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Allowance for Credit Losses | 3 Months Ended
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Mar. 31, 2021
Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract] |
Allowance for Credit Losses | Allowance for Credit Losses Management's estimate of expected credit losses in the loan and lease portfolios is recorded in the ALLL and the RULC, collectively the ACL. The ALLL and the RULC are reported on the Consolidated Balance Sheets in the Allowance for loan and lease losses and in Other liabilities, respectively. Provision for credit losses related to the loans and leases portfolio and the unfunded lending commitments are reported in the Consolidated Statements of Income as Provision for credit losses. The ACL is maintained at a level management believes to be appropriate to absorb expected lifetime credit losses over the contractual life of the loan and lease portfolio and unfunded lending commitments. The determination of the ACL is based on periodic evaluation of the loan and lease portfolios and unfunded lending commitments considering a number of relevant underling factors, including key assumptions and evaluation of quantitative and qualitative information. In accordance with its accounting policy elections, FHN does not recognize a separate allowance for expected credit losses for AIR and records reversals of AIR as reductions of interest income. FHN reverses previously accrued but uncollected interest when an asset is placed on nonaccrual status. As of March 31, 2021 and December 31, 2020, FHN recognized approximately $1 million in allowance for expected credit losses on COVID-19 deferrals that do not qualify for the election which is not reflected in the table below. AIR and the related allowance for expected credit losses is included as a component of Other assets. The total amount of interest reversals from loans placed on nonaccrual status and the amount of income recognized on nonaccrual loans during the three months ended ended March 31, 2021 and 2020 were not material. Expected credit losses for unfunded commitments are estimated for periods where the commitment is not unconditionally cancellable. The measurement of expected credit losses for unfunded commitments mirrors that of loans and leases with the additional estimate of future draw rates (timing and amount). The following table provides a rollforward of the ALLL and RULC by portfolio type for the three months ended March 31, 2021 and 2020:
(Dollars in millions) |  | Commercial, Financial, and Industrial (a) |  | Commercial Real Estate |  | Consumer Real Estate |  | Credit Card and Other |  | Total
Allowance for loan and lease losses: |  |  |  |  |  |  |  |  |  |
Balance as of January 1, 2021 |  | $ | 453 |  |  | $ | 242 |  |  | $ | 242 |  |  | $ | 26 |  |  | $ | 963 |
Charge-offs |  | (16) |  |  | (3) |  |  | (1) |  |  | (3) |  |  | (23) |
Recoveries |  | 6 |  |  | 2 |  |  | 6 |  |  | 1 |  |  | 15 |
Provision (provision credit) for loan and lease losses |  | (1) |  |  | (8) |  |  | (25) |  |  | (6) |  |  | (41) |
Balance as of March 31, 2021 |  | $ | 442 |  |  | $ | 232 |  |  | $ | 222 |  |  | $ | 18 |  |  | $ | 914 |
Reserve for remaining unfunded commitments: |  |  |  |  |  |  |  |  |  |
Balance as of January 1, 2021 |  | $ | 65 |  |  | $ | 10 |  |  | $ | 10 |  |  | $ | — |  |  | $ | 85 |
Provision (provision credit) for remaining unfunded commitments |  | (3) |  |  | 1 |  |  | (2) |  |  | — |  |  | (4) |
Balance as of March 31, 2021 |  | $ | 62 |  |  | $ | 11 |  |  | $ | 8 |  |  | $ | — |  |  | $ | 81 |
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |
Balance as of January 1, 2020, as adjusted (b) |  | $ | 142 |  |  | $ | 29 |  |  | $ | 121 |  |  | $ | 15 |  |  | $ | 307 |
Charge-offs |  | (7) |  |  | (1) |  |  | (2) |  |  | (4) |  |  | (14) |
Recoveries |  | 1 |  |  | 1 |  |  | 3 |  |  | 1 |  |  | 6 |
Provision for loan losses |  | 119 |  |  | 19 |  |  | — |  |  | 7 |  |  | 145 |
Balance as of March 31, 2020 |  | $ | 255 |  |  | $ | 48 |  |  | $ | 122 |  |  | $ | 19 |  |  | $ | 444 |
Reserve for remaining unfunded commitments: |  |  |  |  |  |  |  |  |  |
Balance as of January 1, 2020, as adjusted (b) |  | $ | 21 |  |  | $ | 3 |  |  | $ | 6 |  |  | $ | — |  |  | $ | 30 |
Provision for remaining unfunded commitments |  | 6 |  |  | 3 |  |  | — |  |  | — |  |  | 9 |
Balance as of March 31, 2020 |  | $ | 27 |  |  | $ | 6 |  |  | $ | 6 |  |  | $ | — |  |  | $ | 39 |
(a) C&I loans as of March 31, 2021 include $5.1 billion in PPP loans which due to the government guarantee and forgiveness provisions are considered to have no credit risk and therefore have no allowance for loan and lease losses. (b) Balance, as adjusted, reflects the adoption of ASU 2016-13 (CECL) effective January 1, 2020. The difference in the ACL as of March 31, 2021 as compared to December 31, 2020 reflects improvement in the macroeconomic outlook. In developing credit loss estimates for its loan and lease portfolios, FHN selected Moody’s baseline forecast as the primary source for its macroeconomic inputs, which included assumptions that were generally in line with Blue Chip Economic Indicators, including unemployment rates for 2021 and 2022 and GDP growth rates for the same periods, as well as assumptions around further business disruption related to COVID-19 and an unchanged target Fed funds range until mid 2023. As there can be no certainty that actual economic performance will precisely follow any specific macroeconomic forecast, FHN also evaluated other macroeconomic forecasts provided by Moody’s and adjusted the modeled outputs through a qualitative adjustment to account for uncertainties inherent in the macroeconomic forecast process. Additionally, where macroeconomic forecast variables used in the models did not take into effect the impact of federal stimulus and bank-supported payment deferral and forbearance programs on the timing of grade migration and recognition of loss content, management adjusted model outputs qualitatively to account for this assistance. During the year ended December 31, 2020 and the three months ended March 31, 2021, FHN also considered stressed loan portfolios or industries that are most exposed to the effects of the COVID-19 pandemic and added qualitative adjustments, where needed, to account for the risks not captured in modeled results. Management also made qualitative adjustments to reflect estimated recoveries based on a review of prior charge off and recovery levels, for default risk associated with large balances with individual borrowers, for estimated loss amounts not reflected in historical factors due to specific portfolio risk, and for instances where limited data for acquired loans is considered to affect modeled results.

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- Definition The entire disclosure for allowance for credit losses. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -URI http://asc.fasb.org/topic&trid=2196771 + Details
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