Premises, Equipment, and Leases

12 Months Ended

Dec. 31, 2023

Property, Plant and Equipment [Abstract]

Premises, Equipment, and Leases

Premises, Equipment, and Leases

Premises and equipment was comprised of the following at December 31, 2023 and 2022:

Table 8.5.1

PREMISES & EQUIPMENT

(Dollars in millions)	December 31, 2023		December 31, 2022
Land	$	163	$	163
Buildings	554		544
Leasehold improvements	84		82
Furniture, fixtures, and equipment	295		277
Fixed assets held for sale (a)	—		1
Total premises and equipment	1,096		1,067
Less accumulated depreciation and amortization	(506)		(455)
Premises and equipment, net	$	590	$	612

(a) Primarily comprised of land and buildings.

Both fixed asset and leased asset impairments were immaterial for 2023 and 2022. In 2021, FHN recognized $34 million of fixed asset impairments and $3 million of leased asset impairments which is included in other expense on the Consolidated Statements of Income.

Net gains related to the sales of bank branches were immaterial for 2023 and 2022. In 2021, FHN had $6 million of net gains related to the sales of bank branches which is 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, 2023		December 31, 2022
Lease right-of-use assets:	Classification
Operating lease right-of-use assets	Other assets	$	306	$	331
Finance lease right-of-use assets	Other assets	3		3
Total lease right-of-use assets		$	309	$	334
Lease liabilities:
Operating lease liabilities	Other liabilities	$	342	$	367
Finance lease liabilities	Other liabilities	3		4
Total lease liabilities		$	345	$	371

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, 2023 and 2022.

Table 8.5.3

REMAINING LEASE TERMS

& DISCOUNT RATES

	December 31, 2023		December 31, 2022
Weighted Average Remaining Lease Terms
Operating leases	11.79 years		12.22 years
Finance leases	9.15 years		9.83 years
Weighted Average Discount Rate
Operating leases	2.84	%	2.69	%
Finance leases	2.39	%	2.62	%

The following table provides a detail of the components of lease expense and other lease information for the years ended December 31, 2023, 2022, and 2021:

Table 8.5.4

LEASE EXPENSE &

OTHER INFORMATION

(Dollars in millions)	2023		2022		2021
Lease cost
Operating lease cost	$	45	$	47	$	48
Sublease income	(2)		(2)		(1)
Total lease cost	$	43	$	45	$	47
Other information
(Gain) loss on right-of-use asset impairment - operating leases	$	1	$	1	$	3
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	46		50		53
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases	11		31		19

The following table provides a detail of the maturities of FHN's operating and finance lease liabilities as of December 31, 2023:

Table 8.5.5

LEASE LIABILITY MATURITIES

(Dollars in millions)	December 31, 2023
2024	$	44
2025	43
2026	42
2027	41
2028	35
2029 and thereafter	204
Total lease payments	409
Less lease liability interest	(64)
Total lease liability	$	345

FHN had no aggregate undiscounted contractual obligations for lease arrangements that have not commenced as of December 31, 2023.

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 2 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, 2023 and 2022 were as follows:

Table 8.5.6

LEASE NET INVESTMENTS

(Dollars in millions)	December 31, 2023		December 31, 2022
Lease receivable	$	1,143	$	984
Unearned income	(244)		(198)
Guaranteed residual	147		121
Unguaranteed residual	189		153
Total net investment	$	1,235	$	1,060

Interest income for direct financing or sales-type leases totaled $50 million, $34 million, and $26 million for the years ended December 31, 2023, 2022, and 2021, 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, 2023, 2022, and 2021.

Maturities of the Company's lease receivables as of December 31, 2023 were as follows:

Table 8.5.7

LEASE RECEIVABLE MATURITIES

(Dollars in millions)	December 31, 2023
2024	$	214
2025	193
2026	168
2027	132
2028	98
2029 and thereafter	338
Total future minimum lease payments	$	1,143

Premises, Equipment, and Leases

Premises, Equipment, and Leases

Premises and equipment was comprised of the following at December 31, 2023 and 2022:

Table 8.5.1

PREMISES & EQUIPMENT

(Dollars in millions)	December 31, 2023		December 31, 2022
Land	$	163	$	163
Buildings	554		544
Leasehold improvements	84		82
Furniture, fixtures, and equipment	295		277
Fixed assets held for sale (a)	—		1
Total premises and equipment	1,096		1,067
Less accumulated depreciation and amortization	(506)		(455)
Premises and equipment, net	$	590	$	612

(a) Primarily comprised of land and buildings.

Both fixed asset and leased asset impairments were immaterial for 2023 and 2022. In 2021, FHN recognized $34 million of fixed asset impairments and $3 million of leased asset impairments which is included in other expense on the Consolidated Statements of Income.

Net gains related to the sales of bank branches were immaterial for 2023 and 2022. In 2021, FHN had $6 million of net gains related to the sales of bank branches which is 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, 2023		December 31, 2022
Lease right-of-use assets:	Classification
Operating lease right-of-use assets	Other assets	$	306	$	331
Finance lease right-of-use assets	Other assets	3		3
Total lease right-of-use assets		$	309	$	334
Lease liabilities:
Operating lease liabilities	Other liabilities	$	342	$	367
Finance lease liabilities	Other liabilities	3		4
Total lease liabilities		$	345	$	371

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, 2023 and 2022.

Table 8.5.3

REMAINING LEASE TERMS

& DISCOUNT RATES

	December 31, 2023		December 31, 2022
Weighted Average Remaining Lease Terms
Operating leases	11.79 years		12.22 years
Finance leases	9.15 years		9.83 years
Weighted Average Discount Rate
Operating leases	2.84	%	2.69	%
Finance leases	2.39	%	2.62	%

The following table provides a detail of the components of lease expense and other lease information for the years ended December 31, 2023, 2022, and 2021:

Table 8.5.4

LEASE EXPENSE &

OTHER INFORMATION

(Dollars in millions)	2023		2022		2021
Lease cost
Operating lease cost	$	45	$	47	$	48
Sublease income	(2)		(2)		(1)
Total lease cost	$	43	$	45	$	47
Other information
(Gain) loss on right-of-use asset impairment - operating leases	$	1	$	1	$	3
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	46		50		53
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases	11		31		19

The following table provides a detail of the maturities of FHN's operating and finance lease liabilities as of December 31, 2023:

Table 8.5.5

LEASE LIABILITY MATURITIES

(Dollars in millions)	December 31, 2023
2024	$	44
2025	43
2026	42
2027	41
2028	35
2029 and thereafter	204
Total lease payments	409
Less lease liability interest	(64)
Total lease liability	$	345

FHN had no aggregate undiscounted contractual obligations for lease arrangements that have not commenced as of December 31, 2023.

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 2 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, 2023 and 2022 were as follows:

Table 8.5.6

LEASE NET INVESTMENTS

(Dollars in millions)	December 31, 2023		December 31, 2022
Lease receivable	$	1,143	$	984
Unearned income	(244)		(198)
Guaranteed residual	147		121
Unguaranteed residual	189		153
Total net investment	$	1,235	$	1,060

Interest income for direct financing or sales-type leases totaled $50 million, $34 million, and $26 million for the years ended December 31, 2023, 2022, and 2021, 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, 2023, 2022, and 2021.

Maturities of the Company's lease receivables as of December 31, 2023 were as follows:

Table 8.5.7

LEASE RECEIVABLE MATURITIES

(Dollars in millions)	December 31, 2023
2024	$	214
2025	193
2026	168
2027	132
2028	98
2029 and thereafter	338
Total future minimum lease payments	$	1,143

Premises, Equipment, and Leases

Premises, Equipment, and Leases

Premises and equipment was comprised of the following at December 31, 2023 and 2022:

Table 8.5.1

PREMISES & EQUIPMENT

(Dollars in millions)	December 31, 2023		December 31, 2022
Land	$	163	$	163
Buildings	554		544
Leasehold improvements	84		82
Furniture, fixtures, and equipment	295		277
Fixed assets held for sale (a)	—		1
Total premises and equipment	1,096		1,067
Less accumulated depreciation and amortization	(506)		(455)
Premises and equipment, net	$	590	$	612

(a) Primarily comprised of land and buildings.

Both fixed asset and leased asset impairments were immaterial for 2023 and 2022. In 2021, FHN recognized $34 million of fixed asset impairments and $3 million of leased asset impairments which is included in other expense on the Consolidated Statements of Income.

Net gains related to the sales of bank branches were immaterial for 2023 and 2022. In 2021, FHN had $6 million of net gains related to the sales of bank branches which is 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, 2023		December 31, 2022
Lease right-of-use assets:	Classification
Operating lease right-of-use assets	Other assets	$	306	$	331
Finance lease right-of-use assets	Other assets	3		3
Total lease right-of-use assets		$	309	$	334
Lease liabilities:
Operating lease liabilities	Other liabilities	$	342	$	367
Finance lease liabilities	Other liabilities	3		4
Total lease liabilities		$	345	$	371

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, 2023 and 2022.

Table 8.5.3

REMAINING LEASE TERMS

& DISCOUNT RATES

	December 31, 2023		December 31, 2022
Weighted Average Remaining Lease Terms
Operating leases	11.79 years		12.22 years
Finance leases	9.15 years		9.83 years
Weighted Average Discount Rate
Operating leases	2.84	%	2.69	%
Finance leases	2.39	%	2.62	%

The following table provides a detail of the components of lease expense and other lease information for the years ended December 31, 2023, 2022, and 2021:

Table 8.5.4

LEASE EXPENSE &

OTHER INFORMATION

(Dollars in millions)	2023		2022		2021
Lease cost
Operating lease cost	$	45	$	47	$	48
Sublease income	(2)		(2)		(1)
Total lease cost	$	43	$	45	$	47
Other information
(Gain) loss on right-of-use asset impairment - operating leases	$	1	$	1	$	3
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	46		50		53
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases	11		31		19

The following table provides a detail of the maturities of FHN's operating and finance lease liabilities as of December 31, 2023:

Table 8.5.5

LEASE LIABILITY MATURITIES

(Dollars in millions)	December 31, 2023
2024	$	44
2025	43
2026	42
2027	41
2028	35
2029 and thereafter	204
Total lease payments	409
Less lease liability interest	(64)
Total lease liability	$	345

FHN had no aggregate undiscounted contractual obligations for lease arrangements that have not commenced as of December 31, 2023.

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 2 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, 2023 and 2022 were as follows:

Table 8.5.6

LEASE NET INVESTMENTS

(Dollars in millions)	December 31, 2023		December 31, 2022
Lease receivable	$	1,143	$	984
Unearned income	(244)		(198)
Guaranteed residual	147		121
Unguaranteed residual	189		153
Total net investment	$	1,235	$	1,060

Interest income for direct financing or sales-type leases totaled $50 million, $34 million, and $26 million for the years ended December 31, 2023, 2022, and 2021, 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, 2023, 2022, and 2021.

Maturities of the Company's lease receivables as of December 31, 2023 were as follows:

Table 8.5.7

LEASE RECEIVABLE MATURITIES

(Dollars in millions)	December 31, 2023
2024	$	214
2025	193
2026	168
2027	132
2028	98
2029 and thereafter	338
Total future minimum lease payments	$	1,143

Premises, Equipment, and Leases

Premises, Equipment, and Leases

Premises and equipment was comprised of the following at December 31, 2023 and 2022:

Table 8.5.1

PREMISES & EQUIPMENT

(Dollars in millions)	December 31, 2023		December 31, 2022
Land	$	163	$	163
Buildings	554		544
Leasehold improvements	84		82
Furniture, fixtures, and equipment	295		277
Fixed assets held for sale (a)	—		1
Total premises and equipment	1,096		1,067
Less accumulated depreciation and amortization	(506)		(455)
Premises and equipment, net	$	590	$	612

(a) Primarily comprised of land and buildings.

Both fixed asset and leased asset impairments were immaterial for 2023 and 2022. In 2021, FHN recognized $34 million of fixed asset impairments and $3 million of leased asset impairments which is included in other expense on the Consolidated Statements of Income.

Net gains related to the sales of bank branches were immaterial for 2023 and 2022. In 2021, FHN had $6 million of net gains related to the sales of bank branches which is 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, 2023		December 31, 2022
Lease right-of-use assets:	Classification
Operating lease right-of-use assets	Other assets	$	306	$	331
Finance lease right-of-use assets	Other assets	3		3
Total lease right-of-use assets		$	309	$	334
Lease liabilities:
Operating lease liabilities	Other liabilities	$	342	$	367
Finance lease liabilities	Other liabilities	3		4
Total lease liabilities		$	345	$	371

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, 2023 and 2022.

Table 8.5.3

REMAINING LEASE TERMS

& DISCOUNT RATES

	December 31, 2023		December 31, 2022
Weighted Average Remaining Lease Terms
Operating leases	11.79 years		12.22 years
Finance leases	9.15 years		9.83 years
Weighted Average Discount Rate
Operating leases	2.84	%	2.69	%
Finance leases	2.39	%	2.62	%

The following table provides a detail of the components of lease expense and other lease information for the years ended December 31, 2023, 2022, and 2021:

Table 8.5.4

LEASE EXPENSE &

OTHER INFORMATION

(Dollars in millions)	2023		2022		2021
Lease cost
Operating lease cost	$	45	$	47	$	48
Sublease income	(2)		(2)		(1)
Total lease cost	$	43	$	45	$	47
Other information
(Gain) loss on right-of-use asset impairment - operating leases	$	1	$	1	$	3
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	46		50		53
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases	11		31		19

The following table provides a detail of the maturities of FHN's operating and finance lease liabilities as of December 31, 2023:

Table 8.5.5

LEASE LIABILITY MATURITIES

(Dollars in millions)	December 31, 2023
2024	$	44
2025	43
2026	42
2027	41
2028	35
2029 and thereafter	204
Total lease payments	409
Less lease liability interest	(64)
Total lease liability	$	345

FHN had no aggregate undiscounted contractual obligations for lease arrangements that have not commenced as of December 31, 2023.

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 2 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, 2023 and 2022 were as follows:

Table 8.5.6

LEASE NET INVESTMENTS

(Dollars in millions)	December 31, 2023		December 31, 2022
Lease receivable	$	1,143	$	984
Unearned income	(244)		(198)
Guaranteed residual	147		121
Unguaranteed residual	189		153
Total net investment	$	1,235	$	1,060

Interest income for direct financing or sales-type leases totaled $50 million, $34 million, and $26 million for the years ended December 31, 2023, 2022, and 2021, 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, 2023, 2022, and 2021.

Maturities of the Company's lease receivables as of December 31, 2023 were as follows:

Table 8.5.7

LEASE RECEIVABLE MATURITIES

(Dollars in millions)	December 31, 2023
2024	$	214
2025	193
2026	168
2027	132
2028	98
2029 and thereafter	338
Total future minimum lease payments	$	1,143

Premises, Equipment, and Leases

Premises, Equipment, and Leases

Premises and equipment was comprised of the following at December 31, 2023 and 2022:

Table 8.5.1

PREMISES & EQUIPMENT

(Dollars in millions)	December 31, 2023		December 31, 2022
Land	$	163	$	163
Buildings	554		544
Leasehold improvements	84		82
Furniture, fixtures, and equipment	295		277
Fixed assets held for sale (a)	—		1
Total premises and equipment	1,096		1,067
Less accumulated depreciation and amortization	(506)		(455)
Premises and equipment, net	$	590	$	612

(a) Primarily comprised of land and buildings.

Both fixed asset and leased asset impairments were immaterial for 2023 and 2022. In 2021, FHN recognized $34 million of fixed asset impairments and $3 million of leased asset impairments which is included in other expense on the Consolidated Statements of Income.

Net gains related to the sales of bank branches were immaterial for 2023 and 2022. In 2021, FHN had $6 million of net gains related to the sales of bank branches which is 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, 2023		December 31, 2022
Lease right-of-use assets:	Classification
Operating lease right-of-use assets	Other assets	$	306	$	331
Finance lease right-of-use assets	Other assets	3		3
Total lease right-of-use assets		$	309	$	334
Lease liabilities:
Operating lease liabilities	Other liabilities	$	342	$	367
Finance lease liabilities	Other liabilities	3		4
Total lease liabilities		$	345	$	371

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, 2023 and 2022.

Table 8.5.3

REMAINING LEASE TERMS

& DISCOUNT RATES

	December 31, 2023		December 31, 2022
Weighted Average Remaining Lease Terms
Operating leases	11.79 years		12.22 years
Finance leases	9.15 years		9.83 years
Weighted Average Discount Rate
Operating leases	2.84	%	2.69	%
Finance leases	2.39	%	2.62	%

The following table provides a detail of the components of lease expense and other lease information for the years ended December 31, 2023, 2022, and 2021:

Table 8.5.4

LEASE EXPENSE &

OTHER INFORMATION

(Dollars in millions)	2023		2022		2021
Lease cost
Operating lease cost	$	45	$	47	$	48
Sublease income	(2)		(2)		(1)
Total lease cost	$	43	$	45	$	47
Other information
(Gain) loss on right-of-use asset impairment - operating leases	$	1	$	1	$	3
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	46		50		53
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases	11		31		19

The following table provides a detail of the maturities of FHN's operating and finance lease liabilities as of December 31, 2023:

Table 8.5.5

LEASE LIABILITY MATURITIES

(Dollars in millions)	December 31, 2023
2024	$	44
2025	43
2026	42
2027	41
2028	35
2029 and thereafter	204
Total lease payments	409
Less lease liability interest	(64)
Total lease liability	$	345

FHN had no aggregate undiscounted contractual obligations for lease arrangements that have not commenced as of December 31, 2023.

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 2 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, 2023 and 2022 were as follows:

Table 8.5.6

LEASE NET INVESTMENTS

(Dollars in millions)	December 31, 2023		December 31, 2022
Lease receivable	$	1,143	$	984
Unearned income	(244)		(198)
Guaranteed residual	147		121
Unguaranteed residual	189		153
Total net investment	$	1,235	$	1,060

Interest income for direct financing or sales-type leases totaled $50 million, $34 million, and $26 million for the years ended December 31, 2023, 2022, and 2021, 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, 2023, 2022, and 2021.

Maturities of the Company's lease receivables as of December 31, 2023 were as follows:

Table 8.5.7

LEASE RECEIVABLE MATURITIES

(Dollars in millions)	December 31, 2023
2024	$	214
2025	193
2026	168
2027	132
2028	98
2029 and thereafter	338
Total future minimum lease payments	$	1,143