Investment Securities

3 Months Ended

Mar. 31, 2021

The following tables summarize FHN’s investment securities on March 31, 2021 and December 31, 2020:


	March 31, 2021
(Dollars in millions)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities available for sale:
U.S. treasuries	$	610	$	—	$	—	$	610
Government agency issued MBS	4,009		68		(39)		4,038
Government agency issued CMO	2,463		19		(41)		2,441
Other U.S. government agencies	733		5		(13)		725
Corporate and other debt	40		—		—		40
States and municipalities	467		9		(1)		475
	$	8,322	$	101	$	(94)	8,329
AFS securities recorded at fair value through earnings:
SBA-interest only strips (a)							22
Total securities available for sale (b)							$	8,351

(a)SBA-interest only strips are recorded at elected fair value. See Note 17 - Fair Value of Assets and Liabilities for additional information.

(b)Includes $7.0 billion of securities pledged to secure public deposits, securities sold under agreements to repurchase, and for other purposes.


	December 31, 2020
(Dollars in millions)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities available for sale:
U.S. treasuries	$	613	$	—	$	—	$	613
Government agency issued MBS	3,722		92		(2)		3,812
Government agency issued CMO	2,380		29		(3)		2,406
Other U.S. government agencies	672		12		—		684
Corporate and other debt	40		1		(1)		40
States and municipalities	445		15		—		460
	$	7,872	$	149	$	(6)	8,015
AFS securities recorded at fair value through earnings:
SBA-interest only strips (a)							32
Total securities available for sale (b)							$	8,047

(a)SBA-interest only strips are recorded at elected fair value. See Note 17 - Fair Value of Assets and Liabilities for additional information.

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

The amortized cost and fair value by contractual maturity for the available-for-sale debt securities portfolio on March 31, 2021 is provided below:


	Available for Sale
(Dollars in millions)	Amortized Cost		Fair Value
Within 1 year	$	758	$	759
After 1 year through 5 years	146		148
After 5 years through 10 years	345		348
After 10 years	601		617
Subtotal	1,850		1,872
Government agency issued MBS and CMO (a)	6,472		6,479
Total	$	8,322	$	8,351

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

Gross gains and losses on sales of debt investment securities and cash proceeds from the sale of available-for-sale securities for the three months ended March 31, 2021 and 2020 were insignificant.

The following tables provide information on investments within the available-for-sale portfolio that had unrealized losses as of March 31, 2021 and December 31, 2020:


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

Government agency issued MBS	$	1,772	$	(39)	$	—	$	—	$	1,772	$	(39)
Government agency issued CMO	1,508		(41)		—		—		1,508		(41)
Other U.S. government agencies	405		(13)		—		—		405		(13)

States and municipalities	82		(1)		—		—		82		(1)
Total	$	3,767	$	(94)	$	—	$	—	$	3,767	$	(94)


	As of December 31, 2020
	Less than 12 months				12 months or longer				Total
(Dollars in millions)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. treasuries	$	307	$	—	$	—	$	—	$	307	$	—
Government agency issued MBS	426		(2)		—		—		426		(2)
Government agency issued CMO	586		(3)		—		—		586		(3)
Other U.S. government agencies	80		(1)		—		—		80		(1)

States and municipalities	1		—		—		—		1		—
Total	$	1,400	$	(6)	$	—	$	—	$	1,400	$	(6)

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 because the primary cause of the decline in value was attributable to changes in interest rates. Total AIR not included in

the fair value or amortized cost basis of AFS debt securities was $24 million and $22 million as of March 31, 2021 and December 31, 2020, respectively. Consistent with FHN's review of the related securities, there were no credit-related write downs of AIR for AFS debt securities during the reporting period. Additionally, for AFS debt securities with unrealized losses, FHN does not intend to sell

them and it is more-likely-than-not that FHN will not be required to sell them prior to recovery. Therefore, no write downs of these investments to fair value occurred during the reporting period.

The carrying amount of equity investments without a readily determinable fair value was $70 million and $57 million at March 31, 2021 and December 31, 2020, respectively. The year-to-date 2021 and 2020 gross amounts of upward and downward valuation adjustments were not significant.

Unrealized gains of $3 million were recognized in the three months ended March 31, 2021 and 2020, respectively, for equity investments with readily determinable fair values.