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Loans and Leases | 9 Months Ended
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Sep. 30, 2020
Receivables [Abstract] |
Loans and Leases | Loans and Leases The following tables and data as of September 30, 2020 include the loan and lease balances acquired in the IBKC merger and Truist Bank branch acquisition, which were recorded at fair value on their respective transaction closing dates. See Note 2 - Acquisitions and Divestitures for further information. As discussed in Note 1 - Financial Information, the ALLL estimation process was revised on January 1, 2020 to reflect the adoption of ASU 2016-13. All information contained in the following disclosures reflects the application of requirements from the adoption of ASU 2016-13 for periods after 2019. Information for periods prior to 2020 has been retained with the content consistent with prior disclosures. Loans and leases are disclosed in portfolio segments and classes. A class is generally a disaggregation of a portfolio segment. In determining classes, FHN considered the loan characteristics and methods it applies in monitoring and assessing credit risk and performance. FHN's loan and lease portfolio segments are commercial and consumer. The classes of loans and leases are: commercial, financial, and industrial ("C&I"), which includes commercial and industrial loans and loans to mortgage companies ("LMC"), commercial real estate ("CRE"), consumer real estate, which includes both real estate ("R/E") installment and home equity lines of credit ("HELOCs"), and credit card and other. The following table provides the amortized cost basis of loans and leases by portfolio segment and class as of September 30, 2020 and December 31, 2019, excluding accrued interest of $177.5 million and $84.6 million, which is included in Other assets in the Consolidated Balance Sheets.
|  | September 30, |  | December 31, |  |
(Dollars in thousands) |  | 2020 |  | 2019 |  |
Commercial: |  |  |  |  |  |
Commercial and industrial (a) |  | $ | 28,048,649 |  |  | $ | 15,640,208 |  |  |
Loans to mortgage companies |  | 5,607,068 |  |  | 4,410,883 |  |  |
Total commercial, financial, and industrial |  | 33,655,717 |  |  | 20,051,091 |  |  |
Commercial real estate |  | 12,510,887 |  |  | 4,337,017 |  |  |
Consumer: |  |  |  |  |  |
HELOC |  | 2,549,837 |  |  | 1,287,441 |  |  |
R/E installment loans |  | 9,778,032 |  |  | 4,889,698 |  |  |
Total consumer real estate |  | 12,327,869 |  |  | 6,177,139 |  |  |
Credit card and other |  | 1,212,058 |  |  | 495,864 |  |  |
Loans and leases |  | $ | 59,706,531 |  |  | $ | 31,061,111 |  |  |
Allowance for loan and lease losses |  | (988,102) |  |  | (200,307) |  |  |
Net loans and leases |  | $ | 58,718,429 |  |  | $ | 30,860,804 |  |  |
(a)September 30, 2020 balance includes equipment financing leases of $524.2 million. In addition to loans issued in the normal course of business, FHN considers overdrafts on customer deposit accounts to be loans and reclassifies these overdrafts as loans in its consolidated balance sheets. At September 30, 2020 and December 31, 2019, overdrafts of $9.0 million and $8.1 million, respectively, had been reclassified to loans. Loans and leases with carrying values of $39.4 billion and $19.2 billion were pledged as collateral for borrowings at September 30, 2020 and December 31, 2019, respectively. Portfolio Segment Risk Factors Commercial Loans and Leases The C&I portfolio is comprised of loans and leases used for general business purposes. Typical products including working capital lines of credit, term loan financing of owner-occupied real estate and fixed assets, direct financing and sales-type leases, and trade credit enhancement through letters of credit. FHN utilizes deal teams comprised of relationship managers (RMs), portfolio managers (PMs), credit analysts and other specialists to identify, mitigate, document, and manage ongoing risk. Their function includes enhanced analytical support during loan origination and servicing, monitoring the financial condition of the borrower, and tracking compliance with loan agreements. FHN strives to identify problem assets early through comprehensive policies and guidelines, targeted portfolio reviews, more frequent servicing on lower rated borrowers, and an emphasis on frequent grading. To the extent a guarantor/sponsor is used to support a commercial lending decision, FHN analyzes capability to pay, factoring in, among other things, liquidity and direct/indirect cash flows. A strong, legally enforceable guaranty can mitigate the risk of default or loss, justify a less severe rating, and consequently reduce the level of allowance or charge-off that might otherwise be deemed appropriate. Loans to mortgage companies include 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. Over 99% of the loans to mortgage companies are collateralized with government guaranteed loans. The loans are of short duration with maturities less than one year. Commercial Real Estate loans include financings for commercial construction and nonconstruction loans. Income-producing CRE loans and draws on lines and letters of credit are to commercial real estate developers for the construction and mini-permanent financing of income-producing real estate. Residential CRE loans are 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. Active residential CRE lending is primarily focused in certain core markets with nearly all new originations made to “strategic” clients. FHN considers a “strategic” residential CRE borrower as a homebuilder who demonstrates the ability to withstand cyclical downturns, maintains active development and investment activities providing for regular financing opportunities, and is fundamentally sound as evidenced by a prudent loan structure, appropriate covenants and recourse, and capable and willing sponsors in markets with positive homebuilding and economic dynamics. The credit administration and ongoing monitoring of these portfolios consists of multiple internal control processes including stressing a borrower’s or project’s financial capacity utilizing numerous attributes such as interest rates, vacancy, and discount rates. Key information captured from the various portfolios is aggregated and utilized to assist with the assessment and adequacy of the ALLL and to steer portfolio management strategies. Paycheck Protection Program Loans Included in C&I loans are $4.2 billion of loans made under the Paycheck Protection Program ("PPP Loans") of the Small Business Administration ("SBA"). PPP Loans have been extended to businesses in response to the economic effects of the COVID-19 pandemic. PPP Loans are fully government guaranteed with the SBA making prepayments through a provision whereby partial or complete forgiveness is granted based on the nature and extent of each borrower's expenditures in relation to program requirements for payroll-related and other types of expenses. PPP Loans have maximum terms ranging from two to five years, with the amount of the loan forgiven by the SBA expected to be paid in the latter half of 2020 and the first half of 2021. Amounts not forgiven by the SBA will amortize over the applicable remaining loan term. Due to the government guarantee and forgiveness provisions, PPP Loans are considered to have no credit risk and receive no risk weighting for capital calculations. Consumer Loans The consumer real estate portfolio is primarily comprised of home equity lines and installment loans within FHN’s regional banking segment and jumbo mortgages and one-time-close (“OTC”) completed construction loans in FHN’s non-strategic segment that were originated through pre-2009 mortgage businesses. The corporate segment also includes loans that were previously included in off-balance sheet proprietary securitization trusts that were brought back into the loan portfolios at fair value through the execution of cleanup calls due to the relatively small balances left in the securitization and should continue to run-off. Generally performance of the consumer real estate portfolio is affected by life events that affect borrowers’ finances, the level of unemployment, and home prices. FHN obtains first lien performance information from third parties and through loss mitigation activities. FHN performs continuous HELOC account review processes in order to identify higher-risk home equity lines and initiate preventative and corrective actions. The reviews consider a number of account activity patterns and characteristics such as the number of times delinquent within recent periods, changes in credit bureaus score since origination, scored degradation, performance of the first lien, and account utilization. FHN may block future draws on accounts in order to mitigate risk of loss to FHN. The credit card and other portfolio is primarily comprised of automobile loans, credit card receivables, and other consumer-related credits. Concentrations FHN has a concentration of residential real estate loans (21% of total loans). Loans to finance and insurance companies total $3.1 billion (9% of the C&I portfolio, or 5% of the total loans). FHN had loans to mortgage companies totaling $5.6 billion (17% of the C&I segment, or 9% of total loans) as of September 30, 2020. As a result, 26% of the C&I portfolio is sensitive to impacts on the financial services industry. Credit Quality Indicators FHN employs a dual grade commercial risk grading methodology to assign an estimate for the probability of default (“PD”) and the loss given default (“LGD”) for each commercial loan using factors specific to various industry, portfolio, or product segments that result in a rank ordering of risk and the assignment of grades PD 1 to PD 16. PD 1 through PD 12 are “pass” grades. PD grades 13-16 correspond to the regulatory-defined categories of special mention (13), substandard (14), doubtful (15), and loss (16). Special mention loans and leases have potential weaknesses that, if left uncorrected, may result in deterioration of FHN's credit position at some future date. Substandard commercial loans and leases have well-defined weaknesses and are characterized by the distinct possibility that FHN will sustain some loss if the deficiencies are not corrected. Doubtful commercial loans and leases have the same weaknesses as substandard loans and leases with the added characteristics that the probability of loss is high and collection of the full amount is improbable. The following tables provide the amortized cost basis of the commercial loan portfolio by year of origination and credit quality indicator as of September 30, 2020:
|  | C&I |  |
(Dollars in thousands) |  | 2020 |  | 2019 |  | 2018 |  | 2017 |  | 2016 |  | Prior to 2016 |  | LMC (a) |  | Revolving Loans |  | Revolving Loans converted to term loans (b) |  | Total
Credit Quality Indicator: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass (PD grades 1 through 12) (c) |  | $ | 7,795,816 |  |  | $ | 5,770,378 |  |  | $ | 3,036,673 |  |  | $ | 1,917,886 |  |  | $ | 1,323,236 |  |  | $ | 2,414,920 |  |  | $ | 5,607,068 |  |  | $ | 4,533,240 |  |  | $ | 60,592 |  |  | $ | 32,459,809 |
Special Mention (PD grade 13) |  | 86,675 |  |  | 75,224 |  |  | 53,067 |  |  | 22,692 |  |  | 45,640 |  |  | 80,438 |  |  | — |  |  | 123,383 |  |  | 47,364 |  |  | 534,483 |
Substandard, Doubtful, or Loss (PD grades 14,15, and 16) |  | 107,126 |  |  | 111,716 |  |  | 109,639 |  |  | 50,811 |  |  | 60,082 |  |  | 46,871 |  |  | — |  |  | 165,173 |  |  | 10,007 |  |  | 661,425 |
Total C&I loans |  | $ | 7,989,617 |  |  | $ | 5,957,318 |  |  | $ | 3,199,379 |  |  | $ | 1,991,389 |  |  | $ | 1,428,958 |  |  | $ | 2,542,229 |  |  | $ | 5,607,068 |  |  | $ | 4,821,796 |  |  | $ | 117,963 |  |  | $ | 33,655,717 |
(a) LMC includes non-revolving 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. The loans are of short duration with maturities less than one year. (b) $40.0 million of C&I loans were converted from revolving to term in 2020. (c) 2020 balance includes PPP loans.
|  | CRE
(Dollars in thousands) |  | 2020 |  | 2019 |  | 2018 |  | 2017 |  | 2016 |  | prior to 2016 |  | Revolving Loans |  | Revolving Loans converted to term loans |  | Total
Credit Quality Indicator: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass (PD grades 1 through 12) |  | 2,099,167 |  |  | 3,244,741 |  |  | 1,940,046 |  |  | 1,410,004 |  |  | 1,056,094 |  |  | 2,015,504 |  |  | 300,752 |  |  | 18,836 |  |  | 12,085,144 |
Special Mention (PD grade 13) |  | 15,089 |  |  | 31,230 |  |  | 97,016 |  |  | 35,573 |  |  | 83,254 |  |  | 45,875 |  |  | 4,065 |  |  | — |  |  | 312,102 |
Substandard, Doubtful, or Loss (PD grades 14,15, and 16) |  | 676 |  |  | 2,481 |  |  | 22,018 |  |  | 41,211 |  |  | 8,180 |  |  | 31,746 |  |  | 7,329 |  |  | — |  |  | 113,641 |
Total CRE loans |  | 2,114,932 |  |  | 3,278,452 |  |  | 2,059,080 |  |  | 1,486,788 |  |  | 1,147,528 |  |  | 2,093,125 |  |  | 312,146 |  |  | 18,836 |  |  | 12,510,887 |
The following table provides the balances of commercial loan portfolio classes with associated allowance, disaggregated by PD grade as of December 31, 2019.
|  | December 31, 2019
(Dollars in thousands) |  | C&I |  |  |  | Loans to Mortgage Companies |  |  |  |  | CRE |  |  |  |  | Total |  | Percentage of Total |  | Allowance for Loan Losses
PD Grade: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass (PD grades 1 through 12) (a) |  | $ | 15,035,946 |  |  |  |  | $ | 4,410,883 |  |  |  |  |  | $ | 4,252,361 |  |  |  |  |  | $ | 23,699,190 |  |  | 98 | % |  | $ | 114,094 |
Special Mention (PD grade 13) |  | 232,823 |  |  |  |  | — |  |  |  |  |  | 34,092 |  |  |  |  |  | 266,915 |  |  | 1 |  |  | 8,142 |
Substandard, Doubtful, or Loss (PD grades 14,15, and 16) |  | 263,076 |  |  |  |  | — |  |  |  |  |  | 44,026 |  |  |  |  |  | 307,102 |  |  | 1 |  |  | 29,318 |
Collectively evaluated for impairment |  | 15,531,845 |  |  |  |  | 4,410,883 |  |  |  |  |  | 4,330,479 |  |  |  |  |  | 24,273,207 |  |  | 100 |  |  | 151,554 |
Individually evaluated for impairment |  | 82,438 |  |  |  |  | — |  |  |  |  |  | 1,563 |  |  |  |  |  | 84,001 |  |  | — |  |  | 6,196 |
Purchased credit-impaired loans |  | 25,925 |  |  |  |  | — |  |  |  |  |  | 4,975 |  |  |  |  |  | 30,900 |  |  | — |  |  | 848 |
Total commercial loans |  | $ | 15,640,208 |  |  |  |  | $ | 4,410,883 |  |  |  |  |  | $ | 4,337,017 |  |  |  |  |  | $ | 24,388,108 |  |  | 100 | % |  | $ | 158,598 |
(a) Balances presented net of a $19.1 million valuation allowance. The consumer portfolio is comprised primarily of smaller-balance loans which are very similar in nature in that most are standard products and are backed by residential real estate. Because of the similarities of consumer loan-types, FHN is able to utilize the Fair Isaac Corporation (“FICO”) score, among other attributes, to assess the credit quality of consumer borrowers. FICO scores are refreshed on a quarterly basis in an attempt to reflect the recent risk profile of the borrowers. Accruing delinquency amounts are indicators of asset quality within the credit card and other consumer portfolio. The following table reflects the amortized cost basis by year of origination and refreshed FICO scores for consumer real estate loans as of September 30, 2020. Within consumer real estate, classes include home equity line of credit ("HELOC") and real estate installment. HELOCs are loans which during their draw period are classified as revolving loans. Once the draw period ends and the loan enters its repayment period, the loan converts to a term loan and is classified as revolving loans converted to term loans. All loans classified in the following table as revolving loans or revolving loans converted to term loans are HELOCs. Real estate installment loans are originated as a fixed term loan and are classified below in their vintage year from prior to 2016 to 2020. All loans in the following table classified in a vintage year are real estate installment loans.
|  | Consumer Real Estate
(Dollars in thousands) |  | 2020 |  | 2019 |  | 2018 |  | 2017 |  | 2016 |  | Prior to 2016 |  | Revolving Loans |  | Revolving Loans converted to term loans (a) |  | Total
FICO score 740 or greater |  | $ | 809,079 |  |  | $ | 1,242,805 |  |  | $ | 797,553 |  |  | $ | 677,865 |  |  | $ | 746,150 |  |  | $ | 1,910,304 |  |  | $ | 1,304,498 |  |  | $ | 178,921 |  |  | $ | 7,667,175 |
FICO score 720-739 |  | 96,670 |  |  | 168,223 |  |  | 110,859 |  |  | 81,669 |  |  | 93,933 |  |  | 205,824 |  |  | 204,419 |  |  | 30,342 |  |  | 991,939 |
FICO score 700-719 |  | 84,995 |  |  | 122,293 |  |  | 89,193 |  |  | 84,727 |  |  | 73,587 |  |  | 225,227 |  |  | 181,823 |  |  | 39,361 |  |  | 901,206 |
FICO score 660-699 |  | 88,346 |  |  | 146,789 |  |  | 143,213 |  |  | 88,989 |  |  | 91,062 |  |  | 316,577 |  |  | 263,818 |  |  | 63,156 |  |  | 1,201,950 |
FICO score 620-659 |  | 21,847 |  |  | 73,365 |  |  | 40,104 |  |  | 28,207 |  |  | 36,391 |  |  | 140,682 |  |  | 87,205 |  |  | 39,707 |  |  | 467,508 |
FICO score less than 620 |  | 357,712 |  |  | 48,100 |  |  | 53,006 |  |  | 61,476 |  |  | 97,995 |  |  | 323,215 |  |  | 99,561 |  |  | 57,026 |  |  | 1,098,091 |
Total |  | $ | 1,458,649 |  |  | $ | 1,801,575 |  |  | $ | 1,233,928 |  |  | $ | 1,022,933 |  |  | $ | 1,139,118 |  |  | $ | 3,121,829 |  |  | $ | 2,141,324 |  |  | $ | 408,513 |  |  | $ | 12,327,869 |
(a) $22.7 million of HELOC loans were converted from revolving to term in 2020. The following table reflects the amortized cost basis by year of origination and refreshed FICO scores for credit card and other loans as of September 30, 2020.
|  | Credit Card and Other
(Dollars in thousands) |  | 2020 |  | 2019 |  | 2018 |  | 2017 |  | 2016 |  | Prior to 2016 |  | Revolving Loans |  | Revolving Loans converted to term loans (a) |  | Total
FICO score 740 or greater |  | $ | 45,014 |  |  | $ | 60,629 |  |  | $ | 67,379 |  |  | $ | 44,445 |  |  | $ | 27,990 |  |  | $ | 129,793 |  |  | $ | 143,754 |  |  | $ | 5,263 |  |  | $ | 524,267 |
FICO score 720-739 |  | 6,617 |  |  | 8,673 |  |  | 10,856 |  |  | 9,913 |  |  | 9,051 |  |  | 29,740 |  |  | 90,623 |  |  | 1,630 |  |  | 167,103 |
FICO score 700-719 |  | 6,172 |  |  | 9,215 |  |  | 9,903 |  |  | 8,635 |  |  | 4,567 |  |  | 42,102 |  |  | 41,039 |  |  | 1,731 |  |  | 123,364 |
FICO score 660-699 |  | 27,173 |  |  | 14,206 |  |  | 16,352 |  |  | 11,032 |  |  | 10,600 |  |  | 53,772 |  |  | 54,963 |  |  | 3,737 |  |  | 191,835 |
FICO score 620-659 |  | 3,526 |  |  | 5,559 |  |  | 7,990 |  |  | 5,761 |  |  | 12,823 |  |  | 29,168 |  |  | 19,492 |  |  | 1,406 |  |  | 85,725 |
FICO score less than 620 |  | 22,715 |  |  | 7,406 |  |  | 16,024 |  |  | 10,876 |  |  | 9,432 |  |  | 28,960 |  |  | 22,835 |  |  | 1,516 |  |  | 119,764 |
Total |  | $ | 111,217 |  |  | $ | 105,688 |  |  | $ | 128,504 |  |  | $ | 90,662 |  |  | $ | 74,463 |  |  | $ | 313,535 |  |  | $ | 372,706 |  |  | $ | 15,283 |  |  | $ | 1,212,058 |
(a) $5.3 million of other consumer loans were converted from revolving to term in 2020. The following table reflects the percentage of balances outstanding, by average refreshed FICO scores, for the HELOC and real estate installment classes of loans as of December 31, 2019.
|  | December 31, 2019
(Dollars in thousands) |  | HELOC |  | R/E Installment Loans (b)
FICO score 740 or greater |  | 62.0 | % |  | 71.9 | %
FICO score 720-739 |  | 8.6 |  |  | 8.3 |
FICO score 700-719 |  | 7.6 |  |  | 6.3 |
FICO score 660-699 |  | 10.8 |  |  | 8.1 |
FICO score 620-659 |  | 4.7 |  |  | 2.8 |
FICO score less than 620 (a) |  | 6.3 |  |  | 2.6 |
Total |  | 100.0 | % |  | 100.0 | %
(a) For this group, a majority of the loan balances had FICO scores at the time of the origination that exceeded 620 but have since deteriorated as the loans have seasoned. Nonaccrual and Past Due Loans and Leases Loans and leases are placed on nonaccrual if it becomes evident that full collection of principal and interest is at risk, 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 nonaccrual are loans for which FHN continues to receive payments including residential real estate loans where the borrower has been discharged of personal obligation through bankruptcy. Past due loans are loans contractually past due as to interest or principal payments, but which have not yet been put on nonaccrual status. The following table reflects accruing and non-accruing loans and leases by class on September 30, 2020:
|  | Accruing |  | Non-Accruing |  |
(Dollars in thousands) |  | Current |  | 30-89 Days Past Due |  | 90+ Days Past Due |  | Total Accruing |  | Current |  | 30-89 Days Past Due |  | 90+ Days Past Due |  | Total Non- Accruing |  | Total Loans
Commercial, financial, and industrial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
C&I (a) (b) |  | $ | 27,815,798 |  |  | $ | 19,892 |  |  | $ | 149 |  |  | $ | 27,835,839 |  |  | $ | 126,674 |  |  | $ | 25,327 |  |  | $ | 60,809 |  |  | $ | 212,810 |  |  | $ | 28,048,649 |
Loans to mortgage companies |  | 5,607,068 |  |  | — |  |  | — |  |  | 5,607,068 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 5,607,068 |
Total commercial and industrial |  | 33,422,866 |  |  | 19,892 |  |  | 149 |  |  | 33,442,907 |  |  | 126,674 |  |  | 25,327 |  |  | 60,809 |  |  | 212,810 |  |  | 33,655,717 |
Commercial real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
CRE |  | 12,444,693 |  |  | 15,133 |  |  | — |  |  | 12,459,826 |  |  | 42,517 |  |  | 2,531 |  |  | 6,013 |  |  | 51,061 |  |  | 12,510,887 |
Consumer real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
HELOC |  | 2,467,907 |  |  | 11,884 |  |  | 6,892 |  |  | 2,486,683 |  |  | 47,101 |  |  | 4,628 |  |  | 11,425 |  |  | 63,154 |  |  | 2,549,837 |
R/E installment loans |  | 9,631,513 |  |  | 22,922 |  |  | 6,663 |  |  | 9,661,098 |  |  | 54,606 |  |  | 3,394 |  |  | 58,934 |  |  | 116,934 |  |  | 9,778,032 |
Total consumer real estate |  | 12,099,420 |  |  | 34,806 |  |  | 13,555 |  |  | 12,147,781 |  |  | 101,707 |  |  | 8,022 |  |  | 70,359 |  |  | 180,088 |  |  | 12,327,869 |
Credit card and other: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Credit card |  | 267,880 |  |  | 1,513 |  |  | 789 |  |  | 270,182 |  |  | 242 |  |  | 38 |  |  | 49 |  |  | 329 |  |  | 270,511 |
Other |  | 936,179 |  |  | 2,698 |  |  | 122 |  |  | 938,999 |  |  | 963 |  |  | 682 |  |  | 903 |  |  | 2,548 |  |  | 941,547 |
Total credit card and other |  | 1,204,059 |  |  | 4,211 |  |  | 911 |  |  | 1,209,181 |  |  | 1,205 |  |  | 720 |  |  | 952 |  |  | 2,877 |  |  | 1,212,058 |
Total loans and leases, net of unearned income |  | $ | 59,171,038 |  |  | $ | 74,042 |  |  | $ | 14,615 |  |  | $ | 59,259,695 |  |  | $ | 272,103 |  |  | $ | 36,600 |  |  | $ | 138,133 |  |  | $ | 446,836 |  |  | $ | 59,706,531 |
(a) $125.7 million of C&I loans are nonaccrual loans that have been specifically reviewed for impairment with no related allowance. (b) C&I loans include $209.4 million in TRUPs loans, which are presented net of an amortizing discount of $18.2 million. The following table reflects accruing and non-accruing loans by class on December 31, 2019:
|  | Accruing |  | Non-Accruing |  |
(Dollars in thousands) |  | Current |  | 30-89 Days Past Due |  | 90+ Days Past Due |  | Total Accruing |  | Current |  | 30-89 Days Past Due |  | 90+ Days Past Due |  | Total Non- Accruing |  | Total Loans
Commercial, financial, and industrial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
C&I (a) |  | $ | 15,532,579 |  |  | $ | 7,155 |  |  | $ | 237 |  |  | $ | 15,539,971 |  |  | $ | 36,564 |  |  | $ | 14,385 |  |  | $ | 23,363 |  |  | $ | 74,312 |  |  | $ | 15,614,283 |
Loans to mortgage companies |  | 4,410,883 |  |  | — |  |  | — |  |  | 4,410,883 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 4,410,883 |
Purchased credit-impaired loans |  | 23,840 |  |  | 287 |  |  | 1,798 |  |  | 25,925 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 25,925 |
Total commercial and industrial |  | 19,967,302 |  |  | 7,442 |  |  | 2,035 |  |  | 19,976,779 |  |  | 36,564 |  |  | 14,385 |  |  | 23,363 |  |  | 74,312 |  |  | 20,051,091 |
Commercial real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
CRE |  | 4,329,531 |  |  | 686 |  |  | — |  |  | 4,330,217 |  |  | — |  |  | 485 |  |  | 1,340 |  |  | 1,825 |  |  | 4,332,042 |
Purchased credit-impaired loans |  | 4,752 |  |  | 128 |  |  | 95 |  |  | 4,975 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 4,975 |
Total commercial real estate |  | 4,334,283 |  |  | 814 |  |  | 95 |  |  | 4,335,192 |  |  | — |  |  | 485 |  |  | 1,340 |  |  | 1,825 |  |  | 4,337,017 |
Consumer real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
HELOC |  | 1,217,344 |  |  | 9,156 |  |  | 5,669 |  |  | 1,232,169 |  |  | 43,007 |  |  | 4,227 |  |  | 7,472 |  |  | 54,706 |  |  | 1,286,875 |
R/E installment loans |  | 4,812,446 |  |  | 12,894 |  |  | 9,170 |  |  | 4,834,510 |  |  | 20,710 |  |  | 1,076 |  |  | 9,202 |  |  | 30,988 |  |  | 4,865,498 |
Purchased credit-impaired loans |  | 18,720 |  |  | 2,770 |  |  | 3,276 |  |  | 24,766 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 24,766 |
Total consumer real estate |  | 6,048,510 |  |  | 24,820 |  |  | 18,115 |  |  | 6,091,445 |  |  | 63,717 |  |  | 5,303 |  |  | 16,674 |  |  | 85,694 |  |  | 6,177,139 |
Credit card and other: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Credit card |  | 198,917 |  |  | 1,076 |  |  | 1,178 |  |  | 201,171 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 201,171 |
Other |  | 291,700 |  |  | 1,802 |  |  | 337 |  |  | 293,839 |  |  | 101 |  |  | 44 |  |  | 189 |  |  | 334 |  |  | 294,173 |
Purchased credit-impaired loans |  | 323 |  |  | 98 |  |  | 99 |  |  | 520 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 520 |
Total credit card and other |  | 490,940 |  |  | 2,976 |  |  | 1,614 |  |  | 495,530 |  |  | 101 |  |  | 44 |  |  | 189 |  |  | 334 |  |  | 495,864 |
Total loans and leases, net of unearned income |  | $ | 30,841,035 |  |  | $ | 36,052 |  |  | $ | 21,859 |  |  | $ | 30,898,946 |  |  | $ | 100,382 |  |  | $ | 20,217 |  |  | $ | 41,566 |  |  | $ | 162,165 |  |  | $ | 31,061,111 |
Certain previously reported amounts have been reclassified to agree with current presentation. (a) C&I loans include $218.3 million in TRUPs loans, which are presented net of an amortizing discount of $19.1 million. Collateral-Dependent Loans Collateral-dependent loans are defined as loans for which repayment is expected to be derived substantially through the operation or sale of the collateral and where the borrower is experiencing financial difficulty. At a minimum, the estimated value of the collateral for each loan equals the current book value. As of September 30, 2020, FHN had C&I loans with amortized cost of approxima tely $247.7 million that was based on the value of underlying collateral. The collateral for these loans generally consists of business assets including land, buildings, equipment and financial assets. During the three and nine months ended September 30, 2020, respectively, FHN recognized charge-offs of approxima tely $18.1 million and $31.1 million on these loans related to reductions in estimated collateral values. Consumer HELOC and installment loans with amortized cost based on the value of underlying real estate collateral were approximat ely $9.7 million and $26.2 million, respectively, as of September 30, 2020. Charge-offs during the three and nine months ended September 30, 2020 were not significant for either portfolio segment. Troubled Debt Restructurings As part of FHN’s ongoing risk management practices, FHN attempts to work with borrowers when necessary 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. A modification is classified as a TDR if the borrower is experiencing financial difficulty and it is determined that FHN has granted a concession to the borrower. FHN may determine that a borrower is experiencing financial difficulty if the borrower is currently in default on any of its debt, or if it is probable that a borrower may default in the foreseeable future. Many aspects of a borrower’s financial situation are assessed when determining whether they are experiencing financial difficulty. Concessions could include extension of the maturity date, reductions of the interest rate (which may make the rate lower than current market for a new loan with similar risk), reduction or forgiveness of accrued interest, or principal forgiveness. The assessments of whether a borrower is experiencing (or is likely to experience) financial difficulty, and whether a concession has been granted, are subjective in nature and management’s judgment is required when determining whether a modification is classified as a TDR. In accordance with regulatory guidance, loans that were modified during the three and nine months ended September 30, 2020 whose modifications met criteria outlined in either the CARES Act or revised intreragency statement were not accounted for as a TDR and have been excluded from the disclosures below. On September 30, 2020 and December 31, 2019, FHN had $321.4 and $206.3 million of portfolio loans classified as TDRs, respectively. For TDRs in the loan portfolio, FHN had loan loss reserves of $12.6 million, or 4% as of September 30, 2020, and $19.7 million, or 10% as of December 31, 2019. Additionally, $44.1 million and $51.1 million of loans held for sale as of September 30, 2020 and December 31, 2019, respectively, were classified as TDRs. The following tables present the end of period balance for loans modified in a TDR during the periods indicated:
|  | Three Months Ended September 30, 2020 |  | Nine Months Ended September 30, 2020
(Dollars in thousands) |  | Number |  | Pre-Modification Outstanding Recorded Investment |  | Post-Modification Outstanding Recorded Investment |  | Number |  | Pre-Modification Outstanding Recorded Investment |  | Post-Modification Outstanding Recorded Investment
Commercial, financial, and industrial: |  |  |  |  |  |  |  |  |  |  |  |
C&I |  | 83 |  |  | $ | 130,281 |  |  | $ | 119,591 |  |  | 87 |  |  | $ | 140,857 |  |  | $ | 128,723 |
Total commercial and industrial |  | 83 |  |  | 130,281 |  |  | 119,591 |  |  | 87 |  |  | 140,857 |  |  | 128,723 |
Commercial real estate: |  |  |  |  |  |  |  |  |  |  |  |
CRE |  | 14 |  |  | 11,848 |  |  | 11,825 |  |  | 14 |  |  | 11,848 |  |  | 11,825 |
Total commercial real estate |  | 14 |  |  | 11,848 |  |  | 11,825 |  |  | 14 |  |  | 11,848 |  |  | 11,825 |
Consumer real estate: |  |  |  |  |  |  |  |  |  |  |  |
HELOC |  | 35 |  |  | 2,623 |  |  | 2,584 |  |  | 47 |  |  | 3,687 |  |  | 3,626 |
R/E installment loans |  | 44 |  |  | 6,075 |  |  | 6,022 |  |  | 94 |  |  | 15,379 |  |  | 15,260 |
Total consumer real estate |  | 79 |  |  | 8,698 |  |  | 8,606 |  |  | 141 |  |  | 19,066 |  |  | 18,886 |
Credit card and other |  | 10 |  |  | 80 |  |  | 76 |  |  | 50 |  |  | 334 |  |  | 313 |
Total troubled debt restructurings |  | 186 |  |  | $ | 150,907 |  |  | $ | 140,098 |  |  | 292 |  |  | $ | 172,105 |  |  | $ | 159,747 |
|  | Three Months Ended September 30, 2019 |  | Nine Months Ended September 30, 2019
(Dollars in thousands) |  | Number |  | Pre-Modification Outstanding Recorded Investment |  | Post-Modification Outstanding Recorded Investment |  | Number |  | Pre-Modification Outstanding Recorded Investment |  | Post-Modification Outstanding Recorded Investment
Commercial, financial, and industrial: |  |  |  |  |  |  |  |  |  |  |  |
C&I |  | 1 |  |  | $ | 62 |  |  | $ | 59 |  |  | 4 |  |  | $ | 14,179 |  |  | $ | 14,101 |
Total commercial and industrial |  | 1 |  |  | 62 |  |  | 59 |  |  | 4 |  |  | 14,179 |  |  | 14,101 |
Consumer real estate: |  |  |  |  |  |  |  |  |  |  |  |
HELOC |  | 13 |  |  | 1,638 |  |  | 1,631 |  |  | 57 |  |  | 7,013 |  |  | 6,950 |
R/E installment loans |  | 16 |  |  | 1,771 |  |  | 1,854 |  |  | 82 |  |  | 10,730 |  |  | 10,790 |
Total consumer real estate |  | 29 |  |  | 3,409 |  |  | 3,485 |  |  | 139 |  |  | 17,743 |  |  | 17,740 |
Credit card and other |  | 35 |  |  | 134 |  |  | 126 |  |  | 68 |  |  | 317 |  |  | 300 |
Total troubled debt restructurings |  | 65 |  |  | $ | 3,605 |  |  | $ | 3,670 |  |  | 211 |  |  | $ | 32,239 |  |  | $ | 32,141 |
The following tables present TDRs which re-defaulted during the three and nine months ended September 30, 2020 and 2019, a nd as to which the modification occurred 12 months or less prior to the re-default. For purposes of this disclosure, FHN generally defines payment default as 30 or more days past due.
|  | Three Months Ended September 30, 2020 |  | Nine Months Ended September 30, 2020
(Dollars in thousands) |  | Number |  | Recorded Investment |  | Number |  | Recorded Investment
Commercial (C&I): |  |  |  |  |  |  |  |
General C&I |  | — |  |  | $ | — |  |  | — |  |  | $ | — |
Total commercial (C&I) |  | — |  |  | — |  |  | — |  |  | — |
Consumer real estate: |  |  |  |  |  |  |  |
HELOC |  | 1 |  |  | 32 |  |  | 8 |  |  | 34 |
R/E installment loans |  | 6 |  |  | 839 |  |  | 16 |  |  | 841 |
Total consumer real estate |  | 7 |  |  | 871 |  |  | 24 |  |  | 875 |
Credit card & other |  | 7 |  |  | 24 |  |  | 21 |  |  | 24 |
Total troubled debt restructurings |  | 14 |  |  | $ | 895 |  |  | 45 |  |  | $ | 899 |
|  | Three Months Ended September 30, 2019 |  | Nine Months Ended September 30, 2019
(Dollars in thousands) |  | Number |  | Recorded Investment |  | Number |  | Recorded Investment
Commercial (C&I): |  |  |  |  |  |  |  |
General C&I |  | — |  |  | $ | — |  |  | — |  |  | $ | — |
Total commercial (C&I) |  | — |  |  | — |  |  | — |  |  | — |
Consumer real estate: |  |  |  |  |  |  |  |
HELOC |  | 2 |  |  | 99 |  |  | 4 |  |  | 198 |
R/E installment loans |  | 1 |  |  | 7 |  |  | 2 |  |  | 45 |
Total consumer real estate |  | 3 |  |  | 106 |  |  | 6 |  |  | 243 |
Credit card & other |  | 8 |  |  | 45 |  |  | 23 |  |  | 77 |
Total troubled debt restructurings |  | 11 |  |  | $ | 151 |  |  | 29 |  |  | $ | 320 |
Loans Acquired with Deteriorated Credit Quality Upon FHN's adoption of CECL, purchased credit deteriorated ("PCD") loans are recorded at an initial amortized cost, which is the sum of the purchase price and the estimated credit losses recorded in the ALLL. Subsequent to this initial recognition, PCD loans are accounted for under the same methodology as non-PCD loans. As discussed in Note 2, on July 1, 2020, FHN and IBKC closed their merger-of-equals transaction. On July 17, 2020, First Horizon Bank completed its purchase of 30 branches from Truist Bank. In connection with these transactions, FHN acquired approximately $25.9 billion in loans from IBKC and purchased approximately $423.4 million of branch loans from Truist Bank. For PCD loans acquired or purchased during the third quarter of 2020, a reconciliation of the unpaid principal balance, contractual cash flow owed to FHN at acquisition date, and purchase price is presented in the following table.
|  | Three Months Ended September 30, 2020
(Dollars in thousands) |  | C&I |  | CRE |  | Consumer Real Estate |  | Credit Card and Other |  |  |  |  |  |  |  |  |  | Total
Par value (UPB) |  | $ | 4,074,927 |  |  | $ | 6,435,556 |  |  | $ | 2,393,677 |  |  | $ | 192,980 |  |  |  |  |  |  |  |  |  |  | $ | 13,097,140 |
Allowance for Loan Losses (a) |  | (137,702) |  |  | (100,123) |  |  | (44,141) |  |  | (4,845) |  |  |  |  |  |  |  |  |  |  | (286,811) |
(Discount) Premium |  | (64,328) |  |  | 3,485 |  |  | (31,764) |  |  | (3) |  |  |  |  |  |  |  |  |  |  | (92,610) |
Purchase Price |  | $ | 3,872,897 |  |  | $ | 6,338,918 |  |  | $ | 2,317,772 |  |  | $ | 188,132 |  |  |  |  |  |  |  |  |  |  | $ | 12,717,719 |
Purchased Credit-Impaired Loans Before the adoption of CECL on January 1, 2020, FHN applied the guidance in ASC 310-30 to loans that were identified as PCI loans at the acquisition date. The following table presents a rollforward of the accretable yield for the year ended December 31, 2019:
|  | Year Ended
(Dollars in thousands) |  | 2019
Balance, beginning of period |  | $ | 13,375 |
Accretion |  | (5,792) |
Adjustment for payoffs |  | (2,438) |
Adjustment for charge-offs |  | (479) |
Adjustment for pool excess recovery (a) |  | — |
Increase in accretable yield (b) |  | 5,513 |
Disposals |  | (4) |
Other |  | (367) |
Balance, end of period |  | $ | 9,808 |
(a) Represents the removal of accretable difference for the remaining loans in a pool which is now in a recovery state. (b) Includes changes in the accretable yield due to both transfers from the nonaccretable difference and the impact of changes in the expected timing of the cash flows. At December 31, 2019, the ALLL related to PCI loans was $2.0 million. Net charge-offs related to PCI loans during 2019 were $5.8 million. The loan loss provision expense related to PCI loans during 2019 was $1.3 million. The following table reflects the outstanding principal balance and carrying amounts of the acquired PCI loans as of December 31, 2019:
|  | December 31, 2019
(Dollars in thousands) |  | Carrying value |  | Unpaid balance
Commercial, financial and industrial |  | $ | 24,973 |  |  | $ | 25,938 |
Commercial real estate |  | 5,078 |  |  | 5,466 |
Consumer real estate |  | 23,681 |  |  | 26,245 |
Credit card and other |  | 489 |  |  | 567 |
Total |  | $ | 54,221 |  |  | $ | 58,216 |
Impaired Loans The following tables provide additional disclosures previously required by ASC Topic 310 related to FHN's December 31, 2019 balances. Information on impaired loans at December 31, 2019 was as follows:
|  |  |  | December 31, 2019
(Dollars in thousands) |  |  |  |  |  |  |  | Recorded Investment |  | Unpaid Principal Balance |  | Related Allowance
Impaired loans with no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |
C&I |  |  |  |  |  |  |  | $ | 52,672 |  |  | $ | 63,602 |  |  | $ | — |
CRE |  |  |  |  |  |  |  | 1,563 |  |  | 1,563 |  |  | — |
Total |  |  |  |  |  |  |  | $ | 54,235 |  |  | $ | 65,165 |  |  | $ | — |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |
HELOC (a) |  |  |  |  |  |  |  | $ | 4,940 |  |  | $ | 10,438 |  |  | $ | — |
R/E installment loans (a) |  |  |  |  |  |  |  | 7,593 |  |  | 10,054 |  |  | — |
Total |  |  |  |  |  |  |  | $ | 12,533 |  |  | $ | 20,492 |  |  | $ | — |
Impaired loans with related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |
C&I |  |  |  |  |  |  |  | $ | 29,766 |  |  | $ | 31,536 |  |  | $ | 6,196 |
CRE |  |  |  |  |  |  |  | — |  |  | — |  |  | — |
Total |  |  |  |  |  |  |  | $ | 29,766 |  |  | $ | 31,536 |  |  | $ | 6,196 |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |
HELOC |  |  |  |  |  |  |  | $ | 55,522 |  |  | $ | 59,122 |  |  | $ | 7,016 |
R/E installment loans |  |  |  |  |  |  |  | 94,191 |  |  | 104,121 |  |  | 12,282 |
Credit card & other |  |  |  |  |  |  |  | 653 |  |  | 653 |  |  | 422 |
Total |  |  |  |  |  |  |  | $ | 150,366 |  |  | $ | 163,896 |  |  | $ | 19,720 |
Total commercial |  |  |  |  |  |  |  | $ | 84,001 |  |  | $ | 96,701 |  |  | $ | 6,196 |
Total consumer |  |  |  |  |  |  |  | $ | 162,899 |  |  | $ | 184,388 |  |  | $ | 19,720 |
Total impaired loans |  |  |  |  |  |  |  | $ | 246,900 |  |  | $ | 281,089 |  |  | $ | 25,916 |
(a)All discharged bankruptcy loans are charged down to an estimate of net realizable value and do not carry any allowance.
|  |  |  |  | Three Months Ended September 30, |  | Nine Months Ended September 30
|  |  |  | 2019 |  | 2019
(Dollars in thousands) |  |  |  |  |  | Average Recorded Investment |  | Interest Income Recognized |  | Average Recorded Investment |  | Interest Income Recognized
Impaired loans with no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |
C&I |  |  |  |  |  | $ | 64,558 |  |  | $ | 173 |  |  | $ | 62,553 |  |  | $ | 530 |
Loans to mortgage companies |  |  |  |  |  | 18,628 |  |  | — |  |  | 12,419 |  |  | — |
CRE |  |  |  |  |  | 1,690 |  |  | 3 |  |  | 1,576 |  |  | 30 |
Total |  |  |  |  |  | $ | 84,876 |  |  | $ | 176 |  |  | $ | 76,548 |  |  | $ | 560 |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |
HELOC (a) |  |  |  |  |  | $ | 6,495 |  |  | $ | — |  |  | $ | 6,852 |  |  | $ | — |
R/E installment loans (a) |  |  |  |  |  | 8,147 |  |  | — |  |  | 8,564 |  |  | — |
Total |  |  |  |  |  | $ | 14,642 |  |  | $ | — |  |  | $ | 15,416 |  |  | $ | — |
Impaired loans with related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |
C&I |  |  |  |  |  | $ | 14,620 |  |  | $ | 4 |  |  | $ | 10,892 |  |  | $ | 4 |
TRUPS |  |  |  |  |  | 2,750 |  |  | — |  |  | 2,806 |  |  | — |
CRE |  |  |  |  |  | 169 |  |  | — |  |  | 294 |  |  | 9 |
Total |  |  |  |  |  | $ | 17,539 |  |  | $ | 4 |  |  | $ | 13,992 |  |  | $ | 13 |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |
HELOC |  |  |  |  |  | $ | 60,312 |  |  | $ | 449 |  |  | $ | 62,650 |  |  | $ | 1,475 |
R/E installment loans |  |  |  |  |  | 102,576 |  |  | 787 |  |  | 106,175 |  |  | 2,424 |
Credit card & other |  |  |  |  |  | 710 |  |  | 4 |  |  | 697 |  |  | 13 |
Total |  |  |  |  |  | $ | 163,598 |  |  | $ | 1,240 |  |  | $ | 169,522 |  |  | $ | 3,912 |
Total commercial |  |  |  |  |  | $ | 102,415 |  |  | $ | 180 |  |  | $ | 90,540 |  |  | $ | 573 |
Total consumer |  |  |  |  |  | $ | 178,240 |  |  | $ | 1,240 |  |  | $ | 184,938 |  |  | $ | 3,912 |
Total impaired loans |  |  |  |  |  | $ | 280,655 |  |  | $ | 1,420 |  |  | $ | 275,478 |  |  | $ | 4,485 |
(a)All discharged bankruptcy loans are charged down to an estimate of net realizable value and do not carry any allowance.

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