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Allowance for Credit Losses | 12 Months Ended
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Dec. 31, 2022
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 reserve for unfunded lending commitments, collectively referred to as the Allowance for Credit Losses, or the ACL. See Note 1 - Significant Accounting Policies for further discussion of FHN's ACL methodology. 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. The expected loan losses are the product of multiplying FHN’s estimates of probability of default (PD), loss given default (LGD), and individual loan level exposure as default (EAD), including amortization and prepayment assumptions, on an undiscounted basis. FHN uses models or assumptions to develop the expected loss forecasts, which incorporate multiple macroeconomic forecasts over a four-year reasonable and supportable forecast period. After the reasonable and supportable forecast period, the Company immediately reverts to its historical loss averages, evaluated over the historical observation period, for the remaining estimated life of the loans. In order to capture the unique risks of the loan portfolio within the PD, LGD, and prepayment models, FHN segments the portfolio into pools, generally incorporating loan grades for commercial loans. As there can be no certainty that actual economic performance will precisely follow any specific macroeconomic forecast, FHN uses qualitative adjustments where current loan characteristics or current or forecasted economic conditions differ from historical periods. The evaluation of quantitative and qualitative information is performed through assessments of groups of assets that share similar risk characteristics and certain individual loans and leases that do not share similar risk characteristics with the collective group. As described in Note 3 - Loans and Leases, loans are grouped generally by product type and significant loan portfolios are assessed for credit losses using analytical or statistical models. The quantitative component utilizes economic forecast information as its foundation, and is primarily based on analytical models that use known or estimated data as of the balance sheet date and forecasted data over the reasonable and supportable period. The ACL is also affected by qualitative factors that FHN considers to reflect current judgment of various events and risks that are not measured in the quantitative calculations, including alternative economic forecasts. 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. 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 year ended December 31, 2022 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 ACL balance as of December 31, 2022 as compared to December 31, 2021 reflects the impact of loan growth and deterioration in the macroeconomic forecast. In developing credit loss estimates for its loan and lease portfolios, FHN utilized three Moody’s forecast scenarios for its macroeconomic inputs. As of December 31, 2022, FHN's scenario selection process focused on key economic drivers such as unemployment and economic activity including recession risk. Risks considered include: the effects of inflation, rising interest rates, supply chain disruptions, labor/wage constraints, and international conflict. FHN selected one scenario as its base case, which was the Moody's baseline growth scenario. The heaviest weight was placed on the base case forecast, which assumed positive real GDP growth over the forecast horizon. Lower weightings were applied to more positive and more negative macroeconomic scenarios. During the year ended December 31, 2021, FHN 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. The following table provides a rollforward of the ALLL and the reserve for unfunded lending commitments by portfolio type for December 31, 2022, 2021 and 2020: Table 8.4.1 ROLLFORWARD OF ALLL & RESERVE FOR UNFUNDED LENDING COMMITMENTS
(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, 2022 |  | $ | 334 |  |  | $ | 154 |  |  | $ | 163 |  |  | $ | 19 |  |  | $ | 670 |
Charge-offs |  | (62) |  |  | (1) |  |  | (5) |  |  | (25) |  |  | (93) |
Recoveries |  | 9 |  |  | 1 |  |  | 19 |  |  | 5 |  |  | 34 |
Provision for loan and lease losses |  | 27 |  |  | (8) |  |  | 23 |  |  | 32 |  |  | 74 |
Balance as of December 31, 2022 |  | 308 |  |  | 146 |  |  | 200 |  |  | 31 |  |  | 685 |
Reserve for remaining unfunded commitments: |  |  |  |  |  |  |  |  |  |
Balance as of January 1, 2022 |  | 46 |  |  | 12 |  |  | 8 |  |  | — |  |  | 66 |
Provision for unfunded lending commitments |  | 9 |  |  | 10 |  |  | 2 |  |  | — |  |  | 21 |
Balance as of December 31, 2022 |  | 55 |  |  | 22 |  |  | 10 |  |  | — |  |  | 87 |
Allowance for credit losses as of December 31, 2022 |  | $ | 363 |  |  | $ | 168 |  |  | $ | 210 |  |  | $ | 31 |  |  | $ | 772 |
Allowance for loan and lease losses: |  |  |  |  |  |  |  |  |  |
Balance as of January 1, 2021 |  | $ | 453 |  |  | $ | 242 |  |  | $ | 242 |  |  | $ | 26 |  |  | $ | 963 |
Charge-offs |  | (34) |  |  | (5) |  |  | (5) |  |  | (15) |  |  | (59) |
Recoveries |  | 21 |  |  | 5 |  |  | 27 |  |  | 4 |  |  | 57 |
Provision for loan and lease losses |  | (106) |  |  | (88) |  |  | (101) |  |  | 4 |  |  | (291) |
Balance as of December 31, 2021 |  | 334 |  |  | 154 |  |  | 163 |  |  | 19 |  |  | 670 |
Reserve for remaining unfunded commitments: |  |  |  |  |  |  |  |  |  |
Balance as of January 1, 2021 |  | 65 |  |  | 10 |  |  | 10 |  |  | — |  |  | 85 |
Provision for unfunded lending commitments |  | (19) |  |  | 2 |  |  | (2) |  |  | — |  |  | (19) |
Balance as of December 31, 2021 |  | 46 |  |  | 12 |  |  | 8 |  |  | — |  |  | 66 |
Allowance for credit losses as of December 31, 2021 |  | $ | 380 |  |  | $ | 166 |  |  | $ | 171 |  |  | $ | 19 |  |  | $ | 736 |
Allowance for loan and lease losses |  |  |  |  |  |  |  |  |  |
Balance as of January 1, 2020 |  | $ | 123 |  |  | $ | 36 |  |  | $ | 28 |  |  | $ | 13 |  |  | $ | 200 |
Adoption of ASU 2016-13 |  | 19 |  |  | (7) |  |  | 93 |  |  | 2 |  |  | 107 |
Balance as of January 1, 2020, as adjusted |  | 142 |  |  | 29 |  |  | 121 |  |  | 15 |  |  | 307 |
Charge-offs (b) |  | (129) |  |  | (5) |  |  | (8) |  |  | (14) |  |  | (156) |
Recoveries |  | 9 |  |  | 4 |  |  | 18 |  |  | 5 |  |  | 36 |
Initial allowance on loans purchased with credit deterioration (b) |  | 138 |  |  | 100 |  |  | 44 |  |  | 5 |  |  | 287 |
Provision for loan and lease losses (c) |  | 293 |  |  | 114 |  |  | 67 |  |  | 15 |  |  | 489 |
Balance as of December 31, 2020 |  | 453 |  |  | 242 |  |  | 242 |  |  | 26 |  |  | 963 |
Reserve for remaining unfunded commitments: |  |  |  |  |  |  |  |  |  |
Balance as of January 1, 2020 |  | 4 |  |  | 2 |  |  | — |  |  | — |  |  | 6 |
Adoption of ASU 2016-13 |  | 17 |  |  | 1 |  |  | 6 |  |  | — |  |  | 24 |
Balance as of January 1, 2020, as adjusted |  | 21 |  |  | 3 |  |  | 6 |  |  | — |  |  | 30 |
Initial reserve on loans acquired |  | 12 |  |  | 26 |  |  | 3 |  |  | — |  |  | 41 |
Provision for unfunded lending commitments |  | 32 |  |  | (19) |  |  | 1 |  |  | — |  |  | 14 |
Balance as of December 31, 2020 |  | 65 |  |  | 10 |  |  | 10 |  |  | — |  |  | 85 |
Allowance for credit losses as of December 31, 2020 |  | $ | 518 |  |  | $ | 252 |  |  | $ | 252 |  |  | $ | 26 |  |  | $ | 1,048 |
(a) C&I loans as of December 31, 2022, 2021 and 2020 include $76 million, $1.0 billion, and $4.1 billion in PPP loans, respectively, 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) The year ended December 31, 2020 excludes day 1 charge-offs and the related initial allowance on PCD loans is net of these amounts. Under ASC 326, the initial ALLL recognized on PCD assets included an additional $237 million for charged-off loans that had been written off prior to acquisition (whether full or partial) or which met FHN's charge-off policy at the time of acquisition. After charging these amounts off immediately upon acquisition, the net impact was $287 million of additional ALLL for PCD loans. (c) Provision for loan and lease losses for the year ended December 31, 2020 includes $147 million recognized on non-PCD loans from the IBKC merger and Truist branch acquisition.

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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 https://asc.fasb.org/topic&trid=2196771 + Details
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