0000036966srt:MaximumMemberfhn:OtherAssetsTaxCreditInvestmentsMemberfhn:MeasurementInputAdjustmentsToCurrentSalesYieldsForSpecificPropertiesMemberus-gaap:FairValueInputsLevel3Memberus-gaap:ValuationTechniqueDiscountedCashFlowMember2022-12-310000036966us-gaap:EstimateOfFairValueFairValueDisclosureMember2024-03-31

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 March 31, ~~2023~~2024


☐			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 of incorporation ofor organization)		(~~IRS~~I.R.S. Employer Identification No.)

165 Madison Avenue
Memphis,	Tennessee	38103
(Address of principal executive ~~office)~~offices)		(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 DD*

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

*Shares of Series D Preferred Stock, along with the related Series D Depositary Shares, were outstanding on March 31, 2024. All shares of Series D Preferred Stock were redeemed on May 1, 2024, which resulted in the redemption of the Series D Depositary Shares. The New York Stock Exchange suspended the Series D Depositary Shares from trading on May 1, 2024 and is expected to delist the securities on May 13, 2024.

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

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging ~~Growth Company~~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 April ~~28, 2023~~30, 2024
Common Stock, $.625 par value						~~537,811,498~~546,867,683


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
CODM			Chief Operating Decision-Maker
Company			First Horizon Corporation
Corporation			First Horizon Corporation
CRE			Commercial Real Estate
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
Fed			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.)
GHG		Greenhouse Gas
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
HTC		Historic tax credit
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
PAM


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


~~GLOSSARY OF ACRONYMS & TERMS~~
~~Table of Contents~~

		Proportional amortization method
PCAOB	Public Company Accounting Oversight Board
PCD	Purchased credit deteriorated financial assets
PCI	Purchased credit impaired
PD	Probability of default
PM	Portfolio managers


			1			1Q24 FORM 10-Q REPORT


GLOSSARY OF ACRONYMS & TERMS
Table of Contents


PPP			Paycheck Protection Program
PSU			Performance Stock Unit
RE			Real estate
RM			Relationship managers
ROA			Return on assets
RPL			Reasonably possible ~~Loss~~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
TD Merger Agreement			Merger agreement between FHN, TD, ~~TD-US,~~ and ~~a TD-US subsidiary~~certain TD subsidiaries, which the parties mutually terminated on May 4, 2023
TD 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			~~1Q23~~1Q24 FORM 10-Q REPORT


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

Forward-Looking Statements

This report, including ~~material~~materials 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 pertainwith respect 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~~The words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “should,” “is likely,” “will,” “going forward,” and other expressions that indicate future events and ~~trends.~~trends identify forward-looking statements.

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~~our 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.~~change. Examples of uncertainties and contingencies include, among other important factors:

•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 that 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;~~relationships; and


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


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

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

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 in those factors listed in material incorporated by reference into this report. In evaluating forward-looking statements and assessing ~~FHN’s~~our 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, among others.


			43			~~1Q23~~1Q24 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. Table ~~I.2.22~~I.2.23 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.


			54			~~1Q23~~1Q24 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)			76

Consolidated Statements of Income (unaudited)			87

Consolidated Statements of Comprehensive Income (Loss) (unaudited)			109

Consolidated Statements of Changes in Equity (unaudited)			1110

Consolidated Statements of Cash Flows (unaudited)			1211

Notes to the Consolidated Financial Statements (unaudited)			1312
Note 1 Basis of Presentation and Accounting Policies			1312

Note 2 Investment Securities			15
Note 3 Loans and Leases			18
Note 4 Allowance for Credit Losses			27
Note 5 Mortgage Banking Activity			29
Note 6 Goodwill and Other Intangible Assets			30

Note 7 Preferred Stock			31
Note 8 Components of Other Comprehensive Income (Loss)			32
Note 9 Earnings Per Share			33
Note 10 Contingencies and Other Disclosures			34
Note 11 Retirement Plans			36
Note 12 Business Segment Information			37
Note 13 Variable Interest Entities			40
Note 14 Derivatives			43
Note 15 Master Netting and Similar Agreements - Repurchase, Reverse Repurchase, and Securities Borrowing Transactions			50
Note 16 Fair Value of Assets and Liabilities			52
Note 17 ~~Other~~ Subsequent Events			6867


			65			~~1Q23~~1Q24 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents

CONSOLIDATED BALANCE SHEETS


		(Unaudited)		December 31,
		March 31,
		(Unaudited)
		(Unaudited)
		(Unaudited)
		March 31,
		March 31,
		March 31,						December 31,
(Dollars in millions, except per share amounts)	(Dollars in millions, except per share amounts)	2023		2022		(Dollars in millions, except per share amounts)	2024		2023
Assets	Assets
Cash and due from banks
Cash and due from banks
Cash and due from banks	Cash and due from banks	$	987	$	1,061
Interest-bearing deposits with banks	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	309		482
Trading securities	Trading securities	1,122		1,375
Securities available for sale at fair value	Securities available for sale at fair value	8,954		8,836
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)		650		590
Securities held to maturity (fair value of $1,131 and $1,161, respectively)
Loans held for sale (including $84 and $68 at fair value, respectively)
Loans and leases	Loans and leases	59,045		58,102
Allowance for loan and lease losses	Allowance for loan and lease losses	(715)		(685)
Net loans and leases	Net loans and leases	58,330		57,417
Premises and equipment	Premises and equipment	603		612
Goodwill	Goodwill	1,511		1,511
Other intangible assets	Other intangible assets	222		234
Other assets	Other assets	4,191		4,080
Total assets	Total assets	$	80,729	$	78,953

Liabilities	Liabilities
Liabilities
Liabilities
Noninterest-bearing deposits
Noninterest-bearing deposits
Noninterest-bearing deposits	Noninterest-bearing deposits	$	21,134	$	23,466
Interest-bearing deposits	Interest-bearing deposits	40,306		40,023
Total deposits	Total deposits	61,440		63,489
Trading liabilities	Trading liabilities	144		335
Short-term borrowings	Short-term borrowings	6,484		2,506
Term borrowings	Term borrowings	1,605		1,597
Other liabilities	Other liabilities	2,161		2,479
Total liabilities	Total liabilities	71,834		70,406

Equity	Equity
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		336		336
Equity
Equity
Preferred stock, Non-cumulative perpetual, no par value; authorized 5,000,000 shares; issued 26,750 shares
Preferred stock, Non-cumulative perpetual, no par value; authorized 5,000,000 shares; issued 26,750 shares
Preferred stock, Non-cumulative perpetual, no par value; authorized 5,000,000 shares; issued 26,750 shares
Common stock, $0.625 par value; authorized 700,000,000 shares; issued 548,636,986 and 558,838,694 shares, respectively
Capital surplus	Capital surplus	4,863		4,840
Retained earnings	Retained earnings	3,595		3,430
Accumulated other comprehensive loss, net	Accumulated other comprehensive loss, net	(1,208)		(1,368)
FHN shareholders' equity	FHN shareholders' equity	8,600		8,252
Noncontrolling interest	Noncontrolling interest	295		295
Total equity	Total equity	8,895		8,547
Total liabilities and equity	Total liabilities and equity	$	80,729	$	78,953

See accompanying notes to consolidated financial statements.


			76			~~1Q23~~1Q24 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents

CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended March 31,

(Dollars in millions, except per share data; shares in thousands) (Unaudited)

2023

2022

(Dollars in millions, except per share data; shares in thousands) (Unaudited)

Interest income

Interest and fees on loans and leases

806

444

Interest and fees on loans and leases

Interest and fees on loans held for sale

Interest on investment securities

Interest on trading securities

Interest on other earning assets

Total interest income

920

510

Interest expense

Interest on deposits

171

Interest on trading liabilities

Interest on short-term borrowings

Interest on term borrowings

Total interest expense

232

Net interest income

688

479

Net interest income

Provision for credit losses

(40)

Net interest income after provision for credit losses

638

519

Net interest income after provision for credit losses

Noninterest income

Fixed income

Deposit transactions and cash management

Fixed income

Deposit transactions and cash management

Brokerage, management fees and commissions

Card and digital banking fees

Other service charges and fees

Trust services and investment management

Mortgage banking and title income

Securities gains (losses), net

—

Trust services and investment management

Mortgage banking income

Other income

Total noninterest income

171

229

Total noninterest income

Noninterest expense

Personnel expense

271

280

Personnel expense

Net occupancy expense

Computer software

Deposit insurance expense

Operations services

Advertising and public relations

Operations services

Legal and professional fees

Contract employment and outsourcing

Amortization of intangible assets

Equipment expense

Advertising and public relations

Communications and delivery

Legal and professional fees

Communications and delivery

Other expense

Total noninterest expense

478

493

Total noninterest expense

Income before income taxes

331

255

Income tax expense

Net income

255

198

Net income attributable to noncontrolling interest

Net income attributable to controlling interest

251

195

Net income attributable to controlling interest

Preferred stock dividends

Net income available to common shareholders

243

187


			87			~~1Q23~~1Q24 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents

CONSOLIDATED STATEMENTS OF INCOME (continued)

Basic earnings per common share

0.45

0.35

Basic earnings per common share

Diluted earnings per common share

0.43

0.34

Weighted average common shares

536,938

533,218

Weighted average common shares

Diluted average common shares

571,991

549,809

See accompanying notes to consolidated financial statements.


			98			~~1Q23~~1Q24 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Three Months Ended
March 31,

(Dollars in millions) (Unaudited)

2023

2022

(Dollars in millions) (Unaudited)

Net income

255

198

Other comprehensive income (loss), net of tax:

Net unrealized gains (losses) on securities available for sale

114

(404)

Net unrealized gains (losses) on cash flow hedges

(21)

Net unrealized gains (losses) on cash flow hedges

Net unrealized gains (losses) on pension and other postretirement plans

Other comprehensive income (loss)

160

(424)

Other comprehensive income (loss)

Comprehensive income (loss)

415

(226)

Comprehensive income attributable to noncontrolling interest

Comprehensive income (loss) attributable to controlling interest

411

(229)

Income tax expense (benefit) of items included in other comprehensive income:

Net unrealized gains (losses) on securities available for sale

(130)

Net unrealized gains (losses) on cash flow hedges

(7)

Net unrealized gains (losses) on cash flow hedges

Net unrealized gains (losses) on pension and other postretirement plans

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


			109			~~1Q23~~1Q24 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

																									Three Months Ended March 31, 2023
Three Months Ended March 31, 2024
			Preferred Stock			Common Stock
Three Months Ended March 31, 2024

Three Months Ended March 31, 2024
		Preferred 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
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			—	—		—	—		—		4		—		—		4

(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
Balance, December 31, 2023
Adjustment to reflect adoption of ASU 2023-02
Net income	Net income		—	—		—	—		—		251		—		4		255
Other comprehensive income			—	—		—	—		—		—		160		—		160
Other comprehensive income (loss)

Cash dividends declared:	Cash dividends declared:
Cash dividends declared:
Cash dividends declared:
Preferred stock
Preferred stock
Preferred stock	Preferred stock		—	—		—	—		—		(8)		—		—		(8)
Common stock ($0.15 per share)	Common stock ($0.15 per share)		—	—		—	—		—		(82)		—		—		(82)

Common stock repurchased			—	—		(159)	—		(4)		—		—		—		(4)
Common stock repurchased (b)
Common stock repurchased (b)
Common stock repurchased (b)
Excise tax on share repurchases
Common stock issued for:	Common stock issued for:
Stock options exercised and restricted stock awards
Stock options exercised and restricted stock awards
Stock options exercised and restricted stock awards	Stock options exercised and restricted stock awards		—	—		677	—		5		—		—		—		5
Stock-based compensation expense	Stock-based compensation expense		—	—		—	—		22		—		—		—		22
Dividends declared - noncontrolling interest of subsidiary preferred stock	Dividends declared - noncontrolling interest of subsidiary preferred stock		—	—		—	—		—		—		—		(4)		(4)

Balance, March 31, 2023			31,686	$	1,014	537,619	$	336	$	4,863	$	3,595	$	(1,208)	$	295	$	8,895
Balance, March 31, 2024
Balance, March 31, 2024
Balance, March 31, 2024

(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 $154 million repurchased under our general purchase program.

																			Three Months Ended March 31, 2022
			Preferred Stock			Common Stock
Three Months Ended March 31, 2023																			Three Months Ended March 31, 2023
		Preferred 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
Balance, December 31, 2021			26,750	$	520	533,577	$	333	$	4,743	$	2,891	$	(288)	$	295	$	8,494

(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
Balance, December 31, 2022
Adjustment to reflect adoption of ASU 2022-02

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

Cash dividends declared:	Cash dividends declared:
Cash dividends declared:
Cash dividends declared:
Preferred stock
Preferred stock
Preferred stock	Preferred stock		—	—		—	—		—		(8)		—		—		(8)
Common stock ($0.15 per share)	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
Common stock repurchased
Common stock repurchased	Common stock repurchased		—	—		(120)	—		(2)		—		—		—		(2)
Common stock issued for:	Common stock issued for:
Stock options exercised and restricted stock awards
Stock options exercised and restricted stock awards
Stock options exercised and restricted stock awards	Stock options exercised and restricted stock awards		—	—		1,130	1		14		—		—		—		15
Stock-based compensation expense	Stock-based compensation expense		—	—		—	—		14		—		—		—		14
Dividends declared - noncontrolling interest of subsidiary preferred stock	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
Balance, March 31, 2023
Balance, March 31, 2023
Balance, March 31, 2023

See accompanying notes to consolidated financial statements.


			1110			~~1Q23~~1Q24 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents

CONSOLIDATED STATEMENTS OF CASH FLOWS

Three months ended March 31,
(Dollars in millions) (Unaudited) 2023 2022
Operating Activities
Net income $ 255 $ 198
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Provision for credit losses 50 (40)
Deferred income tax expense (benefit) 6 38
Depreciation and amortization of premises and equipment 14 15
Amortization of intangible assets 12 13
Net other amortization and accretion 4 (10)
Net (increase) decrease in trading securities 375 514
Net (increase) decrease in derivatives (266) 395
Stock-based compensation expense 22 14
Securities (gains) losses, net — (6)
Loans held for sale:
Purchases and originations (477) (1,511)
Gross proceeds from settlements and sales 293 920
(Gain) loss due to fair value adjustments and other 2 13
Other operating activities, net (359) 141
Total adjustments (324) 496
Net cash provided by (used in) operating activities (69) 694
Investing Activities
Proceeds from maturities of securities available for sale 244 408
Purchases of securities available for sale (221) (1,492)
Proceeds from prepayments of securities held to maturity 10 11
Proceeds from sales of premises and equipment — 4
Purchases of premises and equipment (5) (10)
Net (increase) decrease in loans and leases (949) (134)
Net (increase) decrease in interest-bearing deposits with banks (1,103) 1,359
Other investing activities, net 2 8
Net cash provided by (used in) investing activities (2,022) 154
Financing Activities
Common stock:
  Stock options exercised 5 15
  Cash dividends paid (83) (82)
  Repurchase of shares (4) (2)
Preferred stock:
  Preferred stock issuance — 494
  Cash dividends paid - preferred stock - noncontrolling interest (4) (3)
  Cash dividends paid - preferred stock (8) (8)
Net increase (decrease) in deposits (2,049) (781)
Net increase (decrease) in short-term borrowings 3,979 (405)
Increases (decreases) in term borrowings 8 1
Net cash provided by (used in) financing activities 1,844 (771)
Net increase (decrease) in cash and cash equivalents (247) 77
Cash and cash equivalents at beginning of period 1,543 1,788
Cash and cash equivalents at end of period $ 1,296 $ 1,865
Supplemental Disclosures
Total interest paid $ 200 $ 19
Total taxes paid 3 2
Total taxes refunded 2 1
Transfer from loans to OREO 2 —
Transfer from loans HFS to trading securities 122 736



	Three months ended March 31,
(Dollars in millions) (Unaudited)	2024		2023
Operating Activities
Net income	$	197	$	255
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Provision for credit losses	50		50
Deferred income tax expense (benefit)	(57)		6
Depreciation and amortization of premises and equipment	14		14
Amortization of intangible assets	11		12
Net other amortization and accretion	1		4
Net (increase) decrease in trading securities	591		375
Net (increase) decrease in derivatives	4		(266)




Stock-based compensation expense	18		22







Loans held for sale:
Purchases and originations	(608)		(477)
Gross proceeds from settlements and sales	379		293

(Gain) loss due to fair value adjustments and other	(6)		2










Other operating activities, net	244		(359)
Total adjustments	641		(324)
Net cash provided by (used in) operating activities	838		(69)
Investing Activities


Proceeds from maturities of securities available for sale	183		244
Purchases of securities available for sale	(21)		(221)

Proceeds from prepayments of securities held to maturity	13		10

Purchases of premises and equipment	(10)		(5)





Net (increase) decrease in loans and leases	(488)		(949)

Net (increase) decrease in interest-bearing deposits with banks	(557)		(1,103)


Other investing activities, net	4		2
Net cash provided (used in) by investing activities	(876)		(2,022)
Financing Activities
Common stock:
Stock options exercised	—		5
Cash dividends paid	(85)		(83)
Repurchase of shares	(159)		(4)

Preferred stock:


Cash dividends paid - preferred stock - noncontrolling interest	(5)		(4)
Cash dividends paid - preferred stock	(8)		(8)




Net increase (decrease) in deposits	(39)		(2,049)
Net increase (decrease) in short-term borrowings	154		3,979
Proceeds from issuance of term borrowings	11		—

Increases (decreases) in term borrowings	4		8
Net cash provided by (used in) financing activities	(127)		1,844
Net increase (decrease) in cash and cash equivalents	(165)		(247)
Cash and cash equivalents at beginning of period	1,731		1,543
Cash and cash equivalents at end of period	$	1,566	$	1,296






Supplemental Disclosures
Total interest paid	$	420	$	200
Total taxes paid	3		3
Total taxes refunded	—		2
Transfer from loans to OREO	1		2
Transfer from loans HFS to trading securities	342		122

See accompanying notes to consolidated financial statements.


			1211			~~1Q23~~1Q24 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 for the year ended December 31, ~~2022.~~2023. 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.

~~TD Transaction~~

Merger and integration planning expenses related to the transactions associated with the TD Merger Agreement are recorded in FHN’s Corporate segment. Expenses recognized during the three months ended March 31, 2023 and 2022 were $21 million and $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~~were 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. 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, 2024, except for hedging relationships existing as of December 31, 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.~~contracts

and implemented those modifications before the last quotation of LIBOR on June 30, 2023. 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~~immediately converted the reference rate within each contract. FHN also elected that revisions to contractual fallback provisions, including modifications in accordance with the provisions of Regulation ZZ, did not require evaluation for modification accounting. Additionally, FHN elected that the revisions to derivative contracts implemented by central clearinghouses to convert centrally cleared derivative contracts from LIBOR to SOFR plus an appropriate spread adjustment were not considered changes requiring assessment for modification accounting.

During the transition period, 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~~dedesignation when critical terms (i.e., reference rates) change and 3) the allowed assumption of shared risk exposure for hedged items. ~~For~~Additionally, 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~~continued to utilize ~~the~~these 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~~through the final cash flows affected by the quotation of LIBOR.

In accordance with the ~~purpose~~provisions of ASU 2020-04, effective immediately after the end of the ~~standard.~~transition period for its cash flow hedges (i.e., no more cash flows were affected by LIBOR), FHN elected that the cessation of effectiveness assessments under the transition guidance and subsequent initiation of hedge effectiveness assessments under ASC 815 did not require dedesignation of the hedge relationships.

In December 2022, the FASB issued ASU 2022-06, "Deferral of the Sunset Date of Topic 848" which extends the transition window for ASU 2020-04 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~~the Secured 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~~


			1312			~~1Q23~~1Q24 FORM 10-Q REPORT


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

contracts affected by the change in discounting convention regardless of whether they are centrally cleared (i.e., bi-lateral 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

~~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. FHN may utilize the provisions of ASU 2022-01 in its future hedging strategies.

~~ASU 2022-02~~

In March 2022, the FASB issued ASU 2022-02, “Troubled Debt Restructurings and Vintage 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. For the transition method related to the recognition and measurement of TDRs, FHN elected to apply the modified retrospective transition effective January 1, 2023, resulting in a cumulative-effect 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 cost of the investment being amortized in 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 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 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 iswas 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~~(restatement of prior years) basis. FHN ~~is assessing 1)~~has assessed the applicability of ASU 2023-02 to its tax credit program equity investments, determined that its New Markets Tax Credit and ~~2) whether to elect~~Historic Tax Credit programs qualified, and made the proportional method election for them. The use of the proportional amortization method continued for ~~qualifying~~FHN's Low-Income Housing Tax Credits

program. Upon adoption of ASU 2023-02, FHN recognized a cumulative effect adjustment that increased retained earnings by $8 million, net of tax, on January 1, 2024.

The adoption of ASU 2023-02 resulted in a revision to FHN’s accounting policy for equity investments in tax credit programs. FHN’s election to utilize the deferral method for investments that generate Investment Tax Credits is now made subsequent to the determination of whether a tax credit program will apply the proportional amortization method. This includes both solar and non-qualifying historic tax credit investments. Under the deferral approach the investment tax credits are recorded as an offset to the related investment on the balance sheet. Credit amounts are recognized in earnings over the life of the investment within the same income or expense accounts as used for the investment.

Accounting Changes Issued But Not Currently Effective

ASU 2023-07

In November 2023, the FASB issued ASU 2023-07, "Improvements to Reportable Segment Disclosures" that requires public entities to provide disclosures of significant segment expenses and other segment items on an annual and interim basis and to provide in interim periods all disclosures about a reportable segment's profit or loss and assets that are currently required annually. The ASU requires a public entity to disclose, for each reportable segment, the significant expense categories and amounts that are regularly provided to the chief operating decision-maker (CODM) and included in each reported measure of a segment's profit or loss. ASU 2023-07 also requires disclosure of the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023 and for interim periods beginning after December 15, 2024. Early adoption is permitted. The guidance is applied retrospectively to all periods presented in the financial statements, unless it is impracticable. FHN will adopt ASU 2023-07 as of December 31, 2024 and is currently assessing the effect on its reportable segment disclosures.

ASU 2023-09

In December 2023, the FASB issued ASU 2023-09, "Improvements to Income Tax Disclosures" to enhance transparency and decision usefulness of income tax disclosures. The provisions of this ASU require disaggregated information about a reporting entity's effective tax rate reconciliation in both percentages and reporting currency amounts. Certain categories of reconciling items are required by the ASU with additional categories required if a specified quantitative threshold is met. Reporting entities are also required to provide a qualitative discussion of the primary state and local


			13			1Q24 FORM 10-Q REPORT


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

jurisdictions for income taxes and the type of reconciling categories. ASU 2023-09 also requires disaggregation of income taxes paid by jurisdiction.

For public business entities, ASU 2023-09 is effective for annual periods beginning after December 31, 2024. The guidance will be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted. FHN is currently assessing the impact of adopting ASU 2023-09 on its income tax disclosures.

SEC Final Rule

In March 2024, the SEC adopted final rules, “The Enhancement and Standardization of Climate-Related Disclosures for Investors” (the “Climate Disclosures Rules”) to require registrants to disclose certain climate-related information in registration statements and annual reports. Information required for inclusion within the footnotes to the financial statements for severe weather events and other natural conditions includes 1) income statement effects before insurance recoveries above 1% of pre-tax income/loss, 2) balance sheet effects above 1% of shareholders’ equity, and 3) certain carbon offsets and renewable energy credits. Qualitative discussion is also required for material impacts on financial estimates and assumptions that are due to severe weather events and other natural conditions or disclosed climate-related targets or transition plans.

In April 2024 the SEC issued a stay of the Climate Disclosures Rules pending the completion of judicial review of various legal challenges. Therefore, the actual timing of the implementation of the Climate Disclosure Rules, if sustained through the judicial process, is uncertain. FHN is assessing the potential effects of the Climate Disclosure Rules on its financial statements.


			14			~~1Q23~~1Q24 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 March 31, ~~2023~~2024 and December 31, ~~2022:~~2023:

										INVESTMENT SECURITIES AT MARCH 31, 2023
INVESTMENT SECURITIES AT MARCH 31, 2024										INVESTMENT SECURITIES AT MARCH 31, 2024
		March 31, 2023									March 31, 2024
(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:

Government agency issued MBS

Government agency issued MBS

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

States and municipalities	States and municipalities	650		2		(47)		605
States and municipalities
States and municipalities
Total securities available for sale (a)	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:
Securities held to maturity:
Government agency issued MBS
Government agency issued MBS
Government agency issued MBS	Government agency issued MBS	$	889	$	—	$	(95)	$	794
Government agency issued CMO	Government agency issued CMO	473		—		(53)		420
Total securities held to maturity	Total securities held to maturity	$	1,362	$	—	$	(148)	$	1,214

(a)Includes ~~$6.9~~$8.3 billion of securities pledged to secure public deposits, securities sold under agreements to repurchase, and for other purposes.

										INVESTMENT SECURITIES AT YE 2022
INVESTMENT SECURITIES AT DECEMBER 31, 2023										INVESTMENT SECURITIES AT DECEMBER 31, 2023
		December 31, 2022									December 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:

Government agency issued MBS

Government agency issued MBS

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

States and municipalities	States and municipalities	658		1		(62)		597
States and municipalities
States and municipalities
Total securities available for sale (a)	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:
Securities held to maturity:
Government agency issued MBS
Government agency issued MBS
Government agency issued MBS	Government agency issued MBS	$	897	$	—	$	(109)	$	788
Government agency issued CMO	Government agency issued CMO	474		—		(53)		421
Total securities held to maturity	Total securities held to maturity	$	1,371	$	—	$	(162)	$	1,209

(a)Includes ~~$6.5~~$8.9 billion of securities pledged to secure public deposits, securities sold under agreements to repurchase, and for other purposes.


			15			~~1Q23~~1Q24 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 March 31, ~~2023~~2024 is provided below:


DEBT SECURITIES PORTFOLIO MATURITIES	DEBT SECURITIES PORTFOLIO MATURITIES
DEBT SECURITIES PORTFOLIO MATURITIES
DEBT SECURITIES PORTFOLIO MATURITIES


		Held to Maturity				Available for Sale
(Dollars in millions)	(Dollars in millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
(Dollars in millions)
(Dollars in millions)
Within 1 year
Within 1 year
Within 1 year	Within 1 year	$	—	$	—	$	9	$	9
After 1 year through 5 years	After 1 year through 5 years	—		—		127		123
After 1 year through 5 years
After 1 year through 5 years
After 5 years through 10 years
After 5 years through 10 years
After 5 years through 10 years	After 5 years through 10 years	—		—		391		357
After 10 years	After 10 years	—		—		1,497		1,355
After 10 years
After 10 years
Subtotal
Subtotal
Subtotal	Subtotal	—		—		2,024		1,844
Government agency issued MBS and CMO (a)	Government agency issued MBS and CMO (a)	1,362		1,214		8,066		7,110
Government agency issued MBS and CMO (a)
Government agency issued MBS and CMO (a)
Total
Total
Total	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~~There were no sales of AFS securities for the three months ended March 31, ~~2023~~2024 and ~~2022 were insignificant. Cash proceeds from sales of AFS securities were insignificant for the three months ended March 31, 2023 and March 31, 2022.~~2023.

The following tables provide information on investments within the available-for-sale portfolio that had unrealized losses as of March 31, ~~2023~~2024 and December 31, ~~2022:~~2023:

AFS INVESTMENT SECURITIES WITH UNREALIZED LOSSES


		As of March 31, 2023													As of March 31, 2024
		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	$	700	$	(20)	$	3,996	$	(602)	$	4,696	$	(622)
Government agency issued MBS
Government agency issued MBS
Government agency issued CMO	Government agency issued CMO	309		(15)		2,006		(321)		2,315		(336)
Other U.S. government agencies	Other U.S. government agencies	265		(10)		733		(131)		998		(141)

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


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

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


			16			~~1Q23~~1Q24 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 ~~$30~~$29 million and $32 million as of March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, respectively. Consistent with FHN's review of the related securities, there were no credit-related write downs of AIR for AFS debt securities during the reporting periods. Additionally, for AFS debt securities with unrealized losses, FHN does not intend to sell them, and it is more likely than not that FHN will not be required to sell them prior to recovery. Therefore, no write downs of these investments to fair value occurred during the reporting periods. There were no transfers to or from AFS or HTM during the three months ended March 31, 2024 and 2023.

For HTM securities, an allowance for credit losses is required to absorb estimated lifetime credit losses. Total AIR not included in the fair value or amortized cost basis of HTM debt securities was $3 million as of both March 31, ~~2023~~2024 and December 31, ~~2022.~~2023. FHN has assessed the risk of credit loss and has determined that no allowance for credit losses for HTM securities was necessary as of March 31, ~~2023~~2024 and December 31, ~~2022.~~2023. The evaluation of credit risk includes consideration of third-party and government guarantees (both explicit and implicit), senior or subordinated status, credit ratings of the issuer, the effects of interest rate changes since purchase and observable market information such as issuer-specific credit spreads.

The carrying amount of equity investments without a readily determinable fair value was ~~$80~~$92 million and ~~$79~~$89 million at March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, respectively. The year-to-date ~~2023~~2024 and ~~2022~~2023 gross amounts of upward and downward valuation adjustments were not significant.

Unrealized gains of $2$5 million and $4$2 million were recognized in the three months ended March 31, ~~2023~~2024 and ~~2022,~~2023, respectively, for equity investments with readily determinable fair values.


			17			~~1Q23~~1Q24 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 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 March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, excluding accrued interest of ~~$227~~$283 million and ~~$226~~$287 million, respectively, which is included in other assets in the Consolidated Balance Sheets.

LOANS AND LEASES BY PORTFOLIO SEGMENT

(Dollars in millions)

March 31, 2023

December 31, 2022

Commercial:

Commercial and industrial (a) (b)

30,132

29,523

Loans to mortgage companies

2,040

2,258

Loans to mortgage companies

Total commercial, financial, and industrial

32,172

31,781

Commercial real estate

13,398

13,228

Commercial real estate

Consumer:

HELOC

2,114

2,028

HELOC

Real estate installment loans

10,554

10,225

Total consumer real estate

12,668

12,253

Credit card and other

807

840

Total consumer real estate

Credit card and other (c)

Loans and leases

59,045

58,102

Allowance for loan and lease losses

(715)

(685)

Allowance for loan and lease losses

Net loans and leases

58,330

57,417

(a)Includes equipment financing leases of ~~$1.1~~$1.3 billion and $1.2 billion for March 31, ~~2023~~2024 and December 31, ~~2022.~~2023, respectively.

(b)Includes PPP loans fully guaranteed by the SBA of ~~$53~~$23 million and ~~$76~~$29 million as of March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, respectively.

(c)Includes $181 million and $180 million of commercial credit card balances as of March 31, 2024 and December 31, 2023, respectively.

Restrictions

Loans and leases with carrying values of ~~$39.6~~$50.1 billion and ~~$38.3~~$46.1 billion were pledged as collateral for borrowings at March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, 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 March 31, ~~2023,~~2024, FHN had loans to mortgage companies of ~~$2.0~~$2.4 billion and loans to finance and insurance companies of ~~$4.2~~$3.8 billion. As a result, 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~~well-


			18			~~1Q23~~1Q24 FORM 10-Q REPORT


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

defined weaknesses and are characterized by the distinct 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 March 31, ~~2023~~2024 and December 31, ~~2022:~~2023:


C&I PORTFOLIO	C&I PORTFOLIO																						C&I PORTFOLIO
		March 31, 2024																													March 31, 2024
			March 31, 2023

(Dollars in millions)
(Dollars in millions)
(Dollars in millions)	(Dollars in millions)		2023		2022		2021		2020		2019		Prior to 2019		LMC (a)		Revolving Loans		Revolving Loans Converted to Term Loans		Total			2024	2023	2022	2021	2020	Prior to 2020	LMC (a)	Revolving Loans	Revolving Loans Converted to Term Loans	Total
Credit Quality Indicator:	Credit Quality Indicator:
Pass (PD grades 1 through 12) (b)	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
Pass (PD grades 1 through 12) (b)
Pass (PD grades 1 through 12) (b)

Special Mention (PD grade 13)

Special Mention (PD grade 13)

Special Mention (PD grade 13)	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		34		57		132		43		189		—		104		85		680

Total C&I loans	Total C&I loans		$	930	$	5,872	$	4,093	$	1,949	$	2,166	$	4,993	$	2,040	$	9,692	$	437	$	32,172

Total C&I loans

Total C&I loans


		December 31, 2023																												December 31, 2023

(Dollars in millions)
(Dollars in millions)
(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)
Pass (PD grades 1 through 12) (b)

			December 31, 2022

(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:
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)

Special Mention (PD grade 13)	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)		41		54		51		38		67		124		—		134		97		606

Total C&I loans	Total C&I loans		$	5,916	$	4,157	$	2,050	$	2,278	$	1,305	$	3,924	$	2,258	$	9,425	$	468	$	31,781

Total C&I loans

Total C&I loans

(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 investors. The loans are of short duration with maturities less than one year.

(b) Balances include PPP loans.


CRE PORTFOLIO	CRE PORTFOLIO																				CRE PORTFOLIO
		March 31, 2024																											March 31, 2024
			March 31, 2023

(Dollars in millions)
(Dollars in millions)
(Dollars in millions)	(Dollars in millions)		2023		2022		2021		2020		2019		Prior to 2019		Revolving Loans		Revolving Loans Converted to Term Loans		Total			2024	2023	2022	2021	2020	Prior to 2020	Revolving Loans		Revolving Loans Converted to Term Loans	Total

Credit Quality Indicator:	Credit Quality Indicator:
Credit Quality Indicator:
Credit Quality Indicator:
Pass (PD grades 1 through 12)
Pass (PD grades 1 through 12)
Pass (PD grades 1 through 12)	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		2��		85		57		—		—		145
Substandard, Doubtful, or Loss (PD grades 14,15, and 16)	Substandard, Doubtful, or Loss (PD grades 14,15, and 16)		—		1		4		11		48		59		9		—		132

Total CRE loans

Total CRE loans

Total CRE loans	Total CRE loans		$	240	$	2,847	$	3,447	$	1,399	$	1,837	$	3,367	$	242	$	19	$	13,398


			19			~~1Q23~~1Q24 FORM 10-Q REPORT


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


		December 31, 2023																										December 31, 2023

(Dollars in millions)
(Dollars in millions)
(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)
Pass (PD grades 1 through 12)

			December 31, 2022

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

Credit Quality Indicator:
Pass (PD grades 1 through 12)			$	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)

Special Mention (PD grade 13)	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)		1		4		12		50		31		31		11		—		140

Total CRE loans	Total CRE loans		$	2,638	$	3,331	$	1,503	$	1,942	$	907	$	2,601	$	286	$	20	$	13,228

Total CRE loans

Total CRE loans

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 March 31, ~~2023~~2024 and December 31, ~~2022.~~2023. 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
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 $ 397 $ 2,157 $ 1,822 $ 800 $ 512 $ 1,516 $ 1,383 $ 60 $ 8,647
FICO score 720-739 45 292 245 114 97 258 184 17 1,252
FICO score 700-719 34 241 202 92 54 249 151 21 1,044
FICO score 660-699 42 207 136 88 55 328 192 21 1,069
FICO score 620-659 1 21 24 25 40 120 45 8 284
FICO score less than 620 2 15 19 31 12 261 18 14 372
Total $ 521 $ 2,933 $ 2,448 $ 1,150 $ 770 $ 2,732 $ 1,973 $ 141 $ 12,668


			20			~~1Q23~~1Q24 FORM 10-Q REPORT


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

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 $ 2,154 $ 1,847 $ 819 $ 523 $ 278 $ 1,294 $ 1,297 $ 63 $ 8,275
FICO score 720-739 292 246 116 98 34 238 183 18 1,225
FICO score 700-719 242 206 93 55 35 226 142 22 1,021
FICO score 660-699 214 137 90 55 62 278 192 23 1,051
FICO score 620-659 21 24 25 41 20 105 47 9 292
FICO score less than 620 15 19 32 12 23 256 16 16 389
Total $ 2,938 $ 2,479 $ 1,175 $ 784 $ 452 $ 2,397 $ 1,877 $ 151 $ 12,253


CONSUMER REAL ESTATE PORTFOLIO
	March 31, 2024

(Dollars in millions)	2024		2023		2022		2021		2020		Prior to 2020		Revolving Loans		Revolving Loans Converted to Term Loans		Total
FICO score 740 or greater	$	204	$	1,562	$	2,080	$	1,695	$	717	$	1,733	$	1,466	$	47	$	9,504
FICO score 720-739	16		203		282		225		106		308		190		14		1,344
FICO score 700-719	15		152		230		189		79		270		159		16		1,110
FICO score 660-699	26		170		193		111		81		332		162		17		1,092
FICO score 620-659	3		11		18		23		22		138		34		6		255
FICO score less than 620	3		18		19		18		18		230		23		11		340
Total	$	267	$	2,116	$	2,822	$	2,261	$	1,023	$	3,011	$	2,034	$	111	$	13,645


	December 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	$	1,572	$	2,099	$	1,720	$	730	$	465	$	1,332	$	1,522	$	50	$	9,490
FICO score 720-739	205		286		227		107		88		230		192		15		1,350
FICO score 700-719	154		232		193		81		52		224		159		17		1,112
FICO score 660-699	170		198		113		83		53		290		168		18		1,093
FICO score 620-659	11		20		23		22		36		106		36		7		261
FICO score less than 620	18		19		15		20		12		225		24		11		344
Total	$	2,130	$	2,854	$	2,291	$	1,043	$	706	$	2,407	$	2,101	$	118	$	13,650

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~~2024 and December 31, ~~2022.~~2023.


CREDIT CARD & OTHER PORTFOLIO	CREDIT CARD & OTHER PORTFOLIO																				CREDIT CARD & OTHER PORTFOLIO
		March 31, 2024																											March 31, 2024
			March 31, 2023

(Dollars in millions)
(Dollars in millions)
(Dollars in millions)	(Dollars in millions)		2023		2022		2021		2020		2019		Prior to 2019		Revolving Loans		Revolving Loans Converted to Term Loans		Total			2024	2023	2022	2021	2020	Prior to 2020	Revolving Loans		Revolving Loans Converted to Term Loans	Total
FICO score 740 or greater	FICO score 740 or greater		$	8	$	31	$	14	$	6	$	7	$	28	$	252	$	8	$	354
FICO score 720-739	FICO score 720-739		1		3		2		2		1		4		33		1		47
FICO score 700-719	FICO score 700-719		1		3		3		1		1		4		28		—		41
FICO score 660-699	FICO score 660-699		—		3		1		1		1		8		31		1		46
FICO score 620-659	FICO score 620-659		—		1		2		—		—		2		14		—		19
FICO score less than 620	FICO score less than 620		2		7		6		6		10		85		183		1		300
Total	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


			21			~~1Q23~~1Q24 FORM 10-Q REPORT


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


	December 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	$	52	$	26	$	10	$	5	$	3	$	27	$	207	$	5	$	335
FICO score 720-739	5		3		1		1		1		5		24		1		41
FICO score 700-719	5		4		1		1		1		4		25		1		42
FICO score 660-699	4		3		1		1		1		8		23		—		41
FICO score 620-659	2		1		1		—		—		3		7		—		14
FICO score less than 620	12		9		6		8		13		103		168		1		320
Total	$	80	$	46	$	20	$	16	$	19	$	150	$	454	$	8	$	793

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.

The following table reflects accruing and non-accruing loans and leases by class on March 31, ~~2023~~2024 and December 31, ~~2022:~~2023:

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 no related allowance in 2023 and 2022, respectively.~~

~~(b) $55 million and $5 million of CRE loans are nonaccrual loans that have been specifically reviewed for impairment with no related allowance in 2023 and 2022, respectively.~~


ACCRUING & NON-ACCRUING LOANS AND LEASES
	March 31, 2024
	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)	$	30,287	$	55	$	1	$	30,343	$	102	$	30	$	70	$	202	$	30,545

Loans to mortgage companies	2,362		—		—		2,362		4		—		—		4		2,366

Total commercial, financial, and industrial	32,649		55		1		32,705		106		30		70		206		32,911
Commercial real estate:
CRE (b)	14,261		8		—		14,269		57		28		72		157		14,426



Consumer real estate:
HELOC (c)	2,089		12		3		2,104		27		4		10		41		2,145
Real estate installment loans (d)	11,359		39		3		11,401		41		13		45		99		11,500
Total consumer real estate	13,448		51		6		13,505		68		17		55		140		13,645
Credit card and other:
Credit card	267		2		3		272		—		—		—		—		272
Other	494		3		—		497		1		—		1		2		499
Total credit card and other	761		5		3		769		1		—		1		2		771
Total loans and leases	$	61,119	$	119	$	10	$	61,248	$	232	$	75	$	198	$	505	$	61,753


			22			~~1Q23~~1Q24 FORM 10-Q REPORT


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

~~(c) $7~~


	December 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)	$	30,398	$	31	$	1	$	30,430	$	108	$	18	$	53	$	179	$	30,609

Loans to mortgage companies	2,018		1		—		2,019		5		—		—		5		2,024


Total commercial, financial, and industrial	32,416		32		1		32,449		113		18		53		184		32,633
Commercial real estate:
CRE (b)	14,072		8		—		14,080		41		—		95		136		14,216




Consumer real estate:
HELOC (c)	2,158		11		4		2,173		30		6		10		46		2,219
Real estate installment loans (d)	11,295		29		13		11,337		43		6		45		94		11,431

Total consumer real estate	13,453		40		17		13,510		73		12		55		140		13,650
Credit card and other:
Credit card	271		3		3		277		—		—		—		—		277
Other	512		2		—		514		1		—		1		2		516

Total credit card and other	783		5		3		791		1		—		1		2		793
Total loans and leases	$	60,724	$	85	$	21	$	60,830	$	228	$	30	$	204	$	462	$	61,292

(a) $191 million and $5$178 million of C&I loans are nonaccrual loans that have been specifically reviewed for impairment with no related allowance in 2024 and 2023, respectively.

(b) $150 million and $129 million of CRE loans are nonaccrual loans that have been specifically reviewed for impairment with no related allowance in 2024 and 2023, respectively.

(c) $4 million of HELOC loans are nonaccrual loans that have been specifically reviewed for impairment with no related allowance in both 2024 and 2023, ~~and 2022,~~ respectively.

(d) ~~$10~~$9 million and $7$10 million of real estate installment loans are nonaccrual loans that have been specifically reviewed for impairment with no related allowance in 2024 and 2023, ~~and 2022,~~ respectively.

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 March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, FHN had commercial loans with amortized cost of approximately ~~$256~~$264 million and ~~$124~~$250 million, respectively, that were based on the value of underlying collateral. Collateral-dependent C&I and CRE loans totaled ~~$199~~$145 million and ~~$57~~$119 million, respectively, at March 31, ~~2023.~~2024. The collateral for these loans generally consists of business assets including land, buildings, equipment, and financial assets. During the three months ended March 31, ~~2023,~~2024, FHN recognized charge-offs of ~~$12~~$22 million 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 $29 million, respectively, as of March 31, 2023 and $7~~$6 million and $26 million, respectively, as of March 31, 2024 and $6 million and $27 million, respectively, as of December 31, ~~2022.~~2023. Charge-offs ~~during~~relating to collateral-dependent consumer loans for the three months ended March 31, ~~2023~~2024 and March 31, ~~2022~~2023 were not ~~significant for collateral-dependent consumer loans.~~significant.

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 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 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.


			23			1Q24 FORM 10-Q REPORT


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

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 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.~~2024:

LOAN MODIFICATIONS TO BORROWERS EXPERIENCING FINANCIAL DIFFICULTY

Interest Rate Reduction

Three Months Ended March 31, 2024

Three Months Ended March 31, 2023

(Dollars in millions)

Balance

% of Total Class

Financial Effect

Balance

% of Total Class

Financial Effect

Consumer real estate (a)

—

Reduced weighted-average contractual interest rate from 9.95% to 6.75%

—

N/A

Credit card and other (a)

—

Reduced weighted-average contractual interest rate from 20.50% to 0.00%

—

N/A

Total

—

(a) Balance less than $1 million.


	Term Extension
	Three Months Ended March 31, 2024					Three Months Ended March 31, 2023
(Dollars in millions)	Balance		% of Total Class		Financial Effect	Balance		% of Total Class		Financial Effect
C&I	$	64	0.2	%	Added an estimated weighted-average 1.4 years to the life of loans, which reduced monthly payment amounts for the borrowers	$	63	0.2	%	Added a weighted-average 1 year to the life of loans, which reduced monthly payment amounts for the borrowers
CRE	19		0.1		Added an estimated weighted-average 0.8 years to the life of loans, which reduced monthly payment amounts for the borrowers	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	—		—		N/A	1		—		Added a weighted-average 14.9 years to the life of loans, which reduced monthly payment amounts for the borrowers

Total	$	83	0.1	%		$	96	0.2	%


			2324			~~1Q23~~1Q24 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 %

Principal Forgiveness

Three Months Ended March 31, 2024

Three Months Ended March 31, 2023

(Dollars in millions)

Balance

% of Total Class

Financial Effect

Balance

% of Total Class

Financial Effect

Consumer real estate (a)

—

Less than $1 million of the principal of consumer loans was legally discharged in bankruptcy during the period and the borrowers have not re-affirmed the debt as of period end

—

N/A

Total

—

(a) Balance less than $1 million


	Payment Deferrals
	Three Months Ended March 31, 2024						Three Months Ended March 31, 2023
(Dollars in millions)			Balance				% of Total Class						Financial Effect	Balance	% of Total Class	Financial Effect


~~C&I~~Consumer real estate			$	—			—		%				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~~	$	24	—	%

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 — %


	Combination - Term Extension and Interest Rate Reduction
	Three Months Ended March 31, 2024					Three Months Ended March 31, 2023
(Dollars in millions)	Balance		% of Total Class		Financial Effect	Balance		% of Total Class		Financial Effect


Consumer real estate	$	1	—	%	Added an estimated weighted-average 18.8 years to the life of loans and reduced weighted-average contractual interest rate from 6.43% to 3.69%	$	2	—	%	Added a weighted-average 8.8 years to the life of loans and reduced weighted-average contractual interest rate from 5.00% to 4.90%

Total	$	1	—	%		$	2	—	%


	Combination - Principal Forgiveness and Term Extension
	Three Months Ended March 31, 2024					Three Months Ended March 31, 2023
(Dollars in millions)	Balance		% of Total Class		Financial Effect	Balance		% of Total Class		Financial Effect
C&I	$	—	—	%	N/A	$	18	0.1	%	Reduced the balance of the loans by $2 million and added a weighted-average 6.2 years to the life of the loans



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 and were modified in the 12 months before default totaled $1 million for the three months ended March 31, 2024 and were insignificant ~~as of~~for the three months ended 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~~1Q24 FORM 10-Q REPORT


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

~~Troubled Debt Restructurings~~

Prior to January 1, 2023, a modification was classified as a TDR if the borrower was experiencing financial difficulty and it was determined that FHN granted a concession to the borrower. Concessions represented modifications that FHN would not otherwise consider if a borrower had not been experiencing financial difficulty. Evaluation of whether a concession was granted, was subjective in nature and management’s judgment was required in making the determination of whether a modification was

~~classified as a TDR. All non-reaffirmed residential real estate loans discharged in Chapter 7 bankruptcy were considered concessions and classified as nonaccruing TDRs.~~


PERFORMANCE OF LOANS THAT HAVE BEEN MODIFIED IN THE LAST 12 MONTHS
	March 31, 2024

(Dollars in millions)	Current		30-89 Days Past Due		90+ Days Past Due		Non-Accruing
C&I	$	100	$	1	$	—	$	18
CRE	19		—		—		28
Consumer Real Estate	4		—		—		3
Credit Card and Other	—		—		—		—
Total	$	123	$	1	$	—	$	49

~~On December 31, 2022, FHN had $180 millionof portfolio loans classified as TDRs. Additionally, $30 million of loans held for sale as of December 31, 2022were classified as TDRs.~~

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

The following table presents TDRs which re-defaulted during 2022 and 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
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


			26			~~1Q23~~1Q24 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~~Provisions 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 at 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 where current loan characteristics or current or forecasted economic conditions differ from historical 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 component utilizes economic forecast 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 is also

affected by qualitative factors that FHN considers to reflect current judgment of various events and risks that are not measured in the quantitative 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. 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 months ended March 31, ~~2023~~2024 and ~~2022~~2023 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 March 31, ~~2023~~2024 as compared to December 31, ~~2022~~2023 largely reflects ~~potential economic instability projected in the~~an evolving macroeconomic ~~forecasts resulting from inflation~~outlook, modest grade migration, and ~~interest rate~~net commercial loan balance increases. In developing credit loss estimates for its loan and lease portfolios, FHN utilized two Moody’s forecast scenarios for its macroeconomic inputs. As of March 31, ~~2023,~~2024, among other things, FHN's scenario selection process ~~focused on key economic drivers such as unemployment and economic activity including recession risk. Risks considered include:~~factored in the ~~effects of~~outlook for production, inflation, ~~rising~~ interest rates, ~~supply chain disruptions, labor/wage constraints,~~employment, real estate prices, international conflict, and ~~international conflict.~~grade migration. FHN selected one scenario as its base case, which


			27			~~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~~this 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~~FHN-selected downside 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 months ended March 31, ~~2023~~2024 and ~~2022:~~2023:

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
Allowance for loan and lease losses:
Balance as of January 1, 2023 $ 308 $ 146 $ 200 $ 31 $ 685
Adoption of ASU 2022-02 1 — (7) — (6)
Charge-offs (14) (2) (1) (5) (22)
Recoveries 3 — 2 1 6
Provision for loan and lease losses 27 6 15 4 52
Balance as of March 31, 2023 $ 325 $ 150 $ 209 $ 31 $ 715
Reserve for remaining unfunded commitments:
Balance as of January 1, 2023 55 22 10 — 87
Provision for remaining unfunded commitments (2) (1) 1 — (2)
Balance as of March 31, 2023 53 21 11 — 85
Allowance for credit losses as of March 31, 2023 $ 378 $ 171 $ 220 $ 31 $ 800
Allowance for loan and lease losses:
Balance as of January 1, 2022 $ 334 $ 154 $ 163 $ 19 $ 670
Charge-offs (13) — (1) (5) (19)
Recoveries 3 — 5 1 9
Provision for loan and lease losses (37) (3) (3) 5 (38)
Balance as of March 31, 2022 $ 287 $ 151 $ 164 $ 20 $ 622
Reserve for remaining unfunded commitments:
Balance as of January 1, 2022 $ 46 $ 12 $ 8 $ — $ 66
Provision for remaining unfunded commitments (3) — 1 — (2)
Balance as of March 31, 2022 43 12 9 — 64
Allowance for credit losses as of March 31, 2022 $ 330 $ 163 $ 173 $ 20 $ 686


			27			1Q24 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



































(Dollars in millions)	Commercial, Financial, and Industrial (a)		Commercial Real Estate		Consumer Real Estate		Credit Card and Other		Total
	Three Months Ended March 31, 2024
Allowance for loan and lease losses:
Balance as of January 1, 2024	$	339	$	172	$	233	$	29	$	773

Charge-offs	(28)		(12)		—		(6)		(46)
Recoveries	3		—		1		2		6

Provision for loan and lease losses	34		21		(3)		2		54
Balance as of March 31, 2024	$	348	$	181	$	231	$	27	$	787

Reserve for remaining unfunded commitments:
Balance as of January 1, 2024	$	49	$	22	$	12	$	—	$	83

Provision for remaining unfunded commitments	—		(4)		—		—		(4)
Balance as of March 31, 2024	49		18		12		—		79
Allowance for credit losses as of March 31, 2024	$	397	$	199	$	243	$	27	$	866

	Three Months Ended March 31, 2023
Allowance for loan and lease losses:
Balance as of January 1, 2023	$	308	$	146	$	200	$	31	$	685
Adoption of ASU 2022-02	1		—		(7)		—		(6)
Charge-offs	(14)		(2)		(1)		(5)		(22)
Recoveries	3		—		2		1		6
Provision for loan and lease losses	27		6		15		4		52
Balance as of March 31, 2023	$	325	$	150	$	209	$	31	$	715

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

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

(a) C&I loans as of March 31, ~~2023~~2024 and ~~2022~~2023 include ~~$53~~$23 million and ~~$642~~$53 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 following table ~~below~~ presents gross charge-offs by year of origination ~~as of~~for the three months ended March 31, 2024 and 2023:


GROSS CHARGE-OFFS

(Dollars in millions)	2024		2023		2022		2021		2020		Prior to 2020		Revolving Loans		Total
C&I	$	—	$	—	$	7	$	13	$	1	$	6	$	1	$	28
CRE	—		—		—		—		—		12		—		12
Consumer Real Estate	—		—		—		—		—		—		—		—
Credit Card and Other	2		—		—		—		—		1		3		6
Total	$	2	$	—	$	7	$	13	$	1	$	19	$	4	$	46

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


			28			~~1Q23~~1Q24 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 March 31, ~~2023,~~2024, FHN

had approximately ~~$38~~$33 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 ~~2023~~2024 and ~~2022,~~2023, 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~~related to residential mortgage loans held for sale as of and for the three months ended March 31, ~~2023~~2024 and the year ended December 31, ~~2022.~~2023.

MORTGAGE LOAN ACTIVITY

(Dollars in millions)

March 31, 2023

December 31, 2022

(Dollars in millions)

March 31, 2024

December 31, 2023

Balance at beginning of period

250

Originations and purchases

120

1,275

Originations and purchases

Sales, net of gains

(103)

(1,481)

Mortgage loans transferred from (to) held for investment

—

Balance at end of period

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.~~indicated in the table below.

MORTGAGE SERVICING RIGHTS

March 31, 2023

December 31, 2022

MORTGAGE SERVICING RIGHTS

March 31, 2024

(Dollars in millions)

Gross Carrying Amount

Accumulated Amortization

Net Carrying Amount

Gross Carrying Amount

Accumulated Amortization

Net Carrying Amount

Mortgage servicing rights

(5)

Mortgage servicing rights

In addition, there was an insignificant amount of non-mortgage and commercial servicing rights as of March 31, ~~2023~~2024 and December 31, ~~2022.~~2023. Total mortgage servicing fees included in mortgage banking ~~and title~~ income were $1 ~~million and $2~~ million for the three months ended March 31, ~~2023~~2024 and ~~2022, respectively.~~2023.


			29			~~1Q23~~1Q24 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 March 31, ~~2023~~2024 and December 31, ~~2022.~~2023.


GOODWILL	GOODWILL							GOODWILL
(Dollars in millions)	(Dollars in millions)	Regional Banking		Specialty Banking		Total		(Dollars in millions)	Regional Banking	Specialty Banking	Total
December 31, 2021		$	880	$	631	$	1,511
December 31, 2022 (a)
Additions	Additions	—		—		—
December 31, 2022		$	880	$	631	$	1,511
Divestitures (b)
December 31, 2023
Additions
Divestitures
March 31, 2024

Additions		—		—		—
March 31, 2023		$	880	$	631	$	1,511

(a)FHN reorganized its internal management structure and reallocated goodwill in its reportable segments effective January 1, 2024. Prior periods have been revised to reflect this reallocation.

(b)Reduction in goodwill is related to the divestiture of FHN Financial Main Street Advisors assets in December 2023.

FHN performed the required annual goodwill impairment test as of October 1, ~~2022.~~2023. The annual qualitative 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 it is not more likely than not that goodwill was impaired. If there are any triggering events between annual periods, management will evaluate whether an impairment analysis is warranted. FHN will conduct its annual impairment analysis as of October 1, 2024.

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
		March 31, 2023						December 31, 2022							March 31, 2024			December 31, 2023
(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	$	(181)	$	190	$	371	$	(171)	$	200
Client relationships	Client relationships	32		(14)		18		32		(13)		19
Other (a)	Other (a)	27		(13)		14		27		(12)		15
Total	Total	$	430	$	(208)	$	222	$	430	$	(196)	$	234

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


			30			~~1Q23~~1Q24 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
(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
Series B 7/2/2020 8/1/2025 6.625% (b) Semi-annually 8,000 $ 80 $ 77 $ 77
Series C 7/2/2020 5/1/2026 6.600% (c) Quarterly 5,750 58 59 59
Series D 7/2/2020 5/1/2024 6.100% (d) Semi-annually 10,000 100 94 94
Series E 5/28/2020 10/10/2025 6.500% Quarterly 1,500 150 145 145
Series F 5/3/2021 7/10/2026 4.700% Quarterly 1,500 150 145 145
Series G 2/28/2022 2/28/2027 N/A N/A 4,936 494 494 494
31,686 $ 1,032 $ 1,014 $ 1,014

~~N/A - not applicable~~


PREFERRED STOCK
(Dollars in millions)									March 31, 2024		December 31, 2023
	Issuance Date	Earliest Redemption Date (a)	Annual Dividend Rate		Dividend Payments	Shares Outstanding	Liquidation Amount		Carrying Amount		Carrying Amount

Series B	7/2/2020	8/1/2025	6.625%	(b)	Semi-annually	8,000	$	80	$	77	$	77
Series C	7/2/2020	5/1/2026	6.600%	(c)	Quarterly	5,750	58		59		59
Series D	7/2/2020	5/1/2024	6.100%	(d)	Semi-annually	10,000	100		94		94
Series E	5/28/2020	10/10/2025	6.500%		Quarterly	1,500	150		145		145
Series F	5/3/2021	7/10/2026	4.700%		Quarterly	1,500	150		145		145

						26,750	$	538	$	520	$	520

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

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

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

(d) ~~Fixed dividend rate will reset~~On April 1, 2024, FHN provided notice of its intent to redeem all outstanding shares of its Series D Preferred Stock on May 1, ~~2024~~2024. The fixed dividend rate was set to convert to three-month CME Term SOFR plus 4.12061% (0.26161% plus 3.859%). on May 1, 2024. See Note 17 — Subsequent Events for more information.

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. For more information on the impact of the convertible features on diluted earnings per share, see Note 9 - Earnings Per Share.

The $494 million carrying value of the Series G Convertible Preferred Stock qualified as Tier 1 Capital as of March 31, 2023. When conversion occurs, the 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 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 March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, $295 million of Class A

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

~~LIBOR Change~~FT Real Estate Securities Company, Inc. (FTRESC), an indirect subsidiary of FHN, has issued 50 shares of 9.50% Cumulative Preferred Stock, Class B (Class B Preferred Shares), with a liquidation preference of $1 million per share; of those shares, 47 were issued to ~~SOFR~~

Onnonaffiliates. FTRESC is a real estate investment trust established for the purpose of acquiring, holding, and managing real estate mortgage assets. Dividends on the Class B Preferred Shares are cumulative and are payable semi-annually. At March ~~5, 2021,~~31, 2024 and December 31, 2023, the ~~U.K.'s Financial Conduct Authority announced that~~Class B Preferred Shares qualified as Tier 2 regulatory capital. For 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~~periods presented, these securities are presented in the ~~U.S.~~ Consolidated Balance Sheets as term borrowings.

The ~~LIBOR Act provides~~Class B Preferred Shares are mandatorily redeemable on March 31, 2031, and redeemable at the discretion of FTRESC in the event 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~~Class B Preferred Shares cannot be accounted for as Tier 2 regulatory capital or

there is more than an insubstantial risk 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 pursuantdividends paid with respect to the ~~LIBOR Act and the implementing regulations. The information presented in this Note reflects that transition.~~Class B Preferred Shares will not be fully deductible for tax purposes.


			31			~~1Q23~~1Q24 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 months ended March 31, ~~2023~~2024 and ~~2022:~~2023:

ACCUMULATED OTHER COMPREHENSIVE INCOME


(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, 2023		$	(973)	$	(127)	$	(268)	$	(1,368)
Balance as of Jan 1, 2024
Net unrealized gains (losses)	Net unrealized gains (losses)	114		33		—		147
Amounts reclassified from AOCI	Amounts reclassified from AOCI	—		11		2		13
Other comprehensive income (loss)	Other comprehensive income (loss)	114		44		2		160
Balance as of March 31, 2023		$	(859)	$	(83)	$	(266)	$	(1,208)
Balance as of March 31, 2024


(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, 2022		$	(36)	$	3	$	(255)	$	(288)
Balance as of Jan 1, 2023
Net unrealized gains (losses)	Net unrealized gains (losses)	(404)		(20)		—		(424)
Amounts reclassified from AOCI	Amounts reclassified from AOCI	—		(1)		1		—
Other comprehensive income (loss)	Other comprehensive income (loss)	(404)		(21)		1		(424)
Balance as of March 31, 2022		$	(440)	$	(18)	$	(254)	$	(712)
Balance as of March 31, 2023

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

								RECLASSIFICATIONS FROM AOCI
RECLASSIFICATIONS FROM AOCI
RECLASSIFICATIONS FROM AOCI
(Dollars in millions)	(Dollars in millions)		Three Months Ended March 31,
Details about AOCI
Details about AOCI
Details about AOCI	Details about AOCI		2023		2022		Affected line item in the statement where net income is presented		2024					2023						Affected line item in the statement where net income is presented

Cash Flow Hedges:	Cash Flow Hedges:

Cash Flow Hedges:

Cash Flow Hedges:
Realized (gains) losses on cash flow hedges
Realized (gains) losses on cash flow hedges
Realized (gains) losses on cash flow hedges	Realized (gains) losses on cash flow hedges		$	15	$	(1)	Interest and fees on loans and leases		$	17		$		$	15			Interest and fees on loans and leases				Interest and fees on loans and leases
Tax expense (benefit)	Tax expense (benefit)		(4)		—		Income tax expense	Tax expense (benefit)			(4)		(4)				(4)		Income tax expense				Income tax expense
			11		(1)
		13
Pension and Postretirement Plans:
Pension and Postretirement Plans:
Pension and Postretirement Plans:	Pension and Postretirement Plans:
Amortization of prior service cost and net actuarial (gain) loss	Amortization of prior service cost and net actuarial (gain) loss		3		1		Other expense
Amortization of prior service cost and net actuarial (gain) loss
Amortization of prior service cost and net actuarial (gain) loss											3					3					Other expense
Tax expense (benefit)	Tax expense (benefit)		(1)		—		Income tax expense	Tax expense (benefit)			(1)		(1)				(1)		Income tax expense				Income tax expense
			2		1
		2
Total reclassification from AOCI
Total reclassification from AOCI
Total reclassification from AOCI	Total reclassification from AOCI		$	13	$	—


			32			~~1Q23~~1Q24 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

Three Months Ended
March 31,

(Dollars in millions, except per share data; shares in thousands)

2023

2022

(Dollars in millions, except per share data; shares in thousands)

Net income

255

198

Net income attributable to noncontrolling interest

Net income attributable to controlling interest

251

195

Preferred stock dividends

Net income available to common shareholders

243

187

Weighted average common shares outstanding—basic

536,938

533,218

Weighted average common shares outstanding—basic

Effect of dilutive restricted stock, performance equity awards and options

7,541

6,809

Effect of dilutive convertible preferred stock (a)

27,512

9,782

Effect of dilutive convertible preferred stock (a)

Weighted average common shares outstanding—diluted

571,991

549,809

Basic earnings per common share

0.45

0.35

Basic earnings per common share

Diluted earnings per common share

0.43

0.34

(a) On February 28, 2022, FHN issued $494 million of Series G Convertible Preferred Stock, which ~~will be~~was converted into common stock on June 26, 2023, following the termination of the TD Merger Agreement. ~~For more information~~Conversion occurred at the rate of 4,000 common shares per Series G preferred share resulting in 19,742,776 additional common shares outstanding. 2023 includes the impact of the Series G preferred shares based on the ~~convertible features, including the~~original maximum conversion rate ~~see Note 7 - Preferred Stock.~~(prior to the termination of the TD Merger Agreement).

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

Three Months Ended
March 31,

(Shares in thousands)

2023

2022

(Shares in thousands)

Stock options excluded from the calculation of diluted EPS

—

Weighted average exercise price of stock options excluded from the calculation of diluted EPS

24.36

24.86

Weighted average exercise price of stock options excluded from the calculation of diluted EPS

Other equity awards excluded from the calculation of diluted EPS

3,803

791


			33			~~1Q23~~1Q24 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 March 31, ~~2023,~~2024, the aggregate amount of liabilities established for all such loss contingency matters was $3$2 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 March 31, ~~2023,~~2024, 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~~Loan Repurchase and Foreclosure Liability

~~FHN is contending with indemnification claims~~FHN’s repurchase and foreclosure liability, primarily related to ~~"other whole loans sold," which were~~its pre-2009 mortgage ~~loans originated by FHN before 2009~~origination, sale, securitization, and ~~sold outside~~servicing businesses, is comprised of aaccruals to cover estimated loss content in the active pipeline, estimated future inflows, and estimated loss content related to certain known claims not currently included in the active pipeline. The active pipeline consists of mortgage loan repurchase and make-whole demands from loan purchasers or 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 theparticipants, foreclosure/servicing demands from borrowers, and


			34			~~1Q23~~1Q24 FORM 10-Q REPORT


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

certain related exposures. 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 million as of both March 31, 2024 and December 31, 2023. Accrued liabilities for FHN’s estimate of these obligations are reflected in other ~~whole loans sold by FHN~~liabilities on the Consolidated Balance Sheets. Charges/expense reversals to ~~claimant in relation~~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 ~~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.liability.

~~FHN also has indemnification claims related to servicing obligations.~~ The most significant outstanding claim associated with FHN's pre-2009 businesses is ~~from~~a servicing indemnification claim asserted by 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.

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.


			35			~~1Q23~~1Q24 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 no contributions to the qualified pension plan in ~~2022.~~2023. Management does not currently anticipate that FHN will make a contribution to the qualified pension plan in ~~2023.~~2024.

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$6 million for ~~2022.~~2023. FHN anticipates making benefit payments under the non-qualified plans of $5 million in ~~2023.~~ 2024.

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 17 - Retirement Plans and Other Employee Benefits in FHN's ~~2022~~2023 Annual Report on Form 10-K.

The components of net periodic benefit cost for the three months ended March 31 were as follows:

COMPONENTS OF NET PERIODIC BENEFIT COST
(Dollars in millions) 2023 2022
Components of net periodic benefit cost
Interest cost $ 8 $ 5
Expected return on plan assets (8) (6)
Amortization of unrecognized:
Actuarial (gain) loss 3 2
Net periodic benefit cost $ 3 $ 1


COMPONENTS OF NET PERIODIC BENEFIT COST

	Three months ended March 31,
(Dollars in millions)	2024		2023
Components of net periodic benefit cost

Interest cost	$	8	$	8
Expected return on plan assets	(8)		(8)
Amortization of unrecognized:

Actuarial (gain) loss	3		3

Net periodic benefit cost	$	3	$	3


			36			~~1Q23~~1Q24 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~~commercial and ~~commercial~~consumer 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.~~mortgage. 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. During the first quarter of 2024, FHN made organizational changes in its internal management structure, and accordingly, its segment reporting structure. Prior period segment information has been reclassified to conform to the current period presentation. 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.


			37			~~1Q23~~1Q24 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 months ended March 31, ~~2023~~2024 and ~~2022:~~2023:


SEGMENT FINANCIAL INFORMATION	SEGMENT FINANCIAL INFORMATION									SEGMENT FINANCIAL INFORMATION
		Three Months Ended March 31, 2023
	Three Months Ended March 31, 2024													Three Months Ended March 31, 2024
(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)	$	586	$	126	$	(24)	$	688
Provision for credit losses	Provision for credit losses	41		10		(1)		50
Noninterest income	Noninterest income	107		53		11		171
Noninterest expense (a)	Noninterest expense (a)	322		91		65		478
Income (loss) before income taxes	Income (loss) before income taxes	330		78		(77)		331
Income tax expense (benefit)	Income tax expense (benefit)	78		19		(21)		76
Net income (loss)	Net income (loss)	$	252	$	59	$	(56)	$	255
Average assets	Average assets	$	44,487	$	19,436	$	14,918	$	78,841


		Three Months Ended March 31, 2022

		Three Months Ended March 31, 2023
		Three Months Ended March 31, 2023
		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)	$	427	$	144	$	(92)	$	479
Provision for credit losses	Provision for credit losses	(30)		(3)		(7)		(40)
Noninterest income	Noninterest income	114		105		10		229
Noninterest expense (a)	Noninterest expense (a)	306		132		55		493
Income (loss) before income taxes	Income (loss) before income taxes	265		120		(130)		255
Income tax expense (benefit)	Income tax expense (benefit)	62		29		(34)		57
Net income (loss)	Net income (loss)	$	203	$	91	$	(96)	$	198
Average assets	Average assets	$	40,544	$	20,246	$	27,797	$	88,587

(a)2024 includes $5 million of restructuring costs and an FDIC special assessment of $10 million in the Corporate segment. 2023 includes $21 million in merger and integration expenses related to the TD Transaction ~~and 2022 includes $37 million in merger and integration expenses related to the IBKC merger and TD Transaction~~ in the Corporate segment.


			38			~~1Q23~~1Q24 FORM 10-Q REPORT


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

The following tables reflect a disaggregation of FHN’s noninterest income by major product line and reportable segment for the three months ended March 31, ~~2023~~2024 and ~~2022:~~2023:


NONINTEREST INCOME DETAIL BY SEGMENT	NONINTEREST INCOME DETAIL BY SEGMENT									NONINTEREST INCOME DETAIL BY SEGMENT
		Three months ended March 31, 2023
	Three months ended March 31, 2024													Three months ended March 31, 2024
(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:
Fixed income (a)
Fixed income (a)
Fixed income (a)
Deposit transactions and cash management	Deposit transactions and cash management	$	38	$	2	$	2	$	42
Fixed income (a)		—		39		—		39
Brokerage, management fees and commissions	Brokerage, management fees and commissions	22		—		—		22
Card and digital banking fees	Card and digital banking fees	17		1		2		20
Other service charges and fees	Other service charges and fees	8		5		—		13
Trust services and investment management	Trust services and investment management	11		—		—		11
Mortgage banking income

Mortgage banking and title income		—		5		—		5
Other income (c)		11		1		7		19

Other income (b)

Other income (b)

Other income (b)
Total noninterest income	Total noninterest income	$	107	$	53	$	11	$	171


		Three months ended March 31, 2022
	Three months ended March 31, 2023													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:
Fixed income (a)
Fixed income (a)
Fixed income (a)
Deposit transactions and cash management	Deposit transactions and cash management	$	39	$	3	$	2	$	44
Fixed income (a)		—		73		—		73
Brokerage, management fees and commissions	Brokerage, management fees and commissions	24		—		—		24
Card and digital banking fees	Card and digital banking fees	17		1		2		20
Other service charges and fees	Other service charges and fees	8		5		—		13
Trust services and investment management	Trust services and investment management	13		—		—		13
Mortgage banking and title income		—		22		—		22
Securities gains (losses), net (b)		—		—		6		6
Mortgage banking income

Other income (c)		13		1		—		14

Other income (b)

Other income (b)

Other income (b)
Total noninterest income	Total noninterest income	$	114	$	105	$	10	$	229

(a)2024 and 2023 ~~and 2022 includes~~include $10 million 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.


			39			~~1Q23~~1Q24 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 March 31, ~~2023~~2024 and December 31, ~~2022:~~2023:

CONSOLIDATED VIEs

(Dollars in millions)

March 31, 2023

December 31, 2022

(Dollars in millions)

March 31, 2024

December 31, 2023

Assets:

Other assets

168

181

Other assets

Liabilities:

Other liabilities

139

150

Other liabilities

Nonconsolidated Variable Interest Entities

~~Low Income Housing~~ Tax Credit ~~Partnerships~~Investments

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 months ended March 31, 2023 and 2022.


			40			~~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 months ended March 31, 2023 and 2022 for LIHTC investments accounted for under the proportional amortization method.

LIHTC IMPACTS ON TAX EXPENSE
Three Months Ended
March 31,
(Dollars in millions) 2023 2022
Income tax expense (benefit):
Amortization of qualifying LIHTC investments $ 13 $ 12
Low income housing tax credits (14) (12)
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~~purpose of these investments ~~are~~is 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. FHN is therefore not the primary beneficiary of any of these entities.

Accordingly, FHN does not consolidate these VIEs and accounts for these investments in other assets on the Consolidated Balance Sheets.

FHN accounts for qualifying LIHTC investments under the proportional amortization method (PAM). Effective for periods after 2023, all LIHTC investments qualify for the PAM. Commencing in 2024, FHN has determined that its equity investments in NMTC and historic tax credit entities qualify for the PAM and has made the election to apply the PAM for these programs. 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. Prior to 2024, LIHTC investments that did not qualify for the PAM were accounted for using the equity method. Expenses associated with non-qualifying LIHTC investments were not material for the three months ended March 31, 2024 and 2023.


			40			1Q24 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 months ended March 31, 2024 and 2023 for investments accounted for under the PAM. The impact of these investments is Included in other operating activities, net in the Consolidated Statements of Cash Flows.


TAX CREDIT IMPACTS ON TAX EXPENSE
	Three Months Ended March 31,
(Dollars in millions)	2024		2023
Income tax expense (benefit):
Amortization of qualifying investments	$	15	$	13
Tax credits	(17)		(14)
Other tax benefits related to qualifying investments	(2)		(3)

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 Modifications to Borrowers Experiencing Financial Difficulty

For certain troubled commercial loans, First Horizon Bank modifies the terms of the borrower’s debt in an effort to increase the probability of receipt of amounts contractually due. Following a 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


			41			~~1Q23 FORM 10-Q REPORT~~


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

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’


			41			1Q24 FORM 10-Q REPORT


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

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 March 31, ~~2023~~2024 and December 31, ~~2022:~~2023:

NONCONSOLIDATED VIEs AT MARCH 31, 2023

NONCONSOLIDATED VIEs AT MARCH 31, 2024

(Dollars in millions)

Maximum
Loss Exposure

Liability
Recognized

Classification

(Dollars in millions)

Maximum
Loss Exposure

Liability
Recognized

Classification

Type

Low income housing partnerships

462

150

(a)

574

202

(a)

Other tax credit investments (b)

Other assets

Other tax credit investments (b)

Other assets

Small issuer trust preferred holdings (c)

173

—

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)

8,724

—

(e)

Holdings of agency mortgage-backed securities (c)

8,003

—

(e)

Commercial loan modifications to borrowers experiencing financial difficulty (f)

113

—

Loans and leases

Commercial loan modifications to borrowers experiencing financial difficulty (f)

166

—

Loans and leases

Proprietary trust preferred issuances (g)

—

167

Term borrowings

Proprietary trust preferred issuances (g)

—

167

Term borrowings

(a)Maximum loss exposure represents ~~$312~~$372 million of current investments and ~~$150~~$202 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~~$113 million classified as loans and leases and $2 million classified as trading securities, which are offset by ~~$87~~$88 million classified as term borrowings.

(e)Includes ~~$251~~$256 million classified as trading securities, ~~$1.4~~$1.3 billion classified as held to maturity, and ~~$7.1~~$6.4 billion classified as securities available for sale.

(f)Maximum loss exposure represents ~~$113~~$166 million of current receivables with no additional contractual funding commitments on loans related to commercial loan modifications to borrowers experiencing financial difficulty.

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

NONCONSOLIDATED VIEs AT DECEMBER 31, 2022

NONCONSOLIDATED VIEs AT DECEMBER 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

463

154

(a)

587

223

(a)

Other tax credit investments (b)

Other assets

Other tax credit investments (b)

Other assets

Small issuer trust preferred holdings (c)

171

—

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)

8,652

—

(e)

Commercial loan troubled debt restructurings (f)

—

Loans and leases

Holdings of agency mortgage-backed securities (c)

8,402

—

(e)

Commercial loan modifications to borrowers experiencing financial difficulty (f)

129

—

Loans and leases

Proprietary trust preferred issuances (g)

—

167

Term borrowings

Proprietary trust preferred issuances (g)

—

167

Term borrowings

(a)Maximum loss exposure represents ~~$309~~$364 million of current investments and ~~$154~~$223 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~~$113 million classified as loans and leases and $2 million classified as trading securities, which are offset by ~~$87~~$88 million classified as term borrowings.

(e)Includes ~~$205~~$450 million classified as trading securities, ~~$1.4~~$1.3 billion classified as held to maturity, and ~~$7.1~~$6.6 billion classified as securities available for sale.

(f)Maximum loss exposure represents ~~$53~~$129 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.


			42			~~1Q23~~1Q24 FORM 10-Q REPORT


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 March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, respectively, FHN had ~~$136~~$665 million and ~~$159~~$406 million of cash receivables and ~~$26~~$27 million and ~~$42~~$33 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 ~~$27~~$45 million and ~~$61~~$27 million for the three months ended March 31, ~~2023~~2024 and ~~2022,~~2023, respectively.


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

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 table summarizes derivatives associated with FHNF's trading activities as of March 31, ~~2023~~2024 and December 31, ~~2022:~~2023:


DERIVATIVES ASSOCIATED WITH TRADING	DERIVATIVES ASSOCIATED WITH TRADING							DERIVATIVES ASSOCIATED WITH TRADING
		March 31, 2023							March 31, 2024
(Dollars in millions)	(Dollars in millions)	Notional		Assets		Liabilities		(Dollars in millions)	Notional	Assets	Liabilities
Customer interest rate contracts	Customer interest rate contracts	$	3,312	$	11	$	207
Offsetting upstream interest rate contracts	Offsetting upstream interest rate contracts	3,312		94		15
Option contracts written		110		—		1

Forwards and futures purchased
Forwards and futures purchased
Forwards and futures purchased	Forwards and futures purchased	1,607		9		1
Forwards and futures sold	Forwards and futures sold	1,757		1		10


		December 31, 2022							December 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	$	3,076	$	3	$	270
Offsetting upstream interest rate contracts	Offsetting upstream interest rate contracts	3,076		91		6
Option contracts purchased		40		—		—

Forwards and futures purchased
Forwards and futures purchased
Forwards and futures purchased	Forwards and futures purchased	1,127		5		2
Forwards and futures sold	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 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~~table summarizes FHN’s derivatives associated with interest rate risk management activities as of March 31, ~~2023~~2024 and December 31, ~~2022:~~2023:

DERIVATIVES ASSOCIATED WITH INTEREST RATE RISK MANAGEMENT

March 31, 2023

March 31, 2024

(Dollars in millions)

Notional

Assets

Liabilities

(Dollars in millions)

Notional

Assets

Liabilities

Customer Interest Rate Contracts Hedging

Hedging Instruments and Hedged Items:

Customer interest rate contracts

8,424

423

Offsetting upstream interest rate contracts

8,424

413

December 31, 2022

December 31, 2023

(Dollars in millions)

Notional

Assets

Liabilities

(Dollars in millions)

Notional

Assets

Liabilities

Customer Interest Rate Contracts Hedging

Hedging Instruments and Hedged Items:

Customer interest rate contracts

8,377

570

Offsetting upstream interest rate contracts

8,377

351


			44			~~1Q23~~1Q24 FORM 10-Q REPORT


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

The following table summarizes gains (losses) on FHN’s derivatives associated with interest rate risk management activities for the three months ended March 31, ~~2023~~2024 and ~~2022:~~2023:

DERIVATIVE GAINS (LOSSES) ASSOCIATED WITH INTEREST RATE RISK MANAGEMENT

Three Months Ended
March 31,

2023

2022

DERIVATIVE GAINS (LOSSES) ASSOCIATED WITH INTEREST RATE RISK MANAGEMENT

Three Months Ended
March 31,

2024

(Dollars in millions)

Gains (Losses)

Customer Interest Rate Contracts Hedging

Hedging Instruments and Hedged Items:

Customer interest rate contracts (a)

160

353

Customer interest rate contracts (a)

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. The debt instruments primarily consist of held-to-maturity commercial loans that have variable interest payments that historically were based on 1-month LIBOR. In second quarter 2023, the remaining hedge was revised to reference 1-month Term SOFR after the cessation of LIBOR-based cash flows. This hedge matured in first quarter 2024. In conjunction with the IBKC merger, FHN acquired interest rate contracts (floors and collars) which ~~have been~~were re-designated as cash flow hedges. The debt instruments associated with these hedges also primarily ~~consist~~consisted of held-to-maturity commercial loans that ~~have~~had variable interest payments that were based on 1-month LIBOR. The last hedge acquired in conjunction with the IBKC merger matured in second quarter 2023.

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~~transitioned 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 March 31, ~~2023~~2024 and December 31, ~~2022:~~2023:

DERIVATIVES ASSOCIATED WITH CASH FLOW HEDGES

March 31, 2023

March 31, 2024

(Dollars in millions)

Notional

Assets

Liabilities

(Dollars in millions)

Notional

Assets

Liabilities

Cash Flow Hedges

Hedging Instruments:

Interest rate contracts

5,350

—

Hedged Items:

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

N/A

5,350

N/A

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

N/A

5,000

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


			45			~~1Q23~~1Q24 FORM 10-Q REPORT


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



	December 31, 2023
(Dollars in millions)	Notional		Assets		Liabilities
Cash Flow Hedges
Hedging Instruments:
Interest rate contracts	$	5,200	$	—	$	32
Hedged Items:
Variability in cash flows related to debt instruments (primarily loans)	N/A		$	5,200	N/A

The following table summarizes gains (losses) on FHN’s derivatives associated with cash flow hedges for the three months ended March 31, ~~2023~~2024 and ~~2022:~~2023:

DERIVATIVE GAINS (LOSSES) ASSOCIATED WITH CASH FLOW HEDGES

Three Months Ended
March 31,

2023

2022

DERIVATIVE GAINS (LOSSES) ASSOCIATED WITH CASH FLOW HEDGES

Three Months Ended
March 31,

2024

(Dollars in millions)

Gains (Losses)

Cash Flow Hedges

Hedging Instruments:

Interest rate contracts (a)

(32)

Interest rate contracts (a)

Gain (loss) recognized in other comprehensive income (loss)

(20)

Gain (loss) reclassified from AOCI into interest income

(1)

Gain (loss) reclassified from AOCI into interest income

(a)Approximately ~~$10~~$20 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

March 31, 2023

March 31, 2024

(Dollars in millions)

Notional

Assets

Liabilities

(Dollars in millions)

Notional

Assets

Liabilities

Mortgage Banking Hedges

Option contracts written

—

Option contracts written

Forward contracts written

144

—


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

~~Option contracts written~~	$	35	$	—	$	—

~~Forward contracts written~~	61		—		—


	December 31, 2023
(Dollars in millions)	Notional		Assets		Liabilities
Mortgage Banking Hedges

Option contracts written	$	55	$	1	$	—

Forward contracts written	93		—		1


			46			~~1Q23~~1Q24 FORM 10-Q REPORT


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

The following table summarizes gains (losses) on FHN's derivatives associated with mortgage banking activities for the three months ended March 31, ~~2023~~2024 and ~~2022:~~2023:

DERIVATIVE GAINS (LOSSES) ASSOCIATED WITH MORTGAGE BANKING HEDGES

Three Months Ended March 31,

2023

2022

DERIVATIVE GAINS (LOSSES) ASSOCIATED WITH MORTGAGE BANKING HEDGES

Three Months Ended
March 31,

2024

(Dollars in millions)

Gains (Losses)

(Dollars in millions)

Mortgage Banking Hedges

Option contracts written

(1)

(4)

Option contracts written

Forward contracts written

(1)

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 March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, the derivative liabilities associated with the sales of Visa Class B shares were ~~$21~~$20 million and ~~$27~~$23 million, respectively. FHN recognized ~~$22~~$15 million in derivative valuation adjustments related to prior sales of Visa Class B shares for the year ended December 31, ~~2022.~~2023. 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 March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, these loans were valued at ~~$14~~$22 million and $9$17 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 March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, the notional values of FHN’s risk participations were ~~$312~~$364 million and ~~$242~~$351 million of derivative assets and ~~$831~~$872 million and ~~$742~~$874 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 customers referenced in the swap contracts defaulted at March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, 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 March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, FHN had 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.


			47			~~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


			47			1Q24 FORM 10-Q REPORT


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

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$5 million of assets and ~~$201~~$228 million of liabilities on March 31, ~~2023,~~2024, and $5$12 million of assets and ~~$268~~$188 million of liabilities on December 31, ~~2022.~~2023. As of March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, FHN had received collateral of ~~$94~~$88 million and ~~$106~~$95 million and posted collateral of ~~$94~~$99 million and ~~$61~~$83 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 ~~$476~~$5 million of assets and ~~$201~~$228 million of liabilities on March 31, ~~2023,~~2024, and ~~$378~~$12 million of assets and ~~$268~~$188 million of liabilities on December 31, ~~2022.~~2023. As of March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, FHN had received collateral of ~~$574~~$88 million and ~~$479~~$95 million and posted collateral of ~~$94~~$99 million and ~~$61~~$83 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.


			48			~~1Q23~~1Q24 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 March 31, ~~2023~~2024 and December 31, ~~2022:~~2023:


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:
March 31, 2023
March 31, 2024
March 31, 2024
March 31, 2024
Interest rate derivative contracts
Interest rate derivative contracts
Interest rate derivative contracts	Interest rate derivative contracts		$	535	$	—	$	535	$	(45)	$	(481)	$	9
Forward contracts	Forward contracts		11		—		11		(7)		(2)		2
		$
			$	546	$	—	$	546	$	(52)	$	(483)	$	11

December 31, 2022
December 31, 2023
December 31, 2023
December 31, 2023
Interest rate derivative contracts
Interest rate derivative contracts
Interest rate derivative contracts	Interest rate derivative contracts		$	449	$	—	$	449	$	(58)	$	(378)	$	13
Forward contracts	Forward contracts		9		—		9		(6)		(2)		1
		$
			$	458	$	—	$	458	$	(64)	$	(380)	$	14

(a)Included in other assets on the Consolidated Balance Sheets. As of March 31, ~~2023~~2024 and December 31, ~~2022, $2~~2023, $1 million and $2$1 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 March 31, ~~2023~~2024 and December 31, ~~2022:~~2023:


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:
March 31, 2023
March 31, 2024
March 31, 2024
March 31, 2024
Interest rate derivative contracts
Interest rate derivative contracts
Interest rate derivative contracts	Interest rate derivative contracts		$	687	$	—	$	687	$	(45)	$	(194)	$	448
Forward contracts	Forward contracts		11		—		11		(7)		(3)		1
		$
			$	698	$	—	$	698	$	(52)	$	(197)	$	449

December 31, 2022
December 31, 2023
December 31, 2023
December 31, 2023
Interest rate derivative contracts
Interest rate derivative contracts
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 March 31, ~~2023~~2024 and December 31, ~~2022, $24~~2023, $21 million and ~~$29~~$24 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.


			49			~~1Q23~~1Q24 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 March 31, ~~2023~~2024 and December 31, ~~2022:~~2023:

SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL

Gross amounts not offset in the
Balance Sheets

(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:

March 31, 2023

168

—

168

—

(166)

December 31, 2022

353

—

353

(10)

(340)

March 31, 2024

December 31, 2023

The following table provides details of securities sold under agreements to repurchase and collateral pledged by FHN as of March 31, ~~2023~~2024 and December 31, ~~2022:~~2023:

SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

Gross amounts not offset in the
Balance Sheets

(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:

March 31, 2023

1,174

—

1,174

—

(1,174)

—

December 31, 2022

1,013

—

1,013

(10)

(1,003)

—

March 31, 2024

December 31, 2023

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.


			50			~~1Q23~~1Q24 FORM 10-Q REPORT


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

The following table provides details, by collateral type, of the remaining contractual maturity of securities sold under agreements to repurchase as of March 31, ~~2023~~2024 and December 31, ~~2022:~~2023:

MATURITIES OF SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

March 31, 2023

March 31, 2024

(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:

Government agency issued MBS

1,088

—

1,088

Government agency issued CMO

—

Government agency issued MBS

Total securities sold under agreements to repurchase

1,174

—

1,174

December 31, 2022

(Dollars in millions)

Overnight and
Continuous

Up to 30 Days

Total

Securities sold under agreements to repurchase:

U.S. treasuries

—

Government agency issued MBS

851

—

851

Government agency issued CMO

122

—

122

Other U.S. government agencies

—

Total securities sold under agreements to repurchase

1,013

—

1,013

Total securities sold under agreements to repurchase

December 31, 2023

(Dollars in millions)

Overnight and
Continuous

Up to 30 Days

Total

Securities sold under agreements to repurchase:

Government agency issued MBS

Government agency issued CMO

Other U.S. government agencies

Total securities sold under agreements to repurchase


			51			~~1Q23~~1Q24 FORM 10-Q REPORT


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


			52			1Q24 FORM 10-Q REPORT


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

Recurring Fair Value Measurements

The following table presents the balances of assets and liabilities measured at fair value on a recurring basis as of March 31, ~~2023~~2024 and December 31, ~~2022:~~2023:


BALANCES OF ASSETS & LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS
	March 31, 2024
(Dollars in millions)	Level 1		Level 2		Level 3		Total
Trading securities:
U.S. treasuries	$	—	$	6	$	—	$	6
Government agency issued MBS	—		78		—		78
Government agency issued CMO	—		178		—		178
Other U.S. government agencies	—		233		—		233
States and municipalities	—		21		—		21
Corporate and other debt	—		626		—		626
Interest-only strips (elected fair value)	—		—		19		19
Total trading securities	—		1,142		19		1,161

Loans held for sale (elected fair value)	—		70		14		84

Securities available for sale:

Government agency issued MBS	—		4,351		—		4,351
Government agency issued CMO	—		2,085		—		2,085
Other U.S. government agencies	—		1,133		—		1,133
States and municipalities	—		579		—		579


Total securities available for sale	—		8,148		—		8,148
Other assets:
Deferred compensation mutual funds	107		—		—		107
Equity, mutual funds, and other	34		—		—		34
Derivatives, forwards and futures	5		—		—		5
Derivatives, interest rate contracts	—		645		—		645

Total other assets	146		645		—		791
Total assets	$	146	$	10,005	$	33	$	10,184
Trading liabilities:
U.S. treasuries	$	—	$	379	$	—	$	379




Corporate and other debt	—		88		—		88

Total trading liabilities	—		467		—		467
Other liabilities:
Derivatives, forwards and futures	4		—		—		4
Derivatives, interest rate contracts	—		791		—		791
Derivatives, other	—		1		20		21
Total other liabilities	4		792		20		816
Total liabilities	$	4	$	1,259	$	20	$	1,283


			5253			~~1Q23~~1Q24 FORM 10-Q REPORT


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


BALANCES OF ASSETS & LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS
		March 31, 2023									December 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:
U.S. treasuries
U.S. treasuries
U.S. treasuries	U.S. treasuries	$	—	$	33	$	—	$	33
Government agency issued MBS	Government agency issued MBS	—		81		—		81
Government agency issued CMO	Government agency issued CMO	—		170		—		170
Other U.S. government agencies	Other U.S. government agencies	—		128		—		128
States and municipalities	States and municipalities	—		24		—		24
Corporate and other debt	Corporate and other debt	—		658		—		658
Interest-only strips (elected fair value)	Interest-only strips (elected fair value)	—		—		28		28
Total trading securities	Total trading securities	—		1,094		28		1,122

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

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

Government agency issued MBS

Government agency issued MBS

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

Total securities available for sale
Total securities available for sale
Total securities available for sale	Total securities available for sale	—		8,954		—		8,954
Other assets:	Other assets:
Deferred compensation mutual funds
Deferred compensation mutual funds
Deferred compensation mutual funds	Deferred compensation mutual funds	98		—		—		98
Equity, mutual funds, and other	Equity, mutual funds, and other	23		—		—		23
Derivatives, forwards and futures	Derivatives, forwards and futures	11		—		—		11
Derivatives, interest rate contracts	Derivatives, interest rate contracts	—		536		—		536
Derivatives, other		—		1		—		1

Total other assets
Total other assets
Total other assets	Total other assets	132		537		—		669
Total assets	Total assets	$	132	$	10,632	$	49	$	10,813
Trading liabilities:	Trading liabilities:
U.S. treasuries	U.S. treasuries	$	—	$	96	$	—	$	96
U.S. treasuries
U.S. treasuries

Government agency issued MBS
Government agency issued MBS
Government agency issued MBS
Corporate and other debt	Corporate and other debt	—		48		—		48

Total trading liabilities	Total trading liabilities	—		144		—		144
Other liabilities:	Other liabilities:
Derivatives, forwards and futures
Derivatives, forwards and futures
Derivatives, forwards and futures	Derivatives, forwards and futures	12		—		—		12
Derivatives, interest rate contracts	Derivatives, interest rate contracts	—		687		—		687
Derivatives, other	Derivatives, other	—		2		21		23
Total other liabilities	Total other liabilities	12		689		21		722
Total liabilities	Total liabilities	$	12	$	833	$	21	$	866


			5354			~~1Q23~~1Q24 FORM 10-Q REPORT


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

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


			54			~~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 March 31, ~~2023~~2024 and ~~2022~~2023 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 March 31, 2023									Three Months Ended March 31, 2024
(Dollars in millions)	(Dollars in millions)	Interest-only strips			Loans held for sale			Net derivative liabilities
Balance on January 1, 2023		$	25		$	22		$	(27)
Balance on January 1, 2024
Balance on January 1, 2024
Balance on January 1, 2024

Total net gains (losses) included in net income

Total net gains (losses) included in net income

Total net gains (losses) included in net income	Total net gains (losses) included in net income	(3)			—			—
Purchases	Purchases	—			1			—
Purchases
Purchases
Sales
Sales
Sales	Sales	(3)			(2)			—
Settlements	Settlements	—			—			6
Repayments		—			—			—
Settlements
Settlements

Net transfers into (out of) Level 3	Net transfers into (out of) Level 3	9		(b)	—			—
Balance on March 31, 2023		$	28		$	21		$	(21)

Net transfers into (out of) Level 3

Net transfers into (out of) Level 3
Balance on March 31, 2024
Balance on March 31, 2024
Balance on March 31, 2024
Net unrealized gains (losses) included in net income
Net unrealized gains (losses) included in net income
Net unrealized gains (losses) included in net income	Net unrealized gains (losses) included in net income	$	(1)	(c)	$	—	(a)	$	—	(d)		$	(1)	(c)	(c)	$	—	(a)	(a)	$	—	(d)	(d)




		Three Months Ended March 31, 2022
(Dollars in millions)	(Dollars in millions)	Interest-only strips			Loans held for sale			Net derivative liabilities
Balance on January 1, 2022		$	38		$	28		$	(23)
(Dollars in millions)
(Dollars in millions)
Balance on January 1, 2023
Balance on January 1, 2023
Balance on January 1, 2023

Total net gains (losses) included in net income

Total net gains (losses) included in net income

Total net gains (losses) included in net income
Purchases
Purchases
Purchases
Sales
Sales
Sales
Settlements
Settlements
Settlements

Net transfers into (out of) Level 3

Net transfers into (out of) Level 3

Net transfers into (out of) Level 3
Balance on March 31, 2023
Balance on March 31, 2023
Balance on March 31, 2023
Net unrealized gains (losses) included in net income
Net unrealized gains (losses) included in net income
Net unrealized gains (losses) included in net income											$	(1)	(c)	$	—	(a)	$	—	(d)

Purchases		—			1			—
Sales		(37)			—			—
Settlements		—			(1)			5
Net transfers into (out of) Level 3		11		(b)	4			—
Balance on March 31, 2022		$	12		$	32		$	(18)
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.~~

expense on the Consolidated Statements of Income.

There were no net unrealized gains (losses) for Level 3 assets and liabilities included in other comprehensive income as of March 31, ~~2023~~2024 and ~~2022.~~2023.


			55			~~1Q23~~1Q24 FORM 10-Q REPORT


PART I, ITEM 1. FINANCIAL STATEMENTS
Table of Contents			NOTE 16—FAIR VALUE OF ASSETS &AND 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 March 31, ~~2023,~~2024, and December 31, ~~2022,~~2023, 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 NONRECURRING BASIS										LEVEL OF VALUATION ASSUMPTIONS FOR ASSETS MEASURED AT FAIR VALUE ON A NONRECURRING BASIS
		Carrying value at March 31, 2023									Carrying value at March 31, 2024
(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	$	—	$	551	$	—	$	551
Loans held for sale—SBAs and USDA
Loans held for sale—SBAs and USDA

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


		Carrying value at December 31, 2022									Carrying value at December 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	$	—	$	506	$	—	$	506
Loans held for sale—SBAs and USDA
Loans held for sale—SBAs and USDA

Loans and leases (a)
Loans and leases (a)
Loans and leases (a)	Loans and leases (a)	—		—		135		135
OREO (b)	OREO (b)	—		—		3		3
Other assets (c)	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~~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 months ended March 31, ~~2023~~2024 and ~~2022:~~2023:

						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 March 31,
(Dollars in millions)
(Dollars in millions)
(Dollars in millions)
		Net gains (losses) Three Months Ended March 31,
(Dollars in millions)		2023		2022
Loans held for sale—SBAs and USDA

Loans held for sale—SBAs and USDA

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

Loans and leases (a)	Loans and leases (a)	(12)		(2)

Loans and leases (a)

Loans and leases (a)

Other assets (b)	Other assets (b)	(1)		(1)
		$	(15)	$	(6)
Other assets (b)

Other assets (b)
		$
		$
		$

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

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


			56			~~1Q23~~1Q24 FORM 10-Q REPORT


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

For the three months ended March 31, 2023, FHN recognized no fixed asset impairment and less than $1 million of leased asset impairments. These amounts were primarily recognized in the Corporate segment.

For the three months ended March 31, 2022, FHN recognized less than $1 million of fixed asset impairments and leased asset impairments 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.

Fixed asset and leased asset impairments were immaterial for the three months ended March 31, 2024 and 2023.

Level 3 Measurements

The following table provides information regarding the unobservable inputs utilized in determining the fair value of Level 3 recurring and non-recurring measurements as of March 31, ~~2023~~2024 and December 31, ~~2022:~~

2023:


			57			~~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 March 31, 2023

Valuation Techniques

Unobservable Input

Range

Weighted Average (d)

Level 3 Class

Fair Value at March 31, 2024

Valuation Techniques

Unobservable Input

Range

Weighted Average (c)

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

14% - 20%

14%

Bond equivalent yield

15% - 16%

16%

Bond equivalent yield

16% - 20%

19%

Loans held for sale - residential real estate

Discounted cash flow

Prepayment speeds - First mortgage

2% - 8%

Loans held for sale - residential real estate

Discounted cash flow

Prepayment speeds - First mortgage

2% - 6%

Foreclosure losses

63% - 76%

65%

Loss severity trends - First mortgage

0% - 10%

of UPB

Foreclosure losses

63% - 67%

65%

Loss severity trends - First mortgage

0% - 2%

of UPB

Derivative liabilities, other

Discounted cash flow

Visa covered litigation resolution amount

$5.6 billion - $6.1 billion

$5.9 billion

Probability of resolution scenarios

5% - 25%

20%

Time until resolution

9 - 39 months

25 months

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

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

Other assets (c)

Discounted cash flow

Adjustments to current sales yields for specific properties

0% - 15% adjustment to yield

Derivative liabilities, other

Appraisals from comparable properties

Marketability adjustments for specific properties

0% - 25%

of appraisal

Derivative liabilities, other

Discounted cash flow

Visa covered litigation resolution amount

$5.7 billion - $6.7 billion

$6.3 billion

Probability of resolution scenarios

10% - 25%

18%

Time until resolution

3 - 33 months

22 months

Loans and leases (a)

244

Appraisals from comparable properties

Marketability adjustments for specific properties

0% - 25%

of appraisal

Other collateral valuations

Borrowing base certificates liquidation adjustment

25% - 50% of gross value

Financial Statements liquidation adjustment

50% - 100%

of reported value

Auction appraisals marketability adjustment

0% - 10% of reported value

OREO (b)

Appraisals from comparable properties

Adjustment for value changes since appraisal

0% - 10%

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.


			5857			~~1Q23~~1Q24 FORM 10-Q REPORT


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

(Dollars in millions)

Values Utilized

(Dollars in millions)

Values Utilized

Level 3 Class

Fair Value at December 31, 2022

Valuation Techniques

Unobservable Input

Range

Weighted Average (d)

Level 3 Class

Fair Value at December 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

14% - 15%

14%

Bond equivalent yield

17%

Bond equivalent yield

18% - 21%

18%

Loans held for sale - residential real estate

Discounted cash flow

Prepayment speeds - First mortgage

2% - 8%

Loans held for sale - residential real estate

Discounted cash flow

Prepayment speeds - First mortgage

2% - 7%

Foreclosure losses

63% - 75%

65%

Loss severity trends - First mortgage

0% - 11%

of UPB

Foreclosure losses

64% - 68%

65%

Loss severity trends - First mortgage

0% - 3%

of UPB

Derivative liabilities, other

Discounted cash flow

Visa covered litigation resolution amount

$5.6 billion - $6.0 billion

$5.9 billion

Probability of resolution scenarios

5% - 25%

20%

Time until resolution

12 - 42 months

28 months

Loans and leases (a)

135

Appraisals from comparable properties

Marketability adjustments for specific properties

0% - 10%

of appraisal

Other collateral valuations

Borrowing base certificates adjustment

20% - 50% of gross value

Financial Statements/Auction values adjustment

0% - 25%

of reported value

Derivative liabilities, other

Discounted cash flow

Visa covered litigation resolution amount

$5.7 billion - $6.7 billion

$6.3 billion

Probability of resolution scenarios

10% - 25%

18%

Time until resolution

6 - 36 months

24 months

Loans and leases (a)

245

Appraisals from comparable properties

Marketability adjustments for specific properties

0% - 25%

of appraisal

Other collateral valuations

Borrowing base certificates liquidation adjustment

25% - 50% of gross value

Financial Statements liquidation adjustment

50% - 100%

of reported value

Auction appraisals marketability adjustment

0% - 10% 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.

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


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Table of Contents			NOTE 16—FAIR VALUE OF ASSETS AND 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~~Prior to 2024, the estimated fair value of tax credit investments accounted for under the equity method iswas generally

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

Fair Value Option

FHN 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.


			6059			~~1Q23~~1Q24 FORM 10-Q REPORT


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

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

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

March 31, 2023

March 31, 2024

(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:

Total loans

(8)

Total loans

Nonaccrual loans

(4)

December 31, 2022

December 31, 2023

(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:

Total loans

(7)

Total loans

Nonaccrual loans

(3)

Loans 90 days or more past due and still accruing

—

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

Three Months Ended
March 31,

(Dollars in millions)

2023

2022

(Dollars in millions)

Changes in fair value included in net income:

Mortgage banking and title noninterest income

Changes in fair value included in net income:

Mortgage banking noninterest income

Loans held for sale

(8)

For the three months ended March 31, ~~2023~~2024 and ~~2022,~~2023, the amount for residential real estate loans held for sale included an insignificant amount of gains in ~~pretax~~pre-tax 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


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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~~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.

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.


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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~~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~~For periods prior to 2024, tax credit investments accounted for under the equity method ~~are~~were written down to estimated fair value quarterly

based on the estimated

value of the associated tax credits which ~~incorporates~~incorporated estimates of required yield for hypothetical investors. ~~The~~Subsequent to 2023, 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 March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, 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, particularly consumer loans and TRUPS loans within the


			6362			~~1Q23~~1Q24 FORM 10-Q REPORT


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Table of Contents			NOTE 16—FAIR VALUE OF ASSETS &AND 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 table summarizes the book value and estimated fair value of financial instruments recorded in the Consolidated Balance Sheets as of March 31, ~~2023~~2024 and December 31, ~~2022:~~2023:


			6463			~~1Q23~~1Q24 FORM 10-Q REPORT


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Table of Contents			NOTE 16—FAIR VALUE OF ASSETS &AND 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
			March 31, 2023
		March 31, 2024																					March 31, 2024
			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:
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
Loans and leases, net of allowance for loan and lease losses
Commercial:	Commercial:
Commercial:
Commercial:
Commercial, financial and industrial
Commercial, financial and industrial
Commercial, financial and industrial	Commercial, financial and industrial		$	31,847		$	—		$	—		$	31,880		$	31,880
Commercial real estate	Commercial real estate		13,248			—			—			13,109			13,109
Consumer:	Consumer:
Consumer real estate	Consumer real estate		12,459			—			—			12,330			12,330
Consumer real estate
Consumer real estate

Credit card and other
Credit card and other
Credit card and other	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		58,330			—			—			58,095			58,095
Short-term financial assets:	Short-term financial assets:
Interest-bearing deposits with banks
Interest-bearing deposits with banks
Interest-bearing deposits with banks	Interest-bearing deposits with banks		2,488			2,488			—			—			2,488
Federal funds sold	Federal funds sold		141			—			141			—			141
Securities purchased under agreements to resell	Securities purchased under agreements to resell		168			—			168			—			168
Total short-term financial assets	Total short-term financial assets		2,797			2,488			309			—			2,797
Trading securities (a)	Trading securities (a)		1,122			—			1,094			28			1,122
Loans held for sale:	Loans held for sale:
Mortgage loans (elected fair value) (a)	Mortgage loans (elected fair value) (a)		68			—			47			21			68
Mortgage loans (elected fair value) (a)
Mortgage loans (elected fair value) (a)
USDA & SBA loans - LOCOM	USDA & SBA loans - LOCOM		551			—			555			—			555

Mortgage loans - LOCOM
Mortgage loans - LOCOM
Mortgage loans - LOCOM	Mortgage loans - LOCOM		31			—			—			31			31
Total loans held for sale	Total loans held for sale		650			—			602			52			654
Securities available for sale (a)	Securities available for sale (a)		8,954			—			8,954			—			8,954
Securities held to maturity	Securities held to maturity		1,362			—			1,214			—			1,214
Derivative assets (a)	Derivative assets (a)		548			11			537			—			548
Other assets:	Other assets:
Tax credit investments	Tax credit investments		545			—			—			541			541
Tax credit investments
Tax credit investments
Deferred compensation mutual funds	Deferred compensation mutual funds		98			98			—			—			98
Equity, mutual funds, and other (b)	Equity, mutual funds, and other (b)		458			23			—			435			458
Total other assets	Total other assets		1,101			121			—			976			1,097
Total assets	Total assets		$	74,864		$	2,620		$	12,710		$	59,151		$	74,481
Liabilities:	Liabilities:
Defined maturity deposits	Defined maturity deposits		$	3,777		$	—		$	3,793		$	—		$	3,793
Defined maturity deposits
Defined maturity deposits
Trading liabilities (a)	Trading liabilities (a)		144			—			144			—			144
Short-term financial liabilities:	Short-term financial liabilities:
Federal funds purchased
Federal funds purchased
Federal funds purchased	Federal funds purchased		447			—			447			—			447
Securities sold under agreements to repurchase	Securities sold under agreements to repurchase		1,174			—			1,174			—			1,174
Other short-term borrowings	Other short-term borrowings		4,863			—			4,863			—			4,863
Total short-term financial liabilities	Total short-term financial liabilities		6,484			—			6,484			—			6,484
Term borrowings:	Term borrowings:
Real estate investment trust-preferred
Real estate investment trust-preferred
Real estate investment trust-preferred	Real estate investment trust-preferred		46			—			—			47			47
Term borrowings—new market tax credit investment	Term borrowings—new market tax credit investment		65			—			—			60			60
Secured borrowings	Secured borrowings		11			—			—			11			11
Junior subordinated debentures	Junior subordinated debentures		149			—			—			150			150
Other long-term borrowings	Other long-term borrowings		1,334			—			1,300			—			1,300
Total term borrowings	Total term borrowings		1,605			—			1,300			268			1,568
Derivative liabilities (a)	Derivative liabilities (a)		722			12			689			21			722
Total liabilities	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 ~~$232~~$31 million and FRB stock of $203 million.


			6564			~~1Q23~~1Q24 FORM 10-Q REPORT


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


		December 31, 2022														December 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:
Loans and leases and 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
Loans and leases, net of allowance for loan and lease losses
Commercial:	Commercial:
Commercial:
Commercial:
Commercial, financial and industrial
Commercial, financial and industrial
Commercial, financial and industrial	Commercial, financial and industrial	$	31,473		$	—		$	—		$	31,329		$	31,329
Commercial real estate	Commercial real estate	13,082			—			—			12,909			12,909
Consumer:	Consumer:
Consumer real estate	Consumer real estate	12,053			—			—			11,934			11,934
Consumer real estate
Consumer real estate
Credit card and other	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	57,417			—			—			56,982			56,982
Short-term financial assets:	Short-term financial assets:
Interest-bearing deposits with banks
Interest-bearing deposits with banks
Interest-bearing deposits with banks	Interest-bearing deposits with banks	1,384			1,384			—			—			1,384
Federal funds sold	Federal funds sold	129			—			129			—			129
Securities purchased under agreements to resell	Securities purchased under agreements to resell	353			—			353			—			353
Total short-term financial assets	Total short-term financial assets	1,866			1,384			482			—			1,866
Trading securities (a)	Trading securities (a)	1,375			—			1,350			25			1,375
Loans held for sale:	Loans held for sale:
Mortgage loans (elected fair value) (a)	Mortgage loans (elected fair value) (a)	51			—			29			22			51
Mortgage loans (elected fair value) (a)
Mortgage loans (elected fair value) (a)
USDA & SBA loans - LOCOM	USDA & SBA loans - LOCOM	506			—			512			—			512

Mortgage loans - LOCOM
Mortgage loans - LOCOM
Mortgage loans - LOCOM	Mortgage loans - LOCOM	33			—			—			33			33
Total loans held for sale	Total loans held for sale	590			—			541			55			596
Securities available for sale (a)	Securities available for sale (a)	8,836			—			8,836			—			8,836
Securities held to maturity	Securities held to maturity	1,371			—			1,209			—			1,209
Derivative assets (a)	Derivative assets (a)	460			9			451			—			460
Other assets:	Other assets:
Tax credit investments	Tax credit investments	547			—			—			542			542
Tax credit investments
Tax credit investments
Deferred compensation mutual funds	Deferred compensation mutual funds	112			112			—			—			112
Equity, mutual funds, and other (b)	Equity, mutual funds, and other (b)	275			22			—			253			275
Total other assets	Total other assets	934			134			—			795			929
Total assets	Total assets	$	72,849		$	1,527		$	12,869		$	57,857		$	72,253
Liabilities:	Liabilities:
Defined maturity deposits	Defined maturity deposits	$	2,887		$	—		$	2,890		$	—		$	2,890
Defined maturity deposits
Defined maturity deposits
Trading liabilities (a)	Trading liabilities (a)	335			—			335			—			335
Short-term financial liabilities:	Short-term financial liabilities:
Federal funds purchased
Federal funds purchased
Federal funds purchased	Federal funds purchased	400			—			400			—			400
Securities sold under agreements to repurchase	Securities sold under agreements to repurchase	1,013			—			1,013			—			1,013
Other short-term borrowings	Other short-term borrowings	1,093			—			1,093			—			1,093
Total short-term financial liabilities	Total short-term financial liabilities	2,506			—			2,506			—			2,506
Term borrowings:	Term borrowings:
Real estate investment trust-preferred
Real estate investment trust-preferred
Real estate investment trust-preferred	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
Secured borrowings	Secured borrowings	3			—			—			3			3
Junior subordinated debentures	Junior subordinated debentures	148			—			—			150			150
Other long-term borrowings	Other long-term borrowings	1,334			—			1,301			—			1,301
Total term borrowings	Total term borrowings	1,597			—			1,301			259			1,560
Derivative liabilities (a)	Derivative liabilities (a)	958			8			923			27			958
Total liabilities	Total liabilities	$	8,283		$	8		$	7,955		$	286		$	8,249

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

(b)Level 1 primarily consists of mutual funds with readily determinable fair values. Level 3 includes restricted investments in FHLB-Cincinnati stock of ~~$50~~$24 million and FRB stock of $203 million.


			6665			~~1Q23~~1Q24 FORM 10-Q REPORT


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

The following table presents the contractual amount and fair value of unfunded loan commitments and standby and other commitments as of March 31, ~~2023~~2024 and December 31, ~~2022:~~2023:

UNFUNDED COMMITMENTS

Contractual Amount

Fair Value

Contractual Amount

Fair Value

(Dollars in millions)

March 31, 2023

December 31, 2022

March 31, 2023

December 31, 2022

(Dollars in millions)

March 31, 2024

December 31, 2023

March 31, 2024

December 31, 2023

Unfunded Commitments:

Loan commitments

24,964

25,953

Loan commitments

Standby and other commitments

765

754


			6766			~~1Q23~~1Q24 FORM 10-Q REPORT


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

Note ~~17 – Other~~17—Subsequent 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,~~1, 2024 (the "Redemption Date"), 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 theredeemed all outstanding shares of ~~FHN common stock~~its 6.10% Fixed to Floating Non-Cumulative Perpetual Preferred Stock, Series D (the "Series D Preferred Stock"), and all related outstanding depositary shares, each representing a 1/400th interest in ~~certain circumstances, including termination~~a share of the ~~TD Merger Agreement. Because regulatory approval of~~ Series D Preferred Stock ("the ~~TD Transaction was not obtained, conversion will occur at a fixed rate of 4,000~~Series D Depositary Shares"). After the redemptions, no shares of ~~common stock for each~~Series D Preferred Stock, and no Series D Depositary Shares, remain outstanding.

The redemption price was $25.00 per Series D Depository Share, corresponding to $10,000 per share of Series ~~G Convertible~~D Preferred ~~Stock~~Stock. Accrued dividends were not included in either redemption price because the Redemption Date was also a dividend payment date. The regular Series D semi-annual dividend, which ~~reflects a conversion price~~was declared in January, was paid separately in the customary manner on May 1, 2024 to shareholders of ~~$25 per share. Following conversion to common stock,~~record at the ~~Series G will represent 3.5%~~close 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.business on April 16, 2024.


			6867			~~1Q23~~1Q24 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


			6968			~~1Q23~~1Q24 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~~commercial, private banking, ~~mortgage lending, specialized commercial lending, commercial leasing~~consumer, small business, wealth and ~~equipment financing,~~trust management, retail brokerage, ~~wealth management,~~ capital markets, fixed income, and ~~other financial services to commercial, consumer, and governmental clients throughout the U.S.~~mortgage banking services.

At March 31, ~~2023,~~2024, FHN had over 450 business locations in 24 states, including over 400 banking centers in 12 states, and employed 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 ~~2022~~2023 Annual Report on Form 10-K.

Executive Overview

~~Merger Agreement with Toronto-Dominion Bank~~Significant Events and Transactions

OnFDIC Special Assessment

In November 2023, the FDIC approved a final rule to implement a special assessment on banks to replenish the deposit insurance fund following the failures of Silicon Valley Bank and Signature Bank. FHN recognized an estimated expense of $68 million for the special assessment in the fourth quarter of 2023. In February ~~27, 2022, FHN entered into~~2024, the FDIC indicated that it now expects a larger loss to the deposit insurance fund than originally estimated and that it plans to provide institutions with an ~~Agreement and Plan~~updated estimate of ~~Merger (the “TD Merger Agreement”)~~their total special assessment amount 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.~~its first quarter 2024 special assessment invoice, to be

released in June 2024. This updated special assessment total resulted in $10 million in additional estimated FDIC expense recorded in first quarter 2024.

Preferred Stock Redemption

On May 1, 2024, FHN redeemed all outstanding shares of its Series D Preferred Stock with a carrying value of $94 million. The Series D Preferred Stock did not qualify as Tier 1 capital because the earliest redemption date was less than five years from the issuance date. Therefore, the redemption did not impact FHN's regulatory capital ratios. See Note 17 — Subsequent Events for more information.

Financial Performance Summary

FHN reported first quarter ~~2023~~2024 net income available to common shareholders of $184 million, or $0.33 per diluted share, compared to $175 million, or $0.31per diluted share, in fourth quarter 2023 and $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.~~2023.

Net interest income of ~~$688~~$625 million ~~declined $21~~increased $8 million ~~from~~compared to fourth quarter ~~2022 reflecting~~2023 from the benefit of loan and deposit repricing. Net interest income declined $63 million compared to first quarter 2023 driven by the 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~~yields on earning ~~asset yields, loan growth, and higher average investment portfolio balances, partially offset by higher funding costs.~~assets.

Provision for credit losses ~~was~~of $50 million inremained unchanged compared to fourth quarter 2023 and first quarter 2023.

Noninterest income of $194 million increased $11 million compared to fourth quarter 2023 and $23 million compared to first quarter 2023, ~~compared to $45~~largely driven by higher fixed income production.

Noninterest expense of $515 million indecreased $58 million from fourth quarter ~~2022~~2023, 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~~the estimated FDIC special assessment which was $10 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.~~

~~Noninterest income of $171~~2024 and $68 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.~~2023. Compared with first quarter ~~2022,~~2023, noninterest expense decreased $15 million largely reflecting decreases in personnel expense, legal and professional fees and contract employment and outsourcing. Merger and integration planning expenses related to the TD Transaction totaled $21 million for the first quarter of 2023. Merger and integration expenses related to the TD Transaction and the IBKC Merger totaled $36 million in fourth quarter 2022 andincreased $37 million, ~~in first quarter 2022.~~or 8%, largely attributable to higher personnel and deposit insurance expense.

Period-end loans and leases of ~~$59.0~~$61.8 billion increased ~~$943~~$461 million, or 2%1%, from December 31, ~~2022 driven by~~2023 as commercial loan growth of ~~$561~~$488 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~~was driven by ~~an increase of $2.4 billion~~growth in ~~average commercial~~ loans to mortgage companies and ~~an increase of $1.6 billion in average consumer~~CRE loans.

Period-end deposits of ~~$61.4~~$65.7 billion ~~decreased $2.0 billion, or 3%, from~~remained stable compared to December 31, ~~2022 driven by a $2.3 billion decrease in~~2023. Interest-bearing deposits increased $755 million and noninterest-bearing deposits ~~partially offset by a $283 million increase in interest-bearing deposits. Average deposits~~ decreased ~~$11.9 billion~~$794 million.

Tier 1 risk-based capital and total risk-based capital ratios at March 31, 2024 were 12.33% and 13.93%, down from 12.42% and 13.96% at December 31, 2023, respectively. The CET1 ratio was 11.31% at March 31, 2024 compared to ~~first quarter 2022 from higher deposit balances~~11.40% at December 31, 2023.

The following portions of this MD&A focus in more detail on the ~~prior year associated with elevated liquidity related to~~results of operations for the ~~COVID-19 pandemic.~~three months endedMarch 31, 2024, the three months ended December 31, 2023, and the three months ended March 31, 2023 and on information about FHN's financial condition, loan and


			7069			~~1Q23~~1Q24 FORM 10-Q REPORT


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~~

Table I.2.1

KEY PERFORMANCE INDICATORS


		As of or for the three months ended
		As of or for the three months ended
		As of or for the three months ended
		As of or for the three months ended
(Dollars in millions, except per share data)
(Dollars in millions, except per share data)
(Dollars in millions, except per share data)	(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)	$	381		$	379		$	215
Pre-provision net revenue (a)
Pre-provision net revenue (a)
Diluted earnings per common share
Diluted earnings per common share
Diluted earnings per common share	Diluted earnings per common share	$	0.43		$	0.45		$	0.34
Return on average assets (b)	Return on average assets (b)	1.32		%	1.35		%	0.90		%
Return on average assets (b)
Return on average assets (b)
Return on average common equity (c)
Return on average common equity (c)
Return on average common equity (c)	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)	17.43		%	19.14		%	12.98		%
Return on average tangible common equity (a) (d)
Return on average tangible common equity (a) (d)
Net interest margin (e)
Net interest margin (e)
Net interest margin (e)	Net interest margin (e)	3.87		%	3.89		%	2.37		%
Noninterest income to total revenue (f)	Noninterest income to total revenue (f)	19.90		%	19.63		%	31.75		%
Noninterest income to total revenue (f)
Noninterest income to total revenue (f)
Efficiency ratio (g)
Efficiency ratio (g)
Efficiency ratio (g)	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	1.21		%	1.18		%	1.13		%
Allowance for loan and lease losses to total loans and leases
Allowance for loan and lease losses to total loans and leases
Net charge-offs (recoveries) to average loans and leases (annualized)
Net charge-offs (recoveries) to average loans and leases (annualized)
Net charge-offs (recoveries) to average loans and leases (annualized)	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	11.02		%	10.83		%	9.81		%
Total period-end equity to period-end assets
Total period-end equity to period-end assets
Tangible common equity to tangible assets (a)
Tangible common equity to tangible assets (a)
Tangible common equity to tangible assets (a)	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
Cash dividends declared per common share
Cash dividends declared per common share
Book value per common share
Book value per common share
Book value per common share	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)	$	10.89		$	10.23		$	10.46
Tangible book value per common share (a)
Tangible book value per common share (a)
Common equity Tier 1
Common equity Tier 1
Common equity Tier 1	Common equity Tier 1	10.36		%	10.17		%	9.97		%
Market capitalization	Market capitalization	$	9,559		$	13,159		$	12,557
Market capitalization
Market capitalization

(a) Represents a non-GAAP measure which is reconciled in the non-GAAP to GAAP reconciliation in in Table ~~I.2.22.~~I.2.23.

(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:


			7270			~~1Q23~~1Q24 FORM 10-Q REPORT


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

Table I.2.2

AVERAGE BALANCES, NET INTEREST INCOME & YIELDS/RATES


			Three Months Ended
			Three Months Ended
			Three Months Ended
			Three Months Ended
(Dollars in millions)	(Dollars in millions)		March 31, 2023						December 31, 2022						March 31, 2022						(Dollars in millions)			March 31, 2024																December 31, 2023																March 31, 2023
			Average Balance		Interest Income/Expense		Yield/Rate		Average Balance		Interest Income/Expense		Yield/Rate		Average Balance		Interest Income/Expense		Yield/Rate
		Average Balance																										Average Balance							Interest Income/Expense							Yield/Rate							Average Balance								Interest Income/Expense					Yield/Rate								Average Balance							Interest Income/Expense						Yield/Rate
Assets:	Assets:
Loans and leases:	Loans and leases:
Loans and leases:
Loans and leases:
Commercial loans and leases
Commercial loans and leases
Commercial loans and leases	Commercial loans and leases		$	44,848	$	668	6.04	%	$	44,657	$	608	5.40	%	$	42,444	$	339	3.24	%		$	46,756			$		$	782			6.73				6.73		%					$	46,731			$			$	784			6.65				6.65	%					$	44,848			$			$	668			6.04				6.04		%
Consumer loans	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		58,074		809		5.63		57,564		742		5.12		54,082		447		3.34
Loans held for sale	Loans held for sale		596		11		7.08		597		9		6.34		1,156		10		3.51

Investment securities	Investment securities		10,263		63		2.45		10,132		61		2.41		9,668		38		1.59

Investment securities

Investment securities
Trading securities	Trading securities		1,284		20		6.21		1,311		19		5.79		1,594		11		2.75

Federal funds sold	Federal funds sold		47		1		5.19		192		2		3.77		81		—		0.19
Securities purchased under agreements to resell (a)			344		3		4.23		391		3		3.33		672		—		(0.07)
Federal funds sold
Federal funds sold
Securities purchased under agreements to resell
Interest-bearing deposits with banks	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		$	72,076	$	924	5.17	%	$	72,805	$	860	4.70	%	$	82,155	$	513	2.52	%
Total earning assets / Total interest income
Total earning assets / Total interest income																								$	74,778					$	1,077						5.78		%					$	75,448						$	1,090						5.74	%					$	72,076						$	924						5.18		%

Cash and due from banks	Cash and due from banks		1,035						1,118						1,226
Cash and due from banks
Cash and due from banks
Goodwill and other intangible assets, net	Goodwill and other intangible assets, net		1,738						1,750						1,802

Goodwill and other intangible assets, net
Goodwill and other intangible assets, net
Premises and equipment, net
Premises and equipment, net
Premises and equipment, net
Allowance for loan and lease losses
Allowance for loan and lease losses
Allowance for loan and lease losses	Allowance for loan and lease losses		(692)						(675)						(658)
Other assets	Other assets		4,684						4,523						4,062
Other assets
Other assets
Total assets
Total assets
Total assets	Total assets		$	78,841					$	79,521					$	88,587

Liabilities and Shareholders' Equity:	Liabilities and Shareholders' Equity:

Liabilities and Shareholders' Equity:

Liabilities and Shareholders' Equity:

Interest-bearing deposits:	Interest-bearing deposits:

Interest-bearing deposits:

Interest-bearing deposits:
Savings
Savings
Savings	Savings		$	21,824	$	97	1.79	%	$	22,477	$	67	1.19	%	$	26,330	$	3	0.05	%		$	25,390			$		$	206			3.27				3.27		%					$	25,799			$			$	222			3.42				3.42	%					$	21,824			$			$	97			1.79				1.79		%
Other interest-bearing deposits	Other interest-bearing deposits		14,790		58		1.59		14,658		39		1.05		16,557		4		0.09
Time deposits	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		39,950		171		1.73		39,855		112		1.12		46,230		11		0.10
Federal funds purchased	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		1,047		7		2.61		876		4		1.88		1,001		—		0.10
Trading liabilities	Trading liabilities		324		3		3.83		353		3		3.59		614		2		1.69
Other short-term borrowings	Other short-term borrowings		2,188		26		4.79		358		3		3.75		110		1		0.13
Term borrowings	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		$	45,571	$	232	2.06	%	$	43,626	$	148	1.35	%	$	50,430	$	31	0.25	%	Total interest-bearing liabilities / Total interest expense			$	52,922		$			$	448			3.40				3.40		%					$	53,476		$				$	469		3.48				3.48	%						$	45,571		$				$	232		2.06					2.06	%

Noninterest-bearing liabilities:	Noninterest-bearing liabilities:
Noninterest-bearing liabilities:
Noninterest-bearing liabilities:
Noninterest-bearing deposits
Noninterest-bearing deposits
Noninterest-bearing deposits	Noninterest-bearing deposits		22,274						25,021						27,926
Other liabilities	Other liabilities		2,289						2,459						1,613
Other liabilities
Other liabilities
Total liabilities
Total liabilities
Total liabilities	Total liabilities		70,134						71,106						79,969

Shareholders' equity	Shareholders' equity		8,412						8,120						8,323

Shareholders' equity

Shareholders' equity
Noncontrolling interest
Noncontrolling interest
Noncontrolling interest	Noncontrolling interest		295						295						295
Total shareholders' equity	Total shareholders' equity		8,707						8,415						8,618
Total shareholders' equity
Total shareholders' equity
Total liabilities and shareholders' equity
Total liabilities and shareholders' equity
Total liabilities and shareholders' equity	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		$	26,505	$	692	3.11	%	$	29,179	$	712	3.35	%	$	31,725	$	482	2.27	%

Net earnings assets / Net interest income (TE) / Net interest spread

Net earnings assets / Net interest income (TE) / Net interest spread																								$	21,856					$	629						2.38		%					$	21,972						$	621						2.26	%					$	26,505						$	692						3.12		%
Taxable equivalent adjustment	Taxable equivalent adjustment				(4)		0.76				(3)		0.54				(3)		0.10
Net interest income / Net interest margin (b)					$	688	3.87	%			$	709	3.89	%			$	479	2.37	%
Net interest income / Net interest margin (a)																					Net interest income / Net interest margin (a)												$	625						3.37	%															$	617				3.27		%															$	688					3.88	%

(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.


			7371			~~1Q23~~1Q24 FORM 10-Q REPORT


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

First Quarter ~~2023~~2024 versus Fourth Quarter ~~2022~~2023

Net interest income of ~~$688~~$625 million in first quarter ~~2023 decreased $21~~2024 increased $8 million from fourth quarter ~~2022~~2023 and the net interest margin ~~declined 2~~increased 10 basis points to ~~3.87%. A lower day count in first quarter 2023 contributed $11 million of the net interest income decline. In addition,~~3.37% from the benefit of ~~higher~~ loan ~~yields from higher short-term rates was more than offset by higher funding costs driven by lower~~and deposit ~~balances and continued migration from noninterest-bearing to interest-bearing accounts.~~repricing. Loan yield increased 519 basis points ~~while~~and the cost of interest-bearing deposits ~~increased 61~~decreased 9 basis points.

Average earning assets of ~~$72.1~~$74.8 billion in first quarter ~~2023~~2024 decreased ~~$729~~$670 million from fourth quarter ~~2022~~2023 largely due to a ~~$1.2 billion decrease in average interest-bearing cash, offset by a $510~~$763 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 earning asset yields, loan growth, and higher investment portfolio balances partially offset by higher funding costs.

~~First quarter 2023 net interest margin increased 150 basis points from 2.37% in first quarter 2022, driven by the impact of higher yields on earning assets, partially offset by higher funding costs.~~

~~Average earning assets decreased $10.1 billion from first quarter 2022 largely driven by a $13.4 billion~~ decrease in average interest-bearing deposits with banks partially offset by a ~~$4.0~~$196 million increase in average investment securities. Average loans and leases were relatively flat compared to the prior quarter. Average interest-bearing liabilities decreased $554 million largely reflecting a $762 million decrease in interest-bearing deposits partially offset by a $100 million increase in other short-term borrowings.

First Quarter 2024 versus First Quarter 2023

Net interest income decreased $63 million from first quarter 2023 and the net interest margin decreased 51 basis points from 3.88% in first quarter 2023, driven by the impact of higher funding costs partially offset by higher yields on earning assets. Funding costs increased 134 basis points while yields on earning assets increased 60 basis points.

Average earning assets increased $2.7 billion from first quarter 2023 largely driven by a $3.1 billion increase in loans and leases and a ~~$595~~$325 million increase in average interest-bearing deposits with banks partially offset by a $673 million decrease in investment securities. Average interest-bearing liabilities increased $7.4 billion largely driven by a $8.8 billion increase in interest-bearing deposits.

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						1Q24 vs. 4Q23				1Q24 vs. 1Q23
(Dollars in millions)	March 31, 2024		December 31, 2023		March 31, 2023		$ Change		% Change		$ Change		% Change
Noninterest income:
Fixed income	$	52	$	37	$	39	$	15	41	%	$	13	33	%
Deposit transactions and cash management	44		46		42		(2)		(4)		2		5
Brokerage, management fees and commissions	24		25		22		(1)		(4)		2		9
Card and digital banking fees	19		16		20		3		19		(1)		(5)
Other service charges and fees	13		13		13		—		—		—		—
Trust services and investment management	11		11		11		—		—		—		—
Mortgage banking income	9		5		5		4		80		4		80
Securities gains (losses), net	—		(5)		—		5		100		—		—
Other income	22		35		19		(13)		(37)		3		16
Total noninterest income	$	194	$	183	$	171	$	11	6	%	$	23	13	%

First Quarter 2024 versus Fourth Quarter2023

Noninterest income of $194 million increased $11 million, or 6%, from fourth quarter 2023, largely driven by higher fixed income production.

Fixed income of $52 million increased $15 million from the prior quarter. Fixed income average daily revenue of $731 thousand increased 58% from $463 thousand in fourth quarter 2023, driven by the market's expectation that short-term rates have peaked as well as improved liquidity conditions in the banking sector.

Mortgage banking income of $9 million increased $4 million driven by higher origination volume and improvement in gain-on-sale spreads.

Other income decreased $13 million largely driven by a $9 million gain on an FHN Financial asset disposition in fourth quarter 2023 and a $3 million decrease in FHLB dividends.


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First Quarter 2024 versus First Quarter 2023

Noninterest income for first quarter 2024 increased $23 million, or 13%, compared to first quarter 2023, primarily driven by higher fixed income.

Fixed income of $52 million increased $13 million from first quarter 2023, largely reflecting more favorable market conditions.

Mortgage banking income of $9 million increased $4 million driven by higher origination volume and improvement in gain-on-sale spreads.

Noninterest Expense

The following tables present the significant components of noninterest expense for each of the periods presented:

Table I.2.4

NONINTEREST EXPENSE


	Three Months Ended						1Q24 vs. 4Q23				1Q24 vs. 1Q23
(Dollars in millions)	March 31, 2024		December 31, 2023		March 31, 2023		$ Change		% Change		$ Change		% Change
Noninterest expense:
Personnel expense	$	301	$	279	$	271	$	22	8	%	$	30	11	%
Net occupancy expense	31		31		31		—		—		—		—
Computer software	30		29		28		1		3		2		7
Deposit insurance expense	24		82		12		(58)		(71)		12		100
Operations services	21		22		22		(1)		(5)		(1)		(5)
Legal and professional fees	14		16		8		(2)		(13)		6		75
Contract employment and outsourcing	13		14		12		(1)		(7)		1		8
Amortization of intangible assets	11		12		12		(1)		(8)		(1)		(8)
Equipment expense	11		11		11		—		—		—		—
Advertising and public relations	8		24		14		(16)		(67)		(6)		(43)
Communications and delivery	8		8		9		—		—		(1)		(11)
Other expense	43		45		48		(2)		(4)		(5)		(10)
Total noninterest expense	$	515	$	573	$	478	$	(58)	(10)	%	$	37	8	%

First Quarter 2024 versus Fourth Quarter 2023

Noninterest expense of $515 million decreased $58 million, or 10%, compared with fourth quarter 2023, largely driven by lower deposit insurance expense. FHN recognized $10 million in FDIC special assessment expense compared to $68 million in the prior quarter. Personnel expense increased $22 million largely reflecting the impact of annual merit adjustments, seasonality in employee benefits, and higher incentive-based compensation from improved fixed income revenue. Advertising and public relations expense decreased $16 million largely attributable to elevated levels of expense from deposit and brand marketing campaigns in the prior quarter.

First Quarter 2024 versus First Quarter 2023

Noninterest expense of $515 million increased $37 million, or 8%, from first quarter 2023. Personnel expense increased $30 million largely attributable to annual merit adjustments, higher incentive-based compensation, and higher deferred compensation expense. Deposit insurance expense increased $12 million reflecting an increase in the estimated FDIC special assessment. The $6 million increase in legal and professional fees was largely attributable to strategic investment initiatives in first quarter 2024. The $6 million decrease in advertising and public relations expense was largely attributable to strategy and timing differences for various advertising campaigns when comparing the periods.

Provision for Credit Losses

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 first quarter 2023, provision for credit losses was $50 million 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 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.~~


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~~Noninterest Income~~

~~The following table presents~~

expected over the ~~significant components of noninterest income for each~~life of the ~~periods presented:~~loan and lease portfolio and the portfolio of unfunded loan commitments.

~~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~~

~~First Quarter 2023 versus Fourth Quarter2022~~

~~Noninterest income of $171~~Provision for credit losses remained unchanged at $50 million ~~decreased $3 million, or 2%, from fourth~~for the first 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 $4 million from~~2024 compared to both 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~~prior quarter and first quarter 2023 decreased $58 million, or 25%, compared to first quarter 2022, primarily reflecting lower fixed income and mortgage banking and title income. Noninterest income results were also impacted by lower securities gains of $6 million.

~~Fixed income of $39 million decreased $34 million from first quarter 2022, largely reflecting less favorable market conditions.~~

~~Mortgage banking and title income decreased $17 million largely driven by declines in mortgage sales volume and margin compression.~~


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~~Noninterest Expense~~

~~The following tables present the significant components of noninterest expense for each of the periods presented:~~

~~Table I.2.4~~

~~NONINTEREST EXPENSE~~

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 expense:
Personnel expense $ 271 $ 281 $ 280 $ (10) (4) % $ (9) (3) %
Net occupancy expense 31 31 32 — — (1) (3)
Computer software 28 28 29 — — (1) (3)
Operations services 22 22 20 — — 2 10
Advertising and public relations 14 16 11 (2) (13) 3 27
Contract employment and outsourcing 12 10 19 2 20 (7) (37)
Amortization of intangible assets 12 13 13 (1) (8) (1) (8)
Equipment expense 11 11 11 — — — —
Communications and delivery 9 9 10 — — (1) (10)
Legal and professional fees 8 12 23 (4) (33) (15) (65)
Other expense 60 70 45 (10) (14) 15 33
Total noninterest expense $ 478 $ 503 $ 493 $ (25) (5) % $ (15) (3) %

~~First Quarter 2023 versus Fourth Quarter~~ ~~2022~~

Noninterest expense of $478 million decreased $25 million, or 5%, compared with fourth quarter 2022. Personnel expense decreased $10 million largely reflecting lower incentive-based compensation and deferred compensation expense. Other expense decreased $10 million, primarily from derivative valuation adjustments related to prior Visa Class B share sales in fourth quarter 2022. Results also reflect a $4 million decrease in legal and professional fees largely attributable to lower merger and integration related costs.

~~First Quarter 2023 versus First Quarter~~ ~~2022~~

Noninterest expense of $478 million decreased $15 million, or 3%, from first quarter 2022. Personnel expense decreased $9 million largely attributable to lower incentive-based compensation partially offset by higher deferred compensation costs. Legal and professional fees decreased $15 million and contract employment and outsourcing expense decreased $7 million from first quarter 2022 largely attributable to lower merger and integration related costs. The increase in other expense compared2023. For additional information about general asset quality trends, refer to the ~~prior year was largely attributable to increases~~Asset Quality section in ~~FDIC assessment expense, contributions, and pension expense.~~this MD&A.

Income Taxes

FHN recorded income tax expense of ~~$76~~$57 million in first quarter ~~2023~~2024 compared to ~~$64~~an income tax benefit of $11 million in fourth ~~quarter 2022 and~~quarter 2023 ~~$57~~and income tax expense of $76 million i inn first quarter ~~2022.~~2023.

The effective tax rate was approximately ~~22.7%~~22.5%, ~~19.2%~~-6.2%, and ~~22.4%~~22.7% for the three months ended March 31, ~~2023,~~2024, December 31, ~~2022~~2023, and March 31, ~~2022,~~2023, 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~~non-deductible portions 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. For the three months ended December 31, 2023, the reduction in the rate was primarily related to the benefit from the settlement of uncertain tax positions related to prior merger-related items.

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 March 31, ~~2023,~~2024, FHN’s gross DTA and gross DTL were ~~$702~~$792 million and ~~$448~~$488 million, respectively, resulting in a net DTA of ~~$254~~$304 million at March 31, ~~2023,~~2024, compared with a net DTA of ~~$313~~$215 million at December 31, ~~2022.~~2023.

As of March 31, ~~2023,~~2024, FHN had deferred tax asset balances related to federal and state income tax


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carryforwards of ~~$30~~$29 million and $2$3 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 ~~$330~~$285 million for first quarter ~~2023, an increase~~2024, a decrease of ~~$31~~$7 million compared to fourth quarter ~~2022,~~2023, largely driven by a ~~$43 million increase~~decrease in ~~revenue~~net interest income, partially offset by ~~an $11 million increase~~a decrease in ~~provision for credit losses.~~noninterest expense. Net interest income of ~~$586~~$532 million ~~increased $42~~decreased $16 million ~~reflecting~~driven by a decline in noninterest-bearing deposits and thus lower earnings credit under the ~~benefit~~fund transfer pricing methodology. The provision for credit losses of ~~higher interest rates and average loan balances, partially offset by higher funding costs.~~$28 million remained unchanged from the prior quarter. Noninterest income decreased $1 million compared to the prior quarter. Noninterest expense decreased $11 million compared to fourth quarter 2023 largely from a reduction in outside services.

Pre-tax income for first quarter ~~2023 increased $65~~2024 decreased $30 million compared to ~~$265~~$315 million for first quarter ~~2022.~~2023. Net interest income ~~increased $159~~decreased $29 million from first quarter ~~2022~~2023 driven by the impact of higher ~~earning asset yields and loan growth~~ funding costs

partially offset by higher ~~funding costs.~~yields on earning assets. The provision for credit losses ~~increased $72 million as the benefit in the prior year reflected a decrease in the unfavorable impact of the pandemic on the macroeconomic forecast.~~decreased $9 million. Noninterest ~~income decreased $7 million and noninterest~~ expense increased ~~$16~~$11 million compared to first quarter ~~2022.~~2023 largely due to higher personnel expense. Results also reflect a $1 million increase in noninterest income compared to first quarter 2023.

Specialty Banking

Pre-tax income in the Specialty Banking segment of ~~$78~~$98 million for first quarter ~~2023~~2024 increased $7$12 million compared to fourth quarter ~~2022, largely~~2023, driven by a $7 million increase in revenue and an $8 million decrease in provision for credit ~~losses. Revenue in the Specialty Banking segment declined $2 million reflecting a $9 million decrease in net interest income~~losses, offset by a $7$4 million increase in noninterest ~~income.~~expense.

Fixed income of ~~$39~~$52 million increased $15 million, driven by the market's expectation that short-term rates have peaked as well as improved liquidity conditions in the banking sector. Mortgage banking income of $9 million increased $4 million ~~despite continuing challenging market conditions. Mortgage banking~~driven by higher origination volume and ~~title~~improvement in gain-on-sale spreads. Other noninterest income ~~of $5~~decreased $10 million, ~~increased $2~~primarily from a $9 million ~~reflecting higher~~ gain on ~~sale spreads.~~an FHN Financial asset disposition in fourth quarter 2023.


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Pre-tax income in the Specialty Banking segment ~~decreased $42~~increased $5 million compared to first quarter ~~2022 largely~~2023 driven by ~~lower~~higher revenue ~~and~~of $18 million, offset by higher provision for credit losses ~~partially offset by lower~~of $9 million and higher noninterest ~~expense.~~expense of $4 million. The ~~decline~~increase in revenue was primarily attributable to ~~lower~~higher fixed income and mortgage banking ~~and title~~ income. The ~~decline~~increase in noninterest expense was largely driven by ~~lower~~higher incentive-based compensation ~~expense.~~expense tied to the improvement in fixed income.

Corporate

Pre-tax loss for the Corporate segment was $129 million for first quarter 2024 compared to $200 million for fourth quarter 2023, largely reflecting a $30 million increase in revenue and a $50 million decrease in noninterest expense. The increase in revenue was largely driven by a $25 million increase in net interest income. The decline in noninterest expense was largely attributable to lower deposit insurance expense partially offset by higher

personnel expense. Results for first quarter 2024 also reflect $5 million in restructuring costs, primarily related to personnel initiatives which will contribute to operational efficiencies.

Pre-tax loss for the Corporate segment was $129 million compared to $77 million for first quarter 2023, ~~compared to $35 million for fourth quarter 2022,~~largely reflecting a ~~$55~~$36 million ~~decrease~~decline in net interest income ~~and a $10 million decrease in noninterest income, offset by a $25 million decrease in noninterest expense. Merger and integration expenses were $21 million compared~~tied to ~~$36 million in the prior quarter.~~

~~Pre-tax loss in the Corporate segment improved $53 million compared to first quarter 2022. Net interest income increased $68 million from~~ the impact of funds transfer ~~pricing. Noninterest~~pricing and a $22 million increase in noninterest expense tied to higher personnel and deposit insurance expense. Personnel expense of $103 million increased $20 million reflecting annual merit adjustments, higher incentive-based compensation, and higher deferred compensation expense. Deposit insurance expense increased ~~$10~~$11 million, primarily from the FDIC special assessment. Noninterest income increased $6 million compared to the first quarter ~~2022,~~2023, largely reflecting higher ~~personnel expense from increased incentive-based~~deferred compensation ~~costs, partially offset by lower legal and professional fees. Merger and integration expenses were $21 million compared to $37 million in first quarter 2022.~~income.

Analysis of Financial Condition

Total period-end assets were ~~$80.7~~$81.8 billion as of March 31, ~~2023~~2024 compared to ~~$79.0~~$81.7 billion at December 31, 2022. The increase in total assets in first quarter 2023 was largely driven by a $1.1 billion increase in interest-bearing deposits with banks from higher FHLB borrowings and a $943 million increase in loans and leases, offset by a $2.0 billion decrease in deposits.2023.

Earning assets consist of loans and leases, loans held for sale, investment securities, and other earning assets, such

as trading securities and interest-bearing deposits with banks. A detailed discussion of the major components of earning assets is provided in the following sections.

Loans and Leases

Period-end loans and leases of $61.8 billion as of March 31, 2024 increased $461 million, or 1%, compared to December 31, 2023. Year-to-date loan growth included a $488 million increase in commercial loans and leases primarily from growth in loans to mortgage companies and commercial real estate loans, offset by a $27 million

decrease in consumer loans primarily from a decline in credit card and other loans.

The following table provides detail regarding FHN's loans and leases as of March 31, 2024 and December 31, 2023.

Table I.2.5

LOANS & LEASES


	As of March 31, 2024				As of December 31, 2023
(Dollars in millions)	Amount		Percent of total		Amount		Percent of total		Growth Rate
Commercial:
Commercial, financial, and industrial (a)	$	32,911	53	%	$	32,633	53	%	1	%
Commercial real estate	14,426		24		14,216		23		1
Total commercial	47,337		77		46,849		76		1
Consumer:
Consumer real estate	13,645		22		13,650		23		—
Credit card and other	771		1		793		1		(3)
Total consumer	14,416		23		14,443		24		—
Total loans and leases	$	61,753	100	%	$	61,292	100	%	1	%

(a)Includes equipment financing loans and leases.


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~~Loans and Leases~~

Period-end loans and leases of $59.0 billion as of March 31, 2023 increased $943 million, or 2%, compared to December 31, 2022. First quarter loan growth included a $561 million increase in commercial loans and leases largely from C&I loan growth and a $382 million increase in consumer loans largely from consumer real estate loan growth. Average loans and leases of $58.1 billion

~~increased $510 million from fourth quarter 2022 from a $319 million increase in average consumer loans and a $191 million increase in average commercial loans. The following table provides detail regarding FHN's loans and leases as of~~ ~~March 31, 2023~~ ~~and~~ ~~December 31, 2022~~.

~~Table I.2.5~~

~~LOANS & LEASES~~

As of March 31, 2023 As of December 31, 2022
(Dollars in millions) Amount Percent of total Amount Percent of total Growth Rate
Commercial:
Commercial, financial, and industrial (a) $ 32,172 54 % $ 31,781 55 % 1 %
Commercial real estate 13,398 23 13,228 23 1
Total commercial 45,570 77 45,009 78 1
Consumer:
Consumer real estate 12,668 22 12,253 21 3
Credit card and other 807 1 840 1 (4)
Total consumer 13,475 23 13,093 22 3
Total loans and leases $ 59,045 100 % $ 58,102 100 % 2 %

~~(a)Includes equipment financing loans and leases.~~

Loans Held for Sale

~~In 2020, FHN obtained IBKC's~~Loans held for sale primarily consists of government guaranteed loans under SBA and USDA lending programs. Smaller amounts of other consumer and home equity loans are also included in loans HFS. Additionally, FHN'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

non-conforming 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 p~~Activity~~ortfolio consists of small business, other consumer loans, mortgage warehouse, USDA and home equity loans.~~.

On March 31, ~~2023~~2024 and December 31, ~~2022~~2023, loans HFS were ~~$650~~$395 million and ~~$590~~$502 million, respectively. Held-for-sale consumer mortgage loans secured by residential real estate in process of foreclosure totaled $3$2 million atfor both March 31, ~~2023~~2024 and December 31, ~~2022~~.

2023.

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 ~~(22%~~of 22% and ~~21%~~23% of total loans at March 31, ~~2023~~2024 and December 31, ~~2022, respectively).~~2023, respectively. Industry concentrations are discussed under the C&I~~C&I~~ heading below.

Credit underwriting guidelines are outlined in Item 7 of FHN’s Annual Report on Form 10-K for the year ended December 31, ~~2022~~2023 in the Asset Quality Section within the Analysis of Financial Condition discussion. FHN’s credit underwriting guidelines and loan product offerings as of March 31, ~~2023~~2024 are generally consistent with those reported and disclosed in FHN’s Form 10-K for the year ended December 31, ~~2022.~~2023.


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~~Commercial~~ Loan and Lease Portfolios

C&I

C&I loans are the largest component of the loan and lease portfolio, comprising ~~54%~~53% of total loans ~~at the end~~as of ~~the first quarter 2023~~both March 31, 2024 and ~~55% at year-end 2022.~~December 31, 2023. The C&I portfolio increased ~~$391~~$278 million to ~~$32.2~~$32.9 billion as of March 31, ~~2023~~2024 compared to $32.6 billion at December 31, ~~2022 and~~2023. The C&I portfolio 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, 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, ~~2022~~2023 was largely driven by growth in ~~Tennessee, asset-based lending and equipment and franchise finance. C&I loan~~

~~growth was tempered by a $218 million decline in~~ loans to mortgage companies and ~~PPP loan run-off of $23 million.~~the wholesale trade portfolio, offset by a decline in

the finance and insurance portfolio. The largest geographical concentrations of balances in the C&I portfolio as of March 31, ~~2023~~2024 were in Tennessee ~~(21%~~(20%), 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 March 31, ~~2023,~~2024, and December 31, ~~2022.~~2023. 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.2.6

C&I PORTFOLIO BY INDUSTRY


		March 31, 2023				December 31, 2022					March 31, 2024							December 31, 2023
(Dollars in millions)	(Dollars in millions)	Amount		Percent		Amount		Percent		(Dollars in millions)	Amount			Percent					Amount				Percent
Industry:	Industry:
Real estate and rental and leasing (a)
Real estate and rental and leasing (a)
Real estate and rental and leasing (a)											$	3,838		12		%			$	3,858			12	%
Finance and insurance	Finance and insurance	$	4,187	13	%	$	4,120	13	%
Real estate rental and leasing (a)		3,443		11		3,277		10
Health care and social assistance	Health care and social assistance	2,678		8		2,657		8
Manufacturing		2,349		7		2,206		7
Loans to mortgage companies
Wholesale trade	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		2,040		6		2,258		7
Manufacturing
Retail trade	Retail trade	1,844		6		1,835		6
Transportation and warehousing	Transportation and warehousing	1,490		5		1,432		4
Energy	Energy	1,376		4		1,364		4
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	$	32,172	100	%	$	31,781	100	%	Total C&I loan portfolio	$	32,911	100		100		%			$	32,633	100		100	%

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

(b)Industries in this category each comprise less than 5% as of March 31, ~~2023.~~2024.

Industry Concentrations

Loan concentrations are considered to exist for a financial institution 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 19% and ~~20%~~18% of FHN’s C&I loan portfolio as of March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, respectively, and as a result could be affected by items that uniquely impact the financial services industry. Loans to borrowers in the real estate and rental and leasing industry were ~~11% and 10%~~12% of FHN's C&I portfolio as of both March 31, ~~2023~~2024 and December 31, ~~2022, respectively.~~2023. As of March 31, ~~2023,~~2024, 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 7% and 6%of the C&I portfolio as of March 31, ~~2023~~2024 and ~~7% as of~~ December 31, ~~2022.~~2023, respectively. This portfolio ~~generally fluctuates with mortgage rates and seasonal factors and~~ includes commercial lines of credit to qualified mortgage companies primarily for the temporary warehousing of eligible mortgage loans prior to the borrower’s sale of those mortgage loans to third-party investors. Balances in this portfolio generally fluctuate with mortgage rates and seasonal factors. Generally, new loan originations to mortgage lenders increase when there is a decline in mortgage rates and decrease when rates ~~rise; in the first quarter 2023, rates rose.~~rise. In periods of economic uncertainty, this trend may not occur even if interest rates are declining. In first quarter ~~2023, 91%~~2024, 80% of the loan originations were home purchases and 9%20% were refinance transactions.


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Finance and Insurance

The finance and insurance component represented ~~13%~~12% of the C&I portfolio as of both March 31, ~~2023~~2024 and

December 31, ~~2022,~~2023, 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 March 31, ~~2023,~~2024, asset-based lending to consumer finance companies represented approximately ~~$2.0~~$1.9 billion of the finance and insurance component.

~~Paycheck Protection Program~~Real Estate and Rental and Leasing

~~In 2020, Congress created~~Loans to borrowers in 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 usereal estate and rental and leasing industry were 12% 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~~FHN's C&I portfolio as of both March 31, ~~2023~~2024 and December 31, 2023. This portfolio primarily consists of equipment financing loans and leases to clients across FHN's footprint in a broad range of industries and asset types. This portfolio also includes ~~454 loans made under the PPP with an aggregate principal~~a smaller balance of ~~$53 million, which are fully government guaranteed with the SBA. Due to the government guarantee~~loans and ~~forgiveness provisions, PPP loans are considered to have~~leases for solar and wind generating facilities.


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Table of Contents

~~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~~ ~~March 31, 2023, and~~ ~~FHN has assigned a risk weight of zero to PPP loans for regulatory capital purposes.~~

For these loans, an insignificant amount of net lender fees remains to be paid to FHN as of March 31, 2023. FHN continues to work with its clients that have applied for and received PPP loan forgiveness.

Commercial Real Estate

The CRE portfolio totaled ~~$13.4~~$14.4 billion as of March 31, ~~2023~~2024 and ~~$13.2~~$14.2 billion as of December 31, ~~2022.~~2023. The CRE portfolio ~~reflects~~includes financings for both commercial construction and ~~nonconstruction~~non-construction loans. ~~The largest geographical concentr~~ations of CRE loan balances as of March 31, 2023 were in Florida (25%), Texas (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~~

The largest geographical concentrations of CRE loan balances as of March 31, 2024 were in Florida (27%), Texas (13%), North Carolina (12%), Georgia (10%), Tennessee (9%), and Louisiana (8%). No other state represented more than 5% of the portfolio. The following table represents subcategories of CRE ~~portfolio consist of multi-family (28%), retail (21%), office (17%), industrial (16%), hospitality (11%), land/land development (2%), and other (5%).~~loans by property type:

Table I.2.7

CRE PORTFOLIO BY PROPERTY TYPE


	March 31, 2024				December 31, 2023
(Dollars in millions)	Amount		Percent		Amount		Percent
Property Type:
Multi-family	$	4,701	33	%	$	4,409	31	%
Office	2,770		19		2,782		20
Industrial	2,320		16		2,236		16
Retail	2,269		16		2,310		16
Hospitality	1,413		10		1,467		10
Land/land development	268		2		307		2
Other CRE (a)	685		4		705		5
Total CRE loan portfolio	$	14,426	100	%	$	14,216	100	%

(a) Property types in this category each comprise less than 5%.

Consumer Loan Portfolios

Consumer Real Estate

The consumer real estate portfolio totaled ~~$12.7~~$13.6 billion and ~~$12.3~~$13.7 billion as of March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, respectively, and is primarily composed of home equity lines and installment loans. The largest geographical concentrations of balances as of March 31, ~~2023~~2024 were in Florida ~~(30%~~(29%), Tennessee (22%), Texas ~~(10%~~(11%), Louisiana ~~(9%~~(8%), North Carolina (7%), Georgia (5%), and New York (5%). No other state represented more than 5% of the portfolio.

As of March 31, ~~2023,~~2024, approximately ~~88%~~89% of the consumer real estate portfolio was in a first lien position. At origination, the weighted average FICO score of this portfolio was ~~758~~759 and the refreshed FICO scores averaged ~~754~~756 as of March 31, ~~2023,~~2024, no ~~significant~~ change from FICO scores ~~of 757 and 754, respectively,~~ as of December 31, ~~2022.~~2023. Generally, performance of this portfolio is affected by life events that affect borrowers’ finances, the level of unemployment, and home prices.

As of March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, FHN had held-for-investment consumer mortgage loans secured by real estate that were in the process of foreclosure totaling ~~$23~~$30 million and ~~$42~~$29 million, respectively.

HELOCs comprised $2.1 billion and ~~$2.0~~$2.2 billion of the consumer real estate portfolio as of March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, 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 March 31, ~~2023,~~2024, approximately ~~93%~~95% of FHN's HELOCs were in the draw period compared to ~~92%~~94% at December 31, ~~2022.~~2023. It is expected that ~~$527~~$572 million, or ~~27%~~28%, 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.


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The following table presents HELOCs currently in the draw period, broken down by months remaining in the draw period.


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~~Table of Contents~~

Table ~~I.2.7~~I.2.8

HELOC DRAW TO REPAYMENT SCHEDULE


		March 31, 2023				December 31, 2022							March 31, 2024								December 31, 2023
(Dollars in millions)	(Dollars in millions)	Repayment Amount		Percent		Repayment Amount		Percent		(Dollars in millions)			Repayment Amount					Percent					Repayment Amount					Percent
Months remaining in draw period:	Months remaining in draw period:
0-12
0-12
0-12	0-12	$	29	2	%	$	31	2	%		$	38			2		2		%			$	30			1		1	%
13-24	13-24	48		2		40		2
25-36	25-36	108		6		109		6
37-48	37-48	138		7		135		7
49-60	49-60	204		10		204		11
>60	>60	1,440		73		1,356		72
Total	Total	$	1,967	100	%	$	1,875	100	%	Total			$	2,036		100			100	%				$	2,101		100		100	%

Credit Card and Other

The credit card and other consumer loan portfolio ~~which is primarily within the Regional Banking segment,~~ totaled ~~$807~~$771 million as of March 31, ~~2023~~2024 and ~~$840~~$793 million as of December 31, ~~2022.~~2023. 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 ~~$33~~$22 million decrease was driven by net repayments in ~~other installment loans, partially offset by an increase in consumer construction loans.~~the overall portfolio.

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 4 in FHN's ~~2022~~2023 Form 10-K.

The ALLL increased to ~~$715~~$787 million as of March 31, ~~2023~~2024 from ~~$685~~$773 million as of December 31, ~~2022.~~2023. The increase

in the ALLL balance as of March 31, ~~2023~~2024 reflects ~~the impact of~~an

evolving macroeconomic outlook, modest grade migration, and net commercial loan ~~growth and an uncertain macroeconomic forecast.~~balance increases. The ALLL to total loans and leases ratio increased 31 basis ~~points~~point to ~~1.21%.~~1.27% compared to 1.26% as of December 31, 2023. The ACL to total loans and leases ratio ~~increased to 1.35%~~remained steady at 1.40% as of March 31, ~~2023 from 1.33% as of~~2024 and December 31, ~~2022.~~2023.

Consolidated Net Charge-offs

Net charge-offs in first quarter ~~2023~~2024 were ~~$16~~$40 million, or an annualized 1127 basis points of total loans and leases, compared to net charge-offs of ~~$10~~$16 million, or 711 basis

points of total loans and leases, in first quarter ~~2022.~~2023. The

$24 million increase in net charge-offs was driven by ~~increases of $3 million~~higher charge-offs in ~~both~~ the commercial ~~and consumer portfolios.~~portfolio.

~~Table I.2.8~~

~~ANALYSIS OF ALLOWANCE FOR CREDIT LOSSES AND CHARGE-OFFS~~

(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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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
Table I.2.9

ANALYSIS OF ALLOWANCE FOR CREDIT LOSSES AND CHARGE-OFFS


(Dollars in millions)		March 31, 2024			December 31, 2023			March 31, 2023
Allowance for loan and lease losses
	C&I	$	348		$	339		$	325
	CRE	181			172			150
	Consumer real estate	231			233			209
	Credit card and other	27			29			31
	Total allowance for loan and lease losses	$	787		$	773		$	715


Reserve for remaining unfunded commitments
	C&I	$	49		$	49		$	53
	CRE	18			22			21
	Consumer real estate	12			12			11

	Total reserve for remaining unfunded commitments	$	79		$	83		$	85

Allowance for credit losses
	C&I	$	397		$	388		$	378
	CRE	199			194			171
	Consumer real estate	243			245			220
	Credit card and other	27			29			31
	Total allowance for credit losses	$	866		$	856		$	800

Period-end loans and leases
	C&I	$	32,911		$	32,633		$	32,172
	CRE	14,426			14,216			13,398
	Consumer real estate	13,645			13,650			12,668
	Credit card and other	771			793			807
	Total period-end loans and leases	$	61,753		$	61,292		$	59,045


ALLL / loans and leases %
	C&I	1.06		%	1.04		%	1.01		%
	CRE	1.26			1.21			1.12
	Consumer real estate	1.69			1.71			1.65
	Credit card and other	3.57			3.63			3.86
	Total ALLL / loans and leases %	1.27		%	1.26		%	1.21		%

ACL / loans and leases %
	C&I	1.21		%	1.19		%	1.17		%
	CRE	1.39			1.36			1.28
	Consumer real estate	1.78			1.79			1.74
	Credit card and other	3.57			3.63			3.86
	Total ACL / loans and leases %	1.40		%	1.40		%	1.35		%

Quarter-to-date net charge-offs (recoveries)
	C&I	$	25		$	29		$	11
	CRE	12			2			2
	Consumer real estate	(1)			—			(1)
	Credit card and other	4			5			4
	Total net charge-offs (recoveries)	$	40		$	36		$	16


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Average loans and leases

C&I

CRE

Consumer real estate

Credit card and other

Total average loans and leases

Charge-off % (annualized)

C&I

CRE

Consumer real estate

Credit card and other

Total charge-off %

ALLL / annualized net charge-offs

C&I

CRE

Consumer real estate

Credit card and other

Total ALLL / net charge-offs

C&I

0.15

0.27

0.13

CRE

0.05

—

(0.01)

Consumer real estate

(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

Consumer real estate

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~~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. NPAs consist of nonperforming loans and

OREO (excluding OREO from government insured mortgages).

Total NPAs (including NPLs HFS) increased to ~~$432~~$512 million as of March 31, ~~2023~~2024 from ~~$327~~$469 million as of December 31, ~~2022,~~2023, largely driven by ~~two large~~an increase in commercial ~~loan relationships.~~loans placed on non-accrual. The nonperforming loans and leases ratio increased 187 basis points to ~~0.72%~~0.82% as of March 31, 2024 compared to year-end 2023.


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Table ~~I.2.9~~I.2.10

NONACCRUAL/NONPERFORMING LOANS, FORECLOSED ASSETS, & OTHER DISCLOSURES


(Dollars in millions)
(Dollars in millions)
(Dollars in millions)	(Dollars in millions)

Nonperforming loans and leases	Nonperforming loans and leases		March 31, 2023			December 31, 2022
		C&I	$	204		$	153
		CRE	63			9
		Consumer real estate	155			152
		Credit card and other	2			2
		Total nonperforming loans and leases (a)	$	424		$	316

Nonperforming loans held for sale (a)			$	4		$	8
Foreclosed real estate and other assets (b)			4			3
		Total nonperforming assets (a) (b)	$	432		$	327

Nonperforming loans and leases to total loans and leases

Nonperforming loans and leases
		C&I	0.63		%	0.48		%
		CRE	0.47			0.07
		Consumer real estate	1.22			1.24
		Credit card and other	0.27			0.27
		Total NPL %	0.72		%	0.54		%

Nonperforming loans and leases										March 31, 2024				December 31, 2023
	C&I
	CRE
	Consumer real estate
	Credit card and other
	Total nonperforming loans and leases (a)

Nonperforming loans held for sale (a)
Nonperforming loans held for sale (a)
Nonperforming loans held for sale (a)
Foreclosed real estate and other assets (b)
	Total nonperforming assets (a) (b)

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
		C&I
		C&I								0.63	%			0.57	%
	CRE
	Consumer real estate
	Credit card and other
	Total NPL %								Total NPL %			0.82	%			0.75	%

ALLL / NPLs	ALLL / NPLs
ALLL / NPLs
ALLL / NPLs
		C&I
		C&I
		C&I								168	%			184	%
	CRE
	Consumer real estate
	Credit card and other
	Total ALLL / NPLs								Total ALLL / NPLs			156	%			167	%
		C&I	159		%	202		%
		CRE	238			1,554
		Consumer real estate	135			131
		Credit card and other	1,439			1,364
		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~~Excludes government-insured foreclosed real estate. ~~Foreclosed~~There were no foreclosed real estate balances from GNMA loans ~~totaled less than $1 million as of both~~at March 31, ~~2023~~2024 and December 31, ~~2022.~~2023.


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The following table provides nonperforming assets by business segment:

Table ~~I.2.10~~I.2.11

NONPERFORMING ASSETS BY SEGMENT


(Dollars in millions)	(Dollars in millions)

(Dollars in millions)

(Dollars in millions)
Nonperforming loans and leases (a) (b)	Nonperforming loans and leases (a) (b)		March 31, 2023			December 31, 2022
Nonperforming loans and leases (a) (b)
Nonperforming loans and leases (a) (b)										March 31, 2024				December 31, 2023
	Regional Banking
	Specialty Banking
	Corporate
	Consolidated
Foreclosed real estate (c)
		Regional Banking
		Regional Banking
		Regional Banking
	Specialty Banking
	Corporate
	Consolidated
Nonperforming Assets (a) (b) (c)
		Regional Banking
		Regional Banking
		Regional Banking
	Specialty Banking
	Corporate
	Consolidated
Nonperforming loans and leases to loans and leases
		Regional Banking
		Regional Banking
		Regional Banking								0.79	%			0.74	%
	Specialty Banking
	Corporate
	Consolidated								Consolidated			0.82	%			0.75	%
NPA % (d)
		Regional Banking
		Regional Banking
		Regional Banking								0.79	%			0.74	%
	Specialty Banking
	Corporate
	Consolidated								Consolidated			0.82	%			0.76	%
		Regional Banking	$	334		$	227
		Specialty Banking	62			60
		Corporate	28			29
		Consolidated	$	424		$	316
Foreclosed real estate (c)
		Regional Banking	$	—		$	—
		Specialty Banking	3			2
		Corporate	1			1
		Consolidated	$	4		$	3
Nonperforming Assets (a) (b) (c)
		Regional Banking	$	334		$	227
		Specialty Banking	65			62
		Corporate	29			30
		Consolidated	$	428		$	319
Nonperforming loans and leases to loans and leases
		Regional Banking	0.79		%	0.54		%
		Specialty Banking	0.38			0.37
		Corporate	5.82			6.28
		Consolidated	0.72		%	0.54		%
NPA % (d)
		Regional Banking	0.79		%	0.55		%
		Specialty Banking	0.40			0.39
		Corporate	5.95			6.54
		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 for both~~government-insured mortgages. There were no foreclosed real estate balances from GNMA loans at March 31, ~~2023~~2024 and December 31, ~~2022.~~2023.

(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.

Loans 90 days or more past due and still accruing were ~~$12~~$10 million as of March 31, ~~2023~~2024 compared to ~~$33~~$21 million as of December 31, ~~2022.~~2023. Loans 30 to 89 days past due

~~were $79~~and still accruing increased to $119 million as of March 31, ~~2023~~2024 compared to ~~$105~~$85 million as of December 31, ~~2022.~~2023, largely driven by an increase of $23 million in C&I loans ~~past due 30 to 89 days decreased $24~~and an increase of $11 million ~~and past due CRE loans decreased $6 million while past due~~in consumer real estate ~~loans increased $5 million.~~loans.


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Table ~~I.2.11~~I.2.12

ACCRUING DELINQUENCIES & OTHER CREDIT DISCLOSURES

(Dollars in millions)

Accruing loans and leases 30+ days past due

March 31, 2023

December 31, 2022

C&I

CRE

Consumer real estate

Credit card and other

Total accruing loans and leases 30+ days past due

138

Accruing loans and leases 30+ days past due

C&I

CRE

Consumer real estate

Credit card and other

Total accruing loans and leases 30+ days past due

Accruing loans and leases 30+ days past due %

C&I

0.08

0.19

Accruing loans and leases 30+ days past due %

CRE

0.04

0.08

Consumer real estate

0.39

0.44

Credit card and other

1.26

1.28

Total accruing loans and leases 30+ days past due %

0.15

0.24

Accruing loans and leases 30+ days past due %

C&I

CRE

Consumer real estate

Credit card and other

Total accruing loans and leases 30+ days past due %

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

C&I

—

Consumer real Estate

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

Credit card and other

Total accruing loans and leases 90+ days past due

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

C&I

Consumer real Estate

Credit card and other

Total accruing loans and leases 90+ days past due

Loans held for sale

30 to 89 days past due

30 to 89 days past due - guaranteed portion (d)

90+ days past due

90+ days past due - guaranteed portion (d)

(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 ~~$432~~$712 million on March 31, ~~2023~~2024 and ~~$492~~$666 million on December 31, ~~2022.~~2023. 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.

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. 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

Note 1 - Basis of Presentation and Accounting Policies, Note 3 - Loans and Leases, and Note 4 - Allowance for Credit Losses for further discussion regarding troubled loan modifications.


			8684			~~1Q23~~1Q24 FORM 10-Q REPORT


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

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 deteriorated to such an extent that the credits are individually reviewed for expected credit losses, classified as 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 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 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

using the parameters of the former Home Affordable Modification Program.

Within the HELOC and 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 minimum of 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 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 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 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.

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 were ~~$10.3~~$9.5 billion and ~~$10.2~~$9.7 billion on March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, respectively, representing ~~approximately 13%~~12% of total assets for both periods. See Note 2 - Investment Securities for more information about the securities portfolio.

~~Deposits~~

~~Total de~~
posits 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.


			8785			~~1Q23~~1Q24 FORM 10-Q REPORT


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Deposits

Total deposits of $65.7 billion as of March 31, 2024 were stable compared to December 31, 2023. Interest-bearing deposits increased $755 million and noninterest-bearing deposits decreased $794 million. FHN continues to focus on building and deepening relationships to retain new clients obtained from the 2023 promotional campaigns.

FHN continues to maintain a well-diversified and stable funding mix across its ~~footprint:~~footprint and specialty lines of business.

•At March 31, ~~2023,~~2024, commercial deposits were ~~$33.1~~$36.2 billion, or ~~54%~~55% of total deposits and consumer deposits were ~~$28.3~~$29.5 billion, or ~~46%~~45% of total deposits. At December 31, 2023, commercial deposits were $35.9 billion, or 55% of total deposits and consumer deposits were $29.9 billion, or 45% of total deposits.

•At March 31, ~~2023,~~2024, 38% of deposits were associated with Tennessee, ~~19%~~18% with Florida, 13% with North Carolina,

and 12% with Louisiana, ~~and 11% with North Carolina,~~ with no other state above 10%. This mix remained consistent with December 31, 2023.

•Total estimated uninsured deposits were ~~$27.8~~$27.4 billion and ~~$30.3~~$26.8 billion as of March 31, ~~2023~~2024 and

December 31, ~~2022,~~2023, representing ~~45%~~42% and ~~48%~~41% of total deposits, respectively.

•Of the uninsured deposits at March 31, ~~2023, $5.0~~2024, $5.5 billion, or 8% of total deposits, were collateralized. At December 31, 2023, collateralized deposits were $5.3 billion, or 8% of total deposits.

See Table I.2.2 - 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 March 31, ~~2023~~2024 and December 31, ~~2022.~~2023.

Table ~~I.2.12~~I.2.13

DEPOSITS

March 31, 2023 December 31, 2022
(Dollars in millions) Amount Percent of total Amount Percent of total Change Percent
Savings $ 21,346 35 % $ 21,971 35 % $ (625) (3) %
Time deposits 3,777 6 2,887 4 890 31
Other interest-bearing deposits 15,183 25 15,165 24 18 —
Total interest-bearing deposits 40,306 66 40,023 63 283 1
Noninterest-bearing deposits 21,134 34 23,466 37 (2,332) (10)
Total deposits $ 61,440 100 % $ 63,489 100 % $ (2,049) (3) %


	March 31, 2024				December 31, 2023
(Dollars in millions)	Amount		Percent of total		Amount		Percent of total		Change		Percent
Savings	$	25,848	39	%	$	25,082	38	%	$	766	3	%
Time deposits	6,297		10		6,804		10		(507)		(7)
Other interest-bearing deposits	17,186		26		16,690		26		496		3

Total interest-bearing deposits	49,331		75		48,576		74		755		2
Noninterest-bearing deposits	16,410		25		17,204		26		(794)		(5)
Total deposits	$	65,741	100	%	$	65,780	100	%	$	(39)	—	%

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 ~~increased to $6.6~~were $3.2 billion as of March 31, ~~2023~~2024 compared to ~~$2.8~~$3.1 billion as of December 31, ~~2022,~~2023 ~~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~~$1.2 billion as of both March 31, ~~2023~~2024 and December 31, ~~2022.~~2023.


			86			1Q24 FORM 10-Q REPORT


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

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 ~~$8.9~~$9.2 billion at March 31, ~~2023~~2024 and ~~$8.5~~$9.3 billion at December 31, ~~2022.~~2023. Significant changes included net income of ~~$255 million and an increase in AOCI of $160~~$197 million offset by ~~$90~~$159 million in common stock repurchases and $92 million in common and preferred 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:

Table I.2.14

REGULATORY CAPITAL DATA


(Dollars in millions)	March 31, 2024		December 31, 2023
Shareholders’ equity	$	8,878	$	8,996
Modified CECL transitional amount (a)	28		57
FHN non-cumulative perpetual preferred stock	(520)		(520)
Common equity tier 1 before regulatory adjustments	$	8,386	$	8,533
Regulatory adjustments:
Disallowed goodwill and other intangibles	(1,607)		(1,617)
Net unrealized (gains) losses on securities available for sale	891		836
Net unrealized (gains) losses on pension and other postretirement plans	271		273
Net unrealized (gains) losses on cash flow hedges	109		79
Disallowed deferred tax assets	(1)		—

Common equity tier 1	$	8,049	$	8,104
FHN non-cumulative perpetual preferred stock (b)	426		426
Qualifying noncontrolling interest— First Horizon Bank preferred stock	295		295

Tier 1 capital	$	8,770	$	8,825
Tier 2 capital	1,144		1,097
Total regulatory capital	$	9,914	$	9,922
Risk-Weighted Assets
First Horizon Corporation	$	71,145	$	71,074
First Horizon Bank	70,485		70,635
Average Assets for Leverage
First Horizon Corporation	81,084		82,540
First Horizon Bank	80,336		81,898


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Table of Contents

Table ~~I.2.13~~

~~REGULATORY CAPITAL DATA~~

(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.2.14~~I.2.15

REGULATORY RATIOS & AMOUNTS


		March 31, 2023				December 31, 2022				March 31, 2024		December 31, 2023
		Ratio		Amount		Ratio		Amount		Ratio	Amount		Ratio	Amount
Common Equity Tier 1	Common Equity Tier 1
First Horizon Corporation	First Horizon Corporation	10.36	%	$	7,202	10.17	%	$	7,032
First Horizon Corporation
First Horizon Corporation
First Horizon Bank	First Horizon Bank	10.94		7,557		10.77		7,405
Tier 1	Tier 1
First Horizon Corporation
First Horizon Corporation
First Horizon Corporation	First Horizon Corporation	12.11		8,417		11.92		8,247
First Horizon Bank	First Horizon Bank	11.37		7,852		11.20		7,700
Total	Total
First Horizon Corporation	First Horizon Corporation	13.61		9,458		13.33		9,222
First Horizon Corporation
First Horizon Corporation
First Horizon Bank	First Horizon Bank	12.67		8,748		12.41		8,532
Tier 1 Leverage	Tier 1 Leverage
First Horizon Corporation
First Horizon Corporation
First Horizon Corporation	First Horizon Corporation	10.69		8,417		10.36		8,247
First Horizon Bank	First Horizon Bank	10.05		7,852		9.76		7,700
Other Capital Ratios	Other Capital Ratios
Total period-end equity to period-end assets	Total period-end equity to period-end assets	11.02				10.83
Total period-end equity to period-end assets
Total period-end equity to period-end assets
Tangible common equity to tangible assets (c)
Tangible common equity to tangible assets (c)
Tangible common equity to tangible assets (c)	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)	9.66				9.35
Adjusted tangible common equity to risk-weighted assets (c)
Adjusted tangible common equity to risk-weighted assets (c)

(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. For March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, 25% and 50% ~~and 25%~~, respectively, of the full amount 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.~~date.

(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.2.22.~~I.2.23.

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.


			89			~~1Q23 FORM 10-Q REPORT~~


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

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 March 31, ~~2023, each of~~2024, both FHN and First Horizon Bank had sufficient capital to qualify as well-capitalized institutions and to meet the capital conservation buffer requirement. Capital ratios for both FHN and First Horizon Bank are calculated under the final rule issued by the

banking regulators in 2020 to delay the effects of CECL on regulatory capital for two years, followed by a three-year transition period.

For both FHN and First Horizon ~~Bank's~~Bank, the risk-based regulatory capital ratios ~~increased~~decreased in first quarter ~~2023~~2024 relative to year-end ~~2022~~2023 primarily from the impact of common share repurchases and net income less ~~dividends during the first three months~~dividends. The Tier 1 Leverage ratio for both FHN and First Horizon Bank increased from year-end 2023 largely as a result of ~~2023.~~a decrease in average assets.

During ~~2023,~~2024, capital ratios are expected to remain above well-capitalized standards plus the required capital conservation 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.buffer.

Common Stock ~~Purchase Programs~~Purchases

~~General Purchase Program~~

~~Pursuant to Board authority,~~ FHN may ~~repurchase~~purchase 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 authorized the common stock purchase program described below. FHN’s Board has not authorized a preferred stock purchase program.

2024 General Purchase Program

On January ~~27, 2021,~~23, 2024, FHN announced that its Board of Directors approved a new ~~$500~~$650 million common share purchase program that ~~was~~is scheduled to expire on January 31, ~~2023. On October 26, 2021, FHN announced that the 2021 program had been increased by $500 million and extended to October 31, 2023. The 2021 program is not tied to any compensation plan.~~2025. 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~~are subject to various factors, including FHN's capital position, financial ~~performance, capital impacts of strategic initiatives, market conditions and regulatory considerations.~~

As of 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. The pendency of the TD Transaction resulted in no purchases under the 2021 program since the Transaction was announced in 2022. With the Transaction terminated, FHN expects to utilize the program in a more normal fashion.

~~Table 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~~

~~2023~~

~~January 1 to January 31~~

—

~~N/A~~

—

~~598,646~~

~~February 1 to February 28~~

—

~~N/A~~

—

~~598,646~~

~~March 1 to 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


			9088			~~1Q23~~1Q24 FORM 10-Q REPORT


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

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'sperformance, expected capital ~~position, financial performance, capital~~

impacts of strategic initiatives, market conditions, business conditions, and regulatory considerations. Absent a Rule 10b5-1 plan, FHN does not purchase shares under this program during blackout periods when senior executives are prohibited from purchasing FHN stock on the open market.

As of March 31, ~~2023, the maximum number of shares that may be purchased~~2024, $154 million in purchases had been made life-to-date under the 2024 program ~~was 22.3 million shares. Management currently does not anticipate purchasing a material number~~at an average price per share of ~~shares under this authority~~$14.39, or $14.37 excluding commissions. Program purchases made during ~~2023.~~the quarter ended March 31, 2024 are summarized in the following table.

Table I.2.16

COMMON STOCK PURCHASES—~~COMPENSATION PLANS~~2024 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
2023
(Dollar values and volume in thousands, except per share data)							(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
2024
January 1 to January 31	January 1 to January 31	107	$	24.57	107	22,399
February 1 to February 28		2	24.75		2	22,397
January 1 to January 31
January 1 to January 31
February 1 to February 29
March 1 to March 31	March 1 to March 31	50	21.82		50	22,348
Total	Total	159	$	23.71	159

(a) Represents total costs including commissions paid. Average price paid does not reflect the one percent excise tax charged on public company share repurchases.

Stock Award Purchases

As authorized by the Board's Compensation Committee, FHN makes automatic stock purchases by withholding stock-based award shares to cover tax obligations associated with those awards. Those limited, off-market

purchases are not associated with an announced purchase program and are made any time an associated tax obligation arises, whether or not a blackout period is in effect. Tax withholding purchases made during the quarter ended March 31, 2024 are summarized in the following table.


			91			~~1Q23 FORM 10-Q REPORT~~

Table I.2.17

COMMON STOCK PURCHASES—TAX WITHHOLDING FOR STOCK AWARDS


(Dollar values and 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
2024
January 1 to January 31	49	$	14.60	N/A	N/A
February 1 to February 29	1	13.93		N/A	N/A
March 1 to March 31	270	14.33		N/A	N/A
Total	320	$	14.37	N/A


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

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 ~~2022~~2023 Annual Report on Form 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 our trading securities portfolio.


			89			1Q24 FORM 10-Q REPORT


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

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.2.17~~I.2.18

VaR & SVaR MEASURES

Three Months Ended
March 31, 2023

As of
March 31, 2023

(Dollars in millions)

Mean

High

Low

(Dollars in millions)

1-day

VaR

SVaR

10-day

VaR

SVaR

Three Months Ended
March 31, 2022

As of
March 31, 2022

(Dollars in millions)

Mean

High

Low

1-day

VaR

SVaR

10-day

VaR

SVaR


		Year Ended December 31, 2022						As of December 31, 2022			Year Ended December 31, 2023			As of December 31, 2023
(Dollars in millions)	(Dollars in millions)	Mean		High		Low				(Dollars in millions)	Mean	High	Low
1-day	1-day
VaR	VaR	$	2	$	4	$	2	$	3
VaR
VaR
SVaR	SVaR	5		7		4		6
10-day	10-day
VaR	VaR	8		11		3		10
VaR
VaR
SVaR	SVaR	24		34		18		29


			92			~~1Q23 FORM 10-Q REPORT~~


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

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.2.18~~I.2.19

SCHEDULE OF RISKS INCLUDED IN VaR


		As of March 31, 2023				As of March 31, 2022				As of December 31, 2022					As of March 31, 2024		As of March 31, 2023			As of December 31, 2023
(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	$	4	$	—	$	1	$	1	$	3
Credit spread risk	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.


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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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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 March 31, ~~2023,~~2024, 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~~plus/minus 200 basis points are estimated to have variances as shown in the table below.

Table ~~I.2.19~~I.2.20

INTEREST RATE SENSITIVITY


Shifts in Interest Rates (in bps)	Shifts in Interest Rates (in bps)	% Change in Projected Net Interest Income	Shifts in Interest Rates (in bps)	% Change in Projected Net Interest Income
-200			-200	(5.0)%
-100	-100	(6.2)%	-100	(2.7)%
-50	-50	(3.0)%	-50	(1.3)%
-25	-25	(1.5)%	-25	(0.6)%
+25	+25	+1.5%	+25	0.5%
+50	+50	+2.9%	+50	0.9%
+100	+100	+5.7%	+100	1.7%
+200	+200	+9.0%	+200	1.7%

A steepening yield curve scenario, where long-term rates increase by 50 basis points and short-term rates are static,


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results in a favorable NII variance of ~~0.3%~~0.4%. 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 ~~0.4%~~0.5%. 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.

Short-term interest 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 last half of 2022, ~~which has continued into early 2023.~~throughout 2023, and during the first quarter 2024. The inverted yield curve indicates market expectations that short-term rates ~~are~~have likely ~~to peak~~peaked and then could decline in future periods. Market participants are ~~divided~~now projecting a few rate cuts in ~~their opinions regarding~~2024 while the ~~timing and magnitude of further short-term rate increases or subsequent rate cuts.~~December 2023 Fed Dot plot has indicated three 25 basis point cuts in 2024. FHN continues to monitor current economic trends and potential exposures closely. For additional information, see YieldCurve within Market Uncertainties and Prospective Trends below.

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. After the banking crisis in the first half of 2023, ALCO and the Board examined the liquidity risk management framework and policies to ensure alignment with evolving regulatory expectations, industry best practices, and the company’s risk appetite. 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~~As of March 31, 2024, available liquidity sources included cash, incremental borrowing capacity at the FHLB, access to ~~market conditions~~Federal Reserve Bank borrowings through the discount window, and ~~compliance with applicable regulatory requirements from~~

~~time to time, funds are available from a number~~unencumbered securities. Additional sources of ~~sources, including the available-for-sale securities portfolio,~~liquidity included dealer and commercial customer repurchase agreements, access to the overnight and term Federal F~~unds~~Funds markets, ~~incremental borrowing capacity~~brokered deposits, loan sales, and syndications. The FRB Bank Term Funding Program expired on March 11, 2024. The table below details FHN's sources of available liquidity at ~~the FH~~March 31, 2024.~~LB ($10.1 billion was available~~

Table I.2.21

AVAILABLE LIQUIDITY

as of March 31, ~~2023), brokered~~2024


(Dollars in millions)	Total Capacity		Outstanding Borrowings		Available Liquidity
Cash on deposit with FRB (a)	$	1,732	$	—	$	1,732
FHLB	9,241		—		9,241
Discount Window	24,249		—		24,249

Unencumbered securities (b)	1,136		—		1,136
Total Available Liquidity					$	36,358

(a) Included in interest-bearing deposits ~~loan sales, syndications, and access~~with banks on the Consolidated Balance Sheets.

(b) Subject to ~~the Federal~~market haircuts on collateral.

~~Reserve Bank.~~

~~Core~~ ~~deposits are~~Generally, a ~~significant~~primary source of funding ~~and have historically been~~for a ~~stable source of liquidity for banks. Generally,~~bank is core deposits ~~represent funding~~ from ~~a financial institution's~~the bank's client ~~base which provides inexpensive, predictable pricing.~~base. The period-end loans-to-deposits ratio ~~of average loans, excluding loans HFS and restricted real estate loans, to average core deposits~~ was ~~96% for~~94% as of March 31, ~~2023~~2024 and ~~82% for~~93% as of December 31, ~~2022.~~2023.

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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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 March 31, ~~2023~~2024, FHN had outstanding ~~$1.3 billion~~$797 million in senior and subordinated unsecured debt and ~~$1.0 billion~~$520 million in non-cumulative perpetual preferred stock. On April 1, 2024,


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FHN provided notice of its intent to redeem all outstanding shares of its Series D Non-Cumulative Perpetual Preferred Stock, effective May 1, 2024. Following the redemption on May 1, 2024, no shares of Series D Preferred Stock remain outstanding. Refer to Note 17 - Subsequent Events for additional information. As of March 31, ~~2023,~~2024, First Horizon Bank and subsidiaries had outstanding preferred shares of $295 million, which are reflected as noncontrolling interest on the Consolidated Balance Sheets.

Parent company liquidity is primarily provided by cash flows stemming from dividends and interest payments collected from subsidiaries. These sources of cash represent the primary sources of funds to pay cash dividends to shareholders and principal and interest to debt holders of FHN. Applying the dividend restrictions imposed under applicable federal and state rules, ~~as outlined above,~~ the Bank’s total amount available for dividends was $1.1 billion as of April 1, ~~2023.~~2024.

In March 2022, FHN agreed to suspend the Dividend Reinvestment Plan in connection with the TD Transaction. During the suspension period, dividend payments of FHN ~~were~~are not automatically reinvested in additional shares of FHN common stock and participants in the Plan ~~were~~are not able to purchase shares of FHN common stock through optional cash investments under the Plan.

First Horizon Bank declared and paid a common ~~dividends~~dividend to the parent company in the amount of ~~$110~~$310 million and $150 million in ~~both~~ first and second quarter ~~2023~~2024, respectively. Total common dividends of $220 million were declared and ~~$435 million~~paid to the parent company in ~~2022.~~2023. First Horizon Bank declared preferred dividends in first quarter of ~~2023~~2024 and declared and paid preferred dividends in each quarter of ~~2022.~~2023. Additionally, First Horizon Bank declared preferred dividends in second quarter ~~2023,~~2024, payable in July ~~2023.~~2024.

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 April ~~3, 2023.~~1, 2024. FHN paid cash dividends of $1,625 per Series E preferred share and $1,175 per Series F preferred share on April 10, ~~2023~~2024 and $165 per Series C preferred share and $305 per Series D preferred share on May 1, ~~2023.~~2024. In addition, in April ~~2023,~~2024, the Board approved cash dividends per share in the following amounts:

Table ~~I.2.20~~I.2.22

CASH DIVIDENDS

APPROVED BUT NOT PAID

Dividend/Share

Record Date

Payment Date

Common Stock

0.15

06/~~16/2023~~14/2024

07/~~03/2023~~01/2024

Preferred Stock

Series B

331.25

07/17/~~2023~~2024

08/01/~~2023~~2024

Series C

165.00

07/17/~~2023~~2024

08/01/~~2023~~2024

Series E

1,625.00

06/~~23/2023~~25/2024

07/10/~~2023~~2024

Series F

1,175.00

06/~~23/2023~~25/2024

07/10/~~2023~~2024

Off-Balance Sheet Arrangements

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

Repurchase Obligations

Prior to September 2008, 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.


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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

As discussed in Note 10 - Contingencies and Other Disclosures, FHN’s repurchase and foreclosure liability, primarily related to its pre-2009 mortgage ~~business,~~origination, sale, securitization, and servicing 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. The active pipeline consists of mortgage loan repurchase and make-whole demands from loan purchasers or securitization participants, foreclosure/servicing demands from borrowers, and certain related exposures. 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 total repurchase and foreclosure liability, which includes both the legacy pre-2009 business and the current mortgage business, was ~~$15 million and~~ $16 million as of both March 31, ~~2023~~2024 and December 31, ~~2022, respectively~~2023.

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.

In addition to trends and events noted elsewhere in this MD&A, FHN believes the following trends and events are noteworthy at this time.

Inflation, Recession, and Federal Reserve Policy

Economic Overview

The ~~year 2022 and first quarter 2023 were economically unusual~~post-COVID economy in ~~several respects. The period was~~the U.S. has been marked by: strong inflation, ~~(which~~which began in ~~2021);~~2021, peaked in 2022, and abated, though not fully, starting in 2023; the Federal Reserve ~~implementing a~~ "tightening" ~~policy~~in 2022 and the first half of 2023 to contain inflation by rapidly increasing short-term interest rates and ending asset purchases; ~~and~~ low unemployment ~~rates despite low~~rates; moderate economic ~~growth.~~growth; and a profoundly inverted yield curve. Key aspects were:

•Although the U.S. economy flirted with recession in 2022, it did not officially enter one. In 2023 recession ~~risk remains high but no~~expectations moderated significantly. Early in 2024, recession ~~has begun.~~

•~~Although recessionary~~ expectations ~~were and remain high, consumption and employment have been robust.~~for the rest of this year generally are low.

•The rise in short-term interest rates by the Federal Reserve in 2022 was both rapid and substantial, taking the

overnight Fed Funds rate from 0.20% in March

2022 to 4.65% a year later. Hikes after that were much more modest and infrequent.

•~~Despite the~~In response to 2022's extremely rapid and vigorous tightening of monetary policy, the inflation rate in the U.S. ~~remains high in relation to the decade preceding the COVID-19 pandemic, and in relation to~~now is well below 2022's levels. However, measures of inflation generally remain higher than the Federal Reserve's stated long-term goal of 2%.

•The Federal Reserve has signaled that hikes have ended and that a short term rate cut might become appropriate. No policy or timing commitments have been made. Future actions continue to depend upon future data.

•In first quarter 2024, inflation measures rose modestly, reversing a slow down-trend in 2023 and ending most expectations of a rate cut in the near term.


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•Monetary tightening often creates yield curve inversion for a time. In the current cycle, traditional inversion (when ten-year treasury rates are below two-year rates) has been both very deep and unusually sustained, with the current inversion having begun in the summer of 2022.

•Many factors likely contributed to the current sustained inversion. The immediate cause, of course, is that demand for long-term treasury debt has remained high, depressing yields, even though short yields are higher. The underlying causes of that demand imbalance likely are complex and open to debate.

•A short-term rate cut by the Federal Reserve should lessen inversion, but only if long-term rates do not likewise drop.

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 the first part of 2023. ~~The~~All but one of the raises in 2022 were 75 and 50 basis points each—aggressive by historical standards—while the 2023 raises were athe 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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creating or deepening an economic recession. ~~However,~~The Federal Reserve has indicated that future decisions will be heavily impacted by economic data, especially inflation-rate and -trend data, available at each decision point. Most recently the Federal Reserve ~~also~~ has indicated an expectation that its next action, at an unspecified future point, will be a ~~willingness to slow or even pause its increases to better assess economic reaction thus far. The March banking crisis (mentioned below) may contribute to~~rate cut rather than a ~~more cautious approach, as it fuels concerns that falling deposits could result in reduced ability to lend.~~rate hike.

FHN cannot predict exactly when or how much short-term rates will be ~~further raised, nor~~changed, how market-driven long-term rates will behave, nor how those actions may affect financial markets, during ~~2023. FHN's expectations align with~~ the ~~forward curve in that short-term rates will stop rising at some point in 2023 and begin to fall by the fourth quarter~~rest of ~~2023.~~2024.

Yield Curve

~~During the past five quarters, the yield curve flattened and inverted many times.~~ Unusual yield curve effects, including inversion, ~~may continue.~~are common when monetary policy changes. A traditional measure of inversion occurs when the two-year U.S. Treasury rate is higher than the ten-year rate. Traditional inversion ~~was~~has been sustained ~~for~~continuously since the summer of 2022, an unusually long period. The degree of inversion has varied during that period, but generally has been much ~~of the last three quarters, which~~deeper than is ~~very unusual.~~typical. Sustained traditional yield curve inversion is viewed, with statistical support, as a harbinger of economic recession, but recession has not yet occurred and the U.S. economy currently does not appear close to entering one.

The most recent period with deep and longer-lasting inversion was over 40 years ago. That 4-5 year period was marked by stagflation (low economic growth coupled with high inflation), followed by extremely robust interest rate hikes and a severe recession.

Yield curve flattening and inversion generally reduces the profit FHN can make from lending by compressing FHN's net interest margin, and also generally reduces FHN's revenues from bond trading. Refer to Interest Rate & Yield Curve Risks, located in Item 1A. Risk Factors of FHN's Annual Report on Form 10-K for the year ended December 31, 2023, for a discussion of the risks to FHN associated with flattening and inversion.

Recession

The U.S. economy contracted (experienced negative growth) during the first two quarters of 2022, in both cases modestly. Although two consecutive quarters of contraction often coincides with recession, in 2022 it did not. The economy expanded in each ~~of the most recent three quarters. However, the rate of expansion is falling. If that trend continues, the economy will contract again later this year or early next.~~quarter since then.

Recession expectations in the U.S. were high in 2022 and ~~first quarter~~early 2023. ~~Traditionally, when people and businesses expect a~~They moderated significantly after that. Current 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.expectations generally are low.

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~~the two U.S. failures, bank investors and clients across the U.S. ~~have become~~became 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~~Following these failures, 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 and substantial 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~~early May 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~~reappeared in May. By June bank-stock volatility had abated again, but with regional bank prices well below pre-crisis levels.

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;


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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~~those banks 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 were volatile during much of


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2022. Volatility overall moderated somewhat in ~~late 2022 and early~~ 2023, but volatile episodes have continued. War in the Middle East that started in October 2023 had a much more muted financial market impact than was true in 2022.

Financial asset values broadly fell ~~last year,~~in 2022, especially during the second and third quarters. ~~Broad~~By mid-year 2023, broad stock indices ~~have improved~~largely had recovered from 2022's low points, but ~~remain~~longer-term fixed-rate debt investments remained well below ~~three-year highs, particularly for mid-size~~previous values. By year-end 2023, stock values in most (but not all) sectors had recouped much of their earlier losses, and ~~smaller companies.~~debt investment values generally improved somewhat from their lows when long-term rates fell in anticipation of possible short-term rate cuts in 2024 by the Federal Reserve. Those late-2023 trends generally have continued into 2024.

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~~and FHN's net interest margin ~~compressing slightly from fourth~~started to compress. FHN was able to reverse the compression during the year fueled in part by using increased deposits and capital to reduce borrowings. Moderate margin expansion continued in first quarter ~~2022.~~2024, though it remained well below the same quarter in 2023.

In 2022 and early 2023, FHN experienced a normalization of deposit levels since first quarter 2020 as it allowed ~~higher cost~~ surge deposits resulting from ~~economic~~COVID-driven stimulus

programs to move off its balance sheet. Net deposit outflows ~~averaged~~ranged from roughly $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~~That outflow trend ended in ~~first~~second quarter ~~2023 than first quarter 2020. To mitigate~~as FHN had net deposit ~~outflows,~~inflows of $4.0 billion. For the year 2023, net deposits increased over $2 billion. However, FHN ~~has~~ increased deposit rates appreciably ~~over the past several quarters,~~in 2023, particularly in May and June. Rates paid abated somewhat in first quarter ~~2023. In contrast, during this period FHN's total loans grew modestly each quarter. These impacts resulted from a deliberate plan~~2024 as 2023's promotional rates have reverted to ~~allow deposits to return to more normal levels in relation to loans. We started raising deposit rates to more competitive levels during~~market norms. Deposits at the end of 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~~2024 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.roughly unchanged from year-end 2023.

In addition, some of FHN's businesses have been negatively impacted by ~~rising rates.~~higher rates and inversion. Rate increases have pushed home mortgage rates in the U.S. much higher than in early ~~2022.~~2022, reducing demand. FHN's direct mortgage lending and lending to mortgage companies saw business decline significantly in ~~2022.~~2022 and 2023. Moreover, FHN's revenues from bond trading and related activities fell significantly in 2022 and 2023 due to rising rates coupled with elevated market volatility. ~~These impacts have continued in 2023, although~~In first quarter 2024, bond trading ~~results~~revenues and mortgage activity improved. Bond revenues likely benefited from the market's expectation that short-term rates have peaked along with improved ~~modestly~~liquidity conditions in ~~first quarter.~~the banking sector. Recent inflation data likely have reduced current market expectations of rate cuts. A change in market expectations for fewer cuts or rate hikes may be a moderating factor in bond trading revenues in future quarters.

A recession, if one ~~occurs,~~were to occur, likely would have a ~~significant~~ negative impact on FHN's businesses overall. Demand for loans likely would fall, loan losses and provision expense likely would rise, many commercial activities that generate fee income likely would decline, and competition for clients likely would 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. As mentioned above, recessionary expectations have abated substantially since early 2023 and remain low currently. However, just as expectations in early 2023 proved to be wrong, current expectations may be just as incorrect.

~~LIBOR & Reference Rate Reform~~Other Regulatory Proposals

~~LIBOR~~In 2023 the Board of Governors of the Federal Reserve and other regulators proposed regulatory changes that would, if implemented, significantly increase regulatory constraints and costs on all U.S. banks with assets over $100 billion. A few new requirements would apply to banks, like FHN, with assets over $50 billion, but by far the main impacts would fall on banks greater than $100 billion in assets.

The ~~London Inter-Bank Offered Rate ("LIBOR")~~ proposals touch upon many regulatory requirements, including debt and equity capital requirements, credit risk standards, asset risk-weighting, and resolution planning.

The increased requirements also would entail additional compliance costs.

The triggering of significant cost increases based on a single threshold financial measure—$100 billion in assets—has been in place for many years ~~was~~and has impacted the ~~most widely used reference rate in the world. A small~~U.S. banking industry. Compliance restrictions and ~~declining portion of FHN's floating rate loans use LIBOR, denominated in U.S. Dollars ("USD"),~~costs increase as the ~~reference rate~~threshold is approached but a step-up pattern remains. Banks near the threshold may be likely to ~~determine~~slow or even halt asset growth, at least for a period, and start to implement the ~~interest rate paid by~~higher-level compliance systems. Banks modestly over 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~~threshold, 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~~contrast, 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,~~likely to expand their asset base as quickly as possible to generate additional revenues to cover those costs. Those effects have added to the ~~Federal Reserve, the OCC,~~incentives for banks to consolidate, and the ~~FDIC jointly encouraged U.S. banks~~proposed new rules are likely to ~~transition away from LIBOR for~~enhance that.

It appears likely that, if adopted as proposed, significant parts of the proposals will be challenged in court as being

inconsistent with legislation enacted by Congress in 2018. Such a challenge would be technical and complex, and likely would take many years to resolve. Moreover, even if a challenge of that sort were successful, many parts of the proposals likely would remain intact and others might be modified without being rescinded.

Greenhouse Gas (GHG) Reporting Regimes

In October 2023 the state of California enacted laws which, taken together, will require most larger companies doing business in California to report annually their greenhouse gas ("GHG") emissions, with an external assurance requirement, and to report biennially their climate-related financial risks and risk-mitigation measures. The California laws include multi-year phase in periods and encompass Scope 1, Scope 2, and Scope 3 GHG emissions. The California governor stated in 2023 that the new ~~contracts as soon as practicable and,~~laws are likely to be subjected to technical amendments 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~~2024 or later.

In March ~~2022, Congress passed~~2024 the ~~Adjustable Interest Rate (LIBOR) Act.~~U.S. Securities and Exchange Commission ("SEC") adopted rules that would require all U.S. companies with publicly-traded securities to report annually their Scope 1 and 2 GHG emissions and related risk management processes, along with a related financial statement and audit requirement. Refer to "Accounting Changes" below for additional information. The ~~legislation addresses loans~~SEC rules also have a lengthy phase-in period.

Europe also has adopted a GHG reporting regime. It is not applicable to FHN and is not further discussed here.

Three GHG Scopes

Scope 1 GHG emissions are those from a source the company owns or controls directly, such as a manufacturing plant. Scope 2 emissions are indirect emissions from company activities, such as from power consumed by company operations. Scope 1 and 2 emissions generally can be measured or estimated using information a company normally can obtain without significant external inquiry.

Scope 3 GHG emissions are those from sources and activities 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 harborcompany neither owns nor controls. Scope 3 emissions are 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~~sources that ~~the origination of LIBOR-indexed loans has ended, no single alternative reference rate has replaced LIBOR for USD transactions. Instead,~~touch upon a ~~number of different reference rates are being used in different circumstances. These include~~:

•~~Daily SOFR.~~ ~~The Alternative Reference Rates Committee (“ARRC”~~company, such as: vendors; employees (commuting, business travel, etc.); and customers. Scope 3 information generally is ~~a group of private-market 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~~unknown to a ~~more robust reference rate. The ARRC has recommended the Secured Overnight Financing Rate (“SOFR”) as its preferred alternative. SOFR resets daily~~company without significant external inquiry and/or estimation.

Potential Business Impacts

Direct compliance costs will include creating systems to measure or estimate and ~~is based on actual transaction~~capture relevant data, ~~for the U.S. Treasury repurchase market. Accordingly, SOFR represents~~staffing, and engagement of vendors, including 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, andfirm to provide

~~recommended CME Group's Term SOFR rates. Furthermore,~~required assurances (somewhat analogous to a financial statement auditor).

Potentially of more significance: California may require inquiry of customers rather than merely estimation about them. If FHN is allowed merely to estimate emissions from customers, that process may be costly but would not interfere with our business relationships. If, however, FHN is required to support Scope 3 reporting by obtaining GHG-related information from customers, including customers that are not public companies and that do no business in California, then the ~~Federal Reserve Board's Regulation ZZ, issued~~California disclosure laws could interfere with FHN's business. In that case, effectively FHN would be required to impose costs and/or inconveniences on its customers. Other banks in ~~December 2022, identifies CME Term SOFR (plus~~FHN's markets, particularly those that are private and not doing business in California, could provide financial services without those requirements, putting FHN at a ~~spread adjustment, as defined~~competitive disadvantage.

Legal Challenges

The California laws, especially the application of those laws to companies outside of California, have been challenged in court. Challengers assert that the laws, among other things, unconstitutionally burden interstate commerce, are pre-empted by federal law, and unconstitutionally compel or burden speech. Challenges could take many years to resolve. A key practical question will be whether the courts impose a legal stay (a moratorium) on these laws nationwide while challenges are pending.

The SEC rules likewise are being challenged in court. Challengers assert, among other things, that the SEC lacks explicit Congressional authorization to create a regulatory reporting regime pertaining to GHG emissions. The several challenges have been consolidated in the ~~LIBOR Act)~~U.S. (federal) 8th Circuit. Possibly anticipating a court-ordered stay, the SEC has suspended the effectiveness of its rules while the court challenges are pending.

Assuming that the various legal challenges leave the SEC's rules entirely or largely intact, the California laws might be further challenged by public companies 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~~having been pre-empted by the ~~American Financial Exchange. AMERIBOR is based on actual transaction data involving credit decisions by many financial institutions, on an unsecured basis.~~SEC rules.

•
~~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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Coastal Market Growth and Rising Costs

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

FHN's principal markets are in the southern and ~~be aware of any fragilities associated with that rate and the markets that underlie it”. IOSCO has also warned~~southeastern United States, including most of the ~~potential~~major gulf coast markets and several markets on the southern Atlantic seacoast. Many of FHN's markets have experienced significant population growth over at least the past twenty years, outpacing the growth rate 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. Additionally, FHN expects that each financial contract will contain fallback language to guide transition fromU.S. as 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~~whole. That population growth generally has been ~~limited.~~accompanied by economic growth.

Many of FHN's ~~Actions~~fastest growing markets, including most significantly those in Florida, can be impacted significantly by hurricanes and other severe coastal weather events. As those markets grow, FHN's economic commitment to ~~Date & Transition Plans~~

~~Starting in 2019, FHN modernized the fallback language used in its loan documentation~~them grows, as does FHN's financial exposure to ~~better handle how floating rate loans would be re-set if LIBOR ceased to be published during the loan term.~~those events.

In 2023 and this year it has been widely reported that the ~~fourth quarter~~economic costs 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 ARMshurricane events in the U.S. gulf 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 remaining USD LIBOR tenors noted above. Since November 2021, FHN bankerssouthern Atlantic coastal areas have been ~~amending~~rising significantly. FHN believes that rising costs are directly related to growth in those areas.

For example, much of the ~~pricing~~growth in Florida has been along the coast moving out from older cities. A gulf coast hurricane 50 or 60 years ago had a fair chance of ~~existing LIBOR-based commercial loans via~~making landfall in a ~~rate change at~~relatively unpopulated area. Now, the ~~time~~chances of ~~loan renewal or via amendments to~~directly hitting a population center are much higher, the ~~loan documents to change~~average population in that center is much higher, and the ~~benchmark rate. Additionally, FHN bankers~~average value per building is much higher.

The reported significant increase in casualty risks and ~~FHNF derivatives marketers~~costs is being reflected in property insurance practices which currently are ~~amending interest rate derivative contracts whose tenors extend beyond the June 30, 2023 final cessation date of LIBOR.~~in significant flux. The insurance

~~While FHN~~industry is being forced to revise its risk assessment and premium pricing practices in coastal areas as loss experience has ~~exposure~~deviated from earlier predictions, sometimes badly. In Florida, for example, some smaller carriers have failed, some larger carriers have left markets, and remaining carriers have significantly increased the premiums of hurricane-related insurance, narrowed coverage, or both.

Coastal states such as Florida and Louisiana have created last-resort insurance pools for residents who cannot obtain or afford private property insurance. However, as the costs borne by those pools increase, either the premiums will have to ~~LIBOR in various contracts (e.g., securities, derivatives), FHN's primary exposure~~rise or general taxation will have to ~~LIBOR is in floating rate loans~~cover the difference. In addition, those programs generally do not help business clients.

State and local building and water-control codes are being revised, but often unevenly and often not retroactive to ~~customers~~pre-existing structures and ~~derivative contracts issued to customers through FHN Financial. Below~~developments. The current transition period could be lengthy.

The availability, reliability, and cost of adequate property insurance is a ~~summary~~significant concern for FHN as well as FHN's clients in affected markets. Instability in property insurance has made, and continues to make, FHN's business decisions more difficult. That instability increases FHN's risks of loan loss and business downturn.

More fundamentally, elevated insurance and casualty costs blunt a key factor driving growth in many of these ~~exposures as~~high-growth markets: lower costs of ~~March 31, 2023~~:

~~Table I.2.21~~

~~LIBOR EXPOSURES~~

(Dollars in billions) As of March 31, 2023 Mature after
June 2023
Commercial loans (a) $ 3 $ 3
Consumer loans (a) 3 3
Customer swaps (b) 2 2

~~(a) Amounts represent outstanding loan balances as of~~ ~~March 31, 2023~~.

~~(b) FHN has entered into offsetting upstream transactions with dealers to offset its~~living. If 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.

~~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 ~~2022~~2023 Annual Report on Form 10-K.

Accounting Changes

Disclosures within registration statements that are outside the financial statements include 1) Scope 1 and Scope 2 GHG emissions, if material, 2) how the Board of Directors oversees the assessment and management of climate-related risks, 3) management’s role in assessing and managing climate-related risks if the risks are material, 4) climate-related risks that have had or are reasonably likely to have a material effect on its business strategy, results of operations, or financial condition, including whether the risks are expected to manifest in the short term (i.e., next 12 months) and, separately, in the long term (i.e., beyond the next 12 months), 5) if a registrant has adopted a plan to manage material climate transition risks the plan should be described and updated annually to specify its progress toward completing the transition plan, including any actions taken under the plan and how those actions


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have affected the registrant’s business, results of operations, or financial condition, 6) if a registrant has adopted a plan to manage material climate transition risks the plan should be described and updated annually to specify its progress toward completing the transition plan, including any actions taken under the plan and how those actions have affected the registrant’s business, results of operations, or financial condition, 7) if a registrant uses an internal carbon price (e.g., a monetary cost assigned to carbon emissions for budgeting, forecasting, or performance management) and this use is material to how it evaluates material climate-related risks, 8) if a registrant uses a scenario analysis to assess its business in the context of climate-related risks and, on the basis of that analysis, determines that a climate-related risk is reasonably likely to have a material impact, the registrant must describe each scenario, including the parameters, assumptions, and projected financial impacts, 9) a registrant is required to disclose its processes for “identifying, assessing and managing” material climate-related risks, 10) registrants must disclose information about their publicly announced or internal climate-related targets or goals if they materially affect or are reasonably likely to materially affect the business, results of operations, or financial condition (e.g., expenditures or operational changes needed to meet the targets or goals) and 12) registrants must describe quantitatively and qualitatively the material expenditures incurred and material impacts on financial estimates and assumptions that, in management’s assessment, directly result from activities to mitigate or adapt to material climate-related risks.

In April 2024, the SEC issued a stay of the Climate Disclosures Rules pending the completion of judicial review of various legal challenges. Therefore, the actual timing of the implementation of the Climate Disclosure Rules, if sustained through the judicial process, is uncertain. FHN is assessing the potential effects of the Climate Disclosure Rules on its registration statements and financial statements.

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.2.22~~I.2.23

NON-GAAP TO GAAP RECONCILIATION


		Three Months Ended
		Three Months Ended
		Three Months Ended
		Three Months Ended
(Dollars in millions; shares in thousands)
(Dollars in millions; shares in thousands)
(Dollars in millions; shares in thousands)	(Dollars in millions; shares in thousands)	March 31, 2023			December 31, 2022			March 31, 2022
Pre-provision Net Revenue (Non-GAAP)	Pre-provision Net Revenue (Non-GAAP)
Pre-provision Net Revenue (Non-GAAP)
Pre-provision Net Revenue (Non-GAAP)
Net interest income (GAAP)
Net interest income (GAAP)
Net interest income (GAAP)	Net interest income (GAAP)	$	688		$	709		$	479
Plus: Noninterest income (GAAP)	Plus: Noninterest income (GAAP)	171			173			229
Plus: Noninterest income (GAAP)
Plus: Noninterest income (GAAP)
Total revenues (GAAP)
Total revenues (GAAP)
Total revenues (GAAP)	Total revenues (GAAP)	859			882			708
Less: Noninterest expense (GAAP)	Less: Noninterest expense (GAAP)	478			503			493
Less: Noninterest expense (GAAP)
Less: Noninterest expense (GAAP)
Pre-provision net revenue (Non-GAAP)
Pre-provision net revenue (Non-GAAP)
Pre-provision net revenue (Non-GAAP)	Pre-provision net revenue (Non-GAAP)	$	381		$	379		$	215

Average Tangible Common Equity (Non-GAAP)	Average Tangible Common Equity (Non-GAAP)

Average Tangible Common Equity (Non-GAAP)

Average Tangible Common Equity (Non-GAAP)
Average total equity (GAAP)
Average total equity (GAAP)
Average total equity (GAAP)	Average total equity (GAAP)	$	8,707		$	8,415		$	8,618
Less: Average noncontrolling interest (a)	Less: Average noncontrolling interest (a)	295			295			295
Less: Average noncontrolling interest (a)
Less: Average noncontrolling interest (a)
Less: Average preferred stock (a)
Less: Average preferred stock (a)
Less: Average preferred stock (a)	Less: Average preferred stock (a)	1,014			1,014			695
(A) Total average common equity	(A) Total average common equity	$	7,398		$	7,106		$	7,628
(A) Total average common equity
(A) Total average common equity
Less: Average goodwill and other intangible assets (GAAP)(b)	Less: Average goodwill and other intangible assets (GAAP)(b)	1,738			1,750			1,802
Less: Average goodwill and other intangible assets (GAAP)(b)
Less: Average goodwill and other intangible assets (GAAP)(b)
(B) Average tangible common equity (Non-GAAP)
(B) Average tangible common equity (Non-GAAP)
(B) Average tangible common equity (Non-GAAP)	(B) Average tangible common equity (Non-GAAP)	$	5,660		$	5,356		$	5,826

Net Income Available to Common Shareholders	Net Income Available to Common Shareholders

Net Income Available to Common Shareholders

Net Income Available to Common Shareholders
(C) Net income available to common shareholders (annualized) (GAAP)
(C) Net income available to common shareholders (annualized) (GAAP)
(C) Net income available to common shareholders (annualized) (GAAP)	(C) Net income available to common shareholders (annualized) (GAAP)	$	987		$	1,025		$	756

Tangible Common Equity (Non-GAAP)	Tangible Common Equity (Non-GAAP)

Tangible Common Equity (Non-GAAP)

Tangible Common Equity (Non-GAAP)
(D) Total equity (GAAP)
(D) Total equity (GAAP)
(D) Total equity (GAAP)	(D) Total equity (GAAP)	$	8,895		$	8,547		$	8,696
Less: Noncontrolling interest (a)	Less: Noncontrolling interest (a)	295			295			295
Less: Noncontrolling interest (a)
Less: Noncontrolling interest (a)
Less: Preferred stock (a)
Less: Preferred stock (a)
Less: Preferred stock (a)	Less: Preferred stock (a)	1,014			1,014			1,014
(E) Total common equity	(E) Total common equity	$	7,586		$	7,238		$	7,387
(E) Total common equity
(E) Total common equity
Less: Goodwill and other intangible assets (GAAP)(b)
Less: Goodwill and other intangible assets (GAAP)(b)
Less: Goodwill and other intangible assets (GAAP)(b)	Less: Goodwill and other intangible assets (GAAP)(b)	1,733			1,745			1,796
(F) Tangible common equity (Non-GAAP)	(F) Tangible common equity (Non-GAAP)	5,853			5,493			5,591
(F) Tangible common equity (Non-GAAP)
(F) Tangible common equity (Non-GAAP)
Less: Unrealized gains (losses) on AFS securities, net of tax	Less: Unrealized gains (losses) on AFS securities, net of tax	(859)			(972)			(440)
Less: Unrealized gains (losses) on AFS securities, net of tax
Less: Unrealized gains (losses) on AFS securities, net of tax
(G) Adjusted tangible common equity (Non-GAAP)
(G) Adjusted tangible common equity (Non-GAAP)
(G) Adjusted tangible common equity (Non-GAAP)	(G) Adjusted tangible common equity (Non-GAAP)	$	6,712		$	6,465		$	6,031

Tangible Assets (Non-GAAP)	Tangible Assets (Non-GAAP)

Tangible Assets (Non-GAAP)

Tangible Assets (Non-GAAP)
(H) Total assets (GAAP)
(H) Total assets (GAAP)
(H) Total assets (GAAP)	(H) Total assets (GAAP)	$	80,729		$	78,953		$	88,660
Less: Goodwill and other intangible assets (GAAP) (b)	Less: Goodwill and other intangible assets (GAAP) (b)	1,733			1,745			1,796
Less: Goodwill and other intangible assets (GAAP) (b)
Less: Goodwill and other intangible assets (GAAP) (b)
(I) Tangible assets (Non-GAAP)
(I) Tangible assets (Non-GAAP)
(I) Tangible assets (Non-GAAP)	(I) Tangible assets (Non-GAAP)	$	78,996		$	77,208		$	86,864

Risk-Weighted Assets	Risk-Weighted Assets

Risk-Weighted Assets

Risk-Weighted Assets
(J) Risk-weighted assets (c)
(J) Risk-weighted assets (c)
(J) Risk-weighted assets (c)	(J) Risk-weighted assets (c)	$	69,510		$	69,163		$	65,042

Period-end Shares Outstanding	Period-end Shares Outstanding

Period-end Shares Outstanding

Period-end Shares Outstanding
(K) Period-end shares outstanding
(K) Period-end shares outstanding
(K) Period-end shares outstanding	(K) Period-end shares outstanding	537,619			537,101			534,587

Ratios	Ratios

Ratios

Ratios
(C)/(A) Return on average common equity (GAAP)
(C)/(A) Return on average common equity (GAAP)
(C)/(A) Return on average common equity (GAAP)	(C)/(A) Return on average common equity (GAAP)	13.34		%	14.42		%	9.92		%
(C)/(B) Return on average tangible common equity (Non-GAAP)	(C)/(B) Return on average tangible common equity (Non-GAAP)	17.43			19.14			12.98
(C)/(B) Return on average tangible common equity (Non-GAAP)
(C)/(B) Return on average tangible common equity (Non-GAAP)
(D)/(H) Total period-end equity to period-end assets (GAAP)
(D)/(H) Total period-end equity to period-end assets (GAAP)
(D)/(H) Total period-end equity to period-end assets (GAAP)	(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)	(F)/(I) Tangible common equity to tangible assets (Non-GAAP)	7.41			7.12			6.44
(F)/(I) Tangible common equity to tangible assets (Non-GAAP)
(F)/(I) Tangible common equity to tangible assets (Non-GAAP)
(G)/(J) Adjusted tangible common equity to risk-weighted assets (Non-GAAP)
(G)/(J) Adjusted tangible common equity to risk-weighted assets (Non-GAAP)
(G)/(J) Adjusted tangible common equity to risk-weighted assets (Non-GAAP)	(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)	(E)/(K) Book value per common share (GAAP)	$	14.11		$	13.48		$	13.82
(E)/(K) Book value per common share (GAAP)
(E)/(K) Book value per common share (GAAP)
(F)/(K) Tangible book value per common share (Non-GAAP)
(F)/(K) Tangible book value per common share (Non-GAAP)
(F)/(K) Tangible book value per common share (Non-GAAP)	(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.


			~~102~~100			~~1Q23~~1Q24 FORM 10-Q REPORT


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

Item 3. Quantitative and Qualitative Disclosures ~~about~~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 9289 of this report and the subsections entitled “Market Risk Management” beginning on page 9289 and “Interest Rate Risk Management” beginning on page 9391 of this report, and

(b) Note 14 to the Consolidated Financial Statements appearing on pages ~~43-49~~4 3 -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 for the year ended December 31, ~~2022,~~2023, including in particular the section entitled “Risk Management” beginning on page 8681 of that Report and the subsections entitled “Market Risk Management” beginning on page 8782 and “Interest Rate Risk Management” beginning on page 8984 of that Report; and Note 21 to the Consolidated Financial Statements appearing on pages ~~176-182~~178-184 of Item 8 to FHN’s Annual Report on Form 10-K for the year ended December 31, ~~2022.~~2023.

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 first fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


			~~103~~101			~~1Q23~~1Q24 FORM 10-Q REPORT


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



PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The “Contingencies” section of Note 10 to the Consolidated Financial Statements beginning on page 34 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 for the year ended December 31, ~~2022:~~2023:

Not applicable.

Item 2. Unregistered Sales of Equity Securities, ~~and~~ Use of Proceeds, and Issuer Purchases of Equity Securities

(a) Unregistered Equity Securities Sold

~~During the first quarter of 2023, FHN sold no common or preferred equity securities which were not registered under the Securities Act of 1933, as amended.~~Not applicable

(b) Use of Proceeds If Rule 463 is Applicable

Not applicable

The "Common Stock ~~Purchase Programs”~~Purchases” section including ~~tables I.2.15~~tables I.2.16 and ~~I.2.16~~I.2.17 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 9088 of this report, is incorporated herein by reference.

Items 3., and 4.~~, and 5.~~

Not applicable


			~~104~~102			~~1Q23~~1Q24 FORM 10-Q REPORT


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

Item 5. Other Information

(a) Previously Unreported 8-K Disclosures

Not applicable

(b) Change in Nomination Procedures

Not applicable

During the first quarter of 2024, the following directors or executive officers (those officers who are required to file stock ownership reports on SEC Forms 3, 4, and 5) adopted, modified, or terminated the Rule 10b5-1 trading arrangements, and the non-Rule 10b5-1 trading arrangements, as shown in Table II.5c below.

Unless otherwise explicitly indicated in a footnote to the Table, each arrangement marked in the Table as "10b5-1" under the "Arrangement Type" column is intended by its maker, as reported to FHN, to satisfy the affirmative defense requirements of SEC Rule 10b5-1(c).

If "Not applicable" appears in the Table, then for the first quarter of 2024 no director or executive officer of FHN adopted, modified, or terminated any Rule 10b5-1 trading arrangement or any non-Rule 10b5-1 trading arrangement.

Table II.5c

TRADING ARRANGEMENTS CREATED, MODIFIED, OR TERMINATED MOST RECENT QUARTER

Arrangement Type

Type of Action Taken During Quarter

Date Action Taken

Duration or Expiration Date

Total Shares to be

Name & Title

10b5-1

non-10b5-1

Bought

Sold

Not applicable


			103			1Q24 FORM 10-Q REPORT


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

Furn-ished

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

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 January 24, 2023

8-K

3.1

1/25/2023

3.3

Bylaws of First Horizon Corporation, as amended and restated effective January 22, 2024

8-K

3.1

1/23/2024

4.1

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

10.1

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

10.1

2021 Incentive Plan (as amended February 25, 2024)

Proxy 2024

App. A

3/11/2024

10.2

10.3

31(a)

31~~(a)~~(b)

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~~(a)~~(b)

32(a)

32~~(a)~~(b)

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

32(b)

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

XBRL Exhibits

32~~(a)~~(b)

XBRL Exhibits

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

101. SCH

Inline XBRL Taxonomy Extension Schema

101. CAL

Inline XBRL Taxonomy Extension Calculation Linkbase

101. CAL

101. LAB

Inline XBRL Taxonomy Extension Label Linkbase

101. PRE

Inline XBRL Taxonomy Extension Presentation Linkbase

101. PRE

101. DEF

Inline XBRL Taxonomy Extension Definition Linkbase

104

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

104


			~~105~~104			~~1Q23~~1Q24 FORM 10-Q REPORT


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.~~document; and the phrase “2023 named executive officers” refers to those executive officers whose 2023 compensation was described in our 2024 Proxy Statement.

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.


			~~106~~105			~~1Q23~~1Q24 FORM 10-Q REPORT


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: May ~~8, 2023~~3, 2024

By:

/s/ Hope Dmuchowski

Name:

Hope Dmuchowski

Title:

Senior Executive Vice President and Chief Financial Officer

(Duly Authorized Officer and Principal Financial Officer)


			~~107~~106			~~1Q23~~1Q24 FORM 10-Q REPORT


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


LIHTC IMPACTS ON TAX EXPENSE
	Three Months Ended March 31,
(Dollars in millions)	2023		2022
Income tax expense (benefit):
Amortization of qualifying LIHTC investments	$	13	$	12
Low income housing tax credits	(14)		(12)
Other tax benefits related to qualifying LIHTC investments	(3)		(2)


	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)	%



(Dollars in billions)	As of March 31, 2023		Mature after June 2023
Commercial loans (a)	$	3	$	3
Consumer loans (a)	3		3
Customer swaps (b)	2		2