Investment Securities

9 Months Ended

Sep. 30, 2022

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


INVESTMENT SECURITIES AT SEPTEMBER 30, 2022
	September 30, 2022
(Dollars in millions)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities available for sale:

Government agency issued MBS	$	5,457	$	—	$	(767)	$	4,690
Government agency issued CMO	2,775		—		(360)		2,415
Other U.S. government agencies	1,212		—		(156)		1,056

States and municipalities	648		—		(91)		557
Total securities available for sale (a)	$	10,092	$	—	$	(1,374)	$	8,718

Securities held to maturity:
Government agency issued MBS	$	908	$	—	$	(116)	$	792
Government agency issued CMO	477		—		(47)		430
Total securities held to maturity	$	1,385	$	—	$	(163)	$	1,222

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


INVESTMENT SECURITIES AT YE 2021
	December 31, 2021
(Dollars in millions)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities available for sale:

Government agency issued MBS	$	5,062	$	42	$	(49)	$	5,055
Government agency issued CMO	2,296		8		(47)		2,257
Other U.S. government agencies	861		4		(15)		850

States and municipalities	535		11		(1)		545
Total securities available for sale (a)	$	8,754	$	65	$	(112)	$	8,707

Securities held to maturity:
Government agency issued MBS	$	509	$	—	$	(5)	$	504
Government agency issued CMO	203		—		(2)		201
Total securities held to maturity	$	712	$	—	$	(7)	$	705

(a)Includes $6.5 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 debt securities portfolio as of September 30, 2022 is provided below:


DEBT SECURITIES PORTFOLIO MATURITIES
	Held to Maturity				Available for Sale
(Dollars in millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Within 1 year	$	—	$	—	$	45	$	45
After 1 year through 5 years	—		—		117		110
After 5 years through 10 years	—		—		397		351
After 10 years	—		—		1,301		1,107
Subtotal	—		—		1,860		1,613
Government agency issued MBS and CMO (a)	1,385		1,222		8,232		7,105
Total	$	1,385	$	1,222	$	10,092	$	8,718

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

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

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

AFS INVESTMENT SECURITIES WITH UNREALIZED LOSSES


	As of September 30, 2022
	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	$	3,168	$	(429)	$	1,517	$	(338)	$	4,685	$	(767)
Government agency issued CMO	1,398		(155)		992		(205)		2,390		(360)
Other U.S. government agencies	669		(71)		386		(85)		1,055		(156)

States and municipalities	507		(74)		48		(17)		555		(91)
Total	$	5,742	$	(729)	$	2,943	$	(645)	$	8,685	$	(1,374)


	As of December 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	$	2,973	$	(41)	$	184	$	(8)	$	3,157	$	(49)
Government agency issued CMO	1,436		(37)		248		(10)		1,684		(47)
Other U.S. government agencies	459		(11)		90		(4)		549		(15)

States and municipalities	68		(1)		—		—		68		(1)
Total	$	4,936	$	(90)	$	522	$	(22)	$	5,458	$	(112)

FHN has evaluated all AFS debt securities that were in unrealized loss positions in accordance with its accounting policy for recognition of credit losses. No AFS debt securities were determined to have credit losses. Total AIR not included in the fair value or amortized cost basis of AFS debt securities was $27 million and $23 million as of September 30, 2022 and December 31, 2021. 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.

For HTM securities, an allowance for credit losses is required to absorb estimated lifetime credit losses. Total AIR not included in the fair value or amortized cost basis of HTM debt securities was $3 million and $1 million as of September 30, 2022 and December 31, 2021. FHN has assessed the risk of credit loss and has determined that zero allowance for credit losses for HTM securities was necessary as of September 30, 2022 and December 31, 2021. The evaluation of credit risk includes consideration of third-party and government guarantees (both explicit and implicit), senior or subordinated status, credit ratings of the issuer, the effects of interest rate changes since purchase and observable market information such as issuer-specific credit spreads.

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

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