Income Taxes (Tables)

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Schedule of Components of Consolidated Statements of Income and Equity

The aggregate amount of income taxes included in the Consolidated Statements of Income and the Consolidated Statements of Changes in Equity for the years ended December 31, were as follows:

Table 8.14.1

INCOME TAX EXPENSE

(Dollars in millions)	2022		2021		2020
Consolidated Statements of Income:
Income tax expense	$	247	$	274	$	76
Consolidated Statements of Changes in Equity:
Income tax expense (benefit) related to:
Net unrealized gains (losses) on pension and other postretirement plans	(5)		2		3
Net unrealized gains (losses) on securities available for sale	(302)		(46)		25
Net unrealized gains (losses) on cash flow hedges	(42)		(3)		3
Total	$	(102)	$	227	$	107

Schedule of Components of Income Tax Expense/(Benefit)

The components of income tax expense (benefit) for the years ended December 31, were as follows:

Table 8.14.2

INCOME TAX EXPENSE COMPONENTS

(Dollars in millions)	2022		2021		2020
Current:
Federal	$	123	$	235	$	80
State	33		39		14
Deferred:
Federal	87		(1)		(15)
State	4		1		(3)
Total	$	247	$	274	$	76

Schedule of Computation of Income Tax Expense Differed from The Amounts Computed By Applying Statutory Federal Income Tax Rate To Income/(Loss) From Continuing Operations Before Income Taxes

A reconciliation of expected income tax expense (benefit) at the federal statutory rate of 21% for 2022, 2021, and 2020, respectively to the total income tax expense follows:

Table 8.14.3

RECONCILIATION FROM STATUTORY RATES

(Dollars in millions)	2022			2021			2020
Federal income tax rate	21		%	21		%	21		%
Tax computed at statutory rate	$	243		$	270		$	196
Increase (decrease) resulting from:
State income taxes, net of federal income tax benefit	31			32			9
Bank-owned life insurance	(4)			(7)			(6)
401(k) – employee stock ownership plan	(1)			(1)			(1)
Tax-exempt interest	(10)			(10)			(8)
Non-deductible expenses	11			8			13
LIHTC credits and benefits, net of amortization	(16)			(14)			(9)
Other tax credits	(4)			(4)			(5)
Other changes in unrecognized tax benefits	(2)			4			(9)
Purchase accounting gain	—			—			(112)
Other	(1)			(4)			8
Total	$	247		$	274		$	76

Net DTA Balances Related to Income Tax Carryforwards

As of December 31, 2022, FHN had net deferred tax asset balances related to federal and state income tax carryforwards of $34 million and $2 million, respectively, which will expire at various dates as follows:

Table 8.14.4

TAX CARRYFORWARD DTA EXPIRATION DATES

(Dollars in millions)	Expiration Dates	Net Deferred Tax Asset Balance
Losses - federal	2026 - 2035	$	34
Net operating losses - states	2027 - 2042	2

Schedule of Deferred Tax Assets and Liabilities

Temporary differences which gave rise to deferred tax assets and deferred tax liabilities on December 31, 2022 and 2021 were as follows:

Table 8.14.5

COMPONENTS OF DTAs & DTLs

(Dollars in millions)	2022		2021
Deferred tax assets:
Loan valuations and loss reserves	$	108	$	161
Employee benefits	93		83
Accrued expenses	22		16
Depreciation and amortization	24		13
Lease liability	91		94
Federal loss carryforwards	34		38
State loss carryforwards	2		2
Securities available-for-sale and financial instruments (a)	355		12
Other	32		29
Gross deferred tax assets	761		448
Deferred tax liabilities:
Equity investments	$	3	$	4
Other intangible assets	80		86
Prepaid expenses	17		18
ROU lease asset	82		85
Leasing	265		198
Other	1		5
Gross deferred tax liabilities	448		396
Net deferred tax assets	$	313	$	52

(a)    Tax effects of unrealized gains and losses are tracked on a security-by-security basis.

Schedule of Rollforward of Unrecognized Tax Benefits

The rollforward of unrecognized tax benefits is shown in the following table:

Table 8.14.6

ROLLFORWARD OF UNRECOGNIZED TAX BENEFITS

(Dollars in millions)
Balance at December 31, 2020	$	70
Increases related to prior year tax positions	24
Increases related to current year tax positions	1
Lapse of statutes	(3)
Balance at December 31, 2021	$	92
Increases related to prior year tax positions	3
Increases related to current year tax positions	1
Decreases related to prior year tax positions	(7)
Balance at December 31, 2022	$	89