On July 1, 2020, FHN and IBERIABANK Corporation ("IBKC") closed their merger-of-equals transaction. FHN issued approximately 243 million shares of FHN common stock, plus three new series of preferred stock (Series B, Series C, and Series D) in a transaction valued at $2.5 billion. At the time of closing, IBKC operated 319 offices in 12 states, mostly in the southern and southeastern U.S.

The merger-of-equals transaction has been accounted for as a business combination. Accordingly, the assets acquired and liabilities assumed are presented at their fair values as of the merger date. The determination of fair value requires management to make estimates about discount rates, future expected cash flows, market conditions and other future events that are highly subjective in nature and subject to change.

The following schedule details a preliminary allocation of merger consideration to the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed from IBKC as of July 1, 2020.



(Dollars in thousands)	IBERIABANK Corporation
Assets:
Cash and due from banks	$	129,553
Interest-bearing deposits with banks	1,947,933
Securities available for sale at fair value	3,544,364
Loans held for sale	319,743
Loans and leases (a)	25,917,828
Allowance for loan and lease losses	(284,457)
Other intangible assets	237,763
Premises and equipment	310,617
Other real estate owned ("OREO")	8,593
Other assets	1,126,786
Total assets acquired	$	33,258,723
Liabilities:
Deposits	28,231,609
Short-term borrowings	208,733
Term borrowings	1,199,533
Other liabilities	585,143
Total liabilities assumed	$	30,225,018
Net assets acquired	$	3,033,705
Consideration paid:
Consideration for outstanding common stock	2,242,611
Consideration for equity awards	28,291
Consideration for preferred stock	230,641
Cash in lieu of fractional shares	12
Total consideration paid	$	2,501,555
Preliminary purchase accounting gain	$	(532,150)

(a) Includes $1.3 billion of initial net investments in sales-type and direct financing leases.

In relation to the merger-of-equals, FHN recorded a preliminary $532.2 million purchase accounting gain, representing the shortfall of the purchase price under the acquisition accounting value of net assets acquired, net of deferred taxes. The preliminary purchase accounting gain is not taxable. Due to the fact that back office functions (including loan and deposit processing) still have not been

integrated, the evaluation of post-merger activity, and the extended information gathering and management review processes required to properly record acquired assets and liabilities, FHN considers its valuations of IBKC's loans and leases, allowance for loan and lease losses, loans held-for-sale, premises and equipment, OREO, other assets, tax receivables and payables, core deposit intangibles, other intangibles, time deposits, acquired debt, lease assets and

liabilities, other liabilities and acquired contingencies to be provisional as management continues to identify and assess information regarding the nature of these assets and liabilities and reviews the associated valuation assumptions and methodologies. Accordingly, the amounts recorded for current and deferred tax assets and liabilities are also considered provisional as FHN continues to evaluate the

nature and extent of permanent and temporary (timing) differences between the book and tax bases of the acquired assets and liabilities assumed. Additionally, the accounting policies of both FHN and IBKC are in the process of being reviewed in detail. Upon completion of such review, conforming adjustments or financial statement reclassification may be determined.

The following is a description of the methods used to determine the fair values of significant assets acquired and liabilities assumed presumed above.

Cash and due from banks and Interest-bearing deposits with banks: The carrying amount of these assets is a reasonable estimate of fair value based on the short-term nature of these assets.

Securities available for sale: Fair values for securities were based on quoted market prices where available. If quoted market prices are not available, fair value estimates are based on observable inputs obtained from market transactions in similar securities. Securities held to maturity were reclassified to securities available for sale based on FHN's intent at closing.

Loans: Fair values for loans were based on a discounted cash flow methodology that considered factors including loan type and related collateral, classification status, remaining term of the loan, fixed or variable interest rate, amortization status and current discount rates. Expected cash flows were derived using inputs consistent with management's assessment of credit risk for allowance measurement with adjustments for consistency with fair value measurement concepts. Large loans were specifically reviewed to evaluate credit risk. Loans were valued individually although multiple inputs were applied to loans with similar characteristics as appropriate. The discount rate did not include an explicit factor for credit losses, as that was included as a reduction to the estimated cash flows.

Leases: Sales-type and direct financing leases were valued at the net investment in the lease which consists of both the lease receivable (including both the remaining lease payments and the guaranteed residual asset value) and the unguaranteed residual asset, if any. Discounting of the lease receivable was performed using the rate implicit in the lease. The unguaranteed residual asset represents the difference in the fair value of the underlying asset and the lease receivable and therefore includes consideration of all terms and conditions in the lease.

Intangible assets: Core deposit intangible assets ("CDI") represents the value of the relationships with deposit customers. The fair value for CDI was estimated based on a discounted cash flow methodology that gave appropriate consideration to expected customer attrition rates, net maintenance cost of the deposit base, alternative costs of funds, and the interest costs associated with the customer deposits. The CDI is being amortized over its estimated

useful life of approximately ten years utilizing an accelerated method. Customer relationship intangibles are valued using a discounted cash flow methodology that reflects the estimated value of the future net earnings from the relationships which includes adjustments for estimated attrition.

Loans Held for Sale: The valuation of loans held for sale, primarily conforming mortgages, reflected quotes or bids on these loans directly from the purchasing financial institutions.

Allowance for Loan and Lease Losses: The allowance for loan losses relates to PCD loans and was determined using a methodology consistent with that described in Note 5 - Allowance for Credit Losses with inputs determined as of the merger date.

Derivatives: Derivative assets and liabilities are included in Other assets and Other liabilities. Forward sales contracts are valued using current transactions involving identical securities. Interest rate swaps, interest rate locks, interest rate collars, interest rate floors, and equity indexed derivatives are estimated using prices of financial instruments with similar characteristics and observable inputs. Risk participations also incorporate an estimate of credit risk.

Lease Assets and Lease Liabilities: Lease assets and lease liabilities were measured using a methodology that involved estimating the future rental payments over the remaining lease term with discounting using a fully-collateralized discount rate. The lease term was determined for individual leases based on management's assessment of the probability of exercising existing renewal options. The net effect of any off-market terms in a lease were also discounted and applied to the balance of the lease asset.

Premises and Equipment: Land and buildings held for use are valued at appraised values, which reflect considerations of recent disposition values for similar property types with adjustments for characteristics of individual properties. Locations held for sale are valued at appraised values which also reference recent disposition values for similar property types but also considers marketability discounts for vacant properties. The valuations of locations held for

sale are reduced by estimated costs to sell. Other fixed assets are valued using a discounted cash flow methodology which reflects estimates of future value of assets to a hypothetical buyer.

OREO: OREO properties are valued at estimated fair value less estimated costs to sell the real estate. Estimated fair value is determined using appraised values which includes consideration of recent disposition values for similar property types with adjustments for characteristics of individual properties.

Deposits: The fair values used for the demand and savings deposits by definition equal the amount payable on demand at the acquisition date. Fair values for time deposits were estimated using a discounted cash flow analysis applying interest rates currently offered to the contractual interest rates on such time deposits.

Short-term borrowings: The carrying amount of these liabilities is a reasonable estimate of fair value based on the short-term nature of these liabilities.

Term Borrowings: The fair values of long-term debt instruments are estimated based on quoted market prices for instrument if available, or for similar instruments if not available. For redeemable debt instruments, an evaluation of the debt terms in comparison to current financing alternatives was performed to evaluate if the redemption value represented the fair value relevant to a market participant. If pricing for similar instruments is not available, a discounted cash flow analysis is utilized based on estimated current borrowing rates for similar types of instruments and considers whether the debt is currently callable. Estimated discount rates are determined from the perspective of the post-merger combined entity rather than the acquiree and/or original issuers.

FHN's operating results for the three and nine months ended September 30, 2020 include the operating results of the acquired assets and assumed liabilities of IBKC subsequent to the merger-of-equals transaction on July 1, 2020.

The following table presents unaudited pro forma information as if the transaction occurred on January 1, 2019. The pro forma information does not necessarily reflect the results of operations that would have occurred had the two companies combined on January 1, 2019. Furthermore, cost savings and other business synergies related to the transaction are not reflected in the pro forma amounts.


	Actual from acquistion date through September 30, 2020		Unaudited Pro Forma Information for the
(Dollars in thousands)			Three Months Ended September 30, 2020		Three Months Ended September 30, 2019 (a)		Nine Months Ended September 30, 2020		Nine Months Ended September 30, 2019 (a)
Net interest income	$	222,912	$	550,636	$	566,174	$	1,691,623	$	1,711,502
Noninterest income	89,510		290,773		235,409		783,132		645,781

Net income (loss)	(41,750)		71,162		218,572		359,214		654,884

(a) Three and nine months ended September 30, 2019 does not include the impact of CECL which was adopted January 1, 2020.

Total merger and integration expenses for the IBKC merger recognized for the three and nine months ended September 30, 2020 are presented in the table below:


(Dollars in thousands)	Three Months Ended September 30, 2020		Nine Months Ended September 30, 2020
Legal and professional fees (a)	$	29,984	$	34,394
Personnel expense (b)	34,846		40,240
Contribution expense (c)	20,000		20,000
Miscellaneous expense (d)	11,138		12,395
Total IBKC acquisition expense	$	95,968	$	107,029

(a) Primarily comprised of fees for legal, accounting, and merger consultants.

(b) Primarily comprised of fees for severance and retention.

(d) Primarily comprised of fees for travel and entertainment, contract employment, contributions and other miscellaneous expenses.

On July 17, 2020, First Horizon Bank completed its purchase of 30 branches from Truist Bank. As part of the transaction, FHN assumed approximately $2.2 billion of branch deposits for a 3.40% deposit premium and purchased approximately $423.4 million of branch loans. The branches are in communities in North Carolina (20 branches), Virginia (8 branches), and Georgia (2 branches). This transaction qualifies as a business combination.

Due to the timing of transaction completion in relation to quarter end, FHN considers its valuations of Truist's loans, fixed assets, core deposit intangible assets and other liabilities to be provisional as management continues to identify and assess information regarding the nature of these assets and liabilities and reviews the associated valuation assumptions and methodologies. Fair value estimates related to the acquired assets and liabilities assumed are subject to adjustment for up to one year after the closing date of the transaction as additional information as of closing date becomes available.



(Dollars in thousands)	Truist Bank
Assets:
Cash and due from banks	$	2,201,685
Loans and leases	423,397
Allowance for loan and lease losses	(2,355)
Other intangible assets	7,000
Premises and equipment	10,965

Other assets	27,700
Total assets acquired	$	2,668,392
Liabilities:
Deposits	2,194,870
Other liabilities	29,733
Total liabilities assumed	$	2,224,603
Net assets acquired	$	443,789
Consideration paid:
Cash	521,433
Total consideration paid	$	521,433
Preliminary goodwill	$	77,644

In relation to the acquisition, FHN recorded $77.6 million in goodwill, representing the excess of acquisition consideration over the estimated fair value of net assets acquired. All goodwill has been attributed to FHN's Regional Banking segment (refer to Note 7 - Intangible Assets for additional information). This goodwill is the result of expected synergies, operational efficiencies and other factors. FHN's operating results for the three and nine months ended September 30, 2020 include the operating

results of the acquired assets and assumed liabilities of Truist Bank subsequent to the acquisition on July 17, 2020.

See Note 2- Acquisitions and Divestitures in the Notes to Consolidated Financial Statements on Form 10-K for the year ended December 31, 2019, for additional information about FHN's other acquisitions. Expenses related to FHN's merger and integration activities are recorded in FHN's Corporate segment.

Total other merger and integration expense recognized for the three and nine months ended September 30, 2020 and 2019 are presented in the table below:


	Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in thousands)	2020		2019		2020		2019
Legal and professional fees (a)	$	1,196	$	3,507	$	3,322	$	9,852
Personnel expense (b)	303		1,473		786		4,462
Contract employment and outsourcing (c)	203		223		929		240
Net occupancy expense (d)	449		(76)		342		1,547
Miscellaneous expense (e)	951		1,022		2,276		2,170
All other expense (f)	1,723		2,840		6,207		5,025
Total	$	4,825	$	8,989	$	13,862	$	23,296

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

(a) Primarily comprised of fees for legal, accounting, and merger consultants.

(b) Primarily comprised of fees for severance and retention.

(d) Primarily relates to expenses associated with lease exits.

(e) Consists of fees for operations services, communications and courier, equipment rentals, depreciation and maintenance, supplies, travel and entertainment, computer software, and advertising and public relations.

(f) Primarily relates to contract termination charges, internal technology development costs, costs of shareholder matters and asset impairments, as well as other miscellaneous expenses.

In addition to the transactions mentioned above, FHN acquires or divests assets from time to time in transactions that are considered business combinations or divestitures but are not material to FHN individually or in the aggregate. In April 2019, FHN sold a subsidiary acquired as part of the CBF merger in 2017 that did not fit within FHN's risk profile. The sale resulted in the removal of approximately $25 million UPB of subprime consumer loans from Loans held for sale on FHN's Consolidated Balance Sheets.