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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

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 Equity for the years ended December 31, were as follows:



(Dollars in thousands)	2019		2018			2017
Consolidated Statements of Income:
Income tax expense/(benefit)	$	133,291	$	157,602		$	131,892
Consolidated Statements of Equity:
Income tax expense/(benefit) related to:
Net unrealized gains/(losses) on pension and other postretirement plans	4,876		(177		)	(832		)
Net unrealized gains/(losses) on securities available-for-sale	35,062		(16,054		)	(2,955		)
Net unrealized gains/(losses) on cash flow hedges	5,035		(1,360		)	(3,163		)
Total	$	178,264	$	140,011		$	124,942

Schedule of Components of Income Tax Expense/(Benefit)

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



(Dollars in thousands)	2019		2018		2017
Current:
Federal	$	105,294	$	44,088	$	10,012
State	13,640		9,957		879
Deferred:
Federal	5,091		81,852		114,059
State	9,266		21,705		6,942
Total	$	133,291	$	157,602	$	131,892

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 percent for 2019 and 2018, respectively, and 35 percent for 2017 to the total income tax expense follows:



(Dollars in thousands)	2019			2018			2017
Federal income tax rate	21%			21%			35%
Tax computed at statutory rate	$	122,989		$	149,963		$	108,105
Increase/(decrease) resulting from:
State income taxes, net of federal income tax benefit	15,319			24,553			4,753
Bank-owned life insurance (“BOLI”)	(4,915		)	(3,626		)	(8,401		)
401(k) – employee stock ownership plan (“ESOP”)	(764		)	(653		)	(904		)
Tax-exempt interest	(6,480		)	(6,538		)	(7,890		)
Non-deductible expenses	10,609			8,301			7,558
LIHTC credits and benefits, net of amortization	(4,419		)	(7,178		)	(5,327		)
Other tax credits	—			(2,825		)	(2,480		)
Change in valuation allowance – DTA	(74		)	(73		)	(40,473		)
Other changes in unrecognized tax benefits	4,044			6,143			46
Effect of Tax Act	—			(6,746		)	82,027
Other	(3,018		)	(3,719		)	(5,122		)
Total	$	133,291		$	157,602		$	131,892

Net DTA Balances Related to Income Tax Carryforwards

As of December 31, 2019, FHN had net deferred tax asset balances related to federal and state income tax carryforwards of $43.8 million and $1.2 million, respectively, which will expire at various dates as follows:

Schedule of Deferred Tax Assets and Liabilities

Temporary differences which gave rise to deferred tax assets and deferred tax liabilities on December 31, 2019 and 2018 were as follows:



(Dollars in thousands)	2019		2018
Deferred tax assets:
Loss reserves	$	58,251	$	65,015
Employee benefits	68,254		64,843
Accrued expenses	4,340		15,763
Lease liability	55,543		—
Federal loss carryforwards	43,774		49,821
State loss carryforwards	1,186		7,225
Investment in debt securities (ASC 320) (a)	—		24,863
Other	19,255		27,168
Gross deferred tax assets	250,603		254,698
Valuation allowance	—		(74		)
Deferred tax assets after valuation allowance	$	250,603	$	254,624
Deferred tax liabilities:
Depreciation and amortization	$	50,725	$	51,519
Investment in debt securities (ASC 320) (a)	10,154		—
Equity investments	3,656		7,705
Other intangible assets	56,352		57,632
Prepaid expenses	10,024		9,218
ROU lease asset	50,151		—
Other	540		683
Gross deferred tax liabilities	181,602		126,757
Net deferred tax assets	$	69,001	$	127,867

(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 below:



(Dollars in thousands)
Balance at December 31, 2017	$	4,271
Increases related to prior year tax positions	16,695
Increases related to current year tax positions	1,576
Settlements	(2,080		)
Lapse of statutes	(278		)
Balance at December 31, 2018	$	20,184
Increases related to prior year tax positions	2,522
Increases related to current year tax positions	2,170
Lapse of statutes	(460		)
Balance at December 31, 2019	$	24,416

(Dollars in thousands)

Expiration Dates

Net Deferred Tax
Asset Balance

Losses-federal

Net operating losses-states

Net operating losses-states