First Horizon Corporation Annual Report 2021 Form 10-K (NYSE:FHN) Published: February 25th, 2021 PDF generated by stocklight.com UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 - or - ☐ TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 SECURITIES EXCHANGE ACT OF 1934 For the Transition period from __________ to__________ Commission File Number: 001-15185 fhn-20201231_g1.jpg FIRST HORIZON CORPORATION (Exact name of registrant as specified in its charter) TN 62-0803242 (State or other jurisdiction (IRS Employer incorporation of organization) Identification No.) 165 Madison Avenue Memphis, Tennessee 38103 (Address of principal executive office) (Zip Code) Registrant’s telephone number, including area code: 901-523-4444 Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Trading Symbol(s) Name of Exchange on which Registered $.625 Par Value Common Capital Stock FHN New York Stock Exchange LLC Depositary Shares, each representing a 1/4,000th interest in a share of Non-Cumulative Perpetual Preferred Stock, Series A FHN PR A New York Stock Exchange LLC Depositary Shares, each representing a 1/400th interest in FHN PR B New York Stock Exchange LLC a share of Non-Cumulative Perpetual Preferred Stock, Series B Depositary Shares, each representing a 1/400th interest in FHN PR C New York Stock Exchange LLC a share of Non-Cumulative Perpetual Preferred Stock, Series C Depositary Shares, each representing a 1/400th interest in FHN PR D New York Stock Exchange LLC a share of Non-Cumulative Perpetual Preferred Stock, Series D Depositary Shares, each representing a 1/4,000th interest in FHN PR E New York Stock Exchange LLC a share of Non-Cumulative Perpetual Preferred Stock, Series E Securities registered pursuant to Section 12(g) of the Act :None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☒ Yes ☐ No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☐ Yes ☒ No Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large Accelerated Filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging Growth Company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).☐ Yes ☒ No At June 30, 2020, the aggregate market value of registrant common stock held by non-affiliates of the registrant was approximately $3.0 billion based on the closing stock price reported for that date. At January 29, 2021, the registrant had 555,468,634 shares of common stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE: Portions of the Proxy Statement to be furnished to shareholders in connection with the Annual Meeting of shareholders scheduled for April 27, 2021: Part III of this Report CONTENTS OF ANNUAL REPORT ON FORM 10-K ITEM Page ITEM Page Glossary of Acronyms and Terms 3 Item 8. Financial Statements and Supplementary Data 105 Executive Summary of Principal Investment Risks 5 Forward-Looking Statements 7 Item 9. Changes in and Disagreements with Accountants on 230 Accounting and Financial Disclosure Part I Item 1. Business 8 Item 9A. Controls and Procedures 232 Item 1A. Risk Factors 26 Item 9B. Other Information 232 Item 1B. Unresolved Staff Comments 46 Part III Item 2. Properties 46 Item 10. Directors and Executive Officers of the Registrant 232 Item 3. Legal Proceedings 47 Item 11. Executive Compensation 233 Item 4. Mine Safety Disclosures 47 Item 12. Security Ownership of Certain Beneficial Owners Supplemental Part I Information 48 and Management and Related Stockholder Matters 234 Part II Market for the Registrant’s Common Equity, Related Item 5. Stockholder Matters, and Issuer Item 13. Certain Relationships and Related Transactions 234 Purchases of Equity Securities 50 Item 14. Principal Accountant Fees and Services 234 Item 6. [reserved] 51 Part IV Item 7. Management’s Discussion and Analysis of Item 15. Exhibits and Financial Statement Schedules 236 Financial Condition and Results of Operations 52 Item 16. Form 10-K Summary 240 Quantitative and Qualitative Disclosures about Market Item 7A. Risk 104 Signatures 241 MD&A and Financial Statement References In this report: " 2020 MD&A" and " 2020 MD&A (Item 7) " generally refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations, inclusive of Glossary of Selected Financial Terms and Acronyms, appearing in Item 7 within Part II of this report; and, "2020 Financial Statements" and " 2020 Financial Statements (Item 8) " generally refer to our Consolidated Balance Sheets, our Consolidated Statements of Income, our Consolidated Statements of Comprehensive Income, our Consolidated Statements of Changes in Equity, our Consolidated Statements of Cash Flows, and the Notes to the Consolidated Financial Statements, all appearing in Item 8 within Part II of this report. GLOSSARY OF ACRONYMS AND TERMS The following is a list of common acronyms and terms used throughout this report: ACL Allowance for credit losses ASU Accounting Standards Update ADR Average daily revenue Bank First Horizon Bank AFS Available for sale BOLI Bank-owned life insurance AIR Accrued interest receivable C&I Commercial, financial, and industrial loan portfolio ALCO Asset/Liability Committee CAS Credit Assurance Services ALLL Allowance for loan and lease losses CARES Act Coronavirus Aid, Relief, and Economic Security Act ALM Asset/liability management CBF Capital Bank Financial AOCI Accumulated other comprehensive income CCAR Comprehensive Capital Analysis and Review ASC FASB Accounting Standards Codification CD Certificate of deposit Associate Person employed by FHN CECL Current expected credit loss FTNMC First Tennessee New Markets Corporation CEO Chief Executive Officer FTRESC FT Real Estate Securities Company, Inc. CFPB Consumer Financial Protection Bureau GAAP Generally accepted accounting principles CMO Collateralized mortgage obligations GNMA Government National Mortgage Association or Ginnie Mae Company First Horizon Corporation GSE Government sponsored enterprises, in this filing references Corporation First Horizon Corporation Fannie Mae and Freddie Mac CRA Community Reinvestment Act HELOC Home equity line of credit CRE Commercial Real Estate HFS Held for Sale CRMC Credit Risk Management Committee HTM Held to maturity DSCR Debt service coverage ratios HUD Department of Housing and Urban Development DTA Deferred tax asset IBKC IBERIABANK Corporation DTI Debt-to-income IPO Initial public offering DTL Deferred tax liability ISDA International Swap and Derivatives Association ECP Equity Compensation Plan IRS Internal Revenue Service EPS Earnings per share LEP Loss emergence period ESOP Employee stock ownership plan LGD Loss given default FASB Financial Accounting Standards Board LIBOR London Inter-Bank Offered Rate FDIC Federal Deposit Insurance Corporation LIHTC Low Income Housing Tax Credit Federal Federal Reserve Board LLC Limited Liability Company Reserve LMC Loans to mortgage companies Fed Federal Reserve Board LOCOM Lower of cost or market FFP Federal funds purchased LRRD Loan Rehab and Recovery Department FFS Federal funds sold LTV Loan-to-value FHA Federal Housing Administration MBS Mortgage-backed securities FHLB Federal Home Loan Bank MD&A Management’s Discussion and Analysis of Financial FHLMC Federal Home Loan Mortgage Corporation or Freddie Mac Condition and Results of Operations FHN First Horizon Corporation MI Private mortgage insurance FHNF FHN Financial; FHN's fixed income division MSR Mortgage servicing rights FICO Fair Isaac Corporation MSRB Municipal Securities Rulemaking Board FINRA Financial Industry Regulatory Authority NAICS North American Industry Classification