First Horizon Corporation

FHN

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FIRST HORIZON NATIONAL : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION --------------------------- (form 10-Q)

August 05, 2020 at 04:13 pm EDT

TABLE OF ITEM 2 TOPICS
  General Information                                                       84

  Forward-Looking Statements                                                85

  Financial Summary                                                         86

  Statement of Condition Review                                             97

  Capital                                                                  100

  Asset Quality                                                            103

  Risk Management                                                          115

Repurchase Obligations, Off-Balance Sheet Arrangements, and Other Contractual Obligations

120



  Market Uncertainties and Prospective Trends

121



  Critical Accounting Policies                                             123

  Non-GAAP Information                                                     125





                           FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 83

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General Information



First Horizon National Corporation ("FHN") began as a community bank chartered
in 1864. FHN's sole class of common stock, $.625 par value, is listed and trades
on the New York Stock Exchange LLC under the symbol FHN.
FHN is the parent company of First Horizon Bank. First Horizon Bank's principal
divisions and subsidiaries operate under the brands of First Horizon Bank, First
Horizon Advisors, and FHN Financial. FHN offers regional banking, wealth
management and capital market services through the First Horizon family of
companies. First Horizon Bank and First Horizon Advisors provide consumer and
commercial banking and wealth management services. FHN Financial, which operates
partly through a division of First Horizon Bank and partly through subsidiaries,
is an industry leader in fixed income sales, trading, and strategies for
institutional clients in the U.S. and abroad. First Horizon Bank has over 270
banking offices in seven southeastern U.S. states, and FHN Financial has 29
offices in 18 states across the U.S.
Segments
FHN is composed of the following operating segments:
•     Regional banking segment offers financial products and services, including

traditional lending and deposit taking, to consumer and commercial

customers primarily in the southeast U.S. and other selected markets.

Regional banking also provides investments, wealth management, financial

planning, trust services and asset management, mortgage banking, credit

card, and cash management. Additionally, the regional banking segment

includes correspondent banking which provides credit, depository, and other


      banking related services to other financial institutions nationally.

• Fixed income segment consists of 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 of unallocated corporate expenses, expense on

subordinated debt issuances, bank-owned life insurance, unallocated

interest income associated with excess equity, net impact of raising

incremental capital, revenue and expense associated with deferred

compensation plans, funds management, tax credit investment activities,

derivative valuation adjustments related to prior sales of Visa Class B

shares, gain/(loss) on extinguishment of debt, acquisition- and

integration-related costs, expenses associated with rebranding initiatives,

and various charges related

to restructuring, repositioning, and efficiency efforts. • Non-strategic segment consists of run-off consumer lending activities,

pre-2009 mortgage banking elements, and the associated ancillary revenues


      and expenses related to these businesses. Non-strategic also includes the
      wind-down trust preferred loan portfolio and exited businesses.



Significant Recent Transactions
On July 1, 2020, FHN and IBERIABANK Corporation ("IBKC") closed their
merger-of-equals transaction. FHN issued approximately 242 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.
In the merger: FHN acquired approximately $34.7 billion in assets, including
approximately $26.1 billion in loans, and $3.5 billion in AFS securities; and,
FHN assumed approximately $28.3 billion of IBKC deposits. Due to the timing of
the merger closing in relation to quarter end and the uncertainty of valuations
in the current economic environment, FHN's assessment of the fair value of
IBKC's assets and liabilities is incomplete. However, FHN currently expects to
recognize a purchase accounting gain of approximately $500 million.
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 percent deposit premium and purchased
approximately $423.7 million of branch loans. The acquired branches are in
communities in North Carolina (20 branches), Virginia (8 branches), and Georgia
(2 branches).
In relation to all acquisitions, FHN's operating results include the operating
results of the acquired assets and assumed liabilities subsequent to the
acquisition date. Refer to Note 2 - Acquisitions and Divestitures in this report
and in Item 7 to FHN's Annual Report on Form 10-K for the year ended
December 31, 2019 for additional information.

In April 2020, First Horizon Bank issued $450 million of 5.750% Subordinated
Notes due May 1, 2030. Interest payments are due semi-annually on May 1 and
November 1, commencing November 1, 2020. The sale of the Notes resulted in net
proceeds to the Company of approximately $446 million. The notes qualify as Tier
2 capital for the Bank as well as FHN, up to certain regulatory limits for
minority capital instruments.



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In May 2020, FHN issued $450 million of 3.550% Senior Notes due May 26, 2023 and
$350 million of 4.000% Senior Notes due May 26, 2025. Interest payments are due
semi-annually on May 26 and November 26, commencing November 26, 2020. The sale
of these notes resulted in net proceeds to the Company of approximately $795
million.

In May 2020, FHN issued 1,500 shares having an aggregate liquidation preference
of $150 million of Series E Non-Cumulative Perpetual Preferred Stock for net
proceeds of approximately $145 million. Dividends on the Series E Preferred
Stock, if declared, accrue and are payable quarterly, in arrears, at a rate of
6.500% per annum. For the issuance, FHN issued depositary shares, each of which
represents a fractional ownership interest in a share of FHN's preferred stock.
The Series E Preferred Stock qualifies as Tier 1 Capital for FHN.
For the purpose of this management's discussion and analysis ("MD&A"), earning
assets have been expressed as averages, unless otherwise noted, and loans have
been disclosed net of unearned income. The following financial discussion should
be read with the accompanying unaudited Consolidated Condensed Financial
Statements and Notes in this report. Additional information including the 2019
financial statements, notes, and MD&A is provided in Item 7 and 8 to FHN's
Annual Report on Form 10-K for the year ended December 31, 2019.
ADOPTION OF ACCOUNTING UPDATES
Effective January 1, 2020 FHN adopted ASU 2016-13, "Measurement of Credit Losses
on Financial Instruments," (CECL); which resulted in a $106.4 million increase
to the allowance for loan losses ("ALLL") and a $24.0 million increase to the
reserve for unfunded commitments, resulting in a $96.1 million decrease of
retained earnings (net of taxes). See Note 1- Financial Information for
additional information.

Non-GAAP Measures
Certain measures are included in the narrative and tables in this MD&A that are
"non-GAAP", meaning (under U.S. financial reporting rules) they are not
presented in accordance with generally accepted accounting principles ("GAAP")
in the U.S. 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 capital position or financial results of FHN.
Non-GAAP measures are reported to FHN's management and Board of Directors
through various internal reports.
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 MD&A 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 ("RWA"), which is a measure
of total on- and off-balance sheet assets adjusted for credit and market risk,
used to determine regulatory capital ratios.
The non-GAAP measures presented in this filing are pre-provision net revenue
("PPNR"), return on average tangible common equity ("ROTCE"), tangible common
equity to tangible assets ("TCE/TA"), and tangible book value per common share.
Refer to table 23 for a reconciliation of the non-GAAP to GAAP measures and
presentation of the most comparable GAAP items.
Forward-Looking Statements



This MD&A contains certain "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 21 E of
the Securities Exchange Act of 1934, as amended, (the "Exchange Act") with
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. The words "believe,"
"expect," "anticipate," "intend," "estimate," "should," "is likely," "will,"
"going forward" and other expressions that indicate future events and 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


                           FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 85

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competitive uncertainties and contingencies, many of which are beyond the
control of FHN, and many of which, with respect to future business decisions and
actions, are subject to change and which could cause actual results to differ
materially from those contemplated or implied by forward-looking statements or
historical performance. Examples of uncertainties and contingencies include
factors previously disclosed in FHN's recent annual, quarterly, and current
reports filed with the U.S. Securities and Exchange Commission (the "SEC"), as
well as the following factors, among others: the possibility that the
anticipated benefits of FHN's 2020 merger with IBERIABANK Corporation (the "2020
merger") will not be realized when expected or at all, including as a result of
the impact of, or problems arising from, the integration of the two companies or
as a result of the strength of the economy and competitive factors in any or all
of FHN's market areas; the possibility that the 2020 merger may be more
expensive to integrate than anticipated, including as a result of unexpected
factors or events; diversion of management's attention from ongoing business
operations and opportunities; potential adverse reactions or changes to

business or employee relationships resulting from the 2020 merger; FHN's success
in executing its business plans and strategies following the 2020 merger, and
managing the risks involved in the foregoing; the potential impacts on FHN's
businesses of the coronavirus COVID-19 pandemic, including negative impacts from
quarantines, market declines, and volatility, and changes in customer behavior
related to the COVID-19 pandemic; and other factors that may affect future
results of FHN.
FHN cautions that the foregoing list of important factors that may affect future
results is not exhaustive. Additional factors that could cause results to differ
materially from those contemplated by forward-looking statements can be found in
FHN's annual report on Form 10-K for the year ended December 31, 2019, and its
quarterly report on Form 10-Q for the period ended March 31, 2020, both filed
with the SEC and available on the SEC's website, http://www.sec.gov, and also
available in the "Investor Relations" section of FHN's website,
http://www.FirstHorizon.com, under the heading "SEC Filings," and in other
documents FHN files with the SEC.
Financial Summary



As previously mentioned, effective January 1, 2020, FHN adopted ASU 2016-13,
(Current Expected Credit Loss methodology or "CECL"). The application of CECL
can result in greater volatility of estimated credit loss estimates particularly
in periods of rapid changes in macroeconomic projections when compared to the
prior incurred loss estimation methodology. FHN's operating results for the
three and six months ended June 30, 2020 were negatively impacted by further
deterioration in the overall macroeconomic forecast largely tied to the
Coronavirus Disease 2019 ("COVID-19") pandemic resulting in a significant
increase in provision for loan losses and the reserve for unfunded commitments.
Second quarter 2020 net income available to common shareholders was $52.3
million, or $.17 per diluted share, compared to net income available to common
of $109.3 million, or $.35 per diluted share in second quarter 2019. For the six
months ended June 30, 2020, net income available to common shareholders was
$64.3 million, or $0.21 per diluted share, compared to net income available to
common of $208.4 million, or $.66 per diluted share, for the six months ended
June 30, 2019.
Total revenue increased 11 percent and 10 percent to $511.6 million and $989.2
million for the three and six months ended June 30, 2020 from $461.6 million and
$897.2 million for the three and six months ended June 30, 2019.
NII increased a modest 1 percent to $305.3 million in second quarter 2020 as
strong loan growth in loans to mortgage companies and PPP lending and deposit
pricing

discipline more than offset the negative impact of interest rates on loans.
Noninterest income increased 31 percent, or $48.3 million, in second quarter
2020 driven by strong fixed income revenue and higher deferred compensation
income, somewhat offset by the negative impacts of the COVID-19 pandemic on fee
income.
For the six months ended June 30, 2020 NII increased 2 percent to $608.1 million
and was driven by the same trends impacting the second quarter increase in NII.
Noninterest income increased 27 percent, or $82.0 million, to $381.0 million in
the first six months of 2020. The increase in fee income for the year-to-date
period was also driven by strong fixed income revenue. Deferred compensation
income decreased in the first half of 2020 driven by the timing of and extreme
variability in equity market valuations in both 2020 and 2019, offsetting a
portion of this increase.
Noninterest expense increased 11 percent and 8 percent to $332.2 million and
$643.5 million for the three and six months ended June 30, 2020 from $300.4
million and $596.5 million for the three and six months ended June 30, 2019. The
expense increase for 2020 was due in large part to higher fixed income variable
compensation, an increase in credit expense on unfunded commitments associated
with declines and deterioration in economic forecasts attributable to the
COVID-19 pandemic, and a net increase in litigation charges driven by a
favorable expense reversal in second quarter 2019, somewhat offset by lower


                           FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q

REPORT 86

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restructuring and rebranding related expenses. For second quarter 2020, higher
deferred compensation expense also contributed to the increase in noninterest
expense.
Asset quality trends were relatively stable in second quarter 2020 reflecting
continued underwriting discipline, ongoing portfolio management, and continued
prudent credit risk management. The allowance for loan losses increased to
$537.9 million on June 30, 2020 from $200.3 million on December 31, 2019,
reflecting further deterioration in the overall macro-economic outlook under
CECL, as well as the adoption impact of $106.4 million. Net charge-offs as a
percentage of loans was .20 percent for second quarter 2020 and 30+ day
delinquencies declined to .13 percent from .19 percent at December 31, 2019.
Common Equity Tier 1, Tier 1, Total Capital, and Leverage ratios were 9.25
percent, 10.69 percent, 12.47 percent, and

8.55 percent, respectively, in second quarter 2020 compared to 9.25 percent,
10.24 percent, 11.34 percent, and 9.04 percent, respectively, in second quarter
2019. Average assets increased to $47.9 billion and $45.7 billion for the three
and six months ended June 30, 2020 from $41.2 billion and $41.1 billion for the
three and six months ended June 30, 2019. Average loans and deposits increased
to $34.0 billion and $37.5 billion, respectively, in second quarter 2020, up 18
percent and 17 percent from second quarter 2019. For the six months ended June
30, 2020, Average loans and deposits increased 15 percent and 9 percent,
respectively to $32.2 billion and $35.2 billion. Average Shareholders' equity
increased to $5.1 billion for the three and six months ended June 30, 2020 from
$4.9 billion and $4.8 billion, respectively, for the three and six months ended
June 30, 2019. Period-end Shareholders' equity increased to $5.2 billion on June
30, 2020 from $4.9 billion on June 30, 2019.
Key Performance Indicators
                                             As of or for the three months

ended As of or for the six months


                                                          June 30,                          ended June 30,
(Dollars in thousands, except per share
data)                                              2020                2019             2020              2019

Pre-Provision Net Revenue ("PPNR") (a) $ 179,445 $ 161,209 $ 354,684 $ 300,672 Diluted earnings per common share

$       0.17         $       0.35     $      0.21       $      0.66
Return on average assets (annualized) (b)            0.48 %               1.11 %          0.32 %            1.07 %
Return on average common equity ("ROCE")
(annualized) (c)                                     4.50 %               9.79 %          2.79 %            9.45 %
Return on average tangible common equity
("ROTCE") (annualized) (a) (d)                       6.74 %              15.20 %          4.19 %           19.63 %
Net interest margin (e)                              2.90 %               3.34 %          3.02 %            3.32 %
Fee income to total revenue (f)                     40.49 %              34.22 %         38.61 %           33.33 %
Efficiency ratio (g)                                64.74 %              65.08 %         64.96 %           66.49 %
Allowance for loan losses to loans                   1.64 %               0.65 %          1.64 %            0.65 %
Net charge-offs to average loans
(annualized)                                         0.20 %               0.07 %          0.15 %            0.07 %
Total period-end equity to period-end assets        10.71 %              11.68 %         10.71 %           11.68 %
Tangible common equity to tangible assets
("TCE/TA") (a)                                       6.63 %               7.29 %          6.63 %            7.29 %

Cash dividends declared per common share $ 0.15 $ 0.14 $ 0.30 $ 0.28 Book value per common share

$      14.96         $      14.51     $     14.96       $     14.51
Tangible book value per common share (a)     $       9.99         $       9.47     $      9.99       $      9.47
Common equity Tier 1                                 9.25 %               9.25 %          9.25 %            9.25 %
Market capitalization (millions)             $   3,111.10         $

4,665.30 $ 3,111.10 $ 4,665.30




(a)  Represents a non-GAAP measure which is reconciled in the non-GAAP to GAAP
reconciliation in table 23.
(b)  Calculated using net income divided by average assets.
(c)  Calculated using net income available to common shareholders divided by
average common equity.
(d)  Calculated using 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 percent and,

where applicable, state income taxes.

(f) Ratio is fee income excluding securities gains/(losses) to total revenue

excluding securities gains/(losses).

(g) Ratio is noninterest expense to total revenue excluding securities

gains/(losses).





Key financial ratios were negatively impacted during the three and six months
ended June 30, 2020 by the large increase in loan loss provision expense due to
the deterioration in the economic forecast related to the effects of the
COVID-19 pandemic.




                           FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 87

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Business Line Review



Regional Banking
Second quarter 2020 regional banking pre-tax income was $118.5 million, down
from $168.9 million in second quarter 2019. For the six months ended June 30,
2020, regional banking pre-tax income was $144.1 million compared to $316.0
million for the six months ended June 30, 2019. The decrease in pre-tax income
in 2020 largely reflected an increase in the provision for loan losses and
higher credit expense on unfunded commitments somewhat offset by an increase in
revenue.
Total revenue increased 13 percent, or $50 million, to $429.1 million in second
quarter 2020 from $379.1 million in second quarter 2019, primarily driven by an
increase in NII. The increase in NII was primarily due to strong loan growth
tied to loans to mortgage companies and PPP lending, deposit pricing discipline,
and wider loan spreads (with offset in the corporate segment) compared to second
quarter 2019. Noninterest income decreased 3 percent or $2.3 million to $79.3
million in second quarter 2020 from $81.6 million in the prior year. Fee income
was negatively impacted by the COVID-19 pandemic in second quarter 2020,
resulting in lower NSF fee income as a result of a decline in transaction volume
and fee waivers, other service charges, and brokerage fees. Noninterest income
was positively impacted by a $4.6 million debit card incentive payment
recognized in second quarter 2020, as well as increases in fees from mortgage
banking activities and derivative sales relative to second quarter 2019.
Provision expense increased to $108.3 million in second quarter 2020 from $17.8
million in second quarter 2019, primarily driven by deterioration in the
economic forecast attributable to the effects of the COVID-19 pandemic.
Noninterest expense was $202.3 million in second quarter 2020, up from $192.4
million in second quarter 2019. The increase in expense was primarily driven by
an $11.7 million increase in the credit expense on unfunded commitments due to
the economic forecast attributable to the COVID-19 pandemic. An increase in FDIC
premium expense due to balance sheet growth and expected loss severity ratios as
well as $1.0 million of additional credit risk adjustments related to Regional
Banking interest rate derivatives and swap participations also contributed to
the overall increase in expenses in second quarter 2020 compared to the prior
year. These increases were somewhat offset by lower personnel-related expenses
driven by a head-count reduction compared to second quarter 2019.
Total revenue increased 10 percent, or $72.9 million, to $811.1 million in the
first half of 2020 from $738.3 million in the first half of 2019, driven by
increases in NII and noninterest income. The increase in NII for the
year-to-date period of 2020 was driven by the same factors impacting the
quarterly trend. Noninterest income increased 4 percent

or $6.6 million to $161.2 million in the first half of 2020 from $154.6 million
in the prior year. The increase was primarily driven by higher fees from
derivative sales and the $4.6 million debit card incentive payment previously
mentioned. To a lesser extent an increase in brokerage, management fees and
commissions driven by higher advisory revenue and annuity income as a result of
increased transaction volume, and higher income associated mortgage banking
activities also contributed to the increase in noninterest income for the six
months ended June 30, 2020. A decline in NSF fee income, primarily in second
quarter 2020, partially offset a portion of the overall increase relative to the
first half of 2019.
Provision expense increased to $253.8 million for the six months ended June 30,
2020 from $31.2 million for the six months ended June 30, 2019, driven by
deterioration in the economic forecast attributable to the effects of the
COVID-19 pandemic.
Noninterest expense was $413.3 million for the six months ended June 30, 2020,
up from $391.0 million for the six months ended June 30, 2019. The increase in
expense was primarily driven by a $20.5 million increase in the credit expense
on unfunded commitments due to the economic forecast attributable to the
COVID-19 pandemic. An increase in FDIC premium expense and $2.0 million of
additional credit risk adjustments also contributed to the expense increase in
the first half of 2020 compared to the prior year. A reduction in personnel
expense, largely attributable to a reduction in headcount partially mitigated
the increase in noninterest expense for the six months ended June 30, 2020.
Fixed Income
Fixed income pre-tax income increased to $43.7 million in second quarter 2020
from $16.3 million in second quarter 2019. For the six months ended June 30,
2020 fixed income pre-tax income increased to $69.3 million from $26.9 million
for the six months ended June 30, 2019. Results reflect higher revenue,
partially offset by an increase in expenses.
Noninterest income increased 73 percent, or $47.6 million, to $113.2 million in
second quarter 2020 from $65.6 million in second quarter 2019. Average daily
revenue ("ADR") increased to $1.6 million in second quarter 2020 from $866
thousand in second quarter 2019, due to favorable market conditions including
low rates, market volatility and increased depository liquidity. Other product
revenue was $13.0 million in second quarter 2020, up from $11.1 million in the
prior year, primarily driven by increases in fees from derivative sales. NII was
$13.5 million in second quarter 2020, up from $6.2 million in second quarter
2019, primarily due to higher spreads on inventory positions compared to prior
year.


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Noninterest expense increased 50 percent, or $27.5 million, to $83.0 million in
second quarter 2020 from $55.5 million in second quarter 2019, primarily driven
by higher variable compensation due to higher fixed income sales revenues.
Noninterest income increased 75 percent, or $89.6 million, to $209.0 million in
the first half of 2020 from $119.4 million in the first half of 2019. Fixed
income product revenue increased to $178.6 million for the six months ended June
30, 2020 from $99.0 million for the six months ended June 30, 2019, largely
driven by the same factors impacting the quarterly period, partially offset by
elevated levels of trading losses driven by extreme market volatility in first
quarter 2020 compared to the prior year. Other product revenue was $30.3 million
in the first half of 2020, up 48 percent from $20.4 million in the prior year,
primarily driven by increases in fees from derivative sales. NII was $24.5
million and $13.5 million, respectively, for the six months ended June 30, 2020
and 2019. The increase was due in large part to higher spreads on inventory
positions in addition to higher inventory balances compared to prior year.
Noninterest expense was $164.1 million for the six months ended June 30, 2020
compared to $106.1 million for the six months ended June 30, 2019, primarily
driven by higher variable compensation due to increased commissionable revenues.
Corporate
The pre-tax loss for the corporate segment was $93.8 million in second quarter
2020 compared to $54.6 million in second quarter 2019. For the six months ended
June 30, 2020 the pre-tax loss for the corporate segment was $126.3 million
compared to $91.0 million in the prior year.
Net interest expense was $63.5 million and $7.1 million in second quarter 2020
and 2019, respectively. Net interest expense was negatively impacted by funds
transfer pricing ("FTP") methodology (with offset in regional banking segment).
Noninterest income/(loss)(including securities gain/losses) in second quarter
2020 was $12.9 million, up from $9.4 million in second quarter 2019, primarily
due to an increase in deferred compensation income driven by equity market
valuations relative to the prior year.
Noninterest expense decreased 24 percent or $13.7 million to $43.2 million in
second quarter 2020 from $56.9 million in second quarter 2019. The decrease in
expense for second quarter 2020 was primarily driven by decreases in
restructuring costs associated with efficiency initiatives and rebranding
expenses relative to second quarter 2019. This expense decrease was somewhat
offset by increases in deferred compensation expense, acquisition related
charges, and pension expense.
Net interest expense was $76.9 million and $15.1 million for the six months
ended June 30, 2020 and 2019, respectively, as net interest expense for the six
months

ended June 30, 2020 was also negatively impacted by FTP. Noninterest
income/(loss)(including securities gain/losses) in the first half of 2020 was
$9.2 million compared to $22.8 million in the first half of 2019, the decrease
in noninterest income for the year-to-date period of 2020 was primarily due to a
decrease in deferred compensation income driven by the timing of and extreme
variability in equity market valuations in both 2020 and 2019.
Noninterest expense decreased 41 percent or $40.0 million to $58.7 million for
the six months ended June 30, 2020 from $98.7 million for the six months ended
June 30, 2019. The decrease in expense for the six months ended June 30, 2020
was primarily driven by decreases in restructuring costs associated with
efficiency initiatives, deferred compensation expense, and rebranding expenses,
somewhat offset by higher acquisition related charges and an increase in pension
expense.
Non-Strategic
The non-strategic segment had pre-tax income of $1.0 million in second quarter
2020 compared to $17.7 million in second quarter 2019. For the six months ended
June 30, 2020 the non-strategic segment had pre-tax income of $3.6 million
compared to $26.8 million for the six months ended June 30, 2019. The decrease
in results for both periods was largely driven by an increase in loan loss
provision expense and an increase in noninterest expense, coupled with a decline
in NII relative to the prior year.
Total revenue was $6.3 million in second quarter 2020 down from $8.5 million in
second quarter 2019. NII decreased to $5.5 million in second quarter 2020 from
$7.1 million in second quarter 2019, primarily due to continued run-off of the
loan portfolios. Noninterest income was $.8 million and $1.4 million in second
quarter 2020 and 2019, respectively.
The provision for loan losses within the non-strategic segment was an expense of
$1.7 million in second quarter 2020 compared to a provision credit of $4.8
million in second quarter 2019. The increase in provision expense in second
quarter 2020 was due to additional consumer reserves driven by deterioration in
the economic forecast attributable to the effects of the COVID-19 pandemic.
Noninterest expense increased $8.0 million to $3.6 million in second quarter
2020. Noninterest expense in second quarter 2019 was a net credit driven by an
$8.3 million expense reversal related to the favorable resolution of a legal
matter.
For the six months ended June 30, 2020, total revenue was $12.2 million down
from $18.3 million for the six months ended June 30, 2019. NII decreased to
$10.6 million in the first half of 2020 from $16.0 million in the first half of
2019, driven by the continued run-off of the loan portfolios. Noninterest income
was $1.6 million and $2.2


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million, respectively, for the six months ended June 30, 2020 and 2019.
The provision for loan losses within the non-strategic segment was an expense of
$1.2 million for the six months ended June 30, 2020 compared to a provision
credit of $9.2 million in the prior year. The same factors impacting the
quarterly change in loan loss provisioning levels also drove the change for the
year-to-date period.

Noninterest expense was $7.4 million and $.7 million, respectively, for the six
months ended June 30, 2020 and 2019. The increase in noninterest expense in the
first half of 2020 was the result of the favorable impact of the litigation
expense reversal previously mentioned on expenses during the first half of 2019.
Income Statement Review



Total consolidated revenue was $511.6 million in second quarter 2020, up 11
percent from $461.6 million in second quarter 2019, driven by increases in
noninterest income and NII. Provision expense increased significantly from $13.0
million in second quarter 2019 to $110.0 million in second quarter 2020
primarily driven by deterioration in the economic forecast attributable to the
effects of the COVID-19 pandemic. Total consolidated expenses increased 11
percent to $332.2 million in second quarter 2020 from $300.4 million in second
quarter 2019, driven by an increase in personnel-related expense, higher credit
expense on unfunded commitments, and an increase in acquisition-related charges
somewhat offset by lower restructuring and rebranding related expenses.

For the six months ended June 30, 2020 total consolidated revenue was $989.2
million, up 10 percent from $897.2 million for the six months ended June 30,
2019, driven by a 27 percent increase in noninterest income and a 2 percent
increase in NII. Provision expense increased from $22.0 million in the first
half of 2019 to $255.0 million in the first half of 2020 driven by deterioration
in the economic forecast attributable to the effects of the COVID-19 pandemic.
Total consolidated expenses increased 8 percent to $643.5 million for the six
months ended June 30, 2020 from $596.5 million for the six months ended June 30,
2019, and were driven by the same factors that impacted the quarterly increase
in total consolidated noninterest expense.
Net Interest Income
Net interest income was $305.3 million in second quarter 2020, up from $303.6
million in second quarter 2019. The increase in NII was primarily attributable
to strong loan growth tied to loans to mortgage companies and PPP lending and
deposit pricing discipline, somewhat offset by the negative impact of interest
rates on loans (including

LIBOR and Prime) compared to second quarter 2019. For the six months ended June
30, 2020 NII was $608.1 million, up from $598.1 million for the six months ended
June 30, 2019. The same factors that contributed to the second quarter 2020
increase in NII also drove the increase in NII for the year-to-date period of
2020 relative to the prior year. Average earning assets were increased to $42.7
billion and $40.7 billion for the three and six months ended June 30, 2020 from
$36.7 billion and $36.5 billion for the three and six months ended June 30,
2019. The increase in average earning assets for both second quarter and
year-to-date 2020 was primarily driven by loan growth. For the six months ended
June 30, 2020 an increase in interest-bearing cash also contributed to the
increase in average earning assets relative to the prior year.
For purposes of computing yields and the net interest margin, FHN adjusts net
interest income to reflect tax-exempt income on an equivalent pre-tax basis,
which provides comparability of net interest income arising from both taxable
and tax-exempt sources.

The consolidated net interest margin was 2.90 percent in second quarter 2020,
down 44 basis points from 3.34 percent in second quarter 2019. The net interest
spread was 2.75 percent in second quarter 2020, down 19 basis points from 2.94
percent in second quarter 2019. For the six months ended June 30, 2020, the net
interest margin was 3.02 percent, down 30 basis points from 3.32 percent for the
six months ended June 30, 2019. The decline in NIM for the three and six months
ended June 30, 2020 was primarily the result of the negative impact of interest
rates (including LIBOR and Prime) relative to 2019, somewhat mitigated by
deposit pricing discipline and the impact of PPP accretion. For second quarter
2020 an increase in average excess cash at the Fed also negatively impacted NIM
relative to the prior year.


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Table 1-Net Interest Margin

                                                   Three Months Ended          Six Months Ended
                                                         June 30                   June 30
                                                    2020         2019           2020       2019
Assets:
Earning assets:
Loans, net of unearned income:
Commercial loans                                    3.56 %        5.05 %        3.92 %     5.06 %
Consumer loans                                      4.00          4.65          4.17       4.62
Total loans, net of unearned income                 3.65          4.95          3.97       4.95
Loans held-for-sale                                 3.61          5.36          4.08       5.64
Investment securities:
U.S. government agencies                            2.05          2.61          2.19       2.64
States and municipalities                           3.48          3.31          3.43       3.76
Corporates and other debt                           4.71          4.41          4.69       4.39
U.S. treasuries                                     0.12            NM          0.12         NM
Other                                              33.42         34.73         33.67      34.64
Total investment securities                         2.23          2.74          2.37       2.76
Trading securities                                  2.48          3.41          2.73       3.60
Other earning assets:
Federal funds sold                                  0.22          2.74          0.44       2.66
Securities purchased under agreements to resell
(a)                                                (0.08 )        2.23          0.74       2.22
Interest-bearing cash                               0.09          2.28          0.35       2.37
Total other earning assets                          0.06          2.27          0.49       2.34
Interest income / total earning assets              3.29 %        4.52 %        3.60 %     4.51 %
Liabilities:
Interest-bearing liabilities:
Interest-bearing deposits:
Savings                                             0.36 %        1.29 %        0.60 %     1.32 %
Other interest-bearing deposits                     0.13          0.98          0.38       1.02
Time deposits                                       1.31          2.01          1.51       1.96
Total interest-bearing deposits                     0.38          1.32          0.63       1.33
Federal funds purchased                             0.12          2.43          0.57       2.46
Securities sold under agreements to repurchase      0.36          2.08          0.79       2.07
Fixed income trading liabilities                    1.11          2.75          1.56       2.87
Other short-term borrowings                         0.17          2.66          0.94       2.77
Term borrowings                                     3.96          4.96          3.97       4.93
Interest expense / total interest-bearing
liabilities                                         0.54          1.58          0.79       1.57
Net interest spread                                 2.75 %        2.94 %        2.81 %     2.94 %
Effect of interest-free sources used to fund
earning assets                                      0.15          0.40          0.21       0.38
Net interest margin (b)                             2.90 %        3.34 %        3.02 %     3.32 %


NM - Not meaningful
(a) Second quarter 2020 yield 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 percent and, where applicable, state
    income taxes.




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FHN's net interest margin is primarily impacted by its balance sheet mix,
including the levels of fixed and floating rate loans, rate sensitive and
non-rate sensitive liabilities, cash levels, trading inventory levels as well as
loan fees and cash basis income. For the remainder of 2020, NIM will also depend
on potentially modest loan growth, rate impact from the elevated spread of LIBOR
to Fed Funds, widening credit spreads, PPP fees, Fixed Income trading inventory
and the extent of assets moving to nonaccrual status.
PROVISION FOR LOAN LOSSES
The provision for loan losses is the charge to earnings that management
determines to be necessary to maintain the ALLL at a sufficient level to reflect
management's estimate of expected credit losses in the loan portfolio. Provision
expense was $110.0 million and $255.0 million for the three and six months ended
June 30, 2020, calculated under the CECL methodology adopted January 1, 2020,
compared to $13.0 million and $22.0 million for the three and six months ended
June 30, 2019 calculated under the "incurred loss" methodology. The increase in
provision expense was due to the economic forecast attributable to the COVID-19
pandemic, and to a much lesser extent associated with loan growth. For
additional information about the provision for loan losses refer to the Regional
Banking and Non-Strategic sections of the Business Line Review section in this
MD&A. For additional information about general asset quality trends refer to the
Asset Quality section in this MD&A.
NONINTEREST INCOME
Noninterest income (including securities gains/(losses)) was $206.3 million in
second quarter 2020 and represented 40 percent of total revenue compared to
$158.0 million in second quarter 2019 and 34 percent. The increase in
noninterest income in second quarter 2020 was primarily

driven by higher fixed income revenue and an increase in deferred compensation
income relative to second quarter 2019, somewhat offset by the negative impact
of the COVID-19 pandemic on fee income.
For the six months ended June 30, 2020, noninterest income (including securities
gains/(losses)) was $381.0 million and represented 39 percent of total revenue
compared to $299.0 million for the six months ended June 30, 2019 and 33
percent. The increase in noninterest income for the year-to-date period of 2020
was primarily driven by higher fixed income revenue, somewhat offset by a
decrease in deferred compensation income relative to the first half of 2019.
Fixed Income Noninterest Income
Fixed income noninterest income was $112.4 million in second quarter 2020, a 69
percent increase from $66.4 million in second quarter 2019. The increase in
second quarter 2020 was largely driven by favorable market conditions including
low rates, market volatility and increased depository liquidity. Revenue from
other products was $12.1 million and $11.9 million in second quarter 2020 and
2019, respectively. The modest increase was primarily driven by increases in
derivative sales.
For the six months ended June 30, 2020, fixed income noninterest income was
$208.1 million, up 73 percent from $120.2 million for the six months ended June
30, 2019. The increase in the first half of 2020 was largely driven by the same
factors impacting the quarterly period, partially offset by elevated levels of
trading losses driven by extreme market volatility in first quarter 2020
compared to the prior year. Revenue from other products increased 39 percent to
$29.4 million for the year-to-date period of 2020 from $21.2 million in 2019,
driven by increases in derivative sales.
The following table summarizes FHN's fixed income noninterest income for the
three and six months ended June 30, 2020 and 2019.
Table 2-Fixed Income Noninterest Income

                                          Three Months Ended                              Six Months Ended
                                               June 30                                         June 30
(Dollars in thousands)                    2020           2019       Percent

Change 2020 2019 Percent Change Noninterest income: Fixed income

$   100,272     $ 54,533             84 %       $ 178,626     $  99,005             80 %
Other product revenue                      12,149       11,881              2 %          29,430        21,158             39 %
Total fixed income noninterest income $   112,421     $ 66,414             69 %       $ 208,056     $ 120,163             73 %





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Deposit Transactions and Cash Management
Fees from deposit transactions and cash management activities were $30.8 million
and $61.1 million for the three and six months ended June 30, 2020 down 5
percent from $32.4 million and $64.0 million for the three and six months ended
June 30, 2019. In 2020, NSF fees decreased from pandemic-related impacts such as
a decline in transaction volume and fee waivers.These decreases were somewhat
off set by a $4.6 million debit card incentive payment recognized in second
quarter 2020 and increased fees from cash management activities.
Brokerage, Management Fees and Commissions
Noninterest income from brokerage, management fees and commissions was $13.8
million and $29.2 million for the three and six months ended June 30, 2020
compared to $14.2 million and $26.8 million for the three and six months ended
June 30, 2019. The increase for the six months ended June 30, 2020 was primarily
driven by higher advisory revenue and annuity income as a result of increased
transaction volume in first quarter 2020.
Other Noninterest Income
Other income includes revenues related to deferred compensation plans (which are
mirrored by changes in noninterest expense), other service charges, mortgage
banking (primarily within the non-strategic and regional banking segments), ATM
and interchange fees, letters of credit fees, electronic banking fees, dividend
income, insurance commissions, gain/(loss) on the extinguishment of debt and
various other fees.

Revenue from all other income and commissions increased $4.3 million to $30.0
million in second quarter 2020 from $25.7 million in second quarter 2019. The
increase in all other income and commissions in second quarter 2020 was largely
due to a $6.2 million increase in deferred compensation income driven by equity
market valuations relative to the prior year. Deferred compensation income
fluctuates with changes in the market value of the underlying investments and is
mirrored by changes in deferred compensation expense which is included in
personnel expense. Additionally, increases in mortgage banking income and higher
fees from derivative sales also contributed to the increase in all other income
and commissions in second quarter 2020, but were partially offset by decreases
in other service charges and dividend income relative to second quarter 2019.
For the six months ended June 30, 2020 revenue from all other income and
commissions decreased $5.9 million to $44.4 million from $50.3 million for the
six months ended June 30, 2019. The decrease in all other income and commissions
in second quarter 2020 was largely due to a $8.7 million decrease in deferred
compensation income and lower dividend income. The decline in deferred
compensation income was driven by the timing of and extreme variability in
equity market valuations in both 2020 and 2019. Higher fees from derivative
sales relative to first quarter 2019 and an increase related to mortgage banking
activities offset a portion of the overall decline in other noninterest income.
The following table provides detail regarding FHN's other income.


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Table 3-Other Income

                                            Three Months Ended                     Six Months Ended
                                                 June 30             Percent            June 30           Percent
(Dollars in thousands)                      2020           2019       Change       2020         2019       Change
Other income:
Deferred compensation (a)               $     8,171     $  1,938        NM      $ (1,336 )   $  7,412        NM
Other service charges                         4,582        5,624       (19 )%      9,801        9,493         3  %
Mortgage banking                              4,138        2,572        61  %      6,569        4,458        47  %
ATM and interchange fees                      4,009        4,262        (6 )%      8,221        7,503        10  %
Letter of credit fees                         1,559        1,253        24  %      3,021        2,621        15  %
Electronic banking fees                       1,182        1,267        (7 )%      2,212        2,538       (13 )%
Dividend income (b)                           1,057        1,809       (42 )%      2,187        4,122       (47 )%
Insurance commissions                           401          566       (29 )%      1,190        1,190         *
Gain/(loss) on extinguishment of debt             -            -        NM             -           (1 )      NM
Other                                         4,890        6,376       (23 )%     12,488       10,962        14  %
Total                                   $    29,989     $ 25,667        17  %   $ 44,353     $ 50,298       (12 )%


NM - Not meaningful
* Amount is less than one percent.
(a) Amounts are driven by market conditions and are mirrored by changes in

deferred compensation expense which is included in employee compensation

expense; six months ended June 30, 2020 decrease driven by variability in

equity market valuations.

(b) Represents dividend income from Federal Reserve Bank ("FRB") and Federal Home

Loan Bank ("FHLB") holdings. Variability largely driven by dividend rate.





NONINTEREST EXPENSE
Total noninterest expense increased 11 percent to $332.2 million in second
quarter 2020 from $300.4 million in second quarter 2019. For the six months
ended June 30, 2020 noninterest expense increased 8 percent to $643.5 million
from $596.5 million for the six months ended June 30, 2019. The increase in
noninterest expense for the quarter and year-to-date periods of 2020 was
primarily driven by an increase in personnel-related expense, higher credit
expense on unfunded commitments associated with the economic forecast
attributable to the COVID-19 pandemic, and an increase in acquisition-related
charges.
Expenses in second quarter 2019 were favorably impacted by an $8.3 million
expense reversal related to the resolution of legal matters which also
contributed to the year-over-year increase in noninterest expense for both the
three and six months ended June 30, 2020. These increases were somewhat offset
by restructuring costs associated with the identification of efficiency
opportunities within the organization, asset impairments, and rebranding
expenses recognized in the three and six months ended June 30, 2019.
Employee Compensation, Incentives, and Benefits
Employee compensation, incentives, and benefits (personnel expense), the largest
component of noninterest expense, increased $28.6 million in second quarter 2020
to $200.3 million from $171.6 million in second quarter 2019. The increase in
personnel expense in second quarter 2020 was primarily driven by higher variable
compensation due to higher fixed income sales revenue, as

well as increases in deferred compensation expense driven by equity market
valuations and acquisition-related costs. A reduction in headcount and lower
restructuring costs associated with the identification of efficiency
opportunities within the organization favorably impacted personnel expense in
second quarter 2020 relative to the second quarter 2019, offsetting a portion of
the overall increase in personnel expenses.
For the six months ended June 30, 2020 personnel expense was $383.7 million, up
$34.2 million from $349.6 million for the six months ended June 30, 2019. The
increase in personnel expense for the year-to-date period was also driven by
higher variable compensation due to increased commissionable revenues within
Fixed Income. For the year-to-date period of 2020 deferred compensation expense
decreased $9.4 million driven by the timing of and extreme variability in equity
market valuations in both 2020 and 2019. Additionally, a decrease in
restructuring costs associated with the identification of efficiency
opportunities within the organization and a reduction in headcount also offset a
portion of the overall increase in personnel expenses for the first half of
2020.
Professional Fees
Professional fees were $10.3 million in second quarter 2020, down from $11.3
million in second quarter 2019. The decrease in professional fees was primarily
driven by lower restructuring costs associated with the identification of
efficiency opportunities within the organization, largely offset by an increase
in merger and acquisition related expenses.


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Professional fees were $17.3 million in the first half of 2020 compared to $23.6
million in the first half of 2019. The decrease in professional fees for the
first half of 2020 was also primarily driven by lower restructuring costs,
somewhat offset by higher merger and acquisition related expenses. Additionally,
strategic investments recognized in first quarter 2019 to analyze growth
potential and product mix for new markets also contributed to the year-over-year
decline in professional fees.
FDIC premium expense
FDIC premium expense increased 51 percent to $6.4 million in second quarter 2020
from $4.3 million in second quarter 2019. For the six months ended June 30,
2020, FDIC premium expense increased 55 percent to $13.2 million from $8.5
million for the six months ended June 30, 2019. The increase for both periods
was driven by balance sheet growth and expected loss severity ratios.
Legal Fees
Legal fees were $2.5 million in second quarter 2020, down from $6.5 million in
second quarter 2019. Legal fees were $4.3 million in the first half of 2020,
down from $9.3 million in the first half of 2019. The decrease in legal fees was
driven by lower acquisition related expenses in 2020 relative to the prior year.
Other Noninterest Expense
Other expense includes expenses associated with unfunded commitments, expenses
associated with the non-service components of net periodic pension and
post-retirement cost, other insurance and tax expenses, miscellaneous loan
costs, supplies, costs associated with employee training and dues, customer
relation expenses, travel and entertainment, expenses associated with OREO, tax
credit investments expenses, losses from litigation and regulatory matters, and
various other expenses.

All other expenses increased 25 percent to $35.8 million in second quarter 2020
from $28.7 million in second quarter 2019. The increase was primarily driven by
an $11.6 million increase in credit expense on unfunded commitments driven by
deterioration in the economic forecast attributable to the effects of the
COVID-19 pandemic and an $8.3 million expense reversal recognized in second
quarter 2019 associated with the resolution of a legal matter which favorably
impacted all other expenses in the prior year. Additionally, a $2.4 million
increase in pension-related costs also contributed to the overall increase in
all other expenses in second quarter 2020 related to prior year. These increases
were partially offset by costs associated with asset impairments and technology
related costs associated with restructuring and rebranding initiatives
recognized in second quarter 2019 and a decrease in travel and entertainment
expenses.
All other expenses increased 44 percent to $69.0 million for the six months
ended June 30, 2020 from $48.0 million for the six months ended June 30, 2019.
The increase was largely the result of a $21.2 million increase in credit
expense on unfunded commitments related to the COVID-19 pandemic and the $8.3
million litigation expense reversal recognized in 2019 previously mentioned.
Additionally, a $4.5 million increase in pension-related costs contributed to
the increase in all other expenses for the first half of 2020. These increases
were somewhat offset by costs associated with asset impairments and technology
related costs associated with restructuring and rebranding initiatives
recognized in second quarter 2019 and a decrease in travel and entertainment
expenses.
The following table provides detail regarding FHN's other expense.


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Table 4-Other Expense

                                   Three Months Ended                     Six Months Ended
                                         June 30            Percent            June 30           Percent
(Dollars in thousands)              2020          2019       Change       2020         2019       Change
Other expense:
Credit expense on unfunded
commitments (a)                 $   11,158     $   (489 )      NM      $ 20,388     $    (93 )      NM
Non-service components of net
periodic pension and
post-retirement cost                 2,961          559        NM         5,469          991        NM
Other insurance and taxes            2,599        2,495         4  %      5,278        5,189         2  %
Miscellaneous loan costs             2,356          857        NM         3,450        1,884        83  %
Supplies                             1,933        1,342        44  %      4,344        3,146        38  %
Employee training and dues             654        1,251       (48 )%      1,995        2,708       (26 )%
Customer relations                     632        1,540       (59 )%      2,636        3,139       (16 )%
Travel and entertainment               474        2,906       (84 )%      3,183        5,618       (43 )%
OREO                                   437           25        NM           253         (341 )      NM
Tax credit investments                 426          267        60  %        772          942       (18 )%
Litigation and regulatory
matters (b)                              3       (8,230 )      NM            16       (8,217 )      NM
Other                               12,118       26,158       (54 )%     21,193       33,046       (36 )%
Total                           $   35,751     $ 28,681        25  %   $ 68,977     $ 48,012        44  %


Certain previously reported amounts have been reclassified to agree with current
presentation.
NM - Not meaningful
(a) Three and six months ended June 30, 2020 increases largely driven by the

economic forecast attributable to the COVID-19 pandemic.

(b) Litigation and regulatory matters for the three and six months ended June 30,

2019 includes an $8.3 million expense reversal related to the settlement of

litigation matters within the Non-Strategic segment.





INCOME TAXES
FHN recorded an income tax provision of $12.8 million in second quarter 2020,
compared to $34.5 million in second quarter 2019. For the six months ended June
30, 2020 and 2019, FHN recorded an income tax provision of $17.5 million and
$61.5 million, respectively. The effective tax rate for the three and six months
ended June 30, 2020 was approximately 18 percent and 19 percent compared to 23
percent and 22 percent for the three and six months ended June 30, 2019.
The Company's effective tax rate is favorably affected by recurring items such
as bank-owned life insurance, tax-exempt income, and credits and other tax
benefits from affordable housing investments. The effective rate is unfavorably
affected by the non-deductibility of a portion of the Company's FDIC premium and
executive compensation expenses. The Company'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 the deferred tax asset valuation allowance
and changes in unrecognized tax benefits. The rate also may be affected by items
resulting from business combinations.
A deferred tax asset ("DTA") or deferred tax liability ("DTL") 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

enacted statutory tax rates, applicable to future years, to these temporary
differences. As of June 30, 2020, FHN's gross DTA (net of a valuation allowance)
and gross DTL were $310.1 million and $205.4 million, respectively, resulting in
a net DTA of $104.7 million at June 30, 2020, compared with a net DTA of $69.0
million at December 31, 2019.
As of June 30, 2020, FHN had deferred tax asset balances related to federal and
state income tax carryforwards of $37.5 million and $1.2 million, respectively,
which will expire at various dates.
FHN believes that it will be able to realize the value of its DTA and that no
valuation allowance is needed. FHN monitors its DTA and the need for a valuation
allowance on a quarterly basis.
RESTRUCTURING, REPOSITIONING, AND EFFICIENCY INITIATIVES
Beginning in 2019, FHN initiated a company-wide review of business practices
with the goal of optimizing its expense base to improve profitability and create
capacity to reinvest savings into technology and revenue production activities.
The net charges for restructuring, repositioning, and efficiency initiatives
were not significant in the first half of 2020 and were $30.8 million in the
first half of 2019. These expenses are primarily associated with severance and
other employee costs, professional fees, and


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costs associated with asset impairments. Due to the broad nature of the actions
being taken, many components of expense are expected to benefit from the current
efficiency

initiatives. See Note 17 - Restructuring, Repositioning, and Efficiency for additional information. Statement of Condition Review





Total period-end assets were $48.6 billion on June 30, 2020, up 12 percent from
$43.3 billion on December 31, 2019. The increase in period-end assets was
primarily driven by higher levels of interest-bearing cash, strong loan growth,
and increases in available-for-sale ("AFS") securities and derivative assets.
These increases were somewhat offset by an increase in the allowance for loan
losses due to the Adoption of ASU 2016-13, "Measurement of Credit Losses on
Financial Instruments," or ("CECL") and all related ASUs on January 1, 2020 and
additional reserves recognized in first and second quarter 2020 due to the
economic forecast attributable to the COVID-19 pandemic.
Average assets increased 12 percent to $47.9 billion in second quarter 2020 from
$42.9 billion in fourth quarter 2019. The increase in average assets was largely
driven by loan growth and higher levels of interest-bearing cash. Increases in
FHLB stock and derivative assets also contributed to the increase in average
assets during second quarter 2020, somewhat offset by lower average balances of
securities purchased under agreements to resell ("asset repos") and an increase
in the ALLL due to the adoption of CECL and additional loan loss reserves due to
the COVID-19 pandemic.
Total period-end liabilities were $43.4 billion on June 30, 2020, a 14 percent
increase from $38.2 billion on December 31, 2019. The net increase in period-end
liabilities was primarily due to an influx of deposits. Additionally, increases
in term borrowings, securities sold

under agreements to repurchase, and federal funds purchased ("FFP") also
contributed to the increase in period-end liabilities, but were somewhat offset
by a decrease in short-term borrowings. In second quarter 2020, average
liabilities increased to $42.8 billion from $37.8 billion in fourth quarter
2019. The increase in average liabilities was also driven by strong deposit
growth and an increase in term borrowings.
EARNING ASSETS
Earning assets consist of loans, investment securities, loans HFS, and other
earning assets such as trading securities and interest-bearing cash. Average
earning assets increased 12 percent and 16 percent to $42.7 billion in second
quarter 2020 from $38.2 billion and $36.7 billion, respectively, in fourth
quarter 2019 and second quarter 2019. A more detailed discussion of the major
line items follows.
Loans
Period-end loans increased 5 percent and 10 percent to $32.7 billion as of
June 30, 2020 from $31.1 billion on December 31, 2019 and $29.7 billion as of
June 30, 2019. The increase in period-end loan balances compared to December 31,
2019 was primarily driven by PPP lending. Average loans increased to $34.0
billion in second quarter 2020 compared to $30.7 billion in fourth quarter 2019
and $28.7 billion in second quarter 2019.
The following table summarizes FHN's average loans for quarters-ended June 30,
2020 and December 31, 2019.
Table 5-Average Loans

                                        Quarter Ended                         Quarter Ended
                                        June 30, 2020                       December 31, 2019
(Dollars in thousands)            Amount       Percent of total        Amount        Percent of total     Growth Rate
Commercial:
Commercial, financial, and
industrial                    $ 22,694,432               67 %      $  19,739,937               64 %          15  %
Commercial real estate           4,709,676               14            4,263,597               14            10
Total commercial                27,404,108               81           24,003,534               78            14

Consumer:


Consumer real estate (a)
(b)                              6,087,485               18            6,194,134               20            (2 )
Credit card, OTC and other         476,088                1              508,651                2            (6 )
Total consumer                   6,563,573               19            6,702,785               22            (2 )
Total loans, net of
unearned income               $ 33,967,681              100 %      $  30,706,319              100 %          11  %


* Amount is less than one percent.
(a) Balance as December 31, 2019 includes $7.1 million of restricted and secured
    real estate loans.




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(b) In first quarter 2020, the Permanent Mortgage portfolio was combined into

Consumer Real Estate portfolio, all prior periods were revised for
    comparability.



C&I loans are the largest component of the loan portfolio, comprising 67 percent
of total loans in second quarter 2020 and 64 percent fourth quarter 2019. C&I
loans increased 15 percent from fourth quarter 2019, largely driven by PPP
lending and higher balances within mortgage warehouse lending. Commercial real
estate loans experienced a net increase of 10 percent to $4.7 billion in second
quarter 2020.
Average consumer loans declined 2 percent from fourth quarter 2019 to $6.6
billion in second quarter 2020, largely driven by the continued wind-down of
portfolios within the Non-strategic segment and declines in home equity lines of
credit within the Regional Banking segment.
Investment Securities
FHN's investment portfolio consists principally of debt securities, including
government agency issued mortgage-backed securities ("MBS") and government
agency issued collateralized mortgage obligations ("CMO"), substantially all of
which are classified as available-for-sale. FHN utilizes the securities
portfolio as a source of income, liquidity and collateral for repurchase
agreements, for public funds, and as a tool for managing risk of interest rate
movements. Period-end investment securities were $5.5 billion on June 30, 2020
up from $4.5 billion on December 31, 2019.
Average investment securities were $4.5 billion in second quarter 2020 and $4.4
billion in fourth quarter 2019, representing 11 percent of average earning
assets in second quarter 2020 and 12 percent in fourth quarter 2019. The
increase in period-end and average investment securities was driven by FHN's
reinvestment strategy in 2020 coupled with excess levels of cash from strong
customer liquidity. FHN manages the size and mix of the investment portfolio to
assist in asset liability management, provide liquidity, and optimize risk
adjusted returns.

Loans Held-for-Sale
Loans HFS consists of small business, other consumer loans, the mortgage
warehouse, USDA, student, and home equity loans. On June 30, 2020, and December
31, 2019, loans HFS were $745.7 million and $593.8 million, respectively. The
average balance of loans HFS increased to $731.3 million in second quarter 2020
from $581.8 million in fourth quarter 2019. The increase in period-end and
average loans HFS was primarily driven by an increase in small business loans,
somewhat offset by a decrease in USDA loans.
Other Earning Assets
Other earning assets include trading securities (fixed income trading
inventory), securities purchased under agreements to resell ("asset repos"),
federal funds sold ("FFS"), and interest-bearing deposits with the Fed and other
financial institutions. Other earning assets averaged $3.5 billion in second
quarter 2020, a 38 percent increase from $2.5 billion in fourth quarter 2019.
The increase in average other earning assets was primarily driven by strong
customer liquidity that led to higher balances of interest-bearing cash and, to
a lesser extent, an increase in fixed income trading inventory relative to
fourth quarter 2019. Fixed income's trading inventory fluctuates daily based on
customer demand. These increases were somewhat offset by a decline in asset
repos, which are used in fixed income trading activities and generally fluctuate
with the level of fixed income trading liabilities (short-positions) as
securities collateral from asset repo transactions are used to fulfill trades.
Other earning assets were $4.7 billion on June 30, 2020, up from $2.5 billion on
December 31, 2019, primarily driven by an increase in interest-bearing cash,
partially offset by decreases in asset repos and trading securities.
The following table summarizes FHN's average other earning assets for
quarters-ended June 30, 2020 and December 31, 2019.
Table 6-Average Other Earning Assets
                                             Quarter Ended                        Quarter Ended
                                             June 30, 2020                      December 31, 2019
(Dollars in thousands)                Amount       Percent of total         Amount        Percent of total     Growth Rate
Other earning assets
Interest-bearing cash              $ 1,619,686               47 %      $      586,495               23 %           NM
Trading securities                   1,419,868               41             1,263,633               50             12  %
Securities purchased under
agreements to resell                   393,539               11               645,979               26            (39 )
Federal funds sold                      28,208                1                 9,700                1             NM
Total other earning assets         $ 3,461,301              100 %      $    2,505,807              100 %           38  %





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Non-earning assets
Period-end non-earning assets were $5.0 billion and $4.7 billion on June 30,
2020 and December 31, 2019, respectively, driven largely by increases in
derivative assets, equity investments (primarily FHLB stock), and fixed income
receivables, partially offset by an increase in the ALLL. Derivative assets and
fixed income receivable balances were higher as a result of market volatility
during the first half of 2020 and an increase in required margin posting. The
increase in the ALLL was due to the adoption of ASU 2016-13 (CECL) on January 1,
2020 and additional reserves established during first and second quarter 2020
due to the deterioration in the economic forecast related to the effects of the
COVID-19 pandemic.
Deposits
Average deposits increased $4.7 billion and $5.6 billion to $37.5 billion in
second quarter 2020, from $32.8 billion in

fourth quarter 2019 and $32.0 billion in second quarter 2019. Period-end
deposits increased 16 percent and 17 percent, respectively, to $37.8 billion on
June 30, 2020, from $32.4 billion on December 31, 2019 and $32.3 billion on June
30, 2019. The increase in both average and period-end balances from December 31,
2019 and June 30, 2019 was largely the result of significant customer deposit
inflows beginning in March 2020 as brokerage customers exited equity markets to
move in cash positions given the market volatility associated with the COVID-19
pandemic, as well as management's decision in first quarter 2020 to increase
market-indexed deposits (given the favorable benefits of this funding source in
lower interest-rate environments). The influx in noninterest-bearing deposits
during the first half of 2020 resulted in an increase in the percentage of
average noninterest-bearing deposits from 26 percent of total deposits in fourth
quarter 2019 to 30 percent of total deposits in second quarter 2020.
The following table summarizes FHN's average deposits for quarters-ended
June 30, 2020 and December 31, 2019.
Table 7-Average Deposits

                                            Quarter Ended                         Quarter Ended
                                            June 30, 2020                       December 31, 2019
(Dollars in thousands)                Amount       Percent of total        Amount        Percent of total     Growth Rate
Interest-bearing deposits:
Consumer                          $ 14,153,186               38 %      $  13,718,820               42 %            3  %
Commercial                           6,002,315               16            6,145,681               19             (2 )
Market-indexed (a)                   6,055,468               16            4,370,025               13             39
Total interest-bearing deposits     26,210,969               70           24,234,526               74              8
Noninterest-bearing deposits        11,315,526               30            8,542,521               26             32
Total deposits                    $ 37,526,495              100 %      $  32,777,047              100 %           14  %

(a) Market-indexed deposits are tied to an index not administered by FHN and are

comprised of insured network deposits, correspondent banking deposits, and


    trust/sweep deposits.



Short-Term Borrowings
Short-term borrowings (federal funds purchased ("FFP"), securities sold under
agreements to repurchase, trading liabilities, and other short-term borrowings)
averaged $3.0 billion in second quarter 2020, down 10 percent from $3.3 billion
in fourth quarter 2019. As noted in the table below, the decrease in short-term
borrowings between second quarter 2020 and fourth quarter 2019 was primarily
driven by decreases in other short-term borrowings, trading liabilities, and
FFP, partially offset by an increase in securities sold under agreements to
repurchase. Other 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
fluctuates based on expectations of customer demand. FFP fluctuates depending on
the amount of excess funding of FHN's correspondent bank customers. Period-end
short-term borrowings decreased 35 percent to $2.6 billion on June 30, 2020 from
$4.0 billion on December 31, 2019, primarily driven by a decrease in other
short-term borrowings, as FHN was able to use an influx of customer deposits to
support balance sheet funding. To a lesser extent trading liabilities also
decreased on a period-end basis, somewhat offset by increases in securities
purchased under agreements to resell and FFP.


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Table 8-Average Short-Term Borrowings



                                             Quarter Ended                        Quarter Ended
                                             June 30, 2020                      December 31, 2019
(Dollars in thousands)                Amount       Percent of total         Amount        Percent of total     Growth Rate
Short-term borrowings:
Federal funds purchased            $ 1,037,107               35 %      $    1,163,701               35 %          (11 )%
Securities sold under agreements
to repurchase                        1,011,339               34               701,213               21             44
Other short-term borrowings            555,032               19               844,558               26            (34 )
Trading liabilities                    352,433               12               585,889               18            (40 )
Total short-term borrowings        $ 2,955,911              100 %      $    3,295,361              100 %          (10 )%



Term Borrowings
Term borrowings include senior and subordinated borrowings with original
maturities greater than one year. Average term borrowings were $1.4 billion in
second quarter 2020 and $.9 billion in fourth quarter 2019. Period-end term
borrowings were $2.0 billion on June 30, 2020, up from $.8 billion on December
31, 2019. The increase in term borrowings on both an average and period-end
basis

was the result of the issuance of $450 million of subordinated notes by First
Horizon Bank in April 2020, and the issuance of $800 million of senior notes by
FHN in May 2020.
Other Liabilities
Period-end other liabilities were $1.0 billion on June 30, 2020 and December 31,
2019.
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. Period-end equity
increased to $5.2 billion on June 30, 2020 from $5.1 billion on December 31,
2019. Average equity increased to $5.1 billion in second quarter 2020 from $5.0
billion in fourth quarter 2019. The increase in period-end and average equity
was primarily due to the issuance of 1,500 shares of Series E Non-Cumulative
Perpetual Preferred Stock in

May 2020 and a decrease in accumulated other comprehensive income ("AOCI"),
largely the result of an increase in unrealized gains associated with AFS debt
securities. These increases were partially offset by the adoption impact of ASU
2016-13 (CECL) which resulted in a net decrease to retained earnings of $96.1
million on January 1, 2020, coupled with common and preferred dividends paid,
somewhat offset by net income recognized since fourth quarter 2019.


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The following tables provide a reconciliation of Shareholders' equity from the
Consolidated Condensed Statements of Condition to Common Equity Tier 1, Tier 1
and Total Regulatory Capital as well as certain selected capital ratios:
Table 9-Regulatory Capital and Ratios
(Dollars in thousands)                                     June 30, 2020     December 31, 2019
Shareholders' equity                                      $   4,912,954     $        4,780,577
Modified CECL transitional amount (a)                           158,948                      -
FHN non-cumulative perpetual preferred                         (240,289 )              (95,624 )
Common equity                                             $   4,831,613     $        4,684,953
Regulatory adjustments:
Disallowed goodwill and other intangibles                    (1,496,625 )           (1,505,971 )
Net unrealized (gains)/losses on securities
available-for-sale                                             (118,327 )              (31,079 )

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

                                            269,430                273,914
Net unrealized (gains)/losses on cash flow hedges               (16,305 )               (3,227 )
Disallowed deferred tax assets                                  (11,491 )               (8,610 )
Other deductions from common equity tier 1                         (849 )               (1,044 )
Common equity tier 1                                      $   3,457,446     $        3,408,936
FHN non-cumulative perpetual preferred                          240,289                 95,624
Qualifying noncontrolling interest-First Horizon Bank
preferred stock                                                 294,816                255,890
Tier 1 capital                                            $   3,992,551     $        3,760,450
Tier 2 capital                                                  667,100                394,435
Total regulatory capital                                  $   4,659,651     $        4,154,885
Risk-Weighted Assets
First Horizon National Corporation                        $  37,360,843     $       37,045,782
First Horizon Bank                                           37,037,629

36,626,993


Average Assets for Leverage
First Horizon National Corporation                           46,683,933             41,583,446
First Horizon Bank                                           46,111,262             40,867,365



                                         June 30, 2020          December 31, 2019
                                      Ratio       Amount       Ratio       Amount
Common Equity Tier 1
First Horizon National Corporation    9.25 %   $ 3,457,446     9.20 %   $ 3,408,936
First Horizon Bank                    9.84       3,644,724     9.38

3,433,867


Tier 1
First Horizon National Corporation   10.69       3,992,551    10.15       3,760,450
First Horizon Bank                   10.64       3,939,540    10.18

3,728,683

Total

First Horizon National Corporation 12.47 4,659,651 11.22 4,154,885 First Horizon Bank

                   13.05       4,835,218    10.77

3,944,613


Tier 1 Leverage
First Horizon National Corporation    8.55       3,992,551     9.04       3,760,450
First Horizon Bank                    8.54       3,939,540     9.12       3,728,683

(a) The modified CECL transitional amount is calculated as defined in the CECL

interim final rule issued by the banking regulators on March 27, 2020 and

includes the full amount of the impact to retained earnings from the initial

adoption of CECL plus 25 percent of the change in the adjusted allowance for

credit losses ("AACL") since FHN's initial adoption of CECL through June 30,


    2020.



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. 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 6.5 percent, 8 percent, 10
percent, and 5 percent, respectively. Furthermore, beginning January 1, 2019, a
capital conservation buffer of 50 basis points above these levels must be
maintained on the Common Equity Tier 1, Tier 1


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Capital and Total Capital ratios to avoid restrictions on dividends, share
repurchases and certain discretionary bonuses.
As of June 30, 2020, each of FHN and First Horizon Bank had sufficient capital
to qualify as well-capitalized institutions and to meet the capital conservation
buffer requirement. The second quarter 2020 capital ratios for both FHN and
First Horizon Bank are calculated under the interim final rule issued by the
banking regulators in late March 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, the risk-based regulatory capital ratios increased in
second quarter 2020 relative to fourth quarter 2019 primarily due to the impact
of net income less dividends during the first half of 2020 and, for the Bank
only, a reduction of $100 million in its equity investment in its financial
subsidiary, FHN Financial Securities Corp.  In addition, the Tier 1 Capital
ratio for FHN benefited from the issuance of $150 million of Non-Cumulative
Perpetual Preferred Stock, Series E, and the Total Capital ratios for both FHN
and First Horizon Bank benefited from the Bank's issuance of $450 million of
Tier 2 qualifying subordinated notes. The Tier 1 leverage ratio declined for
both FHNC and First Horizon Bank as average assets for leverage in the second
quarter 2020 increased relative to fourth quarter 2019.  During 2020, capital
ratios are expected to remain above well-capitalized standards plus the required
capital conservation buffer.

Common Stock Purchase Programs
Pursuant to board authority, FHN may repurchase 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. Two common stock purchase programs
currently authorized are discussed below. FHN's board has not authorized a
preferred stock purchase program.
General Authority
On January 23, 2018, FHN announced a $250 million share purchase authority with
an expiration date of January 31, 2020. On January 29, 2019, FHN announced a
$250 million increase in that authority along with an extension of the
expiration date to January 31, 2021. Purchases may be made in the open market or
through privately negotiated transactions and are subject to market conditions,
accumulation of excess equity, prudent capital management, and legal and
regulatory restrictions. As of June 30, 2020, $229.3 million in purchases had
been made under this authority at an average price per share of $15.09, $15.07
excluding commissions. Management currently does not anticipate purchasing a
material number of shares under this authority during 2020.
Table 10a-Issuer Purchases of Common Stock - General Authority
                                                                      Total number of        Maximum approximate
(Dollar values and volume     Total number                           shares purchased       dollar value that may
in thousands, except per       of shares        Average price       as part of publicly    yet be purchased under
share data)                    purchased      paid per share (a)    announced programs          the programs
2020
April 1 to April 30                     -                     NA                     -     $             270,654
May 1 to May 31                         -                     NA                     -                   270,654
June 1 to June 30                       -                     NA                     -                   270,654
Total                                   -                    N/A                     -


N/A - not applicable
(a) Represents total costs including commissions paid.


Compensation Authority
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, inclusive of a program amendment on April 24, 2006, is
29.6 million shares calculated before adjusting for stock dividends distributed
through January 1, 2011. The authorization has been reduced for that portion
which relates to compensation plans for which no options remain outstanding. The
shares may be purchased over the option exercise period of the various
compensation plans on or before December 31, 2023. Purchases may be made in the


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open market or through privately negotiated transactions and are subject to market conditions, accumulation of excess equity, prudent capital management, and legal and regulatory restrictions. As of June 30, 2020, the maximum

number of shares that may be purchased under the program was 24.1 million shares. Management currently does not anticipate purchasing a material number of shares under this authority during 2020.

Table 10b-Issuer Purchase of Common Stock - Compensation Authority


                                                                      Total

number of Maximum number

Total number shares purchased of shares that may
(Volume in thousands, of shares Average price as part of publicly yet be purchased
except per share data) purchased paid per share announced programs under the programs
2020
April 1 to April 30 1 $ 7.18 1 $ 24,315
May 1 to May 31 182 8.03 182 24,134
June 1 to June 30 * 12.09 * 24,133
Total 183 $ 8.04 183

* - amount less than 500 shares.
Asset Quality

Loan 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 are composed of commercial, financial, and industrial ("C&I")
and commercial real estate ("CRE"). Consumer loans are composed of consumer real
estate; and credit card and other. In first quarter 2020, FHN consolidated its
permanent mortgage portfolio into consumer real estate. Loans previously
classified in permanent mortgage included primarily jumbo mortgages and
one-time-close ("OTC") completed construction loans in the non-strategic segment
that were originated through pre-2009 mortgage businesses. FHN has a
concentration of residential real estate loans (19 percent of total loans).
Industry concentrations are discussed under the heading C&I below.
Consolidated key asset quality metrics for each of these portfolios can be found
in Table 17 - Asset Quality by Portfolio. Credit underwriting guidelines are
outlined in Item 7 of FHN's Annual Report on Form 10-K for the year ended
December 31, 2019, in the Loan Portfolio Composition discussion in the Asset
Quality Section

beginning on page 67 and continuing to page 87. FHN's credit underwriting
guidelines and loan product offerings as of June 30, 2020, are generally
consistent with those reported and disclosed in the Company's Form 10-K for the
year ended December 31, 2019.
COMMERCIAL LOAN PORTFOLIOS
C&I
The C&I portfolio was $21.4 billion on June 30, 2020, and is comprised of loans
used for general business purposes. Typical products include working capital
lines of credit, term loan financing of owner-occupied real estate and fixed
assets, and trade credit enhancement through letters of credit. The largest
geographical concentrations of balances as of June 30, 2020, are in Tennessee
(32 percent), North Carolina (11 percent), California (7 percent), Florida (7
percent), Texas (6 percent), Georgia (4 percent), and South Carolina (3
percent), with no other state representing more than 3 percent of the portfolio.
The following table provides the composition of the C&I portfolio by industry as
of June 30, 2020, and December 31, 2019. 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 11-C&I Loan Portfolio by Industry



                                             June 30, 2020               December 31, 2019
(Dollars in thousands)                     Amount        Percent         Amount        Percent
Industry:
Loans to mortgage companies            $   4,020,591         19 %   $    4,410,883         22 %
Finance & insurance                        2,530,808         12          2,778,411         14
Health care & social assistance            1,850,006          9          1,499,178          8
Accommodation & food service               1,741,834          8          1,364,833          7
Real estate rental & leasing (a)           1,547,227          7          1,454,336          7
Wholesale trade                            1,413,665          6          1,372,147          7
Manufacturing                              1,303,421          6          1,150,701          6
Other (education, arts,
entertainment, etc) (b)                    6,986,341         33          6,020,602         29
Total C&I loan portfolio               $  21,393,893        100 %   $   20,051,091        100 %

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

(b) Industries in this category each comprise less than 5 percent for 2020.





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. 31 percent
of FHN's C&I portfolio (Finance and insurance plus Loans to mortgage companies)
could be affected by items that uniquely impact the financial services industry.
Except "Finance and Insurance" and "Loans to Mortgage Companies", as discussed
below, on June 30, 2020, FHN did not have any other concentrations of C&I loans
in any single industry of 10 percent or more of total loans.
Loans to Mortgage Companies
The balance of loans to mortgage companies was 19 percent of the C&I portfolio
as of June 30, 2020, 22 percent as of December 31, 2019 and 20 percent as of
June 30, 2019, and includes balances related to both home purchase and refinance
activity. This portfolio class, which generally fluctuates with mortgage rates
and seasonal factors, 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.
Generally, lending to mortgage lenders increases when there is a decline in
mortgage rates and decreases when rates rise. In periods of economic
uncertainty, this trend may not occur even if interest rates are declining. In
second quarter 2020, 35 percent of the loans funded were home purchases and 65
percent were refinance transactions.
Finance and Insurance
The finance and insurance component represents 12 percent of the C&I portfolio
as of June 30, 2020, compared to 14 percent as of December 31, 2019, 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 June 30, 2020, asset-based lending
to consumer finance companies represents approximately $1.1 billion of the
finance and insurance component.
TRUPS lending was originally extended as a form of "bridge" financing to
participants in the pooled trust preferred securitization program offered
primarily to smaller banking (generally less than $15 billion in total assets)
and insurance institutions through FHN's fixed income business. Origination of
TRUPS lending ceased in early 2008. Individual TRUPS are re-graded at least
quarterly as part of FHN's commercial loan review process. The terms of these
loans generally include a scheduled 30 year balloon payoff and include an option
to defer interest for up to 20 consecutive quarters. As of June 30, 2020, no
TRUP relationship was on interest deferral. As of June 30, 2020, the unpaid
principal balance ("UPB") of trust preferred loans totaled $227.6 million
($172.6 million of bank TRUPS and $55.0 million of insurance TRUPS) with the UPB
of other bank-related loans totaling $305.0 million. Inclusive of an amortizing
discount on TRUPS of $18.4 million, total reserves (ALLL plus the amortizing
discount) for TRUPS and other bank-related loans were $30.4 million, or
6 percent of outstanding UPB.
C&I Asset Quality Trends
The C&I portfolio trends have been negatively impacted in the second quarter
2020 by economic uncertainty attributable to the COVID-19 pandemic and could
continue to be negatively impacted in future periods. The C&I ALLL increased
$196.2 million from December 31, 2019, to $318.7 million as of June 30, 2020,
primarily due to the steep decline in the economic forecast attributable to the
COVID-19 pandemic and the adoption of ASU 2016-13.


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The allowance as a percentage of period-end loans increased 88 basis points to
1.49 percent as of June 30, 2020, compared to .61 percent as of year-end 2019.
Nonperforming C&I loans increased $53.0 million from December 31, 2019, to
$127.3 million on June 30, 2020. The nonperforming loan ("NPL") ratio increased
to .60 percent of C&I loans as of June 30, 2020, from .37 percent as of December
31, 2019. The increase in NPLs was primarily driven by two credits.

The 30+ delinquency ratio decreased 2 basis points as of June 30, 2020. Second
quarter 2020 experienced net charge-offs of $17.1 million compared to $3.3
million and $6.1 million of net charge-offs in fourth quarter 2019 and second
quarter 2019, respectively. Second quarter 2020 net charge-offs were primarily
driven by two credits.
The following table shows C&I asset quality trends by segment.
Table 12-C&I Asset Quality Trends by Segment
                                                                        2020
                                                                 Three months ended
(Dollars in thousands)                            Regional Bank     Non-Strategic      Consolidated
Allowance for loan losses as of April 1          $     244,662     $        9,854     $    254,516
Charge-offs                                            (18,201 )                -          (18,201 )
Recoveries                                               1,070                  3            1,073
Provision/(provision credit) for loan losses            80,930                404           81,334

Allowance for loan losses as of June 30 $ 308,461 $ 10,261 $ 318,722 Net charge-offs % (qtr. annualized)

                       0.31 %               NM             0.30 %
Allowance / net charge-offs                               4.48 x               NM             4.63 x

                                                                    As of June 30
Period-end loans                                 $  21,074,103     $      319,790     $ 21,393,893
Nonperforming loans                                    127,345                  -          127,345
Troubled debt restructurings                            42,292                  -           42,292
30+ Delinq. % (a)                                         0.03 %                - %           0.03 %
NPL %                                                     0.60                  -             0.60
Allowance / loans %                                       1.46               3.21             1.49

                                                                        2019
                                                                 Three months ended
(Dollars in thousands)                            Regional Bank     Non-Strategic      Consolidated
Allowance for loan losses as of April 1          $     102,393     $        1,320     $    103,713
Charge-offs                                             (6,562 )              (28 )         (6,590 )
Recoveries                                                 513                  6              519
Provision/(provision credit) for loan losses            18,466                (12 )         18,454
Allowance for loan losses as of June 30          $     114,810     $        1,286     $    116,096
Net charge-offs % (qtr. annualized)                       0.14 %             0.03 %           0.14 %
Allowance / net charge-offs                               4.73 x            14.47 x           4.77 x

                                                                  As of December 31
Period-end loans                                 $  19,721,457     $      329,634     $ 20,051,091
Nonperforming loans                                     74,312                  -           74,312
Troubled debt restructurings                            42,199                  -           42,199
30+ Delinq. % (a)                                         0.05 %                - %           0.05 %
NPL %                                                     0.38                  -             0.37
Allowance / loans %                                       0.62               0.02             0.61


NM-Not meaningful
Loans are expressed net of unearned income.
(a) 30+ Delinquency % includes all accounts delinquent more than one month and
    still accruing interest.




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Commercial Real Estate
The CRE portfolio was $4.8 billion on June 30, 2020. The CRE portfolio includes
both financings for commercial construction and nonconstruction loans. The
largest geographical concentrations of balances as of June 30, 2020 are in North
Carolina (28 percent), Tennessee (19 percent), Florida (15 percent), Texas (8
percent), South Carolina (7 percent), and Georgia (6 percent), with no other
state representing more than 3 percent of the portfolio. This portfolio is
segregated between the income-producing CRE class which 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, and
the residential CRE class. Subcategories of income CRE consist of office (29
percent), multi-family (22 percent), retail (19 percent), industrial (12
percent), hospitality (11 percent), land/land development (2 percent), and other
(5 percent).
The residential CRE class includes loans to residential builders and developers
for the purpose of constructing single-family homes, condominiums, and town
homes, and on a limited basis, for developing residential subdivisions. After
the fulfillment of existing commitments over the near term, the residential CRE
class will be in a wind-down state with the expectation of full runoff in the
foreseeable future.

CRE Asset Quality Trends
The CRE portfolio asset quality trends as of June 30, 2020 were not
significantly affected by the global COVID-19 pandemic, with nonperforming loans
up $.2 million from December 31, 2019. However, economic uncertainty
attributable to COVID-19 could impact future CRE portfolio trends. The allowance
increased to $57.3 million as of June 30, 2020, from $36.1 million as of
December 31, 2019 primarily due to COVID-19. Allowance as a percentage of loans
increased 36 basis points from .83 percent as of December 31, 2019, to 1.19
percent as of June 30, 2020. Nonperforming loans as a percentage of total CRE
loans remained the same at .04 percent as of June 30, 2020 and December 31,
2019.
Accruing delinquencies as a percentage of period-end loans decreased to .2 basis
points as of June 30, 2020, from 2.0 basis point as of December 31, 2019. Net
recoveries were $95 thousand in second quarter 2020 compared to net charge-offs
of $209 thousand in second quarter 2019.
The following table shows commercial real estate asset quality trends by
segment.



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Table 13-Commercial Real Estate Asset Quality Trends by Segment



                                                                        2020
                                                                 Three months ended
(Dollars in thousands)                            Regional Bank      Non-Strategic     Consolidated
Allowance for loan losses as of April 1          $       46,929     $         696     $     47,625
Charge-offs                                                 (61 )               -              (61 )
Recoveries                                                  156                 -              156
Provision/(provision credit) for loan losses              9,699              (134 )          9,565
Allowance for loan losses as of June 30          $       56,723     $         562     $     57,285
Net charge-offs % (qtr. annualized)                          NM                 -               NM
Allowance / net charge-offs                                  NM                NM               NM

                                                                    As of June 30
Period-end loans                                 $    4,793,816     $      19,525     $  4,813,341
Nonperforming loans                                       2,067                 -            2,067
Troubled debt restructurings                              1,120                 -            1,120
30+ Delinq. % (a)                                             - %               - %              - %
NPL %                                                      0.04                 -             0.04
Allowance / loans %                                        1.18              2.88             1.19

                                                                        2019
                                                                 Three months ended
(Dollars in thousands)                            Regional Bank      Non-Strategic     Consolidated
Allowance for loan losses as of April 1          $       30,801     $       3,581     $     34,382
Charge-offs                                                (121 )               -             (121 )
Recoveries                                                  (88 )               -              (88 )
Provision/(provision credit) for loan losses             (1,377 )             157           (1,220 )

Allowance for loan losses as of June 30 $ 29,215 $ 3,738 $ 32,953 Net charge-offs % (qtr. annualized)

                        0.02 %              NM             0.02 %
Allowance / net charge-offs                               34.79 x              NM            39.25 x

                                                                  As of December 31
Period-end loans                                 $    4,292,199     $      44,818     $  4,337,017
Nonperforming loans                                       1,825                 -            1,825
Troubled debt restructurings                              1,200                 -            1,200
30+ Delinq. % (a)                                          0.02 %               - %           0.02 %
NPL %                                                      0.04                 -             0.04
Allowance / loans %                                        0.79              5.32             0.83


NM-Not meaningful
Loans are expressed net of unearned income.
(a) 30+ Delinquency % includes all accounts delinquent more than one month and
    still accruing interest.






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CONSUMER LOAN PORTFOLIOS
Consumer Real Estate
The consumer real estate portfolio was $6.1 billion on June 30, 2020, and is
primarily composed of home equity lines and installment loans including
restricted balances (loans consolidated under ASC 810). The largest geographical
concentrations of balances as of June 30, 2020, are in Tennessee (54 percent),
North Carolina (15 percent), Florida (14 percent), and California (3 percent),
with no other state representing more than 3 percent of the portfolio. As of
June 30, 2020, approximately 86 percent of the consumer real estate portfolio
was in a first lien position. At origination, weighted average FICO score of
this portfolio was 755 and refreshed FICO scores averaged 756 on June 30, 2020.
Generally, performance of this portfolio is affected by life events that affect
borrowers' finances, the level of unemployment, and home prices.
Home equity lines of credit ("HELOCs") comprise $1.2 billion of the consumer
real estate portfolio as of June 30, 2020. 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 automatically frozen if a
borrower becomes 45 days or more past due on payments. Once the

draw period has concluded, 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 June 30, 2020, approximately 78 percent of FHN's HELOCs are in the draw
period compared to approximately 76 percent as of December 31, 2019. Based on
when draw periods are scheduled to end per the line agreement, it is expected
that $295.7 million, or 32 percent of HELOCs currently in the draw period, will
enter the repayment period during the next 60 months. Delinquencies and
charge-off rates 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, after some seasoning, performance of these loans
usually begins to stabilize. The home equity lines of the consumer real estate
portfolio are being monitored closely for those nearing the end of the draw
period and borrowers are initially being contacted at least 24 months before the
repayment period begins to remind the customer of the terms of their agreement
and to inform them of options.
The following table shows the HELOCs currently in the draw period and expected
timing of conversion to the repayment period.
Table 14-HELOC Draw To Repayment Schedule

                                       June 30, 2020            December 31, 2019
                                    Repayment                 Repayment
(Dollars in thousands)               Amount      Percent        Amount       Percent
Months remaining in draw period:
0-12                               $   46,112         5 %   $      47,455         5 %
13-24                                  58,195         6            58,843         6
25-36                                  58,924         6            65,833         7
37-48                                  56,256         6            67,692         7
49-60                                  76,207         8            75,246         7
>60                                   642,628        69           666,001        68
Total                              $  938,322       100 %   $     981,070       100 %



Consumer Real Estate Asset Quality Trends
Overall, performance of the consumer real estate portfolio remained stable in
second quarter 2020. Economic uncertainty attributable to the COVID-19 pandemic
could impact future trends. The non-strategic segment is a run-off portfolio and
while the absolute dollars of delinquencies and nonaccruals as well as the 30+
accruing delinquencies ratio improved from year-end, nonperforming loans ratios
deteriorated. That trend of increasing deterioration of ratios in the
non-strategic segment is likely to continue and may become more skewed as the
portfolio shrinks and stronger

borrowers are better able than weaker ones to payoff or refinance elsewhere.
NPLs as a percentage of loans increased 20 basis points from year-end to 1.59
percent as of June 30, 2020. The ALLL increased $115.3 million from December 31,
2019, to $143.8 million as of June 30, 2020, primarily due to the COVID-19
pandemic and the adoption of ASU 2016-13. The allowance as a percentage of loans
increased 192 basis points to 2.38 percent as of June 30, 2020, compared to
year-end. The balance of nonperforming loans increased $10.6 million to $96.3
million as of June 30, 2020. Loans delinquent 30 or more days and still accruing
declined from $42.9 million as of


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December 31, 2019, to $32.3 million as of June 30, 2020. The portfolio realized
net recoveries of $2.0 million in second quarter 2020 compared to net recoveries
of $3.3

million in fourth quarter 2019 and net recoveries of $3.8 million in second quarter 2019.

The following table shows consumer real estate asset quality trends by segment. Table 15-Consumer Real Estate Asset Quality Trends by Segment



                                                                        2020
                                                                 Three months ended
(Dollars in thousands)                   Regional Bank       Corporate      Non-Strategic      Consolidated
Allowance for loan losses as of April
1                                       $      102,958             N/A     $       20,064     $    123,022
Charge-offs                                       (763 )           N/A             (1,205 )         (1,968 )
Recoveries                                       1,410             N/A              2,577            3,987
Provision/(provision credit) for loan
losses                                          17,280             N/A              1,436           18,716
Allowance for loan losses as of June
30                                      $      120,885             N/A     $       22,872     $    143,757
Net charge-offs % (qtr. annualized)                 NM             N/A                 NM               NM
Allowance / net charge-offs                         NM             N/A                 NM               NM

                                                                   As of June 30
Period-end loans                        $    5,692,309     $    27,887     $      332,197     $  6,052,393
Nonperforming loans                             45,678           1,209             49,437           96,324
Troubled debt restructurings                    49,630           2,908             96,005          148,543
30+ Delinq. % (a)                                 0.42 %          4.90 %             2.11 %           0.53 %
NPL %                                             0.80            4.34              14.88             1.59
Allowance / loans %                               2.12             N/A               6.89             2.38

                                                                        2019
                                                               Three months ended (a)
(Dollars in thousands)                   Regional Bank       Corporate      Non-Strategic      Consolidated
Allowance for loan losses as of April
1                                       $       15,203             N/A     $       18,951     $     34,154
Charge-offs                                       (826 )           N/A               (888 )         (1,714 )
Recoveries                                       1,240             N/A              4,285            5,525
Provision/(provision credit) for loan
losses                                            (912 )           N/A             (5,521 )         (6,433 )
Allowance for loan losses as of June
30                                      $       14,705             N/A     $       16,827     $     31,532
Net charge-offs % (qtr. annualized)                 NM             N/A                 NM               NM
Allowance / net charge-offs                         NM             N/A                 NM               NM

                                                               As of December 31 (a)
Period-end loans                        $    5,738,455     $    31,473     $      407,211     $  6,177,139
Nonperforming loans                             37,014           1,327             47,353           85,694
Troubled debt restructurings                    46,031           2,457            113,758          162,246
30+ Delinq. % (b)                                 0.50 %          5.29 %             3.10 %           0.70 %
NPL %                                             0.65            4.22              11.63             1.39
Allowance / loans %                               0.23             N/A               3.71             0.46


NM-Not meaningful
Loans are expressed net of unearned income.
(a) In first quarter 2020, the Permanent Mortgage portfolio was combined into

Consumer Real Estate portfolio, all prior periods were revised for

comparability.

(b) 30+ Delinquency % includes all accounts delinquent more than one month and


    still accruing interest.






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Credit Card and Other
The credit card and other portfolio, which is primarily within the regional
banking segment, was $.4 billion as of June 30, 2020, and primarily includes
credit card receivables, other consumer-related credits, and automobile loans.
The allowance increased to $18.1 million as of June 30, 2020, from $13.3 million
as December 31, 2019,

primarily driven by economic uncertainty attributable to the COVID-19 pandemic
and the adoption of ASU 2016-13. Loans 30 days or more delinquent and accruing
as a percentage of loans decreased 16 basis points from December 31, 2019, to
.77 percent as of June 30, 2020. Net charge-offs were $1.6 million in second
quarter 2020 compared to $2.7 million in second quarter 2019.
Table 16-Credit Card and Other Asset Quality Trends by Segment

                                                                         2020
                                                                  Three months ended
(Dollars in thousands)                            Regional Bank      Non-Strategic     Consolidated
Allowance for loan losses as of April 1          $       19,003     $         324     $      19,327
Charge-offs                                              (2,471 )            (206 )          (2,677 )
Recoveries                                                  871               211             1,082
Provision/(provision credit) for loan losses                404               (19 )             385

Allowance for loan losses as of June 30 $ 17,807 $

   310     $      18,117
Net charge-offs % (qtr. annualized)                        1.42 %              NM              1.35 %
Allowance / net charge-offs                                2.77 x              NM              2.82 x

                                                                    As of June 30
Period-end loans                                 $      429,610     $      19,700     $     449,310
Nonperforming loans                                          98               157               255
Troubled debt restructurings                                661                27               688
30+ Delinq. % (a)                                          0.74 %            1.42 %            0.77 %
NPL %                                                      0.02              0.79              0.06
Allowance / loans %                                        4.14              1.57              4.03

                                                                         2019
                                                                  Three months ended
(Dollars in thousands)                            Regional Bank      Non-Strategic     Consolidated
Allowance for loan losses as of April 1          $       12,517     $         145     $      12,662
Charge-offs                                              (2,884 )            (914 )          (3,798 )
Recoveries                                                  887               218             1,105
Provision/(provision credit) for loan losses              1,599               600             2,199

Allowance for loan losses as of June 30 $ 12,119 $

    49     $      12,168
Net charge-offs % (qtr. annualized)                        1.84 %            4.41 %            2.17 %
Allowance / net charge-offs                                1.51 x            0.02 x            1.13 x

                                                                  As of December 31
Period-end loans                                 $      460,742     $      35,122     $     495,864
Nonperforming loans                                          36               298               334
Troubled debt restructurings                                615                38               653
30+ Delinq. % (a)                                          0.69 %            4.05 %            0.93 %
NPL %                                                      0.01              0.85              0.07
Allowance / loans %                                        2.87              0.09              2.68


NM-Not meaningful
Loans are expressed net of unearned income.
(a) 30+ Delinquency % includes all accounts delinquent more than one month and
    still accruing interest.





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The following table provides additional asset quality data by loan portfolio: Table 17-Asset Quality by Portfolio



                                    June 30      December 31
                                     2020            2019
Key Portfolio Details
C&I
Period-end loans ($ millions)     $  21,394     $     20,051
30+ Delinq. % (a)                      0.03 %           0.05 %
NPL %                                  0.60             0.37
Charge-offs % (qtr. annualized)        0.30             0.07
Allowance / loans %                    1.49 %           0.61 %
Allowance / net charge-offs            4.63 x           9.25 x
Commercial Real Estate
Period-end loans ($ millions)     $   4,813     $      4,337
30+ Delinq. % (a)                         - %           0.02 %
NPL %                                  0.04             0.04
Charge-offs % (qtr. annualized)          NM     NM
Allowance / loans %                    1.19 %           0.83 %
Allowance / net charge-offs              NM               NM
Consumer Real Estate (b)
Period-end loans ($ millions)     $   6,053     $      6,177
30+ Delinq. % (a)                      0.53 %           0.70 %
NPL %                                  1.59             1.39
Charge-offs % (qtr. annualized)          NM               NM
Allowance / loans %                    2.38 %           0.46 %
Allowance / net charge-offs              NM               NM
Credit Card and Other
Period-end loans ($ millions)     $     449     $        496
30+ Delinq. % (a)                      0.77 %           0.93 %
NPL %                                  0.06             0.07
Charge-offs % (qtr. annualized)        1.35             2.29
Allowance / loans %                    4.03 %           2.68 %
Allowance / net charge-offs            2.82 x           1.14 x


NM - Not meaningful
Loans are expressed net of unearned income.
(a) 30+ Delinquency % includes all accounts delinquent more than one month and

still accruing interest.

(b) In first quarter 2020, the Permanent Mortgage portfolio was combined into

Consumer Real Estate portfolio, all prior periods were revised for
    comparability.





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Allowance for Loan Losses
Management's policy is to maintain the ALLL at a level sufficient to recognize
current expected credit losses on the amortized cost basis of the loan
portfolio. The total allowance for loan losses increased to $537.9 million on
June 30, 2020, from $200.3 million on December 31, 2019. The ALLL as of June 30,
2020, reflects the adoption of ASU 2016-13 on January 1, 2020 and the steep
decline in the economic forecast attributable to the COVID-19 pandemic. The
ratio of allowance for credit losses to total loans, net of unearned income,
increased 100 basis points to 1.64 percent on June 30, 2020, compared to .64
percent on December 31, 2019.
The provision for loan losses is the charge to or release of earnings necessary
to maintain the ALLL at a sufficient level reflecting management's estimate of
current expected losses on the amortized cost basis of the loan portfolio.
Provision expense was $110.0 million in second quarter 2020, compared to $13.0
million provision expense in second quarter 2019. The increase is primarily
attributable to the declining economic forecast attributable to the COVID-19
pandemic.
FHN expects asset quality trends to be impacted by the economic uncertainty
attributable to the COVID-19 pandemic. The C&I portfolio reflects a broad mix of
categories with the heaviest concentration in loans to mortgage companies which
carry minimal credit risk. The C&I portfolio as of June 30, 2020 includes $2.1
billion of loans made under the Paycheck Protection Program ("PPP Loans") of the
Small Business Administration ("SBA"). PPP loans are fully government guaranteed
with the SBA. Due to the government guarantee and forgiveness provisions, PPP
loans are considered to have no credit risk. The CRE portfolio metrics could be
impacted by the COVID-19 pandemic due to travel and occupancy restrictions set
by state and local governments affecting CRE- Hospitality and CRE-Retail. The
consumer portfolio could be impacted by the COVID-19 pandemic if consumer
unemployment continues to rise and customers are unable to continue making loan
payments. The consumer portfolio, however, is high quality with no subprime and
minimal exposure to other traditional categories of high risk lending. The
remaining non-strategic consumer real estate should continue to steadily wind
down; however, it could be impacted if unemployment continues to rise and
borrowers have difficulty making loan payments. Asset quality metrics within
non-strategic have become skewed as the portfolio continues to shrink.
Consolidated Net Charge-offs
In second quarter 2020, FHN experienced net charge-offs of $16.6 million
compared to $5.2 million of net charge-offs in second quarter 2019.

The commercial portfolio experienced $17.0 million of net charge-offs in second
quarter 2020 compared to $6.3 million in net charge-offs in second quarter 2019.
In addition, the consumer real estate portfolio experienced net recoveries of
$2.0 million in second quarter 2020 compared to $3.8 million in net recoveries
in second quarter 2019. Credit card and other consumer experienced net
charge-offs of $1.6 million in second quarter 2020 compared to $2.7 million a
year ago.
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 are loans in which FHN continues to receive payments,
including residential real estate loans where the borrower has been discharged
of personal obligation through bankruptcy. These, along with OREO, excluding
OREO from government insured mortgages, represent nonperforming assets ("NPAs").
Total nonperforming assets (including NPLs HFS) increased to $245.4 million on
June 30, 2020, from $181.9 million on December 31, 2019. The nonperforming
assets ratio (nonperforming assets excluding NPLs HFS to total period-end loans
plus OREO and other assets) increased to .73 percent as of June 30, 2020, from
.57 percent as of December 31, 2019. Portfolio nonperforming loans increased to
$226.0 million as of June 30, 2020, from $162.2 million as of December 31, 2019.
The increase in nonperforming loans was driven by the C&I portfolio.
The ratio of the ALLL to NPLs in the loan portfolio was 2.38 times as of
June 30, 2020, compared to 1.24 times as of December 31, 2019. Certain
nonperforming loans in both the commercial and consumer portfolios are deemed
collateral-dependent and are charged down to an estimate of collateral value
less costs to sell. Because loss content has been recognized through a partial
charge-off, typically reserves are not recorded.
Table 19 provides an activity rollforward of OREO balances for June 30, 2020 and
2019. The balance of OREO, exclusive of inventory from government insured
mortgages, decreased to $13.2 million as of June 30, 2020, from $16.6 million as
of June 30, 2019, driven by the sale of OREO. Moreover, property values have
stabilized which also affects the balance of OREO.


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Table 18-Rollforward of OREO
                                  Three Months Ended         Six Months Ended
                                       June 30                    June 30
(Dollars in thousands)            2020          2019         2020         2019
Beginning balance              $  13,881     $ 20,676     $ 15,660     $ 22,387
Valuation adjustments               (142 )         (9 )       (169 )         26
New foreclosed property              757        1,394        1,685        3,001
Disposal                          (1,319 )     (5,468 )     (3,999 )     (8,821 )
Ending balance, March 31 (a)   $  13,177     $ 16,593     $ 13,177     $ 16,593

(a) Excludes OREO and receivables related to government insured mortgages of $6.4

million and $3.4 million as of June 30, 2020 and 2019, respectively.

The following table provides consolidated asset quality information for the three months ended June 30, 2020 and 2019, and as of June 30, 2020, and December 31, 2019: Table 19-Asset Quality Information


                                                                 Three Months Ended
                                                                      June 30
(Dollars in thousands)                                       2020                2019
Allowance for loan losses:
Beginning balance on April 1                           $      444,490     $         184,911
Provision/(provision credit) for loan losses                  110,000                13,000
Charge-offs                                                   (22,907 )             (12,223 )
Recoveries                                                      6,298                 7,061
Ending balance on June 30                              $      537,881     $         192,749
Reserve for remaining unfunded commitments                     50,461

7,524


Total allowance for loan losses and reserve for
unfunded commitments                                   $      588,342     $

200,273


Key ratios
Allowance / net charge-offs (a)                                  8.05 x                9.31 x
Net charge-offs % (b)                                            0.20 %                0.07 %

                                                        As of June 30      As of December 31
Nonperforming Assets by Segment                              2020                2019
Regional Banking:
Nonperforming loans (c)                                $      175,188     $         113,187
OREO (e)                                                        9,210                12,347
Total Regional Banking                                        184,398               125,534
Non-Strategic:
Nonperforming loans (c)                                        49,594                47,651
Nonperforming loans held-for-sale net of fair value
adjustment (c)                                                  6,219                 4,047
OREO (e)                                                        3,967                 3,313
Total Non-Strategic                                            59,780                55,011
Corporate:
Nonperforming loans (c)                                         1,209                 1,327
Total Corporate                                                 1,209                 1,327
Total nonperforming assets (c) (d)                     $      245,387     $

181,872




NM - Not meaningful.
(a) Ratio is total allowance divided by annualized net charge-offs.

(b) Ratio is annualized net charge-offs divided by quarterly average loans, net

of unearned income.

(d) Excludes OREO from government-insured mortgages.

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Table 19-Asset Quality Information (continued)


                                                        As of June 30      As of December 31
                                                             2020                 2019
Loans and commitments:
Total period-end loans, net of unearned income         $   32,708,937     $       31,061,111
Potential problem assets (a)                                  401,049                346,896
Loans 30 to 89 days past due                                   27,156                 36,052
Loans 90 days past due (b) (c)                                 14,498

21,859


Loans held-for-sale 30 to 89 days past due (c)                  4,979                  3,732
Loans held-for-sale 30 to 89 days past
due-guaranteed portion (c) (d)                                  4,755                  3,424
Loans held-for-sale 90 days past due (c)                        6,336                  6,484
Loans held-for-sale 90 days past due-guaranteed
portion (c) (d)                                                 6,233                  6,417
Remaining unfunded commitments                         $   12,945,839     $       12,355,220
Key ratios
Allowance / loans %                                              1.64 %                 0.64 %
Allowance / NPL                                                  2.38 x                 1.24 x
NPA % (e)                                                        0.73 %                 0.57 %
NPL %                                                            0.69 %                 0.52 %

(a) Includes past due loans.

(b) Excludes loans classified as held-for-sale.

(d) Guaranteed loans include FHA, VA, SBA, USDA, and GNMA loans repurchased

through the GNMA buyout program.

(e) Ratio is non-performing assets related to the loan portfolio to total loans

plus OREO and other assets.





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 in the
portfolio that are 90 days or more past due and still accruing were $14.5
million on June 30, 2020, compared to $21.9 million on December 31, 2019. The
decrease was primarily driven by R/E installment loans. Loans 30 to 89 days past
due were $27.2 million on June 30, 2020, compared to $36.1 million on
December 31, 2019. The decrease was primarily driven by the HELOC and General
C&I portfolios.
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 $401.0 million on June 30, 2020, $346.9 million on
December 31, 2019, and $279.7 million on June 30, 2019. The increase in
potential problem assets compared to December 31, 2019 was due to a net increase
in classified commercial loans within the C&I portfolio. 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
losses.
Troubled Debt Restructuring and Loan Modifications
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. Extensions and 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.
In a situation where an economic concession has been granted to a borrower that
is experiencing financial difficulty, FHN identifies and reports that loan as a
Troubled Debt Restructuring ("TDR"). See Note 4 - Loans for further discussion
regarding TDRs and loan modifications.
On June 30, 2020 and December 31, 2019, FHN had $192.6 million and $206.3
million portfolio loans classified as TDRs, respectively. For TDRs in the loan
portfolio, FHN had loan loss reserves of $13.6 million and $19.7 million, or 7
percent and 10 percent of TDR balances, as of June 30, 2020 and December 31,
2019, respectively. Additionally, FHN had $45.1 million and $51.1 million of HFS
loans classified as TDRs as of June 30, 2020 and December 31, 2019,
respectively.


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The following table provides a summary of TDRs for the periods ended June 30,
2020 and December 31, 2019:
Table 20-Troubled Debt Restructurings

                                          As of                As of
(Dollars in thousands)                June 30, 2020      December 31, 2019
Held-to-maturity:
Consumer real estate (a):
Current                                       92,229                105,525
Delinquent                                     2,624                  4,634
Non-accrual (b)                               53,690                 52,087
Total consumer real estate                   148,543                162,246
Credit card and other:
Current                                          663                    615
Delinquent                                        25                     38
Non-accrual                                        -                      -
Total credit card and other                      688                    653
Commercial loans:
Current                                       18,751                 10,558
Delinquent                                         -                      -
Non-accrual                                   24,661                 32,841
Total commercial loans                        43,412                 43,399
Total held-to-maturity               $       192,643    $           206,298
Held-for-sale:
Current                              $        36,371    $            39,014
Delinquent                                     6,758                  8,008
Non-accrual                                    1,923                  4,106
Total held-for-sale                           45,052                 51,128
Total troubled debt restructurings   $       237,695    $           257,426

(a) In first quarter 2020, the Permanent Mortgage portfolio was combined into

Consumer Real Estate portfolio, all prior periods were revised for

comparability.

(b) Balances as of June 30, 2020 and December 31, 2019, include $11.6 million and

$12.6 million, respectively, of discharged bankruptcies.




Risk Management



There have been no significant changes to FHN's risk management practices as
described under "Risk Management" beginning on page 88 of Item 7 to FHN's Annual
Report on Form 10-K for the year ended December 31, 2019.
MARKET RISK MANAGEMENT
There have been no significant changes to FHN's market risk management practices
as described under "Market Risk Management" beginning on page 89 of Item 7 to
FHN's Annual Report on Form 10-K for the year ended December 31, 2019.

Value-at-Risk ("VaR") 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 percent confidence level and 1-day and
10-day time horizons. Additionally, FHN computes a Stressed VaR ("SVaR")
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.



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A summary of FHN's VaR and SVaR measures for 1-day and 10-day time horizons is
as follows:
Table 21-VaR and SVaR Measures

                                Three Months Ended                   Six Months Ended                    As of
                                   June 30, 2020                       June 30, 2020                 June 30, 2020
(Dollars in thousands)     Mean        High         Low        Mean        High         Low
1-day
VaR                      $ 3,038     $ 5,058     $ 1,717     $ 2,668     $ 6,783     $ 1,023     $             2,927
SVaR                       3,933       6,194       2,726       6,212      17,727       2,726                   3,246
10-day
VaR                       13,261      19,214       7,603      10,126      24,880       1,807                  12,929
SVaR                      13,680      19,214       9,316      20,043      43,221       9,316                  12,929

                                Three Months Ended                   Six Months Ended                    As of
                                   June 30, 2019                       June 30, 2019                 June 30, 2019
(Dollars in thousands)     Mean        High         Low        Mean        High         Low
1-day
VaR                      $ 1,015     $ 1,246     $   748     $ 1,221     $ 1,907     $   748     $               901
SVaR                       6,266       9,595       4,700       7,239       9,629       4,700                   5,356
10-day
VaR                        2,643       4,518       2,025       3,010       4,518       2,025                   3,164
SVaR                      16,859      22,333      13,588      19,268      28,086      13,588                  13,932

                                                                        Year Ended                       As of
                                                                     December 31, 2019             December 31, 2019
(Dollars in thousands)                                         Mean        High         Low
1-day
VaR                                                          $ 1,068     $ 1,907     $   503     $             1,325
SVaR                                                           6,198       9,629       3,157                   4,579
10-day
VaR                                                            2,824       7,000       1,499                   2,233
SVaR                                                          17,367      28,086       8,803                  14,975


2020 VaR and SVaR increased due to extreme volatility as a result of economic
uncertainty associated with the COVID-19 pandemic.
FHN's overall VaR measure includes both interest rate risk and credit spread
risk. Separate measures of these component risks are as follows:
Table 22-Schedule of Risks Included in VaR
                                As of June 30, 2020             As of June 30, 2019              As of December 31, 2019
(Dollars in thousands)          1-day            10-day         1-day         10-day               1-day               10-day
Interest rate risk        $     1,166          $   3,858     $      722     $   2,495     $       693                $  3,929
Credit spread risk              1,770              7,725            204           450             417                     828

2020 VaR and SVaR increased due to extreme volatility as a result of economic uncertainty associated with the COVID-19 pandemic.



The potential risk of loss reflected by FHN's VaR measures assumes the trading
securities inventory is static. Because FHN's Fixed Income division procures
fixed income securities for purposes of distribution to customers, its trading
securities inventory turns over regularly. Additionally, Fixed Income traders
actively manage the trading securities inventory continuously throughout each

trading day. Accordingly, FHN's trading securities inventory is highly dynamic,
rather than static. As a result, it would be rare for Fixed Income to incur a
negative revenue day in its fixed income activities of the level indicated by
its VaR measurements.


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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 Fixed Income 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 internal assurance group charged with
oversight responsibility for FHN's model risk management.

INTEREST RATE RISK MANAGEMENT
There have been no significant changes to FHN's interest rate risk management
practices as described under "Interest Rate Risk Management" beginning on page
90 of Item 7 to FHN's Annual Report on Form 10-K for the year ended December 31,
2019.
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 MD&A.

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 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 June 30, 2020, NII exposures over the next
12 months assuming rate shocks of plus 25 basis points, 50 basis points, 100
basis points, and 200 basis points are estimated to have favorable variances of
2.3 percent, 4.5 percent, 8.1 percent, and 13.0 percent, respectively compared
to base NII. A steepening yield curve scenario where long-term rates increase by
50 basis points and short-term rates are static, results in a favorable NII
variance of 1.6 percent. 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 1.8 percent. Rate shocks of minus 25 basis points
and 50 basis points result in unfavorable NII variances of 3.3 percent and 4.2
percent. 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.
FHN's net interest income has been, and likely will continue to be, impacted by
the disruption from the


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COVID-19 pandemic. The increase in the unemployment rate, customer loan deferral
requests, the impact of government assistance programs, and other developments
have influenced net interest income results. FHN is monitoring current economic
trends and potential exposures closely.
CAPITAL RISK MANAGEMENT AND ADEQUACY
There have been no significant changes to FHN's capital management practices as
described under "Capital Risk Management and Adequacy" on page 91 of Item 7 to
FHN's Annual Report on Form 10-K for the year ended December 31, 2019.
OPERATIONAL RISK MANAGEMENT
There have been no significant changes to FHN's operational risk management
practices as described under "Operational Risk Management" beginning on page 91
of Item 7 to FHN's Annual Report on Form 10-K for the year ended December 31,
2019.
COMPLIANCE RISK MANAGEMENT
There have been no significant changes to FHN's compliance risk management
practices as described under "Compliance Risk Management" on page 92 of Item 7
to FHN's Annual Report on Form 10-K for the year ended December 31, 2019.
CREDIT RISK MANAGEMENT
There have been no significant changes to FHN's credit risk management practices
as described under "Credit Risk Management" beginning on page 92 of Item 7 to
FHN's Annual Report on Form 10-K for the year ended December 31, 2019.
LIQUIDITY RISK MANAGEMENT
Among other things, ALCO focuses on 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. The objective of the Liquidity Policy is to ensure that FHN meets its
cash and collateral obligations promptly, in a cost-effective manner and with
the highest degree of reliability. 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 as a whole, or both. Subject to market conditions and
compliance with applicable regulatory requirements from time to time, funds are
available from a number of sources including the available-for-sale securities
portfolio, dealer and commercial customer repurchase agreements, access to the
overnight and term Federal Funds markets, incremental borrowing capacity at the
FHLB ($5.8 billion was available at June 30, 2020), brokered deposits, loan
sales, syndications, and access to the Federal Reserve Bank.
Core deposits are a significant source of funding and have historically been a
stable source of liquidity for banks. Generally, core deposits represent funding
from a financial institution's customer base which provide inexpensive,
predictable pricing. The Federal Deposit Insurance Corporation insures these
deposits to the extent authorized by law. Generally, these limits are $250
thousand per account owner for interest bearing and non-interest bearing
accounts. The ratio of total loans, excluding loans HFS and restricted real
estate loans, to core deposits was 102 percent on June 30, 2020 compared to 98
percent on December 31, 2019.
FHN also may use unsecured short-term borrowings as a source of liquidity.
Currently, the largest concentration of unsecured borrowings is federal funds
purchased from correspondent bank customers. These funds 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 is securities sold under agreements to
repurchase transactions accounted for as secured borrowings with Regional
Banking's business customers or Fixed Income's broker dealer counterparties.
Both FHN and First Horizon Bank may access the debt markets in order to provide
funding through the issuance of senior or subordinated unsecured debt subject to
market conditions and compliance with applicable regulatory requirements. In May
2020, FHN issued $800 million of senior capital notes. In April 2020, First
Horizon Bank issued $450 million of subordinated notes. These subordinated notes
qualify as Tier 2 capital for First Horizon Bank as well as FHN, up to certain
regulatory limits for minority interest capital instruments.
Both FHN and First Horizon Bank have the ability to generate liquidity by
issuing preferred equity, and (for FHN) by issuing common equity, subject to
market conditions and compliance with applicable regulatory requirements. In
January 2013, FHN issued $100 million of Non-Cumulative Perpetual Preferred
Stock, Series A, and in May 2020, FHN issued $150 million of Non-Cumulative
Perpetual Preferred Stock, Series E. As of


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June 30, 2020, First Horizon Bank and subsidiaries had outstanding preferred
shares of $295.4 million, which are reflected as noncontrolling interest on the
Consolidated Condensed Statements of Condition.
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. The amount paid
to the parent company through First Horizon Bank common dividends is managed as
part of FHN's overall cash management process, subject to applicable regulatory
restrictions. Certain regulatory restrictions exist regarding the ability of
First Horizon Bank to transfer funds to FHN in the form of cash, common
dividends, loans, or advances. At any given time, the pertinent portions of
those regulatory restrictions allow First Horizon Bank to declare preferred or
common dividends without prior regulatory approval in an aggregate amount equal
to First Horizon Bank's retained net income for the two most recent completed
years plus the current year to date. For any period, First Horizon Bank's
'retained net income' generally is equal to First Horizon Bank's regulatory net
income reduced by the preferred and common dividends declared by First Horizon
Bank. Applying the dividend restrictions imposed under applicable federal and
state rules as outlined above, the Bank's total amount available for dividends
was $363.4 million as of July 1, 2020. Additionally, a capital conservation
buffer of 50 basis points above well-capitalized levels (equal to an extra 2.5
percent above minimum levels) must be maintained on the Common Equity Tier 1,
Tier 1 Capital and Total Capital ratios to avoid restrictions on dividends.
First Horizon Bank declared and paid common dividends to the parent company in
the amounts of $65 million and $115 million in first and third quarter 2020 and
$345.0 million in 2019. First Horizon Bank declared and paid preferred dividends
in first and second quarter 2020 and each quarter of 2019. Additionally, First
Horizon Bank declared preferred dividends in third quarter 2020, payable in
October 2020.
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, and also availability of funds to FHN through a dividend from
First Horizon Bank. FHN is subject to the capital conservation buffer
requirements as described in the above paragraph for 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 $.15 per common share on July 1, 2020. FHN paid cash dividends
of $1,550.00 per Series A preferred share on July 10, 2020, as

well as $331.25 per Series B preferred share and $165.00 per Series C preferred share on August 3, 2020. In addition, in July 2020 the Board approved cash dividends per share in the following amounts:


                 Dividend/share     Record Date   Payment Date


Common Stock    $           0.15     09/11/2020     10/01/2020
Preferred Stock
Series A        $       1,550.00     09/28/2020     10/13/2020
Series C        $         165.00     10/16/2020     11/02/2020
Series D        $         305.00     10/16/2020     11/02/2020
Series E        $       2,383.33     09/28/2020     10/13/2020


CASH FLOWS
The Consolidated Condensed Statements of Cash Flows provide information on cash
flows from operating, investing, and financing activities for the six months
ended June 30, 2020 and 2019. The level of cash and cash equivalents decreased
$247.3 million during the first half of 2020 and $155.6 million during the first
half of 2019
Net cash used by investing activities was $5.2 billion in the first half of
2020, driven by an increase in interest-bearing cash, strong loan growth and a
net increase in the AFS securities portfolio as purchases outpaced proceeds from
maturities and sales. Net cash used by operating activities was $.5 billion in
the first half of 2020 primarily due to net cash outflows of $767.8 million
related to loans held-for-sale as purchases and originations outpaced proceeds
from sales and settlements and $368.6 million related to an increase in
derivatives, partially offset by cash inflows of$430.5 million related to fixed
income trading activities. Net cash provided in financing activities was $5.5
billion in the first half of 2020, largely driven by an inflow of deposits,
proceeds from the issuance of $800 million of senior notes, $450 million of
subordinated notes, and $150 million of preferred stock, somewhat offset by a
decrease in short-term borrowings (primarily FHLB stock).
Net cash used by investing activities was $1.1 billion in the first half of
2019, largely driven by an increase in loan balances somewhat offset by a
decrease in interest-bearing cash and a net decrease in AFS debt securities, as
maturities and sales outpaced purchases. Net cash provided by financing
activities was $595.7 million in the first half of 2019, primarily driven by an
increase in other short-term borrowings somewhat offset by a decrease in
deposits, share repurchases and cash dividends paid during the first half of
2019. The increase in short-term borrowings was primarily the result of an
increase in FHLB borrowings, which fluctuate largely based on loan demand,
deposit levels and balance sheet funding strategies. Net cash provided by
operating activities was $347.3 million in the first half of 2019 due in large
part to net cash inflows of $752.2 million related to fixed income trading
activities and favorably driven cash-related net income items. Cash outflows of
$605.3 million related to loans HFS negatively


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impacted operating cash flows during the first half of 2019, as purchases of government guaranteed loans outpaced



sales, including the sale of approximately $25 million UPB of subprime consumer
loans.
Repurchase Obligations, Off-Balance Sheet Arrangements, and Other Contractual Obligations



Obligations from Pre-2009 Mortgage Businesses
Prior to September 2008 FHN originated loans through its pre-2009 mortgage
business, primarily first lien home loans, with the intention of selling them.
Sales typically were effected either as non-recourse whole loan sales or through
non-recourse proprietary securitizations. Conventional conforming single-family
residential mortgage loans were sold predominately to two government-sponsored
entities, or "GSEs": Fannie Mae and Freddie Mac. Also, federally insured or
guaranteed whole loans were pooled, and payments to investors were guaranteed
through Ginnie Mae. Many mortgage loan originations, especially nonconforming
mortgage loans, were sold to investors, or certificate-holders, predominantly
through First Horizon proprietary securitizations but also, to a lesser extent,
through other whole loans sold to private non-Agency purchasers. FHN used only
one trustee for all of its First Horizon proprietary securitizations. In
addition to First Horizon proprietary securitization and other whole loan sales
activities, FHN also originated and sometimes sold or securitized second-lien,
line of credit, and government-insured mortgage loans.
From these pre-2009 activities, FHN has incurred substantial losses stemming
from obligations to repurchase loans, pay make-whole amounts, or otherwise
resolve claims that loans which FHN originated, or FHN's servicing of those
loans, were deficient in a manner for which FHN was liable. Many years ago, FHN
established a repurchase and foreclosure liability, or reserve, in connection
with those claims. FHN has settled many claims, and the reserve is reduced each
time a claim is settled. 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.
Servicing Obligations
FHN's national servicing business was sold as part of the platform sale in 2008.
A significant amount of mortgage servicing rights ("MSR") was sold at that time,
and a significant amount was retained. The related servicing activities,
including foreclosure and loss mitigation practices, not sold in 2008 were
outsourced including a subservicing arrangement initiated in 2011 (the "2011
subservicer"). In fourth quarter 2013 and first quarter 2014, FHN sold and
transferred a substantial majority of its

remaining servicing obligations and servicing assets (including advances) to the
2011 subservicer. The servicing still retained by FHN is not significant and
continues to be subserviced.
As servicer, FHN had contractual obligations to the owners of the loans
(primarily GSEs) and securitization trustees to handle billing, custodial, and
other tasks related to each loan. Each subservicer undertook to perform those
obligations on FHN's behalf during the applicable subservicing period, although
FHN legally remained the servicer of record for those loans that were
subserviced.
As mentioned in Note 10 - Contingencies and Other Disclosures - FHN has received
a notice of indemnification claims from its 2011 subservicer, Nationstar
Mortgage LLC, currently doing business as "Mr. Cooper." The notice asserts
several categories of indemnity obligations by FHN to Nationstar in connection
with mortgage loans under the subservicing arrangement and under the purchase
transaction. This matter currently is not in formal litigation, but litigation
in the future is possible.
Repurchase Accrual Methodology
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 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.
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
The repurchase and foreclosure liability 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


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included in the active pipeline. 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
cancellations 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 repurchase and foreclosure liability decreased to
$12.9 million on June 30, 2020 from $14.5 million on December 31, 2019.
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, availability and the
administration of stimulus relief for the economy. Additional impacts include
how the pandemic affects FHN's customers, as well as political uncertainty,
potential changes in federal policies and the potential impact to our customers,
and FHN's strategic initiatives.
FHN's performance, and the entire U.S. financial services industry, is affected
considerably by the overall health of the U.S. and global economy and outlook.
Furthermore, FHN may be directly or indirectly impacted by global events that
impact clients and their businesses. The global COVID-19 pandemic has led to
periods of significant volatility in financial commodities (including oil and
gas) and other markets, and has adversely affected FHN's and its clients'
ability to conduct normal business, and could harm FHN's business and future
results of operations.
In March 2020 the Federal Reserve lowered short-term interest rates twice and
started a "quantitative easing" program intended to lower longer-term interest
rates and foster access to credit. The effective yields of 10-year and 30-year
U.S. Treasury securities achieved record low rates and the U.S. Congress enacted
relief legislation which, among other things, is intended to provide emergency
credit to businesses at risk for failure from government and public actions
related to the COVID-19 pandemic, and to mitigate the severity of an economic
recession. These changes in interest rates and the volatility in the market are
likely to negatively impact FHN's net interest margin. In the near term,
amortization of net processing fees related to government relief programs,
including the Paycheck Protection Program ("PPP"), may offset a portion of the
net interest margin decline.
The economic effects of the COVID-19 pandemic have significantly altered
business in the U.S. and globally leading to partial or full business closures,
individuals being furloughed or laid off, significant increases in unemployment,
and workers being partially or wholly ordered to work from home. Disruption to
FHN's customers due to governmental and societal responses to COVID-19 are
likely to adversely affect FHN's loan and deposit fee income and could create
downward loan migration and a corresponding increase in loan loss

expense and reserves. In addition, loan charge-offs likely will increase over
time, especially if economic disruption related to the COVID-19 pandemic
continues for an extended period of time. Furthermore, government programs under
the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") and
other guidance intended to provide relief to customers through temporary
modifications and deferrals, may in some instances mask or postpone reporting of
credit problems and potential defaults. In these circumstances, current credit
quality indicators may not be reflective of the underlying health of FHN's
portfolios.
Given the ongoing and dynamic nature of the circumstances, it is difficult to
predict the impact of the COVID-19 pandemic on the businesses of FHN for the
remainder of 2020 or afterward.
In 2017, the Chief Executive of the United Kingdom Financial Conduct Authority,
which regulates the London InterBank Offered Rate ("LIBOR"), announced that it
intends to halt persuading or compelling banks to submit rates for the
calculation of LIBOR after 2021. As a result, LIBOR as currently operated may
not continue after 2021. FHN is not currently able to predict the impact that
the transition from LIBOR will have on the Company; however, because FHN has
instruments with floating rate terms based on LIBOR, FHN may experience
increases in interest, dividends, and other costs relative to these instruments
subsequent to 2021. Additionally, the transition from LIBOR could impact or
change FHN's hedge accounting practices. FHN has initiated efforts to 1) develop
an inventory of affected loans, securities, and derivatives, 2) evaluate and
draft modifications as needed to address loans outstanding at the time of LIBOR
retirement, 3) obtain an understanding of the potential effects for applicable
securities and derivatives and 4) assess revisions to product pricing structures
based on alternative reference rates. 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 reference rate reform. Refer to the
Accounting Changes Issued but Not Currently Effective section of Note 1 -
Financial Information for additional information. Additionally, the IRS has
released a proposal that is intended to facilitate the


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transition of existing contracts from LIBOR to new reference rates without
triggering modification accounting or taxable exchange treatment for those
contracts. This proposal contains specific guidance that must be met in order to
qualify for the beneficial transition approach and FHN is considering this
guidance in its transition plans.
FHN has prioritized expense discipline to include reducing or controlling
certain expenses including realization of merger efficiencies, enabling the
investment into revenue-producing activities, customer-facing technology, and
critical infrastructure. FHN remains committed to organic growth through
customer retention, key hires, targeted incentives, and other traditional means.
Under applicable accounting guidance, FHN is required to record IBKC's loans at
estimated fair value as of the closing date, July 1, 2020. In addition, FHN is
required to assess the current expected credit losses associated with IBKC
loans. That credit loss assessment will be separate from the fair value
estimation, and will result in a charge to FHN's income for certain loans during
third quarter 2020. FHN has not yet completed those estimations and assessments,
but currently expects that the associated charge to third-quarter income will be
substantial.
Lastly, while FHN has resolved most matters from the pre-2009 mortgage business,
some remain unresolved. The timing or financial impact of resolution of these
matters cannot be predicted with accuracy. Accordingly, the non-strategic
segment may occasionally and unexpectedly impact FHN's overall quarterly results
negatively or positively with reserve accruals or releases. Also, although new
pre-2009 mortgage business matters of significance arise at a much slower pace
than in years past and some formerly common legal claims no longer can be made
due to the passage of time, potential for new pre-2009 mortgage business matters
remains.
Foreclosure Practices
FHN retains exposure for potential deficiencies in servicing related to its
pre-2009 mortgage servicing business and subservicing arrangements. Further
details regarding these matters are provided in
"Obligations from Pre-2009 Mortgage Businesses - Servicing Obligations" under
"Repurchase Obligations, Off-Balance Sheet Arrangements, and Other Contractual
Obligations."
FHN response to the COVID-19 pandemic
As previously mentioned, the COVID-19 pandemic has, and will continue, to
directly and indirectly impact FHN and our customers. FHN has adapted many
operations to help ensure the health and safety of employees and customers
during these uncertain times. Among other things, FHN has implemented remote
work policies, encouraged contactless banking or in-person branch

activities to be handled by appointment, as well as additional sick time and
child care assistance for employees.
Loans
FHN is actively monitoring the COVID-19 pandemic and its impact on customers and
FHN's credit quality. FHN continues to reach out to customers to discuss
challenges and solutions, provide line draws and new extensions to existing
customers, provide support for small businesses through the PPP (discussed in
more detail below) and other stimulus programs, as well as provide lending and
deposit assistance through deferrals and waived fees. Additionally, in certain
sectors, FHN has reduced or stopped new lending.
Paycheck Protection Program
In 2020 Congress created the foundation for a paycheck protection program
("PPP"). Under the PPP, qualifying businesses may 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 use of the funds and maintenance of employment
levels; to the extent forgiven, the borrower is relieved from payment, while the
lender still is paid from the program. Congress has revised the PPP this year,
and may make further revisions to PPP in the future.
Lenders making PPP loans are paid a fee by the Small Business Administration.
Gross lender fees range from 1% to 5% of the loan amount. A borrower can use an
agent to assist in the preparation of their PPP applications, with the costs of
the agent potentially being paid from the gross lender fee. Additionally,
originating banks have certain internal costs of originating PPP loans.

FHN originated 15,512 of PPP loans with an aggregate principal of $2.1 billion
through June 30, 2020. For these loans, FHN anticipates recognizing net lender
fees of approximately $60 million. PPP lending has continued in third quarter,
but at lower volumes. FHN has decided to hold its PPP loans for investment.
Therefore, the amount of SBA fees net of total direct origination costs are
deferred as a discount to the recorded carrying value of the PPP loans. This
discount is being amortized prospectively to interest income. SBA loan
forgiveness payments are considered prepayments of the related loans. Under
existing accounting principles, amortization of net origination fees can reflect
expected prepayment activity if prepayments are determined to be probable and
both the timing and volume can be reasonably estimated. Based on the current
terms of the PPP loans, including the expected end of the payment deferral
period, FHN estimates that substantially all of the prepayment-eligible portions
of PPP loans will be prepaid by second quarter 2021 as these loans are forgiven.
These estimated prepayments result in


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a similar amount of the net fees being recognized in interest income.
Since PPP loans carry a full SBA guarantee, they do not have any credit risk and
will not affect the amount of provision and ALLL recorded. FHN has assigned a
risk weight of zero to PPP loans for regulatory capital purposes.
Lending Assistance for Borrowers
Other customer support initiatives include incremental lending assistance for
borrowers through delayed payment programs and fee waivers. The following table
provides the UPB of loans related to deferrals granted to FHN's customers that
have been processed through June 30, 2020.
(Dollars in thousands)         As of June 30, 2020
Commercial:
General C&I                   $           1,828,501
Loans to mortgage companies                       -
TRUPS                                             -
Income CRE                                1,328,907
Residential CRE                               1,977
Total Commercial              $           3,159,385
Consumer:
HELOC                         $              71,529
R/E installment loans                       497,058
Credit Card & Other                           5,808
Total Consumer                              574,395
Total                         $           3,733,780




Commercial deferrals processed are comprised primarily of general commercial (43
percent or $1.4 billion), commercial real estate (27 percent or $862.9 million -
primarily within our Mid-Atlantic, Southeast Tennessee, and Middle Tennessee
markets), franchise finance (11 percent or $356.4 million), business banking (8
percent or $256.7 million), and private client (5 percent or $173.7 million).

Critical Accounting Policies





Except for the changes to the following Allowance for Loan Losses section, there
have been no significant changes to FHN's critical accounting policies as
described in "Critical Accounting Policies" beginning on page 99 of Item 7 to
FHN's Annual Report on Form 10-K for the year ended December 31, 2019.
ALLOWANCE FOR LOAN LOSSES
Management's policy is to maintain the ALLL at a level sufficient to absorb
expected credit losses in the loan portfolio. Management performs periodic and
systematic detailed reviews of its loan portfolio to identify trends and to
assess the overall collectability of the loan portfolio. Management believes the
accounting estimate related to the ALLL is a "critical accounting estimate" as:
(1) changes in it can materially affect the provision for loan losses and net
income, (2) it requires management to predict borrowers' likelihood or capacity
to repay, including evaluation of inherently uncertain future economic
conditions, (3) prepayment activity must be projected to estimate the life of
loans that often are shorter than contractual terms, (4) it requires estimation
of a reasonable and supportable forecast period for credit losses for loan
portfolio segments before reversion to historical

loss levels over the remaining life of a loan and (5) expected future recoveries
of amounts previously charged off must be estimated. Accordingly, this is a
highly subjective process and requires significant judgment since it is
difficult to evaluate current and future economic conditions in relation to an
overall credit cycle and estimate the timing and extent of loss events that are
expected to occur prior to end of a loan's estimated life. The ALLL is increased
by the provision for loan losses and recoveries and is decreased by charged-off
loans. Principal loan amounts are charged off against the ALLL in the period in
which the loan or any portion of the loan is deemed to be uncollectible. This
critical accounting estimate applies to the regional banking, non-strategic, and
corporate segments. A management committee comprised of representatives from
Risk Management, Finance, Credit, and Treasury performs a quarterly review of
the assumptions used in FHN's ALLL analytical models, makes qualitative
assessments of the loan portfolio, and determines if qualitative adjustments
should be recommended to the modeled results. On a quarterly basis, as a part of
Enterprise Risk reporting and discussion, management addresses credit reserve
adequacy and credit losses with the Executive and Risk Committee of FHN's Board
of Directors.


                          FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 123

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FHN believes that the critical assumptions underlying the accounting estimates
made by management include: (1) the commercial loan portfolio has been properly
risk graded based on information about borrowers in specific industries and
specific issues with respect to single borrowers; (2) borrower specific
information made available to FHN is current and accurate; (3) the loan
portfolio has been segmented properly and individual loans have similar credit
risk characteristics and will behave similarly; (4) the lives for loan portfolio
pools have been estimated properly, including consideration of expected
prepayments; (5) the economic forecasts utilized in the modeling of expected
credit losses are reflective of future economic conditions; (6)
entity-specific historical loss information has been properly assessed for all
loan portfolio segments as the initial basis for estimating expected credit
losses; (7) the reasonable and supportable periods for loan portfolio segments
have been properly determined; (8) the reversion methodologies and timeframes
for migration from the reasonable and supportable period to the use of
historical loss rates are reasonable; (9) expected recoveries of prior charge
off amounts have been properly estimated; and (10)  qualitative adjustments to
modeled loss results reasonably reflect expected future credit losses as of the
date of the financial statements.

While management uses the best information available to establish the ALLL,
future adjustments to the ALLL and methodology may be necessary if economic or
other conditions differ substantially from the assumptions used in making the
estimates. Such adjustments to original estimates, as necessary, are made in the
period in which these factors and other relevant considerations indicate that
loss levels vary from previous estimates.
See Note 1 - Summary of Significant Accounting Policies and Note 5 - Allowance
for Loan Losses for detail regarding FHN's processes, models, and methodology
for determining the ALLL.
ACCOUNTING CHANGES ISSUED BUT NOT CURRENTLY EFFECTIVE
Refer to Note 1 - Financial Information for a detail of accounting standards
that have been issued but are not currently effective, which section is
incorporated into MD&A by this reference.



                          FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 124

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Non-GAAP Information

The following table provides a reconciliation of non-GAAP items presented in this MD&A to the most comparable GAAP presentation: Table 23-Non-GAAP to GAAP Reconciliation


                                                 Three Months Ended                 Six Months Ended
                                                       June 30                           June 30
(Dollars in thousands)                          2020             2019             2020             2019
Pre-provision Net Revenue ("PPNR")
Net interest income (GAAP)                 $    305,344     $    303,610     $    608,146     $    598,118
Plus: Noninterest income (GAAP)                 206,269          157,993          381,025          299,038
Total revenues (GAAP)                           511,613          461,603          989,171          897,156
Less: Noninterest expense (GAAP)                332,168          300,394          643,487          596,484
PPNR (Non-GAAP)                                 179,445          161,209          345,684          300,672
Provision/(provision credit) for loan
losses (GAAP)                                   110,000           13,000          255,000           22,000
Income before income taxes (pre-tax
income ("PTI")) (GAAP)                     $     69,445     $    148,209

$ 90,684 $ 278,672



Average Tangible Common Equity
(Non-GAAP)
Average total equity (GAAP)                $  5,117,613     $  4,869,161     $  5,060,003     $  4,839,363
Less: Average noncontrolling interest
(a)                                             295,431          295,431          295,431          295,431
Less: Average preferred stock (a)               149,675           95,624          122,650           95,624
(A) Total average common equity            $  4,672,507     $  4,478,106     $  4,641,922     $  4,448,308
Less: Average intangible assets (GAAP)
(b)                                           1,555,049        1,578,505        1,557,695        1,581,582
(B) Average Tangible Common Equity
(Non-GAAP)                                 $  3,117,458     $  2,899,601     $  3,084,227     $  2,866,726
Net Income Available to Common
Shareholders
(C) Net income available to common
shareholders (annualized) (GAAP)           $    210,205     $    438,562

$ 129,375 $ 420,204



Tangible Common Equity (Non-GAAP)
(D) Total equity (GAAP)                    $  5,208,385     $  4,926,081     $  5,208,385     $  4,926,081
Less: Noncontrolling interest (a)               295,431          295,431          295,431          295,431
Less: Preferred stock (a)                       240,289           95,624          240,289           95,624
(E) Total common equity                    $  4,672,665     $  4,535,026     $  4,672,665     $  4,535,026
Less: Intangible assets (GAAP) (b)            1,552,395        1,575,399        1,552,395        1,575,399
(F) Tangible common equity (Non-GAAP)      $  3,120,270     $  2,959,627

$ 3,120,270 $ 2,959,627



Tangible Assets (Non-GAAP)
(G) Total assets (GAAP)                    $ 48,644,659     $ 42,171,770     $ 48,644,659     $ 42,171,770
Less: Intangible assets (GAAP) (b)            1,552,395        1,575,399        1,552,395        1,575,399
(H) Tangible assets (Non-GAAP)             $ 47,092,264     $ 40,596,371

$ 47,092,264 $ 40,596,371



Period-end Shares Outstanding
(I) Period-end shares outstanding               312,359          312,478

312,359 312,478

Ratios


(C)/(A) Return on average common equity
("ROCE") (GAAP) (c)                                4.50 %           9.79 %           2.79 %           9.45 %
(C)/(B) Return on average tangible
common equity ("ROTCE") (Non-GAAP) (d)             6.74            15.12             4.19            14.66
(D)/(G) Total equity to total assets
(GAAP)                                            10.71            11.68            10.71            11.68
(F)/(H) Tangible common equity to
tangible assets ("TCE/TA") (Non-GAAP)              6.63             7.29             6.63             7.29
(E)/(I) Book value per common share
(GAAP)                                     $      14.96     $      14.51     $      14.96     $      14.51
(F)/(I) Tangible book value per common
share (Non-GAAP)                           $       9.99     $       9.47     $       9.99     $       9.47



(a)Included in Total equity on the Consolidated Condensed Statements of
Condition.
(b)Includes Goodwill and other intangible assets, net of amortization.
(c)Ratio is annualized net income available to common shareholders to average
common equity.
(d)Ratio is annualized net income available to common shareholders to average
tangible common equity.


                          FIRST HORIZON NATIONAL CORP. 2Q20 FORM 10-Q REPORT 125

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Company Profile

First Horizon Corporation is a bank holding company, which provides diversified financial services primarily through its principal subsidiary, First Horizon Bank (the Bank). The Company operates through three segments: Regional Banking, Specialty Banking, and Corporate. The principal lines of business in the regional banking segment include commercial banking, business banking, consumer banking, private client, and wealth management. This segment also provides investment, wealth management, financial planning, trust and asset management services for consumer clients. The principal lines of business in the specialty banking segment include fixed income/capital markets, professional commercial real estate, mortgage warehouse lending, asset-based (secured) lending, franchise finance, equipment finance, energy finance, healthcare finance, and tax credit finance. This segment also delivers treasury management solutions, loan syndications, and international banking.

Sector

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Calendar

2024-06-13 - Ex-dividend day

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Ratings for First Horizon Corporation

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ESG Refinitiv

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Analysts' Consensus

Sell

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Mean consensus

OUTPERFORM

Number of Analysts

Last Close Price

15.8 USD

Average target price

17.37 USD

Spread / Average Target

+9.92%

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FHN

US3205171057

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FIRST HORIZON NATIONAL : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION --------------------------- (form 10-Q)

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