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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
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)202420232022
Consolidated Statements of Income:   
Income tax expense$211 $212 $247 
Consolidated Statements of Changes in Equity:   
Income tax expense (benefit) related to:   
Net unrealized gains (losses) on pension and other postretirement plans7 (1)(5)
Net unrealized gains (losses) on securities available for sale17 44 (302)
Net unrealized gains (losses) on cash flow hedges(5)15 (42)
Total$230 $270 $(102)
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)202420232022
Current:   
Federal$204 $140 $123 
State24 28 33 
Deferred:  
Federal(14)37 87 
State(3)7 4 
Total$211 $212 $247 
A reconciliation of expected income tax expense (benefit) at the federal statutory rate of 21% for 2024, 2023, and 2022, respectively, to total income tax expense follows.
Table 8.14.3
RECONCILIATION FROM STATUTORY RATES
(Dollars in millions)202420232022
Federal income tax rate21 %21 %21 %
Tax computed at statutory rate$211 $237 $243 
Increase (decrease) resulting from:   
State income taxes, net of federal income tax benefit20 34 31 
BOLI
(5)(6)(4)
Tax-exempt interest(12)(12)(10)
FDIC premium12 11 7 
Non-deductible expenses8 9 4 
LIHTC credits and benefits, net of amortization (13)(15)(16)
Other tax credits(1)(5)(4)
Other changes in unrecognized tax benefits(2)(50)(2)
Termination of BOLI policies— 21 — 
Other(7)(12)(2)
Total$211 $212 $247 
As of December 31, 2024, FHN had net deferred tax asset balances related to federal and state income tax carryforwards of $29 million and $3 million, respectively, which will expire at various dates as follows.
Table 8.14.4
TAX CARRYFORWARD DTA EXPIRATION DATES
(Dollars in millions)Expiration DatesNet Deferred Tax
Asset Balance
Losses - federal2028 - 2035$29 
Net operating losses - states2025 - 20342 
Net operating losses - states2035 - 20411 
We believe it is more likely than not that the benefit from certain state NOL carryforwards will not be realized. In recognition of this risk, we have provided an immaterial valuation allowance on the DTAs related to these state NOL carryforwards. If our assumptions change and we determine that we will be able to realize these NOLs, the tax benefits related to any reversal of the valuation allowance on DTAs will be recognized as a reduction of income tax expense.
A DTA or DTL is recognized for the tax consequences of temporary differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. The tax consequence is calculated by applying enacted statutory tax rates, applicable to future years, to these temporary differences. In order to support the recognition of the DTA, FHN’s management must believe that the realization of the DTA is more likely than not. FHN evaluates the likelihood of realization of the DTA based on both positive and negative evidence available at the time, including (as appropriate) scheduled reversals of DTLs, projected future taxable income, tax planning strategies,
and recent financial performance. Realization is dependent on generating sufficient taxable income prior to the expiration of the carryforwards attributable to the DTA. In projecting future taxable income, FHN incorporates assumptions including the estimated amount of future state and federal pre-tax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates used to manage the underlying business.
As of December 31, 2024, FHN's net DTA was $227 million compared to $215 million at December 31, 2023. At December 31, 2024, FHN's gross DTA (net of a valuation allowance) and gross DTL were $768 million and $541 million, respectively. Although realization is not assured, FHN believes that it meets the more-likely-than-not requirement with respect to the net DTA after valuation allowance.
Temporary differences which gave rise to deferred tax assets and deferred tax liabilities on December 31, 2024 and 2023 were as follows.
Table 8.14.5
COMPONENTS OF DTAs & DTLs
(Dollars in millions)20242023
Deferred tax assets:  
Securities available for sale and financial instruments (a)$284 $296 
Loan valuations and loss reserves152 107 
Employee benefits119 128 
Lease liability82 85 
Depreciation and amortization54 37 
Accrued expenses20 21 
Federal loss carryforwards29 32 
State loss carryforwards3 3 
Other25 28 
Gross deferred tax assets768 737 
Deferred tax liabilities:  
Leasing$363 $316 
ROU lease asset73 76 
Other intangible assets71 75 
Prepaid expenses23 20 
Equity investments2 31 
Other9 4 
Gross deferred tax liabilities541 522 
Net deferred tax assets$227 $215 
(a)    Tax effects of unrealized gains and losses are tracked on a security-by-security basis.

Total unrecognized tax benefits at December 31, 2024 and 2023 were $13 million and $15 million, respectively. To the extent such unrecognized tax benefits as of December 31, 2024 are subsequently recognized, $13 million of tax benefits could impact tax expense and FHN’s effective tax rate in future periods.
During 2023, FHN settled audits which allowed it to reduce unrecognized benefits by $76 million, this resulted in a reduction of tax expense by $32 million. A reduction of accrued interest related to unrecognized benefits resulted in a reduction of tax expense of $14 million.
It is reasonably possible that the unrecognized tax benefits related to federal and state exposures could decrease by
$3 million during 2025 if the applicable statutes of limitations expire as scheduled. FHN recognizes interest accrued and penalties related to unrecognized tax benefits within income tax expense. FHN had approximately $2 million and $3 million accrued for the payment of interest as of December 31, 2024 and 2023, respectively. The total amounts of interest and penalties recognized in the Consolidated Statements of Income during 2024 and 2023 were net benefits of $1 million and $14 million, respectively.
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, 2022$89 
Increases related to prior year tax positions1 
Increases related to current year tax positions2 
Settlements(76)
Lapse of statutes(1)
Balance at December 31, 2023$15 
Increases related to prior year tax positions2 
Increases related to current year tax positions3 
Lapse of statutes(7)
Balance at December 31, 2024$13