Premises, Equipment, and Leases

12 Months Ended

Dec. 31, 2022

Property, Plant and Equipment [Abstract]

Premises, Equipment, and Leases

Premises, Equipment, and Leases

Premises and equipment were comprised of the following at December 31, 2022 and 2021:

Table 8.5.1

PREMISES & EQUIPMENT

(Dollars in millions)	December 31, 2022		December 31, 2021
Land	$	163	$	163
Buildings	544		543
Leasehold improvements	82		74
Furniture, fixtures, and equipment	277		276
Fixed assets held for sale (a)	1		16
Total premises and equipment	1,067		1,072
Less accumulated depreciation and amortization	(455)		(407)
Premises and equipment, net	$	612	$	665

(a) Primarily comprised of land and buildings.

In 2022 and 2021, FHN recognized less than $1 million and $37 million, respectively, of fixed asset impairments and lease abandonment charges related to branch closures which were included in other expense on the Consolidated Statements of Income. In 2022 and 2021, FHN had $1 million and $6 million, respectively, of net gains related to the sales of bank branches which was included in other income on the Consolidated Statements of Income.

First Horizon as Lessee

FHN has operating, financing, and short-term leases for branch locations, corporate offices and certain equipment. Substantially all of these leases are classified as operating leases.

The following table provides details of the classification of FHN's right-of-use assets and lease liabilities included in the Consolidated Balance Sheets.

Table 8.5.2

RIGHT-OF-USE ASSETS & LEASE LIABILITIES

(Dollars in millions)		December 31, 2022		December 31, 2021
Lease right-of-use assets:	Classification
Operating lease right-of-use assets	Other assets	$	331	$	345
Finance lease right-of-use assets	Other assets	3		3
Total lease right-of-use assets		$	334	$	348
Lease liabilities:
Operating lease liabilities	Other liabilities	$	367	$	382
Finance lease liabilities	Other liabilities	4		4
Total lease liabilities		$	371	$	386

The calculated amount of the ROU assets and lease liabilities in the table above are impacted by the length of the lease term and the discount rate used to present value the minimum lease payments. The following table details the weighted average remaining lease term and discount rate for FHN's operating and finance leases as of December 31, 2022 and 2021.

Table 8.5.3

REMAINING LEASE TERMS

& DISCOUNT RATES

	December 31, 2022		December 31, 2021
Weighted Average Remaining Lease Terms
Operating leases	12.22 years		12.37 years
Finance leases	9.83 years		10.61 years
Weighted Average Discount Rate
Operating leases	2.69	%	2.35	%
Finance leases	2.62	%	2.85	%

The following table provides a detail of the components of lease expense and other lease information for the years ended December 31, 2022, 2021, and 2020:

Table 8.5.4

LEASE EXPENSE &

OTHER INFORMATION

(Dollars in millions)	2022		2021		2020
Lease cost
Operating lease cost	$	47	$	48	$	39
Sublease income	(2)		(1)		(1)
Total lease cost	$	45	$	47	$	38
Other information
(Gain) loss on right-of-use asset impairment - operating leases	$	1	$	3	$	6
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	50		53		41
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases	31		19		216
Finance leases	—		—		2

The following table provides a detail of the maturities of FHN's operating and finance lease liabilities as of December 31, 2022:

Table 8.5.5

LEASE LIABILITY MATURITIES

(Dollars in millions)	December 31, 2022
2023	$	46
2024	44
2025	42
2026	40
2027	39
2028 and thereafter	228
Total lease payments	439
Less lease liability interest	(68)
Total lease liability	$	371

FHN had no aggregate undiscounted contractual obligations for lease arrangements that have not commenced as of December 31, 2022.

First Horizon as Lessor

As a lessor, FHN engages in the leasing of equipment to commercial clients primarily through direct financing and sales-type leases. Direct financing and sales-type leases are similar to other forms of installment lending in that

lessors generally do not retain benefits and risks incidental to ownership of the property subject to leases. Such arrangements are essentially financing transactions that permit lessees to acquire and use property. As lessor, the sum of all minimum lease payments over the lease term and the estimated residual value, less unearned interest income, is recorded as the net investment in the lease on the commencement date and is included in loans and leases in the Consolidated Balance Sheets. Interest income is accrued as earned over the term of the lease based on the net investment in leases. Fees incurred to originate the lease are deferred on the commencement date and recognized as an adjustment of the yield on the lease.

FHN’s portfolio of direct financing and sales-type leases contains terms of 18 months to 23 years, some of which contain options to extend the lease for various periods of time and/or to purchase the equipment subject to the lease at various points in time. These direct financing and sales-type leases typically include a payment structure set at lease inception and do not provide any additional services. Expenses associated with the leased equipment, such as maintenance and insurance, are paid by the lessee directly to third parties. The lease agreement typically contains an option for the purchase of the leased property by the lessee at the end of the lease term at either the property’s residual value or a specified price. In all cases, FHN expects to sell or re-lease the equipment at the end of the lease term. Due to the nature and structure of FHN’s direct financing and sales-type leases, there is no selling profit or loss on these transactions.

The components of the Company’s net investment in leases as of December 31, 2022 and 2021 were as follows:

Table 8.5.6

LEASE NET INVESTMENTS

(Dollars in millions)	December 31, 2022		December 31, 2021
Lease receivable	$	984	$	729
Unearned income	(198)		(135)
Guaranteed residual	121		97
Unguaranteed residual	153		102
Total net investment	$	1,060	$	793

Interest income for direct financing or sales-type leases totaled $34 million, $26 million, and $11 million for the years ended December 31, 2022, 2021, and 2020, respectively. There was no profit or loss recognized at the commencement date for direct financing or sales-type leases for the years ended December 31, 2022, 2021, and 2020.

Maturities of the Company's lease receivables as of December 31, 2022 were as follows:

Table 8.5.7

LEASE RECEIVABLE MATURITIES

(Dollars in millions)	December 31, 2022
2023	$	185
2024	160
2025	140
2026	112
2027	85
2028 and thereafter	$	302
Total future minimum lease payments	$	984

Premises, Equipment, and Leases

Premises, Equipment, and Leases

Premises and equipment were comprised of the following at December 31, 2022 and 2021:

Table 8.5.1

PREMISES & EQUIPMENT

(Dollars in millions)	December 31, 2022		December 31, 2021
Land	$	163	$	163
Buildings	544		543
Leasehold improvements	82		74
Furniture, fixtures, and equipment	277		276
Fixed assets held for sale (a)	1		16
Total premises and equipment	1,067		1,072
Less accumulated depreciation and amortization	(455)		(407)
Premises and equipment, net	$	612	$	665

(a) Primarily comprised of land and buildings.

In 2022 and 2021, FHN recognized less than $1 million and $37 million, respectively, of fixed asset impairments and lease abandonment charges related to branch closures which were included in other expense on the Consolidated Statements of Income. In 2022 and 2021, FHN had $1 million and $6 million, respectively, of net gains related to the sales of bank branches which was included in other income on the Consolidated Statements of Income.

First Horizon as Lessee

FHN has operating, financing, and short-term leases for branch locations, corporate offices and certain equipment. Substantially all of these leases are classified as operating leases.

The following table provides details of the classification of FHN's right-of-use assets and lease liabilities included in the Consolidated Balance Sheets.

Table 8.5.2

RIGHT-OF-USE ASSETS & LEASE LIABILITIES

(Dollars in millions)		December 31, 2022		December 31, 2021
Lease right-of-use assets:	Classification
Operating lease right-of-use assets	Other assets	$	331	$	345
Finance lease right-of-use assets	Other assets	3		3
Total lease right-of-use assets		$	334	$	348
Lease liabilities:
Operating lease liabilities	Other liabilities	$	367	$	382
Finance lease liabilities	Other liabilities	4		4
Total lease liabilities		$	371	$	386

The calculated amount of the ROU assets and lease liabilities in the table above are impacted by the length of the lease term and the discount rate used to present value the minimum lease payments. The following table details the weighted average remaining lease term and discount rate for FHN's operating and finance leases as of December 31, 2022 and 2021.

Table 8.5.3

REMAINING LEASE TERMS

& DISCOUNT RATES

	December 31, 2022		December 31, 2021
Weighted Average Remaining Lease Terms
Operating leases	12.22 years		12.37 years
Finance leases	9.83 years		10.61 years
Weighted Average Discount Rate
Operating leases	2.69	%	2.35	%
Finance leases	2.62	%	2.85	%

The following table provides a detail of the components of lease expense and other lease information for the years ended December 31, 2022, 2021, and 2020:

Table 8.5.4

LEASE EXPENSE &

OTHER INFORMATION

(Dollars in millions)	2022		2021		2020
Lease cost
Operating lease cost	$	47	$	48	$	39
Sublease income	(2)		(1)		(1)
Total lease cost	$	45	$	47	$	38
Other information
(Gain) loss on right-of-use asset impairment - operating leases	$	1	$	3	$	6
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	50		53		41
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases	31		19		216
Finance leases	—		—		2

The following table provides a detail of the maturities of FHN's operating and finance lease liabilities as of December 31, 2022:

Table 8.5.5

LEASE LIABILITY MATURITIES

(Dollars in millions)	December 31, 2022
2023	$	46
2024	44
2025	42
2026	40
2027	39
2028 and thereafter	228
Total lease payments	439
Less lease liability interest	(68)
Total lease liability	$	371

FHN had no aggregate undiscounted contractual obligations for lease arrangements that have not commenced as of December 31, 2022.

First Horizon as Lessor

As a lessor, FHN engages in the leasing of equipment to commercial clients primarily through direct financing and sales-type leases. Direct financing and sales-type leases are similar to other forms of installment lending in that

lessors generally do not retain benefits and risks incidental to ownership of the property subject to leases. Such arrangements are essentially financing transactions that permit lessees to acquire and use property. As lessor, the sum of all minimum lease payments over the lease term and the estimated residual value, less unearned interest income, is recorded as the net investment in the lease on the commencement date and is included in loans and leases in the Consolidated Balance Sheets. Interest income is accrued as earned over the term of the lease based on the net investment in leases. Fees incurred to originate the lease are deferred on the commencement date and recognized as an adjustment of the yield on the lease.

FHN’s portfolio of direct financing and sales-type leases contains terms of 18 months to 23 years, some of which contain options to extend the lease for various periods of time and/or to purchase the equipment subject to the lease at various points in time. These direct financing and sales-type leases typically include a payment structure set at lease inception and do not provide any additional services. Expenses associated with the leased equipment, such as maintenance and insurance, are paid by the lessee directly to third parties. The lease agreement typically contains an option for the purchase of the leased property by the lessee at the end of the lease term at either the property’s residual value or a specified price. In all cases, FHN expects to sell or re-lease the equipment at the end of the lease term. Due to the nature and structure of FHN’s direct financing and sales-type leases, there is no selling profit or loss on these transactions.

The components of the Company’s net investment in leases as of December 31, 2022 and 2021 were as follows:

Table 8.5.6

LEASE NET INVESTMENTS

(Dollars in millions)	December 31, 2022		December 31, 2021
Lease receivable	$	984	$	729
Unearned income	(198)		(135)
Guaranteed residual	121		97
Unguaranteed residual	153		102
Total net investment	$	1,060	$	793

Interest income for direct financing or sales-type leases totaled $34 million, $26 million, and $11 million for the years ended December 31, 2022, 2021, and 2020, respectively. There was no profit or loss recognized at the commencement date for direct financing or sales-type leases for the years ended December 31, 2022, 2021, and 2020.

Maturities of the Company's lease receivables as of December 31, 2022 were as follows:

Table 8.5.7

LEASE RECEIVABLE MATURITIES

(Dollars in millions)	December 31, 2022
2023	$	185
2024	160
2025	140
2026	112
2027	85
2028 and thereafter	$	302
Total future minimum lease payments	$	984

Premises, Equipment, and Leases

Premises, Equipment, and Leases

Premises and equipment were comprised of the following at December 31, 2022 and 2021:

Table 8.5.1

PREMISES & EQUIPMENT

(Dollars in millions)	December 31, 2022		December 31, 2021
Land	$	163	$	163
Buildings	544		543
Leasehold improvements	82		74
Furniture, fixtures, and equipment	277		276
Fixed assets held for sale (a)	1		16
Total premises and equipment	1,067		1,072
Less accumulated depreciation and amortization	(455)		(407)
Premises and equipment, net	$	612	$	665

(a) Primarily comprised of land and buildings.

In 2022 and 2021, FHN recognized less than $1 million and $37 million, respectively, of fixed asset impairments and lease abandonment charges related to branch closures which were included in other expense on the Consolidated Statements of Income. In 2022 and 2021, FHN had $1 million and $6 million, respectively, of net gains related to the sales of bank branches which was included in other income on the Consolidated Statements of Income.

First Horizon as Lessee

FHN has operating, financing, and short-term leases for branch locations, corporate offices and certain equipment. Substantially all of these leases are classified as operating leases.

The following table provides details of the classification of FHN's right-of-use assets and lease liabilities included in the Consolidated Balance Sheets.

Table 8.5.2

RIGHT-OF-USE ASSETS & LEASE LIABILITIES

(Dollars in millions)		December 31, 2022		December 31, 2021
Lease right-of-use assets:	Classification
Operating lease right-of-use assets	Other assets	$	331	$	345
Finance lease right-of-use assets	Other assets	3		3
Total lease right-of-use assets		$	334	$	348
Lease liabilities:
Operating lease liabilities	Other liabilities	$	367	$	382
Finance lease liabilities	Other liabilities	4		4
Total lease liabilities		$	371	$	386

The calculated amount of the ROU assets and lease liabilities in the table above are impacted by the length of the lease term and the discount rate used to present value the minimum lease payments. The following table details the weighted average remaining lease term and discount rate for FHN's operating and finance leases as of December 31, 2022 and 2021.

Table 8.5.3

REMAINING LEASE TERMS

& DISCOUNT RATES

	December 31, 2022		December 31, 2021
Weighted Average Remaining Lease Terms
Operating leases	12.22 years		12.37 years
Finance leases	9.83 years		10.61 years
Weighted Average Discount Rate
Operating leases	2.69	%	2.35	%
Finance leases	2.62	%	2.85	%

The following table provides a detail of the components of lease expense and other lease information for the years ended December 31, 2022, 2021, and 2020:

Table 8.5.4

LEASE EXPENSE &

OTHER INFORMATION

(Dollars in millions)	2022		2021		2020
Lease cost
Operating lease cost	$	47	$	48	$	39
Sublease income	(2)		(1)		(1)
Total lease cost	$	45	$	47	$	38
Other information
(Gain) loss on right-of-use asset impairment - operating leases	$	1	$	3	$	6
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	50		53		41
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases	31		19		216
Finance leases	—		—		2

The following table provides a detail of the maturities of FHN's operating and finance lease liabilities as of December 31, 2022:

Table 8.5.5

LEASE LIABILITY MATURITIES

(Dollars in millions)	December 31, 2022
2023	$	46
2024	44
2025	42
2026	40
2027	39
2028 and thereafter	228
Total lease payments	439
Less lease liability interest	(68)
Total lease liability	$	371

FHN had no aggregate undiscounted contractual obligations for lease arrangements that have not commenced as of December 31, 2022.

First Horizon as Lessor

As a lessor, FHN engages in the leasing of equipment to commercial clients primarily through direct financing and sales-type leases. Direct financing and sales-type leases are similar to other forms of installment lending in that

lessors generally do not retain benefits and risks incidental to ownership of the property subject to leases. Such arrangements are essentially financing transactions that permit lessees to acquire and use property. As lessor, the sum of all minimum lease payments over the lease term and the estimated residual value, less unearned interest income, is recorded as the net investment in the lease on the commencement date and is included in loans and leases in the Consolidated Balance Sheets. Interest income is accrued as earned over the term of the lease based on the net investment in leases. Fees incurred to originate the lease are deferred on the commencement date and recognized as an adjustment of the yield on the lease.

FHN’s portfolio of direct financing and sales-type leases contains terms of 18 months to 23 years, some of which contain options to extend the lease for various periods of time and/or to purchase the equipment subject to the lease at various points in time. These direct financing and sales-type leases typically include a payment structure set at lease inception and do not provide any additional services. Expenses associated with the leased equipment, such as maintenance and insurance, are paid by the lessee directly to third parties. The lease agreement typically contains an option for the purchase of the leased property by the lessee at the end of the lease term at either the property’s residual value or a specified price. In all cases, FHN expects to sell or re-lease the equipment at the end of the lease term. Due to the nature and structure of FHN’s direct financing and sales-type leases, there is no selling profit or loss on these transactions.

The components of the Company’s net investment in leases as of December 31, 2022 and 2021 were as follows:

Table 8.5.6

LEASE NET INVESTMENTS

(Dollars in millions)	December 31, 2022		December 31, 2021
Lease receivable	$	984	$	729
Unearned income	(198)		(135)
Guaranteed residual	121		97
Unguaranteed residual	153		102
Total net investment	$	1,060	$	793

Interest income for direct financing or sales-type leases totaled $34 million, $26 million, and $11 million for the years ended December 31, 2022, 2021, and 2020, respectively. There was no profit or loss recognized at the commencement date for direct financing or sales-type leases for the years ended December 31, 2022, 2021, and 2020.

Maturities of the Company's lease receivables as of December 31, 2022 were as follows:

Table 8.5.7

LEASE RECEIVABLE MATURITIES

(Dollars in millions)	December 31, 2022
2023	$	185
2024	160
2025	140
2026	112
2027	85
2028 and thereafter	$	302
Total future minimum lease payments	$	984

Premises, Equipment, and Leases

Premises, Equipment, and Leases

Premises and equipment were comprised of the following at December 31, 2022 and 2021:

Table 8.5.1

PREMISES & EQUIPMENT

(Dollars in millions)	December 31, 2022		December 31, 2021
Land	$	163	$	163
Buildings	544		543
Leasehold improvements	82		74
Furniture, fixtures, and equipment	277		276
Fixed assets held for sale (a)	1		16
Total premises and equipment	1,067		1,072
Less accumulated depreciation and amortization	(455)		(407)
Premises and equipment, net	$	612	$	665

(a) Primarily comprised of land and buildings.

In 2022 and 2021, FHN recognized less than $1 million and $37 million, respectively, of fixed asset impairments and lease abandonment charges related to branch closures which were included in other expense on the Consolidated Statements of Income. In 2022 and 2021, FHN had $1 million and $6 million, respectively, of net gains related to the sales of bank branches which was included in other income on the Consolidated Statements of Income.

First Horizon as Lessee

FHN has operating, financing, and short-term leases for branch locations, corporate offices and certain equipment. Substantially all of these leases are classified as operating leases.

The following table provides details of the classification of FHN's right-of-use assets and lease liabilities included in the Consolidated Balance Sheets.

Table 8.5.2

RIGHT-OF-USE ASSETS & LEASE LIABILITIES

(Dollars in millions)		December 31, 2022		December 31, 2021
Lease right-of-use assets:	Classification
Operating lease right-of-use assets	Other assets	$	331	$	345
Finance lease right-of-use assets	Other assets	3		3
Total lease right-of-use assets		$	334	$	348
Lease liabilities:
Operating lease liabilities	Other liabilities	$	367	$	382
Finance lease liabilities	Other liabilities	4		4
Total lease liabilities		$	371	$	386

The calculated amount of the ROU assets and lease liabilities in the table above are impacted by the length of the lease term and the discount rate used to present value the minimum lease payments. The following table details the weighted average remaining lease term and discount rate for FHN's operating and finance leases as of December 31, 2022 and 2021.

Table 8.5.3

REMAINING LEASE TERMS

& DISCOUNT RATES

	December 31, 2022		December 31, 2021
Weighted Average Remaining Lease Terms
Operating leases	12.22 years		12.37 years
Finance leases	9.83 years		10.61 years
Weighted Average Discount Rate
Operating leases	2.69	%	2.35	%
Finance leases	2.62	%	2.85	%

The following table provides a detail of the components of lease expense and other lease information for the years ended December 31, 2022, 2021, and 2020:

Table 8.5.4

LEASE EXPENSE &

OTHER INFORMATION

(Dollars in millions)	2022		2021		2020
Lease cost
Operating lease cost	$	47	$	48	$	39
Sublease income	(2)		(1)		(1)
Total lease cost	$	45	$	47	$	38
Other information
(Gain) loss on right-of-use asset impairment - operating leases	$	1	$	3	$	6
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	50		53		41
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases	31		19		216
Finance leases	—		—		2

The following table provides a detail of the maturities of FHN's operating and finance lease liabilities as of December 31, 2022:

Table 8.5.5

LEASE LIABILITY MATURITIES

(Dollars in millions)	December 31, 2022
2023	$	46
2024	44
2025	42
2026	40
2027	39
2028 and thereafter	228
Total lease payments	439
Less lease liability interest	(68)
Total lease liability	$	371

FHN had no aggregate undiscounted contractual obligations for lease arrangements that have not commenced as of December 31, 2022.

First Horizon as Lessor

As a lessor, FHN engages in the leasing of equipment to commercial clients primarily through direct financing and sales-type leases. Direct financing and sales-type leases are similar to other forms of installment lending in that

lessors generally do not retain benefits and risks incidental to ownership of the property subject to leases. Such arrangements are essentially financing transactions that permit lessees to acquire and use property. As lessor, the sum of all minimum lease payments over the lease term and the estimated residual value, less unearned interest income, is recorded as the net investment in the lease on the commencement date and is included in loans and leases in the Consolidated Balance Sheets. Interest income is accrued as earned over the term of the lease based on the net investment in leases. Fees incurred to originate the lease are deferred on the commencement date and recognized as an adjustment of the yield on the lease.

FHN’s portfolio of direct financing and sales-type leases contains terms of 18 months to 23 years, some of which contain options to extend the lease for various periods of time and/or to purchase the equipment subject to the lease at various points in time. These direct financing and sales-type leases typically include a payment structure set at lease inception and do not provide any additional services. Expenses associated with the leased equipment, such as maintenance and insurance, are paid by the lessee directly to third parties. The lease agreement typically contains an option for the purchase of the leased property by the lessee at the end of the lease term at either the property’s residual value or a specified price. In all cases, FHN expects to sell or re-lease the equipment at the end of the lease term. Due to the nature and structure of FHN’s direct financing and sales-type leases, there is no selling profit or loss on these transactions.

The components of the Company’s net investment in leases as of December 31, 2022 and 2021 were as follows:

Table 8.5.6

LEASE NET INVESTMENTS

(Dollars in millions)	December 31, 2022		December 31, 2021
Lease receivable	$	984	$	729
Unearned income	(198)		(135)
Guaranteed residual	121		97
Unguaranteed residual	153		102
Total net investment	$	1,060	$	793

Interest income for direct financing or sales-type leases totaled $34 million, $26 million, and $11 million for the years ended December 31, 2022, 2021, and 2020, respectively. There was no profit or loss recognized at the commencement date for direct financing or sales-type leases for the years ended December 31, 2022, 2021, and 2020.

Maturities of the Company's lease receivables as of December 31, 2022 were as follows:

Table 8.5.7

LEASE RECEIVABLE MATURITIES

(Dollars in millions)	December 31, 2022
2023	$	185
2024	160
2025	140
2026	112
2027	85
2028 and thereafter	$	302
Total future minimum lease payments	$	984

Premises, Equipment, and Leases

Premises, Equipment, and Leases

Premises and equipment were comprised of the following at December 31, 2022 and 2021:

Table 8.5.1

PREMISES & EQUIPMENT

(Dollars in millions)	December 31, 2022		December 31, 2021
Land	$	163	$	163
Buildings	544		543
Leasehold improvements	82		74
Furniture, fixtures, and equipment	277		276
Fixed assets held for sale (a)	1		16
Total premises and equipment	1,067		1,072
Less accumulated depreciation and amortization	(455)		(407)
Premises and equipment, net	$	612	$	665

(a) Primarily comprised of land and buildings.

In 2022 and 2021, FHN recognized less than $1 million and $37 million, respectively, of fixed asset impairments and lease abandonment charges related to branch closures which were included in other expense on the Consolidated Statements of Income. In 2022 and 2021, FHN had $1 million and $6 million, respectively, of net gains related to the sales of bank branches which was included in other income on the Consolidated Statements of Income.

First Horizon as Lessee

FHN has operating, financing, and short-term leases for branch locations, corporate offices and certain equipment. Substantially all of these leases are classified as operating leases.

The following table provides details of the classification of FHN's right-of-use assets and lease liabilities included in the Consolidated Balance Sheets.

Table 8.5.2

RIGHT-OF-USE ASSETS & LEASE LIABILITIES

(Dollars in millions)		December 31, 2022		December 31, 2021
Lease right-of-use assets:	Classification
Operating lease right-of-use assets	Other assets	$	331	$	345
Finance lease right-of-use assets	Other assets	3		3
Total lease right-of-use assets		$	334	$	348
Lease liabilities:
Operating lease liabilities	Other liabilities	$	367	$	382
Finance lease liabilities	Other liabilities	4		4
Total lease liabilities		$	371	$	386

The calculated amount of the ROU assets and lease liabilities in the table above are impacted by the length of the lease term and the discount rate used to present value the minimum lease payments. The following table details the weighted average remaining lease term and discount rate for FHN's operating and finance leases as of December 31, 2022 and 2021.

Table 8.5.3

REMAINING LEASE TERMS

& DISCOUNT RATES

	December 31, 2022		December 31, 2021
Weighted Average Remaining Lease Terms
Operating leases	12.22 years		12.37 years
Finance leases	9.83 years		10.61 years
Weighted Average Discount Rate
Operating leases	2.69	%	2.35	%
Finance leases	2.62	%	2.85	%

The following table provides a detail of the components of lease expense and other lease information for the years ended December 31, 2022, 2021, and 2020:

Table 8.5.4

LEASE EXPENSE &

OTHER INFORMATION

(Dollars in millions)	2022		2021		2020
Lease cost
Operating lease cost	$	47	$	48	$	39
Sublease income	(2)		(1)		(1)
Total lease cost	$	45	$	47	$	38
Other information
(Gain) loss on right-of-use asset impairment - operating leases	$	1	$	3	$	6
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	50		53		41
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases	31		19		216
Finance leases	—		—		2

The following table provides a detail of the maturities of FHN's operating and finance lease liabilities as of December 31, 2022:

Table 8.5.5

LEASE LIABILITY MATURITIES

(Dollars in millions)	December 31, 2022
2023	$	46
2024	44
2025	42
2026	40
2027	39
2028 and thereafter	228
Total lease payments	439
Less lease liability interest	(68)
Total lease liability	$	371

FHN had no aggregate undiscounted contractual obligations for lease arrangements that have not commenced as of December 31, 2022.

First Horizon as Lessor

As a lessor, FHN engages in the leasing of equipment to commercial clients primarily through direct financing and sales-type leases. Direct financing and sales-type leases are similar to other forms of installment lending in that

lessors generally do not retain benefits and risks incidental to ownership of the property subject to leases. Such arrangements are essentially financing transactions that permit lessees to acquire and use property. As lessor, the sum of all minimum lease payments over the lease term and the estimated residual value, less unearned interest income, is recorded as the net investment in the lease on the commencement date and is included in loans and leases in the Consolidated Balance Sheets. Interest income is accrued as earned over the term of the lease based on the net investment in leases. Fees incurred to originate the lease are deferred on the commencement date and recognized as an adjustment of the yield on the lease.

FHN’s portfolio of direct financing and sales-type leases contains terms of 18 months to 23 years, some of which contain options to extend the lease for various periods of time and/or to purchase the equipment subject to the lease at various points in time. These direct financing and sales-type leases typically include a payment structure set at lease inception and do not provide any additional services. Expenses associated with the leased equipment, such as maintenance and insurance, are paid by the lessee directly to third parties. The lease agreement typically contains an option for the purchase of the leased property by the lessee at the end of the lease term at either the property’s residual value or a specified price. In all cases, FHN expects to sell or re-lease the equipment at the end of the lease term. Due to the nature and structure of FHN’s direct financing and sales-type leases, there is no selling profit or loss on these transactions.

The components of the Company’s net investment in leases as of December 31, 2022 and 2021 were as follows:

Table 8.5.6

LEASE NET INVESTMENTS

(Dollars in millions)	December 31, 2022		December 31, 2021
Lease receivable	$	984	$	729
Unearned income	(198)		(135)
Guaranteed residual	121		97
Unguaranteed residual	153		102
Total net investment	$	1,060	$	793

Interest income for direct financing or sales-type leases totaled $34 million, $26 million, and $11 million for the years ended December 31, 2022, 2021, and 2020, respectively. There was no profit or loss recognized at the commencement date for direct financing or sales-type leases for the years ended December 31, 2022, 2021, and 2020.

Maturities of the Company's lease receivables as of December 31, 2022 were as follows:

Table 8.5.7

LEASE RECEIVABLE MATURITIES

(Dollars in millions)	December 31, 2022
2023	$	185
2024	160
2025	140
2026	112
2027	85
2028 and thereafter	$	302
Total future minimum lease payments	$	984