IBKC Merger of Equals

On July 1, 2020, FHN and IBERIABANK Corporation 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 U.S.

The merger-of-equals transaction was accounted for as a business combination. Accordingly, the assets acquired

and liabilities assumed are generally 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 the allocation of merger consideration to the valuations of the identifiable tangible and intangible assets acquired and liabilities assumed from IBKC as of July 1, 2020.

Table 8.2.1

MERGER CONSIDERATION ALLOCATIONS



(Dollars in millions)	IBERIABANK Corporation
Assets:
Cash and due from banks	$	395
Interest-bearing deposits with banks	1,683
Securities available for sale at fair value	3,544
Loans held for sale	320
Loans and leases (a)	25,921
Allowance for loan and lease losses	(284)
Other intangible assets	240
Premises and equipment	311
OREO	9
Other assets	1,153
Total assets acquired	$	33,292
Liabilities:
Deposits	$	28,232
Short-term borrowings	209
Term borrowings	1,200
Other liabilities	618
Total liabilities assumed	$	30,259
Net assets acquired	$	3,033
Consideration paid:
Consideration for outstanding common stock	$	2,243
Consideration for equity awards	28
Consideration for preferred stock	231

Total consideration paid	$	2,502
Purchase accounting gain	$	(531)

(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 $531 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 purchase accounting gain is not taxable. The valuation of the IBKC merger-of-equals transaction was final as of June 30, 2021.

On July 17, 2020, First Horizon Bank completed its purchase of 30 branches from Truist Bank. As of December 31, 2020, the valuation of the acquired assets and liabilities assumed from the Truist branches acquisition was final. In relation to the acquisition, FHN recorded $78 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 -

Goodwill and Other Intangible Assets for additional information). This goodwill was the result of expected synergies, operational efficiencies and other factors.

Expenses related to FHN's merger and integration activities are recorded in FHN's Corporate segment.

Total merger and integration expense recognized for the years ended December 31, 2021 and 2020 are presented in the following table:

Table 8.2.2

MERGER & INTEGRATION EXPENSE


(Dollars in millions)	2021		2020
Personnel expense (a)	$	56	$	66
Impairment of long-lived assets	34		6
Legal and professional fees (b)	21		39
Contract employment and outsourcing	12		1
Advertising and public relations	10		—
Contribution expense (c)	—		20
Other expense (d)	54		23
Total	$	187	$	155

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

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

(d) Consists of operation services, communications and delivery, equipment expense, supplies, travel and entertainment, computer software, occupancy expense (including costs associated with lease exits) and costs of shareholder matters.

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.

2022 Merger Agreement with Toronto-Dominion Bank

On February 27, 2022, FHN entered into the TD Merger Agreement with TD, TD-US, and Merger Sub. Refer to Note

27—Subsequent Events for additional information regarding the proposed transaction. Merger and integration expenses related to the Proposed TD Merger will be recorded in FHN’s Corporate segment. No such expenses were recognized during 2021.