023.

In March 2022, FHN agreed to suspend the Dividend Reinvestment Plan in connection with the ~~Pending~~ TD ~~Merger. 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.~~Transaction. During the suspension period, dividend payments of FHN ~~will~~were not be automatically reinvested in additional shares of FHN common stock and participants in the Plan ~~will be unable~~were not able 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 ~~amounts~~amount of ~~$180~~$110 million in both first and second quarter 2023 and $435 million in 2022. First Horizon Bank declared preferred dividends in first quarter ~~2022, $85 million in second, third,~~of 2023 and ~~fourth quarter 2022, and $770 million in 2021. First Horizon Bank~~ declared and paid preferred dividends in each quarter of ~~2022 and 2021.~~2022. Additionally, First Horizon Bank declared preferred dividends in ~~fourth~~second quarter ~~2022,~~2023, payable in ~~January~~July 2023.

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 ~~October~~April 3, ~~2022.~~2023. FHN paid cash dividends of $1,625 per Series E preferred share and $1,175 per Series F preferred share on ~~October 11, 2022~~April 10, 2023 and $165 per Series C preferred share and $305 per Series D preferred share ~~and $165 per Series C preferred share~~ on ~~November~~May 1, ~~2022.~~2023. In addition, in ~~October 2022,~~April 2023, the Board approved cash dividends per share in the following amounts:

Table ~~I.2.24~~I.2.20

CASH DIVIDENDS

APPROVED BUT NOT PAID

Dividend/Share

Record Date

Payment Date

Common Stock

0.15

~~12/~~06/16/~~2022~~2023

~~01/~~07/03/2023

Preferred Stock

Series B

331.25

~~01/~~07/17/2023

~~02/~~08/01/2023

Series C

165.00

~~01/~~07/17/2023

~~02/~~08/01/2023

Series E

1,625.00

~~12/~~06/23/~~2022~~2023

~~01/~~07/10/2023

Series F

1,175.00

~~12/~~06/23/~~2022~~2023

~~01/~~07/10/2023

~~If the Pending TD Merger is completed before December 16, 2022 (the common stock record date), the common stock dividend described above will not be paid.~~

The FHN preferred stock and the First Horizon Bank Class A preferred stock will remain outstanding after the closing of the Pending TD Merger. If, following the closing of the Pending TD Merger, TD elects to effect the merger of FHN into TD Bank US Holding Company, at the effective time of such merger, each share of FHN preferred stock described above will be automatically converted into a share of a newly created, corresponding series of preferred stock of TD Bank US Holding Company having terms that are not materially less favorable than those of the existing series of FHN preferred stock. In addition, following the closing of the Pending TD Merger, at the effective time of the merger of First Horizon Bank into TDBNA, each share of First Horizon Bank Class A preferred stock will be automatically converted into a share of a newly created, corresponding series of preferred stock of TDBNA having terms that are not materially less favorable than those of the existing First Horizon Bank Class A preferred stock. The payment and timing of the dividends will not be impacted by any such conversion of the FHN preferred stock into TD Bank US Holding Company preferred stock or the First Horizon Bank Class A preferred stock into TDBNA preferred stock.

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


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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, 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 10 - 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


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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.

Repurchase Accrual Approach

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.

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~~$15 million and ~~$17~~$16 million as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively.

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, and government actions and proposals which could have positive or negative impacts on the economy at large or on certain 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

Economic Overview

The year 2022 and first quarter 2023 were economically unusual in several respects. The period was marked by: strong inflation (which began in 2021); the Federal Reserve implementing a "tightening" policy to contain inflation by rapidly increasing short-term interest rates and ending asset purchases; and low unemployment rates despite low economic growth. Key aspects were:

•Although the U.S. economy flirted with recession in 2022, it did not officially enter one. In ~~late September, Hurricane Ian caused substantial damage~~2023 recession risk remains high but no recession has begun.

•Although recessionary expectations were and ~~disruption in Florida, Georgia,~~remain high, consumption and ~~South Carolina, affecting FHN's operations in those states and impacting many of FHN's clients and communities. The financial impacts of Ian on FHN, especially indirect impacts through FHN's clients,~~employment have been ~~estimated for purposes~~robust.

•The rise in short-term interest rates by the Federal Reserve was both rapid and substantial, taking the

overnight Fed Funds rate from 0.20% in March 2022 to 4.65% a year later.

•Despite the extremely rapid and vigorous tightening of monetary policy, inflation in the U.S. remains high in relation to the decade preceding the COVID-19 pandemic, and in relation to the Federal Reserve's stated long-term goal of 2%.

Key events and circumstances are noted in the following discussions.

Federal Reserve and Rates

The Federal Reserve raised short-term rates several times in 2022, and three times in 2023. The raises in 2022 were 75 and 50 basis points each—aggressive by historical standards—while the 2023 raises were a more-typical 25 basis points each. The Federal Reserve has expressed its intent to bring inflation under control even at the risk of


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~~of this report but only on a preliminary basis; they may not be fully known for some time.~~

~~Inflation, Recession, and Federal Reserve Policy~~

~~Economic Overview~~

The year 2022 to date has been marked by: strong inflation (which began in 2021); the Federal Reserve implementing a "tightening" policy to contain inflation by increasing short-term interest rates and ending asset purchases; many indicators suggesting near-term recession; 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. The onset of winter in Europe is expected to exacerbate shortages of oil, natural gas, and other heating fuels.

~~Federal Reserve and Rates~~

The Federal Reserve has raised short-term rates several times already this year, and recent public comments indicate that further raises will continue until inflation is judged to be adequately controlled. The last four raises have been 75 basis points each, which is aggressive by historical standards. Moreover, the Federal Reserve has expressed its intent to bring inflation under control even at the risk of creating or deepening an economic recession. ~~By raising rates,~~However, recently the Federal Reserve ~~intends~~also has indicated a willingness to ~~curb demand~~slow or even pause its increases to better assess economic reaction thus far. The March banking crisis (mentioned below) may contribute to a more cautious approach, as it fuels concerns that falling deposits could result in ~~the U.S. for goods and services by making credit more expensive and reducing the amount of borrowed dollars generally. If supplies remain constant, curbing demand should curb inflation eventually.~~reduced ability to lend.

FHN cannot predict exactly when or how much short-term rates will be further raised, nor how market-driven long-term rates will behave, nor how those actions may affect financial markets, during 2023. FHN's expectations align with the ~~remainder~~forward curve in that short-term rates will stop rising at some point in 2023 and begin to fall by the fourth quarter of ~~2022 and continuing into~~ 2023. ~~However, currently FHN expects the Federal Reserve to adhere to its guidance and continue raising short-term rates.~~

Yield Curve

During ~~2022,~~the past five quarters, the yield curve flattened and ~~modestly~~ inverted ~~at times in the first two quarters, and was inverted most of the third quarter.~~many times. Unusual yield curve effects, including inversion, may continue. A traditional measure of inversion occurs when the two-year U.S. Treasury rate is higher than the ten-year rate. Traditional inversion was sustained for ~~most~~much of the ~~third quarter, continuing into the fourth.~~last three quarters, which is very unusual. Sustained traditional yield curve inversion is viewed, with statistical support, as a harbinger of economic recession.

Recession

The U.S. economy contracted (experienced negative growth) during the first ~~and second~~two quarters ~~this year. Those first two contractions were modest but,~~of 2022, in ~~each case, contrary to official expectations. The U.S. economy grew modestly in the third quarter, buoyed in part by a disproportionate fall-off in demand for imported goods versus domestic goods.~~both cases modestly. Although third-quarter U.S. growth was a positive development, and the inflation rate no longer is rising, inflation in the U.S. remains persistently high and, therefore, recessionary expectations in the U.S. remain high as well.

~~Traditionally, though not officially,~~ two consecutive quarters of contraction ~~indicates the start of a recession. Official designations~~often coincides with recession, in 2022 it did not. The economy expanded in each of the ~~beginning and end~~most recent three quarters. However, the rate of ~~a recessionary period are based on extensive data analysis and take many months to be announced. Currently, no recession has been officially declared. However, recession~~expansion is falling. If that trend continues, the economy will contract again later this year or early next.

Recession expectations in the U.S. ~~have been growing all year. When~~were high in 2022 and first quarter 2023. Traditionally, when people and businesses expect a recession, they often change their behaviors in ways that make recession more likely: they borrow less, spend less, and invest less. Some of those behaviors have started, but they have not become a broad trend yet.

Banking Crisis

In March 2023, two large regional U.S. banks failed after sudden large deposit outflows, and a major Swiss bank was acquired by another bank at the behest of regulators.

The two U.S. failures appear to have been caused in significant part by risky funds management practices exacerbated by a highly unusual deposit mix and 2022's sharp rise in rates. In the aftermath of these two failures, bank investors and clients across the U.S. have become more focused on deposit mix, funding risk management, and other safety-soundness concerns. The market values of virtually all U.S. bank stocks fell quickly and strongly in March, with a few falling about 90%.

The media published stories about actual and possible bank runs by depositors. Most U.S. banks saw net outflows of deposits in 2022 and early 2023 as the impacts of COVID-19 crisis programs faded and rates available from non-bank-account investments improved. According to Federal Reserve data, starting in mid-March, the two failures triggered an abrupt net deposit outflow from all but the largest U.S. banks. Specifically, during the week of March 15, the 25 largest U.S. banks as a group saw net deposit inflows exceeding $100 billion, while all other (smaller) U.S. banks as a group saw net outflows of nearly $200 billion. The next week large and small U.S. banks experienced net outflows of roughly $100 and $50 billion, respectively. The March crisis shock was short-lived, however. During the final week of March both large and small U.S. banks collectively experienced net inflows of deposits, roughly mirroring the first week of March, before the crisis emerged.

The two U.S. bank failures resulted in Congressional calls for higher regulation of mid-sized regional banks, especially for those with $100 billion or more of assets. FHN cannot predict what, if any, legislative or regulatory outcomes will result from the crisis.

In late April a third large regional U.S. bank failed after experiencing very large deposit outflows in March. Although this failure was widely anticipated, volatility in regional bank stocks resumed in May.

The three failed U.S. banks had a few characteristics that FHN believes were significant negative factors contributing to loss of confidence by depositors, in addition to having an unusual customer mix: well-above-median levels of deposits not covered by FDIC insurance; significant portions of the 2020-21 pandemic deposit inflows invested in longer-term fixed-rate debt securities; and very high (in relation to regulatory capital) market value losses on those investments when rates rose in 2022 and early 2023. These factors made them unusually susceptible to a cascade of negative effects when deposit levels diminished, for the entire industry, starting in 2022 as customers sought better returns in the rising rate environment.

War in Europe

The Russian military invaded Ukraine in February 2022. Over a year later, that conflict continues. Much of Europe and the rest of the world, including the U.S., imposed economic sanctions on Russia. The war and sanctions resulted in global oil and gas prices rising precipitously in early 2022. Oil prices have been volatile since then, but have oscillated around much higher price levels than before the war.

Market Volatility & Valuations

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~~were volatile ~~in 2022. Financial asset values broadly fell this year, especially~~ during ~~the second and third quarters. In the U.S., several major stock indices have fallen more than 20% from their most recent high levels, which conventionally means those indices entered a "bear" market.~~

~~Impacts on FHN~~

~~In several respects FHN has benefited significantly from rising rates. FHN is likely to continue to benefit as long as the rise in lending rates outpaces the rise in deposit and other funding rates.~~

~~However, some~~much of ~~FHN's businesses have been negatively impacted. The general increase in interest rates this year~~


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2022. Volatility overall moderated somewhat in late 2022 and early 2023, but volatile episodes have continued.

Financial asset values broadly fell last year, especially during the second and third quarters. Broad stock indices have improved from 2022's low points, but remain well below three-year highs, particularly for mid-size and smaller companies.

Impacts on FHN

In 2022, FHN benefited significantly from rising rates as the rise in lending rates outpaced the rise in deposit and other funding rates. In the first quarter of 2023 that outpacing ended, with FHN's net interest margin compressing slightly from fourth quarter 2022.

FHN experienced a normalization of deposit levels since first quarter 2020 as it allowed higher cost surge deposits resulting from economic stimulus programs to move off balance sheet. Net deposit outflows averaged $2.0 to $4.0 billion in each of the last three quarters of 2022 and fell again by roughly $2.5 billion in first quarter 2023. Despite these outflows, average deposit balances were higher in first quarter 2023 than first quarter 2020. To mitigate net deposit outflows, FHN has increased deposit rates appreciably over the past several quarters, particularly in first quarter 2023. In contrast, during this period FHN's total loans grew modestly each quarter. These impacts resulted from a deliberate plan to allow deposits to return to more normal levels in relation to loans. We started raising deposit rates to more competitive levels during first quarter 2023 and expect to continue to meet competitive pressures going forward. If net deposit outflows continue despite higher deposit rates, at some point FHN will have to increase borrowing, at higher cost than deposits, or take other funding actions that could adversely impact earnings.

Although FHN cannot predict future actions of its depositors, FHN believes it has avoided key characteristics

of the three failed U.S. banks. Specifically: FHN has a traditional customer mix for a bank its size; 55% of FHN's deposits at March 31, 2023 were FDIC insured, and another 8% were collateralized; and, because FHN kept a substantial portion of the pandemic deposit inflows in overnight and other "cash" investments, the market value losses embedded in FHN's investments do not diminish FHN's regulatory capital levels appreciably in relation to regulatory requirements.

As mentioned above, in 2023 the Federal Reserve has slowed the rate of increase of interest rates, and FHN expects rate increases to pause later this year. Increased stability in interest rates eventually may bring increased stability in funding, including deposits.

In addition, some of FHN's businesses have been negatively impacted by rising rates. Rate increases have pushed home mortgage rates in the U.S. ~~higher.~~much higher than in early 2022. FHN's direct mortgage lending and lending to mortgage companies ~~have seen~~saw business decline significantly in 2022. ~~If mortgage rates continue to rise, FHN's revenues and earnings from those areas likely will continue to fall substantially compared with 2021.~~ Moreover, FHN's revenues from bond trading and related activities ~~have fallen~~fell significantly in 2022 due to rising rates coupled with elevated market volatility. These impacts have continued in 2023, although bond trading results improved modestly in first quarter.

~~More generally, a~~A recession, ~~with still-rising rates~~if one occurs, likely would have a significant negative impact on FHN's businesses overall. ~~Even if loan spreads continue to widen, demand~~Demand for loans is likely towould fall, ~~reserves for~~ loan losses ~~are~~and provision expense likely towould rise, many commercial activities that generate fee income ~~are~~ likely towould decline, and competition for clients is likely towould sharpen. FHN already has experienced some of these impacts. The deeper or longer a recession lasts, the more significant these negative impacts are likely to be for FHN.

Complicating the economic situation in the U.S. this year is the impact that Federal Reserve policy has had on the value of the U.S. dollar versus many other major currencies. The dollar has risen substantially in 2022, resulting in: pressure on U.S. exports, which are relatively more expensive; a windfall for imports into the U.S., which are relatively cheaper; and pressure on non-U.S. borrowers of U.S. dollars and international buyers of goods traded mainly using U.S. dollars. Although FHN is not directly and significantly impacted by those effects, some clients have been and will continue to be. Moreover, other central banks have been pressured to follow the lead of the Federal Reserve to support their respective currencies. As in the U.S., those tightening actions dampen economic activity and increase the risk of recession in those countries.

LIBOR & Reference Rate Reform

LIBOR

The London Inter-Bank Offered Rate ("LIBOR") for many years was the most widely used reference rate in the world. A ~~large but~~small and 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. 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.

In 2017, the Chief Executive of the United Kingdom Financial Conduct Authority (the “FCA”)—the governmental regulator of LIBOR—announced that it 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 would no longer be published as follows:

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


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•All other USD LIBOR tenors (e.g., overnight, 1-month, 3-month, 6-month and 12-month tenors) 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 cessation date, 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-selected replacement benchmark rate at the cessation of LIBOR.

In December 2022, the Federal Reserve Board issued Regulation ZZ, its final rule to implement the Adjustable Interest Rate (LIBOR) Act.

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. Now that the origination of LIBOR-indexed loans has ended, no single alternative reference rate has replaced LIBOR for USD transactions. Instead, a number of different reference rates are being used in different circumstances. These include:

•Daily SOFR. The Alternative Reference Rates Committee (“ARRC”) is a group of private-market


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and financial regulator participants convened by the Federal Reserve Board 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 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 12-month tenors, and is based on SOFR futures contracts. The ARRC recommended conventions for Term SOFR rates, recommended CME Group as the administrator for Term SOFR, and ~~in July 2021 formally~~

recommended CME Group's Term SOFR rates. Furthermore, the Federal Reserve Board's Regulation ZZ, issued in December 2022, identifies CME Term SOFR (plus a spread adjustment, as defined in the LIBOR Act) as the Board-selected replacement rate for the purposes of loans that are repriced in accordance with the LIBOR Act upon the June 2023 final cessation of LIBOR.

•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.

Each alternative reference rate has advantages and disadvantages compared with other alternatives in various circumstances. Despite being supported by the ARRC and being the principal index used in interest rate derivatives in the post-LIBOR environment, Daily SOFR 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 the 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 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 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


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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 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 future. Thus far, the use of credit sensitive alternative reference rates by FHN and its clients has been limited.

FHN's Actions to Date & Transition Plans

Starting in 2019, FHN modernized the fallback language used in 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 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 ceased publication at the end of 2021. Only a small portion of FHN's clients had such loans.

On the consumer side, FHN began transitioning from LIBOR-based adjustable rate mortgages ("ARMs") to SOFR-based ARMs in November 2021, and no longer offers LIBOR-based ARMs. SOFR has emerged as a 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 new contracts tied to LIBOR on 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


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remaining USD LIBOR tenors noted above. Since November 2021, FHN bankers have ~~begun~~been amending the pricing of existing LIBOR-based commercial loans via a rate change at the time of loan renewal or via amendments to the loan documents to change the benchmark rate. Additionally, FHN bankers ~~have begun~~and FHNF derivatives marketers are 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 derivative contracts issued to customers through FHN Financial. Below is a summary of these exposures as of ~~September 30, 2022~~March 31, 2023:

Table ~~I.2.25~~I.2.21

LIBOR EXPOSURES


(Dollars in billions)	(Dollars in billions)	As of September 30, 2022		Mature after June 2023		(Dollars in billions)	As of March 31, 2023		Mature after June 2023
Commercial loans (a)	Commercial loans (a)	$	15	$	12	Commercial loans (a)	$	3	$	3
Consumer loans (a)	Consumer loans (a)	3		3		Consumer loans (a)	3		3
Customer swaps (b)	Customer swaps (b)	8		7		Customer swaps (b)	2		2

(a) Amounts represent outstanding loan balances as of ~~September 30, 2022~~March 31, 2023.

(b) FHN has entered into offsetting upstream transactions with dealers to offset its market risk exposure.

Financial Accounting Aspects

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 With Extended Transition Periods section of Note 1 - Basis of Presentation and Accounting Policies for additional information.

In ~~April~~December 2022, the FASB ~~proposed to extend~~issued ASU 2022-06, "Deferral of the ~~relief under~~Sunset Date of Topic ~~848 (Reference Rate Reform) by two years,~~848" which extends the transition window for ASU 2020-04 from December 31, 2022 to December 31, ~~2024.~~2024, consistent with key USD LIBOR tenors continuing to be published through June 30, 2023.

U.S. Tax Accommodation

On December 30, 2021, the IRS 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.


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Critical Accounting Policies and Estimates

FHN has made no significant changes in its critical accounting policies and estimates from those disclosed in its ~~2021~~2022 Annual Report on Form ~~10-K, as amended.~~10-K.

Accounting Changes

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


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Non-GAAP Information

Table ~~I.2.26~~I.2.22

NON-GAAP TO GAAP RECONCILIATION
Three Months Ended Nine Months Ended
(Dollars in millions; shares in thousands) September 30, 2022 June 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021
Pre-provision Net Revenue (Non-GAAP)
Net interest income (GAAP) $ 662 $ 542 $ 492 $ 1,683 $ 1,496
Plus: Noninterest income (GAAP) 213 201 247 642 829
Total revenues (GAAP) 875 743 739 2,325 2,325
Less: Noninterest expense (GAAP) 469 488 526 1,450 1,567
Pre-provision net revenue (Non-GAAP) $ 406 $ 255 $ 213 $ 875 $ 758
Average Tangible Common Equity (Non-GAAP)
Average total equity (GAAP) $ 8,669 $ 8,614 $ 8,577 $ 8,634 $ 8,462
Less: Average noncontrolling interest (a) 295 295 295 295 295
Less: Average preferred stock (a) 1,014 1,014 520 909 501
(A) Total average common equity $ 7,360 $ 7,305 $ 7,762 $ 7,430 $ 7,666
Less: Average goodwill and other intangible assets (GAAP)(b) 1,767 1,789 1,829 1,786 1,843
(B) Average tangible common equity (Non-GAAP) $ 5,593 $ 5,516 $ 5,933 $ 5,644 $ 5,823
Net Income Available to Common Shareholders
(C) Net income available to common shareholders (annualized) (GAAP) $ 1,020 $ 666 $ 887 $ 815 $ 993
Tangible Common Equity (Non-GAAP)
(D) Total equity (GAAP) $ 8,283 $ 8,551 $ 8,532 $ 8,283 $ 8,532
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 $ 6,974 $ 7,242 $ 7,717 $ 6,974 $ 7,717
Less: Goodwill and other intangible assets (GAAP)(b) 1,757 1,783 1,822 1,757 1,822
(F) Tangible common equity (Non-GAAP) 5,217 5,459 5,895 5,217 5,895
Less: Unrealized gains (losses) on AFS securities, net of tax (1,039) (671) 5 (1,039) 5
(G) Adjusted tangible common equity (Non-GAAP) $ 6,256 $ 6,130 $ 5,890 $ 6,256 $ 5,890
Tangible Assets (Non-GAAP)
(H) Total assets (GAAP) $ 80,299 $ 85,132 $ 88,537 $ 80,299 $ 88,537
Less: Goodwill and other intangible assets (GAAP) (b) 1,757 1,783 1,822 1,757 1,822
(I) Tangible assets (Non-GAAP) $ 78,542 $ 83,349 $ 86,715 $ 78,542 $ 86,715
Risk-Weighted Assets
(J) Risk-weighted assets (c) $ 68,580 $ 67,294 $ 63,013 $ 68,580 $ 63,013
Period-end Shares Outstanding
(K) Period-end shares outstanding 536,737 536,333 541,860 536,737 541,860
Ratios
(C)/(A) Return on average common equity (GAAP) 13.85 % 9.12 % 11.43 % 10.97 % 12.96 %
(C)/(B) Return on average tangible common equity (Non-GAAP) 18.23 12.07 14.95 14.44 17.06
(D)/(H) Total period-end equity to period-end assets (GAAP) 10.32 10.04 9.64 10.32 9.64
(F)/(I) Tangible common equity to tangible assets (Non-GAAP) 6.64 6.55 6.80 6.64 6.80
(G)/(J) Adjusted tangible common equity to risk-weighted assets (Non-GAAP) 9.12 9.11 9.35 9.12 9.35
(E)/(K) Book value per common share (GAAP) $ 12.99 $ 13.50 $ 14.24 $ 12.99 $ 14.24
(F)/(K) Tangible book value per common share (Non-GAAP) $ 9.72 $ 10.18 $ 10.88 $ 9.72 $ 10.88


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Loans and leases excluding PPP loans (Non-GAAP)
Commercial loans and leases excluding PPP loans $ 44,512 $ 43,843 $ 41,693 $ 44,512 $ 41,693
PPP loans 129 375 2,017 129 2,017
Total commercial loans and leases 44,641 44,218 43,710 44,641 43,710
Total consumer loans 12,713 12,311 11,725 12,713 11,725
Total loans and leases $ 57,354 $ 56,529 $ 55,435 $ 57,354 $ 55,435


	Three Months Ended
(Dollars in millions; shares in thousands)	March 31, 2023			December 31, 2022			March 31, 2022
Pre-provision Net Revenue (Non-GAAP)
Net interest income (GAAP)	$	688		$	709		$	479
Plus: Noninterest income (GAAP)	171			173			229
Total revenues (GAAP)	859			882			708
Less: Noninterest expense (GAAP)	478			503			493
Pre-provision net revenue (Non-GAAP)	$	381		$	379		$	215



Average Tangible Common Equity (Non-GAAP)
Average total equity (GAAP)	$	8,707		$	8,415		$	8,618
Less: Average noncontrolling interest (a)	295			295			295
Less: Average preferred stock (a)	1,014			1,014			695
(A) Total average common equity	$	7,398		$	7,106		$	7,628
Less: Average goodwill and other intangible assets (GAAP)(b)	1,738			1,750			1,802
(B) Average tangible common equity (Non-GAAP)	$	5,660		$	5,356		$	5,826

Net Income Available to Common Shareholders
(C) Net income available to common shareholders (annualized) (GAAP)	$	987		$	1,025		$	756

Tangible Common Equity (Non-GAAP)
(D) Total equity (GAAP)	$	8,895		$	8,547		$	8,696
Less: Noncontrolling interest (a)	295			295			295
Less: Preferred stock (a)	1,014			1,014			1,014
(E) Total common equity	$	7,586		$	7,238		$	7,387
Less: Goodwill and other intangible assets (GAAP)(b)	1,733			1,745			1,796
(F) Tangible common equity (Non-GAAP)	5,853			5,493			5,591
Less: Unrealized gains (losses) on AFS securities, net of tax	(859)			(972)			(440)
(G) Adjusted tangible common equity (Non-GAAP)	$	6,712		$	6,465		$	6,031

Tangible Assets (Non-GAAP)
(H) Total assets (GAAP)	$	80,729		$	78,953		$	88,660
Less: Goodwill and other intangible assets (GAAP) (b)	1,733			1,745			1,796
(I) Tangible assets (Non-GAAP)	$	78,996		$	77,208		$	86,864

Risk-Weighted Assets
(J) Risk-weighted assets (c)	$	69,510		$	69,163		$	65,042

Period-end Shares Outstanding
(K) Period-end shares outstanding	537,619			537,101			534,587

Ratios
(C)/(A) Return on average common equity (GAAP)	13.34		%	14.42		%	9.92		%
(C)/(B) Return on average tangible common equity (Non-GAAP)	17.43			19.14			12.98
(D)/(H) Total period-end equity to period-end assets (GAAP)	11.02			10.83			9.81
(F)/(I) Tangible common equity to tangible assets (Non-GAAP)	7.41			7.12			6.44
(G)/(J) Adjusted tangible common equity to risk-weighted assets (Non-GAAP)	9.66			9.35			9.27
(E)/(K) Book value per common share (GAAP)	$	14.11		$	13.48		$	13.82
(F)/(K) Tangible book value per common share (Non-GAAP)	$	10.89		$	10.23		$	10.46

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

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


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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 9992 of this report and the subsections entitled “Market Risk Management” beginning on page 9992 and “Interest Rate Risk Management” beginning on page ~~101~~93 of this report, and

(b) Note 14 to the Consolidated Financial Statements appearing on pages ~~48-54~~43-49 of this report, all of which materials are incorporated herein by reference. For additional information concerning market risk and our

management of it, refer to: Management’s Discussion and Analysis of Financial Condition and Results of Operations appearing in Item 7 to FHN’s Annual Report on Form 10-K ~~as amended,~~ for the year ended December 31, ~~2021,~~2022, including in particular the section entitled “Risk Management” beginning on page 9086 of that Report and the subsections entitled “Market Risk Management” beginning on page 9187 and “Interest Rate Risk Management” beginning on page 9389 of that Report; and Note 2221 to the Consolidated Financial Statements appearing on pages ~~184-190~~176-182 of Item 8 to FHN’s Annual Report on Form 10-K~~, as amended,~~ for the year ended December 31, ~~2021.~~2022.

Item 4. Controls and Procedures

(a)Evaluation of Disclosure Controls and Procedures. Our management, with the participation of our chief executive officer and chief financial officer, has evaluated the effectiveness of 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 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. There have not been any changes in our internal control over financial reporting during the ~~third~~first fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


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



PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The “Contingencies” section of Note 10 to the Consolidated Financial Statements beginning on page 3734 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, ~~2021:~~2022:

Not applicable.

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

(a) Unregistered Equity Securities Sold

During the ~~third~~first quarter of ~~2022,~~2023, 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

The "Common Stock Purchase Programs” section including tables ~~I.2.19~~I.2.15 and ~~I.2.20~~I.2.16 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 9890 of this report, is incorporated herein by reference.

Items 3., 4., and 5.

Not applicable


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

Item 6. Exhibits

10-Q EXHIBIT TABLE

Exh. No.

Description of Exhibit to this Report

Filed Here

Mngt Exh

Furnished

Incorporated by Reference to

Exh. No.

Description of Exhibit to this Report

Filed Here

Mngt Exh

Furnished

Incorporated by Reference to

Form

Exh. No.

Filing Date

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

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

3.1

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

3.2

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 restated effective July 26, 2022

8-K

3.1

7/27/2022

3.3

Bylaws of First Horizon Corporation, as amended and restated effective January 24, 2023

8-K

3.1

1/25/2023

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

4.1

10.1

Rate Applicable to Participating Directors and Executive Officers under the Directors and Executives Deferred Compensation Plan

10.1

Mutual Termination Agreement and Release, dated May 4, 2023, by and among The Toronto-Dominion Bank, TD Bank US Holding Company, Falcon Holdings Acquisition Co., and First Horizon Corporation (conformed copy)

8-K

10.1

5/4/2023

23.1

Accountants' consents

31(a)

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

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)

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(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)

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 September 30, 2022, formatted in Inline XBRL: (i) Consolidated Balance Sheets at September 30, 2022 and December 31, 2021; (ii) Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2022 and 2021; (iii) Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2022 and 2021; (iv) Consolidated Statements of Changes in Equity for the Three and Nine Months Ended September 30, 2022 and 2021; (v) Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2022 and 2021; (vi) Notes to Consolidated Financial Statements.

101

The following financial information from First Horizon Corporation’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, formatted in Inline XBRL: (i) Consolidated Balance Sheets at March 31, 2023 and December 31, 2022; (ii) Consolidated Statements of Income for the Three Months Ended March 31, 2023 and 2022; (iii) Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2023 and 2022; (iv) Consolidated Statements of Changes in Equity for the Three Months Ended March 31, 2023 and 2022; (v) Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2023 and 2022; (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. 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. SCH

Inline XBRL Taxonomy Extension Schema

101. CAL

Inline XBRL Taxonomy Extension Calculation Linkbase

101. CAL

Inline XBRL Taxonomy Extension Calculation Linkbase

101. LAB

Inline XBRL Taxonomy Extension Label Linkbase

101. LAB

Inline XBRL Taxonomy Extension Label Linkbase

101. PRE

Inline XBRL Taxonomy Extension Presentation Linkbase

101. PRE

Inline XBRL Taxonomy Extension Presentation Linkbase

101. DEF

Inline XBRL Taxonomy Extension Definition Linkbase

101. DEF

Inline XBRL Taxonomy Extension Definition Linkbase

104

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

104

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

~~In the Exhibit 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~~


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

In the Exhibit 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” 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.


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SIGNATURES
Table of Contents

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: ~~November 7, 2022~~May 8, 2023

By:

/s/ Hope Dmuchowski

Name:

Hope Dmuchowski

Title:

Senior Executive Vice President and Chief Financial Officer

(Duly Authorized Officer and Principal Financial Officer)


			~~115~~107			~~3Q22~~1Q23 FORM 10-Q REPORT


	Nine Months Ended
	September 30, 2022						September 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	$	43,366	$	1,217	3.75	%	$	44,771	$	1,135	3.38	%
Consumer loans	12,043		344		3.80		12,072		357		3.98
Total loans and leases	55,409		1,561		3.76		56,843		1,492		3.51
Loans held for sale	980		30		4.01		856		22		3.41






Investment securities	9,923		139		1.87		8,406		88		1.43
Trading securities	1,481		39		3.52		1,303		20		2.02

Federal funds sold	190		1		1.52		32		—		0.13
Securities purchased under agreements to resell (a)	567		2		0.61		580		—		(0.08)
Interest-bearing deposits with banks	10,713		63		0.79		12,468		11		0.12

Total earning assets / Total interest income	$	79,263	$	1,835	3.09	%	$	80,488	$	1,633	2.72	%

Cash and due from banks	1,251						1,260
Goodwill and other intangible assets, net	1,786						1,843
Premises and equipment, net	643						724
Allowance for loan and lease losses	(639)						(875)
Other assets	3,495						3,691
Total assets	$	85,799					$	87,131

Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
Savings	$	24,903	$	27	0.14	%	$	27,468	$	31	0.15	%
Other interest-bearing deposits	15,972		34		0.28		15,617		17		0.14
Time deposits	3,046		11		0.51		4,479		19		0.58
Total interest-bearing deposits	43,921		72		0.22		47,564		67		0.19
Federal funds purchased	737		5		0.96		969		1		0.11
Securities sold under agreements to repurchase	882		3		0.40		1,229		2		0.33
Trading liabilities	523		9		2.32		535		4		1.01
Other short-term borrowings	185		2		1.29		130		1		0.08
Term borrowings	1,595		53		4.41		1,669		55		4.39
Total interest-bearing liabilities / Total interest expense	$	47,843	$	144	0.40	%	$	52,096	$	130	0.33	%

Noninterest-bearing liabilities:
Noninterest-bearing deposits	27,468						25,070
Other liabilities	1,854						1,503
Total liabilities	77,165						78,669

Shareholders' equity	8,339						8,167
Noncontrolling interest	295						295
Total shareholders' equity	8,634						8,462
Total liabilities and shareholders' equity	$	85,799					$	87,131

Net earnings assets / Net interest income (TE) / Net interest spread	$	31,420	$	1,691	2.69	%	$	28,392	$	1,503	2.39	%
Taxable equivalent adjustment			(8)		0.16				(7)		0.11
Net interest income / Net interest margin (b)			$	1,683	2.85	%			$	1,496	2.50	%


Loans and leases excluding PPP loans (Non-GAAP)
Commercial loans and leases excluding PPP loans	$	44,512	$	43,843	$	41,693	$	44,512	$	41,693
PPP loans	129		375		2,017		129		2,017
Total commercial loans and leases	44,641		44,218		43,710		44,641		43,710
Total consumer loans	12,713		12,311		11,725		12,713		11,725
Total loans and leases	$	57,354	$	56,529	$	55,435	$	57,354	$	55,435