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Acquisitions and Divestitures | 3 Months Ended
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Mar. 31, 2021
Business Combinations [Abstract] |
Acquisitions and Divestitures | Acquisitions and Divestitures On July 1, 2020, FHN and IBERIABANK Corporation closed their merger-of-equals transaction. FHN issued approximately 243 million shares of FHN common stock, plus three new series of preferred stock (Series B, Series C, and Series D) in a transaction valued at $2.5 billion. At the time of closing, IBKC operated 319 offices in 12 states, mostly in the southern U.S. The merger-of-equals transaction has been accounted for as a business combination. Accordingly, the assets acquired and liabilities assumed are generally presented at their fair values as of the merger date. The determination of fair value requires management to make estimates about discount rates, future expected cash flows, market conditions and other future events that are highly subjective in nature and subject to change. The following schedule details a preliminary allocation of merger consideration to the valuations of the identifiable tangible and intangible assets acquired and liabilities assumed from IBKC as of July 1, 2020.
(Dollars in millions) |  |  |  |  |  | IBERIABANK Corporation
Assets: |  |  |  |  |  |
Cash and due from banks |  |  |  |  |  | $ | 395 |
Interest-bearing deposits with banks |  |  |  |  |  | 1,683 |
Securities available for sale at fair value |  |  |  |  |  | 3,544 |
Loans held for sale |  |  |  |  |  | 320 |
Loans and leases (a) |  |  |  |  |  | 25,921 |
Allowance for loan and lease losses |  |  |  |  |  | (284) |
Other intangible assets |  |  |  |  |  | 240 |
Premises and equipment |  |  |  |  |  | 311 |
OREO |  |  |  |  |  | 9 |
Other assets |  |  |  |  |  | 1,156 |
Total assets acquired |  |  |  |  |  | $ | 33,295 |
Liabilities: |  |  |  |  |  |
Deposits |  |  |  |  |  | $ | 28,232 |
Short-term borrowings |  |  |  |  |  | 209 |
Term borrowings |  |  |  |  |  | 1,200 |
Other liabilities |  |  |  |  |  | 618 |
Total liabilities assumed |  |  |  |  |  | $ | 30,259 |
Net assets acquired |  |  |  |  |  | $ | 3,036 |
Consideration paid: |  |  |  |  |  |
Consideration for outstanding common stock |  |  |  |  |  | $ | 2,243 |
Consideration for equity awards |  |  |  |  |  | 28 |
Consideration for preferred stock |  |  |  |  |  | 231 |
Total consideration paid |  |  |  |  |  | $ | 2,502 |
Preliminary purchase accounting gain |  |  |  |  |  | $ | (534) |
(a) Includes $1.3 billion of initial net investments in sales-type and direct financing leases. In relation to the merger-of-equals transaction, FHN recorded a preliminary $533 million purchase accounting gain in 2020 and an additional $1 million purchase accounting gain during the first quarter of 2021, representing the shortfall of the purchase price under the acquisition accounting value of net assets acquired, net of deferred taxes. The preliminary purchase accounting gain is not taxable. Due to the fact that certain back office functions (including loan processing) have not been integrated, the ongoing evaluation of post-merger activity, and the extended information gathering and management review processes required to properly record acquired assets and liabilities, FHN considers its valuations of IBKC's loans and leases, other assets, tax receivables and payables, other liabilities and acquired contingencies to be provisional as management continues to identify and assess information regarding the nature of these assets and liabilities and reviews the associated valuation assumptions and methodologies. Accordingly, the amounts recorded for current and deferred tax assets and liabilities are also considered provisional as FHN continues to evaluate the nature and extent of permanent and temporary (timing) differences between the book and tax bases of the acquired assets and liabilities assumed. Additionally, the accounting policies of both FHN and IBKC are in the process of being reviewed in detail. Upon completion of such review, conforming adjustments or financial statement reclassification may be determined. All measurement period adjustments made during the first three months of 2021 have been deemed insignificant individually and in the aggregate. FHN will finalize its valuation of the IBKC merger-of-equals transaction within the measurement period (i.e., no later than July 1, 2021). See Note 2, Acquisitions and Divestitures, in the 2020 Annual Report on Form 10-K for the year ended December 31, 2020, for a description of the methods used to determine the fair values of significant assets acquired and liabilities assumed presented above. On July 17, 2020, First Horizon Bank completed its purchase of 30 branches from Truist Bank. As of December 31, 2020, the valuation of the acquired assets and liabilities assumed from the Truist branches acquisition was final. In relation to the acquisition, FHN recorded $78 million in goodwill, representing the excess of acquisition consideration over the estimated fair value of net assets acquired. All goodwill has been attributed to FHN's Regional Banking segment (refer to Note 7 - Intangible Assets for additional information). This goodwill was the result of expected synergies, operational efficiencies and other factors. Expenses related to FHN's merger and integration activities are recorded in FHN's Corporate segment. Total merger and integration expense recognized for the three months ended March 31, 2021 and 2020 are presented in the table below:
|  | Three Months Ended March 31, |  |
(Dollars in millions) |  | 2021 |  | 2020 |  |  |  |
Personnel expense (a) |  | $ | 21 |  |  | $ | 1 |  |  |  |  |
Legal and professional fees (b) |  | 3 |  |  | 2 |  |  |  |  |
Net occupancy expense (c) |  | 3 |  |  | — |  |  |  |  |
Other expense (d) |  | 43 |  |  | 3 |  |  |  |  |
Total |  | $ | 70 |  |  | $ | 6 |  |  |  |  |
Certain previously reported amounts have been reclassified to agree with current presentation. (a) Primarily comprised of fees for severance and retention. (b) Primarily comprised of fees for legal, accounting, and merger consultants. (c) Primarily relates to expenses associated with lease exits. (d) Consists of fees for operations services, communications and delivery, equipment rentals, depreciation and maintenance, supplies, travel and entertainment, computer software, advertising and public relations, contract termination charges, internal technology development costs, costs of shareholder matters and asset impairments.

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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