UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2022

- or -

☐	TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 SECURITIES EXCHANGE ACT OF 1934

For the Transition period from __________ to__________

Commission File Number: 001-15185

(Exact name of registrant as specified in its charter)

TN			62-0803242
(State or other jurisdiction incorporation of organization)			(IRS Employer Identification No.)
165 Madison Avenue
Memphis,	Tennessee		38103
(Address of principal executive office)			(Zip Code)

Registrant’s telephone number, including area code:  901-523-4444

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of Exchange on which Registered
$.625 Par Value Common Capital Stock	FHN	New York Stock Exchange LLC
Depositary Shares, each representing a 1/400th interest in a share of Non-Cumulative Perpetual Preferred Stock, Series B	FHN PR B	New York Stock Exchange LLC
Depositary Shares, each representing a 1/400th interest in a share of Non-Cumulative Perpetual Preferred Stock, Series C	FHN PR C	New York Stock Exchange LLC
Depositary Shares, each representing a 1/400th interest in a share of Non-Cumulative Perpetual Preferred Stock, Series D	FHN PR D	New York Stock Exchange LLC
Depositary Shares, each representing a 1/4,000th interest in a share of Non-Cumulative Perpetual Preferred Stock, Series E	FHN PR E	New York Stock Exchange LLC
Depositary Shares, each representing a 1/4,000th interest in a share of Non-Cumulative Perpetual Preferred Stock, Series F	FHN PR F	New York Stock Exchange LLC

Securities registered pursuant to Section 12(g) of the Act:  None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  ☒ Yes ☐

No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  ☐ Yes ☒

No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities

Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such

reports), and (2) has been subject to such filing requirements for the past 90 days.  ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted

pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period

that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller

reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller

reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. 

Large Accelerated Filer	☒		Accelerated filer	☐		Non-accelerated filer		☐
Smaller reporting company	☐		Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for

complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the

effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b))

by the registered public accounting firm that prepared or issued its audit report. ☒

Note: The following relate to disclosure requirements which are not yet in effect and do not apply to this report.

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

At June 30, 2022, the aggregate market value of registrant common stock held by non-affiliates of the registrant was

approximately $11.6 billion based on the closing stock price reported for that date. At January 31, 2023, the registrant had

537,336,291 shares of common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE:

Portions of the Proxy Statement to be furnished to shareholders in connection with the Annual Meeting of shareholders

scheduled for April 25, 2023 or provided in an amendment to this Annual Report:  Part III of this Report

Auditor Name:KPMG LLPAuditor Location:  Memphis, TNAuditor Firm ID: 185

Table of Contents

ITEM		Page		ITEM		Page
Glossary		3		Item 8.	Financial Statements and Supplementary Data	105
Executive Summary of Principal Investment Risks		5		Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	202
Forward-Looking Statements		7
Part I				Item 9A.	Controls and Procedures	202
Item 1.	Business	9		Item 9B.	Other Information	202
Item 1A.	Risk Factors	31		Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	202
Item 1B.	Unresolved Staff Comments	53		Part III
Item 2.	Properties	53		Item 10.	Directors and Executive Officers of the Registrant	203
Item 3.	Legal Proceedings	53		Item 11.	Executive Compensation	205
Item 4.	Mine Safety Disclosures	53		Item 12.	Security Ownership of Certain Beneficial Owners
Supplemental Part I Information		54			and Management and Related Stockholder Matters	206
Part II
Item 5.	Market for the Registrant’s Common Equity, Related Stockholder Matters, and Issuer			Item 13.	Certain Relationships and Related Transactions	209
	Purchases of Equity Securities	56		Item 14.	Principal Accountant Fees and Services	209
Item 6.	[reserved]	57		Part IV
Item 7.	Management’s Discussion and Analysis of			Item 15.	Exhibits and Financial Statement Schedules	210
	Financial Condition and Results of Operations	58		Item 16.	Form 10-K Summary	215
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	104		Signatures		216

MD&A and Financial Statement References:

In this report: "2022 MD&A" and "2022 MD&A (Item 7)" generally refer to Management’s Discussion and Analysis of Financial

Condition and Results of Operations appearing in Item 7 within Part II of this report; and, "2022 Financial Statements" and

"2022 Financial Statements (Item 8)" generally refer to our Consolidated Balance Sheets, our Consolidated Statements of

Income, our Consolidated Statements of Comprehensive Income, our Consolidated Statements of Changes in Equity, our

Consolidated Statements of Cash Flows, and the Notes to the Consolidated Financial Statements, all appearing in Item 8

within Part II of this report.

Glossary

The following is a list of common acronyms and terms used throughout this report:

     

ACL	Allowance for credit losses
AFS	Available for sale
AIR	Accrued interest receivable
ALCO	Asset/Liability Committee
ALLL	Allowance for loan and lease losses
ALM	Asset/liability management
AOCI	Accumulated other comprehensive income
ASC	FASB Accounting Standards Codification
Associate	Person employed by FHN

ASU	Accounting Standards Update
Bank	First Horizon Bank
BOLI	Bank-owned life insurance
C&I	Commercial, financial, and industrial loan portfolio
CAS	Credit Assurance Services
CARES Act	Coronavirus Aid, Relief, and Economic Security Act
CBF	Capital Bank Financial
CCAR	Comprehensive Capital Analysis and Review

TABLE OF CONTENTS and GLOSSARY

   

	3	2022 FORM 10-K ANNUAL REPORT

CECL	Current expected credit loss
CEO	Chief Executive Officer
CFPB	Consumer Financial Protection Bureau
CMO	Collateralized mortgage obligations
Company	First Horizon Corporation
Corporation	First Horizon Corporation
CRA	Community Reinvestment Act
CRE	Commercial Real Estate
CRMC	Credit Risk Management Committee
DTA	Deferred tax asset
DTL	Deferred tax liability
EAD	Exposure as default
ECP	Equity Compensation Plan
EPS	Earnings per share
Fannie Mae	Federal National Mortgage Association
FASB	Financial Accounting Standards Board
FDIC	Federal Deposit Insurance Corporation
Federal Reserve	Federal Reserve Board
Fed	Federal Reserve Board
FHA	Federal Housing Administration
FHLB	Federal Home Loan Bank
FHN	First Horizon Corporation
FHNF	FHN Financial; FHN's fixed income division
FICO	Fair Isaac Corporation
First Horizon	First Horizon Corporation
FRB	Federal Reserve Bank or the Federal Reserve Board
Freddie Mac	Federal Home Loan Mortgage Corporation
FTE	Fully taxable equivalent
FTRESC	FT Real Estate Securities Company, Inc.
GAAP	Generally accepted accounting principles
GSE	Government sponsored enterprises, in this filing references Fannie Mae and Freddie Mac
HELOC	Home equity line of credit
HFS	Held for sale
HTM	Held to maturity
IBKC	IBERIABANK Corporation
IBKC merger	FHN's merger of equals with IBKC that closed July 2020
ISDA	International Swap and Derivatives Association
IRS	Internal Revenue Service
LGD	Loss given default
LIBOR	London Inter-Bank Offered Rate
LIHTC	Low Income Housing Tax Credit
LLC	Limited Liability Company
LMC	Loans to mortgage companies

LOCOM	Lower of cost or market
LRRD	Loan Rehab and Recovery Department
LTV	Loan-to-value
MBS	Mortgage-backed securities
MD&A	Management’s Discussion and Analysis of Financial Condition and Results of Operations
NAICS	North American Industry Classification System
NII	Net interest income
NM	Not meaningful
NMTC	New Markets Tax Credit
NPA	Nonperforming asset
Non-PCD	Non-Purchased Credit Deteriorated Financial Assets
NPL	Nonperforming loan
OREO	Other Real Estate-owned
PCAOB	Public Company Accounting Oversight Board
PCD	Purchased Credit Deteriorated Financial Assets
PCI	Purchased credit impaired
PD	Probability of default
PM	Portfolio managers
PPP	Paycheck Protection Program
PSU	Performance Stock Unit
RE	Real estate
RM	Relationship managers
ROA	Return on Assets
ROU	Right of use
RPL	Reasonably possible loss
SBA	Small Business Administration
SEC	Securities and Exchange Commission
SOFR	Secure Overnight Funding Rate
SVaR	Stressed Value-at-Risk
TD	The Toronto-Dominion Bank
TDBNA	TD Bank, N.A.
TD-US	TD Bank US Holding Company
TD Merger Agreement	Merger agreement between FHN, TD, TD- US, and a TD-US subsidiary
Pending TD Merger	The merger transactions contemplated by the TD Merger Agreement
Bank Merger Agreement	Merger agreement providing for the merger of the Bank into TDBNA
TDR	Troubled Debt Restructuring
TRUP	Trust preferred loan
UPB	Unpaid principal balance
USDA	United States Department of Agriculture
VaR	Value-at-Risk
VIE	Variable Interest Entities
we/us/our	First Horizon Corporation

TABLE OF CONTENTS and GLOSSARY

   

	4	2022 FORM 10-K ANNUAL REPORT

Executive Summary of

Principal Investment Risks

This section provides an executive summary of the

principal risks associated with an investment in our equity

or debt securities. Our businesses are complex, and so are

the risks associated with them. This summary is not a

complete statement of risks a prospective or current

investor should consider.

•Pending TD Merger. In 2022 we agreed to be acquired

by TD for a cash price per FHN common share that, at

the close of business on February 20, 2023, was

$25.1531488 per share and rising very slightly each day

thereafter. The market price of our common stock was

and continues to be substantially impacted by the

Pending TD Merger. Completion of the Pending TD

Merger is subject to customary closing conditions,

including approvals from U.S. and Canadian regulatory

authorities. On February 9, 2023, FHN and TD agreed to

extend the outside date to May 27, 2023. Subsequent

to the extension, TD recently informed FHN that TD

does not expect that the necessary regulatory approvals

will be received in time to complete the Pending TD

Merger by May 27, 2023, and that TD cannot provide a

new projected closing date at this time. TD has initiated

discussions with FHN regarding a potential further

extension of the outside date. There can be no

assurance that an extension will ultimately be agreed or

that TD will satisfy all regulatory requirements so that

the regulatory approvals required to complete the

Pending TD Merger will be received. For additional

information, see 2022 Merger Agreement with Toronto-

Dominion Bank which begins on page 15, and Risks

Related to Pending TD Merger which begins on page 31.

•The Economy. Our businesses and our industry are

heavily entwined with the U.S. economy. We tend to

perform better when economic conditions are

favorable, and our performance tends to be weaker

when the economy is weaker. That relationship can be

quite strong, which can make our income and other key

performance measures volatile, especially when

compared with companies in many other industries. The

economy tends to rise and fall in roughly a cyclical

manner which is difficult to predict, which in turn makes

our performance difficult to predict. For additional

information, see the Cyclicality discussion within Other

Business Information, which begins on page 18, and

Risks from Economic Downturns and Changes which

begins on page 38.

•Credit Loss. Our lending business—accounting for about

half of our revenues—is critically dependent on our

clients being able to pay us back. That ability often

depends on economic conditions, but many individual

factors can be critical as well. If a client defaults on a

loan, generally we will experience a financial loss which

often is only reduced, not eliminated, by collateral

supporting the loan. Accounting rules require us to

evaluate current expected credit loss (CECL) each

quarter, booking losses based on our expectations. That

process can result in a highly volatile pattern of

recognizing credit loss each quarter. 2020 demonstrated

this volatility, based on the economic and business

disruptions associated with the COVID-19 pandemic in

the first half of 2020. For additional information, see:

the discussion captioned CECL Accounting and COVID-19

within the Significant Business Developments Over Past

Five Years section of Item 1, which begins on page 12;

and Credit Risks beginning on page 40.

•Loan Loss vs Loan Profit. Lending generally is a high-

volume, low-margin business. This means that we often

need the profits from many loans to make up for losses

from one loan. For our earnings to be strong, we need

to hold loan losses to a very low level, which makes our

management of credit quality a critical function for us.

This imbalance between loss and profit can amplify the

potential for volatility in our earnings. For additional

information, see Credit Risks beginning on page 40.

•Interest Rate Conditions. Interest rates and, especially,

the shape of the yield curve, are critical drivers of our

profit margin from lending. If the yield curve is flat—

with long-term rates only slightly higher than short-term

rates—our lending margins shrink, and so does our net

interest income. Interest rate policy is controlled by

federal agencies and by market forces, not by us. In

2022 the key agency in the U.S.  shifted to strong

tightening policy, raising short-term interest rates

multiple times. This represented a significant change of

policy compared with 2020-21. Moreover, by the end of

2021 and during all of 2022, inflation in the U.S. had

risen to levels not seen in decades. This aggressive

policy shift has caused short-term rates to rise

substantially, and to exceed long-term rates on many

occasions (a so-called yield curve inversion). Over half of

our loan portfolio bears variable interest rates

associated with short-term reference rates, which last

year reacted fairly quickly to the new environment. For

additional information, see: the Monetary Policy Shifts

discussion within Significant Business Developments

Over Past Five Years, which begins on page 12; the

Cyclicality discussion within Other Business Information,

which begins on page 18; Risks Associated with

Monetary Events beginning on page 39; Interest Rate

and Yield Curve Risks beginning on page 47; and

discussion under the caption Federal Reserve Policy in

Transition within the Market Uncertainties and

EXECUTIVE SUMMARY OF PRINCIPAL INVESTMENT RISKS
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	5	2022 FORM 10-K ANNUAL REPORT

Prospective Trends section of our 2022 MD&A (Item 7),

which begins on page 95.

•Funding Balance. In our lending business, we aggregate

money and lend it out at rates which more than cover

our costs. We constantly must balance our funding

sources (deposits and borrowings) with our funding

needs (lending). Imbalances tend to hurt our earnings. If

sources become too large, generally we can cut back

short-term borrowing or invest the excess, but our

margins can be weaker as a result. If sources become

too small, we might have to forego profitable lending or

increase funding by increasing deposit or borrowing

volumes and costs. For additional information, see

Liquidity and Funding Risks beginning on page 45.

•Competition. Competition for clients and talent in our

industry is intense and unlikely to abate. Competition

for clients pressures us to make interest rate and other

concessions on lending and on deposits, which reduce

our margins. Competition for revenue-producing talent

is a key method of obtaining new client relationships in

many parts of our industry, and pressures us to increase

compensation expense. For additional information, see

Competition beginning on page 16, and Traditional

Competition Risks beginning on page 34.

•Banking Consolidation. Since the advent of nation-wide

branching in the 1980s, the banking industry has

experienced several waves of substantial consolidation.

In the past twenty years, technological improvements

have allowed institutions to become extremely large

while maintaining adequate client service, and, due to

cost efficiencies associated with scalable technology,

have rewarded the largest institutions

disproportionately, incenting banks to grow larger,

faster. Consolidation can abruptly change the

competitive environment in our markets. In addition,

when we participate in consolidating actions, as we did

in 2017 and 2020, typically it creates internal disruption

and expense for a time while we integrate systems,

consolidate branches, and take other consolidation-

related actions. Moreover, in our industry, the market

tends to discount, for a time, the stock price of banks

that engage in major mergers, in part due to the

transaction and integration expenses mentioned above

coupled with the risk that the combination may not

achieve management’s strategic or tactical objectives.

For additional information, see: Significant Business

Developments Over Past Five Years beginning on page

12; the Strategic Transactions discussion within the

Other Business Information section which begins on

page 18; and Traditional Strategic and Macro Risks

beginning on page 34.

•Industry Disruption. Technological innovation, and the

associated changes in client preferences, are radically

transforming our industry and how financial services are

delivered to clients. Keeping pace is expensive and

difficult, while being a consistent innovation leader is

practically impossible for a bank our size. Moreover,

rapid innovation has the potential to be destructive of

traditional companies in our industry, as it has done and

is doing in other industries. For additional information,

see Industry Disruption beginning on page 35.

•Regulated Industry. Our principal businesses are heavily

regulated. Our two primary banking regulators can

examine us, cause us to change our business operations,

and significantly restrict our ability to pursue lines of

business, in ways not applicable to companies in most

other industries. We also have several secondary

regulators, each with significant though less-

encompassing powers. The primary missions of the

regulators are to protect the banking system as a whole,

to protect the federal government’s deposit insurance

fund and program, and to protect clients; none exists to

enhance our profitability or promote the interests of

our investors. Moreover, regulators are government

agencies, and as such can experience significant policy

changes when the elected branches of government

experience such changes. For additional information,

see Regulatory, Legislative, and Legal Risks beginning on

page 42.

•Security & Technology. Fraud and theft have always

been significant risks for banks; we experience fraud

and theft loss every year. Technology has allowed fraud

and theft risks to grow substantially. Bad actors can

impact us from around the world, day or night, both

directly and through our clients or vendors.

Unfortunately, it is not practical to emphasize security

to the exclusion of other business needs. Typically, the

more a system is built to be secure and robust, the less

that system can be flexible and adaptable. Moreover,

high-security often can be associated with sub-optimal

user experience. For additional information, see

Operational Risks beginning on page 36.

•Expense Control. Banks in the U.S. are focused on

reducing operating costs as much as possible while

maintaining competitive or superior service. Expense

control is viewed as crucial for long-term success. For

additional information, see Operational Risks beginning

on page 36, and Risks of Expense Control beginning on

page 44.

For a more complete discussion of the risks associated

with our businesses and operations and investment in our

securities, see Item 1A—Risk Factors, beginning on page

31.

EXECUTIVE SUMMARY OF PRINCIPAL INVESTMENT RISKS
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	6	2022 FORM 10-K ANNUAL REPORT

Forward-Looking Statements

This report on Form 10-K, including materials incorporated

into it, contains forward-looking statements within the

meaning of the Private Securities Litigation Reform Act of

1995 with respect to FHN's beliefs, plans, goals,

expectations, and estimates. Forward-looking statements

are not a representation of historical information, but

instead pertain to future operations, strategies, financial

results or other developments. The words “believe,”

“expect,” “anticipate,” “intend,” “estimate,” “should,” “is

likely,” “will,” “going forward,” and other expressions that

indicate future events and trends identify forward-looking

statements.

Forward-looking statements are necessarily based upon

estimates and assumptions that are inherently subject to

significant business, operational, economic and

competitive uncertainties and contingencies, many of

which are beyond our control, and many of which, with

respect to future business decisions and actions (including

acquisitions and divestitures), are subject to change.

Examples of uncertainties and contingencies include,

among other important factors:

•the possibility that the anticipated benefits of the

IBKC merger will not be realized when expected or at

all, including as a result of the strength of the

economy and competitive factors in any or all of

FHN’s market areas;

•global, general and local economic and business

conditions, including economic recession or

depression;

•the potential impacts on FHN’s businesses of the

COVID-19 pandemic, including negative impacts from

quarantines, market declines, and volatility, and

changes in client behavior related to the COVID-19

pandemic;

•the stability or volatility of values and activity in the

residential housing and commercial real estate

markets;

•potential requirements for FHN to repurchase, or

compensate for losses from, previously sold or

securitized mortgages or securities based on such

mortgages;

•potential claims alleging mortgage servicing failures,

individually, on a class basis, or as master servicer of

securitized loans;

•potential claims relating to participation in

government programs, especially lending or other

financial services programs;

•expectations of and actual timing and amount of

interest rate movements, including the slope and

shape of the yield curve, which can have a significant

impact on a financial services institution;

•market and monetary fluctuations, including

fluctuations in mortgage markets;

•the financial condition of borrowers and other

counterparties;

•competition within and outside the financial services

industry;

•the occurrence of natural or man-made disasters,

global pandemics, conflicts, or terrorist attacks, or

other adverse external events;

•effectiveness and cost-efficiency of FHN’s hedging

practices;

•fraud, theft, or other incursions through conventional,

electronic, or other means directly or indirectly

affecting FHN or its clients, business counterparties or

competitors;

•the ability to adapt products and services to changing

industry standards and client preferences;

•risks inherent in originating, selling, servicing, and

holding loans and loan-based assets, including

prepayment risks, pricing concessions, fluctuation in

U.S. housing and other real estate prices, fluctuation

of collateral values, and changes in client profiles;

•the changes in the regulation of the U.S. financial

services industry;

•changes in laws, regulations, and administrative

actions, including executive orders, whether or not

specific to the financial services industry;

•changes in accounting policies, standards, and

interpretations;

•evolving capital and liquidity standards under

applicable regulatory rules;

•accounting policies and processes require

management to make estimates about matters that

are uncertain;

•the occurrence of any event, change or other

circumstances that could give rise to the right of one

or both of the parties to terminate the TD Merger

Agreement;

•the outcome of any legal proceedings that may be

instituted against FHN, TD, or TD-US, including

potential litigation that may be instituted against FHN

or its directors or officers related to the Pending TD

Merger or the TD Merger Agreement;

•the timing and completion of the Pending TD Merger,

including the possibility that the Pending TD Merger

will not close because required regulatory or other

approvals are not received or other conditions to the

closing are not satisfied on a timely basis or at all, or

are obtained subject to conditions that are not

anticipated;

FORWARD-LOOKING STATEMENTS
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	7	2022 FORM 10-K ANNUAL REPORT

•the risk that any announcements relating to the

Pending TD Merger could have adverse effects on the

market price of the common stock of FHN;

•certain restrictions during the pendency of the

Pending TD Merger that may impact FHN’s ability to

pursue certain business opportunities or strategic

transactions;

•the possibility that the Pending TD Merger may be

more expensive to complete than anticipated,

including as a result of unexpected factors or events;

•the diversion of management’s attention from

ongoing business operations and opportunities

caused by the Pending TD Merger;

•reputational risk and potential adverse reactions or

changes to business or employee relationships,

including those resulting from announcements

related to the Pending TD Merger; and

•other factors that may affect future results of FHN.

FHN assumes no obligation to update or revise any

forward-looking statements that are made in this report

on Form 10-K or in any other statement, release, report,

or filing from time to time. Actual results could differ and

expectations could change, possibly materially, because of

one or more factors, including those factors listed above

or presented elsewhere in this report, or in those factors

listed in material incorporated by reference into this

report. In evaluating forward-looking statements and

assessing our prospects, readers of this report should

carefully consider the factors mentioned above along with

the additional risk factors discussed in Items 1 and 1A of

this report and in 2022 MD&A (Item 7), among others.

FORWARD-LOOKING STATEMENTS
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	8	2022 FORM 10-K ANNUAL REPORT

PART  I

Item 1.Business

Our Businesses

Overview

First Horizon Corporation is a Tennessee corporation. We

incorporated in 1968, and are headquartered in Memphis,

Tennessee. We are a bank holding company under the

Bank Holding Company Act, and a financial holding

company under the Gramm-Leach-Bliley Act. Our common

stock is listed on the New York Stock Exchange under the

symbol “FHN.” At December 31, 2022, we had total

consolidated assets of $79 billion. We provide diversified

financial services primarily through our principal

subsidiary, First Horizon Bank. The Bank is a Tennessee

banking corporation headquartered in Memphis,

Tennessee.

During 2022 approximately 25% of our consolidated

revenues were provided by fee and other noninterest

income, and approximately 75% of revenues were

provided by net interest income.

As a financial holding company, we coordinate the

financial resources of the consolidated enterprise and

maintain systems of financial, operational, and

administrative control intended to coordinate selected

policies and activities, including as described in Item 9A of

Part II.

The Bank

The Bank was founded in 1864 as First National Bank of

Memphis. During 2022, through its various business lines,

including consolidated subsidiaries, the Bank reported

revenues (net interest income plus noninterest income) of

approximately $3 billion. The Bank generated a substantial

majority of First Horizon’s consolidated revenue. At

December 31, 2022, the Bank had $79 billion in total

assets, $65 billion in total deposits, and $57 billion in total

loans and leases (net of unearned income and net of

allowance for loan and lease losses).

Principal Businesses, Brands, & Locations

Our principal brands at year-end 2022 are summarized in

Table 1.1.

Table 1.1

Principal Businesses & Brands At Year-End

Businesses	Principal Brands
Banking & financial services generally	First Horizon & First Horizon Bank
Fixed income / capital markets	FHN Financial
Mortgage lending	First Horizon Bank
Insurance brokerage & management services	First Horizon Advisors
Wealth management & brokerage services	First Horizon Advisors

At December 31, 2022, First Horizon’s subsidiaries had

over 450 business locations in 24 U.S. states, excluding

off-premises ATMs. Most of those locations were banking

centers. At year-end, First Horizon had 414 banking

centers in twelve states, as shown in Table 1.2.

Table 1.2

Banking Centers at Year-End

State	#		State	#
Tennessee	135		Georgia	12
North Carolina	79		South Carolina	10
Florida	76		Texas	8
Louisiana	56		Virginia	8
Alabama	13		Mississippi	4
Arkansas	12		New York	1

Many banking centers contain special-service areas such

as wealth management and mortgage lending.

At year-end 2022, First Horizon also had client-service

offices not physically within banking centers, including

fixed income, home mortgage, wealth management, and

commercial loan offices. The largest groups of those

offices were: 29 fixed income offices in 18 states across

ITEM 1. BUSINESS
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	9	2022 FORM 10-K ANNUAL REPORT

the U.S.; and 10 stand-alone mortgage lending offices in 6

states. First Horizon also has operational and

administrative offices.

Loans & Deposits

Lending and deposit-taking are core businesses for us. Our

largest resource to fund our lending is our deposit base. At

year-end 2022, we had total loans (net of unearned

income) of $58 billion, total net loans (net of unearned

income and net of allowance for loan and lease losses) of

$57 billion, and total deposits of $63 billion. Most of our

loans and deposits are held in our regional banking and

specialty banking segments. Most of our loans are

commercial, and most of them are traditional, unsecured

commercial, financial, and industrial loans, or “C&I” loans.

The other two major loan portfolios are secured

commercial real estate loans, or “CRE” loans, and secured

consumer real estate loans. Table 1.3 provides an

overview of our loan and deposit balances at

December 31, 2022 or averaged over the year 2022.

Table 1.3

Loans & Deposits by Type

Loans1			Deposits2
Commercial	78%		Savings	35%
Consumer	22%		Time deposits	4%
Commercial Portfolios			Other interest	22%
C&I	71%		Noninterest	39%
CRE	29%
Consumer Portfolios
Real estate	94%
Credit card/other	6%

1Percentages at December 31, 2022; includes certain leases.

2Percentages of average deposits for 2022.

Percentages may not add to 100% due to rounding.

The C&I portfolio, more than half of total loans, was $32

billion on December 31, 2022. Within C&I, about 20% of

loans are to businesses in the financial services industry,

including mortgage lending companies, with the rest in a

wide range of industries, as shown in Table 1.4.

Table 1.4

C&I Loans1 by Line of Business

Finance & Insurance	13%
Real estate rental & leasing	10%
Health care & social assistance	8%
Mortgage lending companies	7%
Accommodation & food service	7%
Manufacturing	7%
Wholesale trade	7%
Retail trade	6%
Other C&I	35%

1 Percentages of C&I portfolio at December 31, 2022.

Percentages may not add to 100% due to rounding.

Geographically, a significant majority of our loans

originate from five states: Tennessee, Florida, Louisiana,

North Carolina, and Texas. The geographic dispersion of

our loans varies considerably among our three major loan

portfolios, as shown in Table 1.5.

Table 1.5

Major Loan Portfolios by Geography

C&I Loans ($32B)1			CRE Loans ($13B)1			Consumer RE Loans ($12B)1
Tennessee	21%		Florida	25%		Florida	30%
Florida	13%		Texas	12%		Tennessee	22%
Texas	11%		North Carolina	11%		Louisiana	9%
North Carolina	7%		Georgia	10%		Texas	9%
Louisiana	7%		Louisiana	9%		North Carolina	7%
California	5%		Tennessee	9%		New York	5%
Georgia	5%		All other states	24%		All other states	18%
All other states	31%

1Dollars and percentages within each portfolio at December 31, 2022.

Further information regarding deposits and our other

major sources of funding is provided in Notes 8, 9, and 10

beginning on pages 148, 149, and 150, respectively,

appearing in our 2022 Financial Statements (Item 8), and

under the captions Deposits, Short-term Borrowings, and

Term Borrowings beginning on pages 81, 82, and 82,

respectively, of our 2022 MD&A (Item 7). Further

information regarding our loans is provided in Note 3

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beginning on page 134 appearing in our 2022 Financial

Statements (Item 8), and under the captions Analysis of

Financial Condition and Asset Quality, beginning on pages

67 and 69, respectively, of our 2022 MD&A (Item 7).

Business Segments

Segment Overview

Our financial results of operations are reported through

operational business segments which are not closely

related to the legal structure of our subsidiaries. Currently,

we operate through three segments: regional banking,

specialty banking, and corporate. In this report, segment

information related to periods prior to our most recent

segment change has been reclassified to conform with

current segments.

Financial and other additional information concerning our

segments—including information concerning assets,

revenues, and financial results—appears in our 2022

MD&A (Item 7) and in our 2022 Financial Statements

(Item 8), especially in Note 19—Business Segment

Information. Note 19 begins on page 170.

Regional and Specialty Banking Segments

By far most of our loans and deposits are in the regional

banking and specialty banking segments. Similarly, those

segments are the sources of most of our revenues and

expenses. The two segments create and use financial

resources differently, and they generate different types of

revenues. Most notably: regional banking provides a

majority of our net interest income (mainly from lending),

while specialty banking provides more noninterest income

(mainly from fees). In addition, regional banking is larger

than specialty banking by many financial measures. Table

1.6 provides high-level financial information for each of

those two segments, highlighting these points.

Table 1.6

Regional vs Specialty Banking Snapshot

(Dollars in millions)	Regional		Specialty
2022 Average assets	$42,295		$19,967
2022 Net interest income	$1,954		$557
2022 Noninterest income	$444		$311
2022 Pretax income	$1,070		$414

Regional and Specialty Lines of Business

The principal lines of business in the regional banking

segment are:

•commercial banking (larger business enterprises)

•business banking (smaller business enterprises)

•consumer banking

•private client and wealth management

The principal lines of business in the specialty banking

segment are:

•fixed income/capital markets

•professional commercial real estate (Pro-CRE)

•mortgage warehouse lending

•asset-based (secured) lending

•franchise finance

•equipment finance

•corporate banking

•correspondent banking

•mortgage origination

Geographically, regional banking's businesses mainly serve

our traditional markets associated with our banking center

footprint. Many of the businesses within specialty banking

have much broader geographic reach. For example: our

fixed income business has offices from Hawaii to

Massachusetts; and California is listed in Table 1.5

primarily because of specialty banking business lines.

Services We Provide

At December 31, 2022, we provided the following services

through our subsidiaries and divisions:

•general banking services for consumers, businesses,

financial institutions, and governments

•fixed income sales and trading; underwriting of bank-

eligible securities and other fixed-income securities

eligible for underwriting by financial subsidiaries; loan

sales; advisory services; and derivative sales

•mortgage banking services

•brokerage services

•correspondent banking

•transaction processing: nationwide check clearing

services and remittance processing

•trust, fiduciary, and agency services

•credit card products 

•equipment finance services

•investment and financial advisory services

•mutual fund sales as agent

•retail insurance sales as agent

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Information about the net interest income and

noninterest income we obtained from our largest

categories of products and services appears under the

caption Results of Operations—2022 Compared to 2021

beginning on page 61 of our 2022 MD&A (Item 7).

Significant Business Developments Over Past Five Years

Selected Financial Data Past Five Years

Table 1.7 provides selected data concerning revenues, expenses, assets, liabilities, and shareholders’ equity for the past five

years.

Table 1.7

SELECTED CONSOLIDATED FINANCIAL DATA

(Dollars in millions; financial condition data shown period-end, as of December 31)

	2022	2021	2020	2019	2018
Net interest income	$2,392	$1,994	$1,662	$1,210	$1,220
Provision for credit losses	95	(310)	503	45	8
Noninterest income	815	1,076	1,492	654	723
Net income available to common shareholders	868	962	822	435	539
Total loans and leases	58,102	54,859	58,232	31,061	27,536
Total assets	78,953	89,092	84,209	43,311	40,832
Total deposits	63,489	74,895	69,982	32,430	32,683
Total term borrowings	1,597	1,590	1,670	791	1,171
Total liabilities	70,406	80,598	75,902	38,235	36,047
Preferred stock	1,014	520	470	96	96
Total shareholders’ equity	8,547	8,494	8,307	5,076	4,785

Priorities & Developments

Over the past five years, our strategic priorities have

focused on:

•targeted and opportunistic expansion of consumer

and commercial banking products and markets;

•targeted and opportunistic expansion of commercial

lending, mainly through strategic and tactical

transactions, talent development, and talent

acquisitions;

•rigorous expense management with continued

investment in revenue generating initiatives;

•managing business units and products with a strong

emphasis on risk-adjusted returns on invested capital;

•providing exceptional client service and experience as

a primary means to differentiate us from competitors;

and

•investment in scalable technology and other

infrastructure to attract and retain clients and to

support expansion.

Examples of our implementation of these priorities

include:

•In July 2020, we completed a merger of equals

transaction with IBERIABANK Corporation and

purchased 30 branches from Truist Bank, making

2020 a transformative year. See IBKC Merger of

Equals and 30-Branch Acquisition in this Item below

for additional information. In February 2022, we

completed the main systems conversion work related

to that merger.

•As shown in Table 1.7, the COVID-19 pandemic

caused us to recognize substantial provision for credit

losses in 2020, and reduced our transaction volume

and revenues. See the discussion captioned CECL

Accounting and COVID-19 within Events Impacting

Year-to-Year Comparisons, immediately below. In

2021, a large portion of that 2020 provision expense

was effectively reversed, resulting in a provision

credit for the year.

•The pandemic also resulted in strong deposit growth

in 2020 and 2021, despite interest rates being

extremely low. We believe federal assistance and

stimulus programs in 2020 and early 2021 significantly

bolstered deposits in both years. Deposits normalized

by the end of 2022, declining over $10 billion.

•We have made key talent hires in critical areas

throughout our company, with the main focus on

organically growing economically profitable business

lines inside and outside our traditional markets.

•Throughout this period, we have pruned and adapted

our physical banking center network to reflect long-

term trends in client usage of banking centers, and

are making more efficient use of other physical

facilities. Correspondingly, we have expanded and

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enhanced our digital banking products and services.

These efforts are expected to continue.

•In 2022 interest rates rose aggressively. This improved

our lending margins during the year as we were able

to raise average lending rates faster than average

funding rates.

•Until 2022, when interest rates in the U.S. began to

rise significantly, lending was strong in certain

specialty areas, such as lending to mortgage

companies, where demand was strongly stimulated

by low interest rates. In 2022, mortgage-related

lending and services fell significantly.

•Similarly, 2022's rising rate environment and

significant financial market volatility negatively

impacted our fixed income and capital markets

business compared to earlier years in this period.

Events Impacting Year-to-Year Comparisons

Pending Acquisition by TD

In February 2022, we agreed to be acquired by TD in a

merger transaction. Our shareholders approved the

transaction in May 2022. The transaction has not yet been

approved by regulators. See 2022 Merger Agreement with

Toronto-Dominion Bank beginning on page 15 for further

information. Preparation for the consummation of the

Pending TD Merger resulted in significant expenses in

2022 unrelated to the ordinary course of business.

Sale of Title Services Business in 2022

In third quarter of 2022, we sold our title services

business, recognizing a $22 million pretax gain.

IBKC Merger of Equals in 2020

In July 2020, we closed our merger of equals with

IBERIABANK Corporation (“IBKC”). IBKC was the parent

company of IBERIABANK based in Lafayette, Louisiana. At

year-end 2019, IBKC had $31.7 billion of total assets—

nearly 75% of our size at that time—and operated over

190 banking centers in 11 states: Louisiana, Texas,

Arkansas, Tennessee, Mississippi, Alabama, Georgia,

Florida, North and South Carolina, and New York. IBKC’s

largest concentrations of banking centers were in

Louisiana and Florida. We and IBKC offered many of the

same financial services before the merger, but IBKC

exceeded us in several areas, most notably in equipment

financing, mortgage, and title services.

After closing, our board expanded to 17 directors, of

which nine were from legacy First Horizon and eight were

from legacy IBKC. IBKC shareholders collectively were

issued 243 million First Horizon common shares (on a net

basis).

Under applicable accounting guidance, none of the

income or expense recognized by IBKC prior to the merger

was included in our income or expense for 2020. As a

result, our 2020 operating results consisted of

approximately two quarters of legacy First Horizon alone

plus approximately two quarters of combined First

Horizon and IBKC. In addition, operating results in 2020

were significantly affected by merger-related expenses

and by two significant accounting impacts, described in

Large Accounting Impacts from IBKC Merger below.

30-Branch Acquisition in 2020

In July 2020, we purchased 30 branches in North Carolina

(20), Virginia (8), and Georgia (2) from SunTrust Bank (now

Truist Bank). Those branches are in markets which we did

not serve previously, or in which we did not have a leading

market position. Along with the branch facilities, we

acquired $0.4 billion of related loans and assumed $2.2

billion of deposits.

Large Accounting Impacts from IBKC Merger

Under applicable accounting guidance, closing the IBKC

merger in July 2020 created two substantial impacts on

our operating results for 2020. First, although we were

required to record IBKC’s loans at fair value on the closing

date, we also were required to recognize, as a provision

for credit losses, an estimate of current expected credit

losses for certain acquired loans. A similar process, with

much smaller numbers, occurred for the loans associated

with the 30-branch purchase. The overall incremental

expense, recorded in third quarter 2020, was $147 million.

Moreover, we were required to record, on a preliminary

basis, a nontaxable purchase accounting gain from the

merger of $533 million, driven by the stock market decline

in 2020 associated with the COVID-19 pandemic. The net

result of those two impacts was a $386 million uplift to

our pretax income in 2020 unrelated to the ordinary

operation of our businesses.

Expenses related to IBKC Merger

Closing the IBKC merger, integrating the business

operations and systems, and making the changes

necessary to achieve intended cost and other synergies

resulted in substantial noninterest expense in 2020-2022.

Low Credit Loss Rates through 2019

During 2018-2019, our provision for credit losses was

unusually low, though in 2019 it began to normalize.

When provision is low, differences from year to year can

be idiosyncratic, driven by just a few clients.

CECL Accounting and COVID-19

Starting in 2020, accounting guidance changed, requiring

us to recognize “current expected credit loss” on all loans.

The new guidance had the effect of accelerating,

compared to prior guidance, the recognition of provision

expense at times when general economic conditions

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deteriorate in a rapid manner. Starting in March 2020,

government and public reaction to the COVID-19

pandemic caused substantial and rapid, and previously

unexpected, business disruption and economic

deterioration. Those events substantially changed our

expectations for future credit loss and, accordingly, our

provision was significantly elevated in 2020.

In 2021, we recognized net provision credit (negative

expense) in the year overall, as a portion of credit loss

accrued in 2020 was effectively reversed and underlying

credit loss trends remained modest in most portfolios. In

2022 our provision expense and underlying credit loss

trends returned to a more normal pattern.

PPP

In 2020, the U.S. government created a temporary

Paycheck Protection Program, or PPP, in response to the

COVID-19 pandemic. The PPP allowed qualifying

employers to take out qualifying bank loans that were

guaranteed by the federal government. The loans later

were forgiven, often within a year, with the bank made

whole by the program. The program ended in 2021. Our

PPP revenues were approximately $122 million in 2021,

but only $21 million in 2022.

Fixed Income Volatility

In 2017 and 2018, market conditions were quite subdued

for our fixed income business. Starting in 2019, however,

increased market volatility and the downward direction of

interest rates resulted in much higher trading volume and

noninterest income in that business. In 2021, performance

in fixed income started to moderate as market conditions

started to change again. During most of 2022 the Federal

Reserve aggressively raised rates, resulting in a significant

fall-off in fixed income revenues. See the Fixed Income

discussion under Cyclicality within the Other Business

Information section of  this Item, which begins on page 18,

for additional information.

Sale of Visa Class B Stock in 2018

In 2018, we sold our remaining legacy stock holdings of

Visa for a large gain, significantly increasing noninterest

income that year.

Monetary Policy Shifts

Although interest rates during each of these years were

quite low by historical standards, short-term rates were

raised in 2018. Short-term rates were reduced in 2019 and

again in 2020, the latter in response to the pandemic. An

asset-buying program by the Federal Reserve put

downward pressure on long-term interest rates as well,

especially in 2020 and 2021. These changes impacted our

net interest margin, raising and lowering it over this

period. Net interest margin is a measure of the profit we

make on loans and other earning assets in relation to our

cost of deposits and other funding sources. Because

funding costs cannot realistically fall below zero, the very

low rate environment during 2020-21 resulted in

historically low net interest margin levels for us.

During much of 2021, the Federal Reserve kept short-term

rates low and maintained an asset-buying program

intended to put downward pressure on long-term rates. In

2022, the Federal Reserve began to raise short-term rates

in large (as much as 75 basis point) moves, and ceased its

asset-buying program. This was in reaction to price

inflation experienced in the U.S. during much of 2021 and

in 2022.

Additional information concerning monetary policy and

changes to it appears: within the Effect of Governmental

Policies and Proposals section of Item 1 beginning on page

29; under the caption Risks Associated with Monetary

Events beginning on page 39 within Item 1A; and under

the caption Federal Reserve Policy in Transition within the

Market Uncertainties and Prospective Trends section of

2022 MD&A (Item 7), which begins on page 95.

Mortgage-Related Businesses

We lend to mortgage lending companies, we originate

mortgage loans, and (until 2022) we provided title and

related services, all of which depend significantly on new

and refinanced home mortgage activity. Lending to

mortgage companies has been a significant business for us

in all five years shown in Table 1.7, while the latter two

businesses were insignificant for us until our merger with

IBKC in 2020.

All three mortgage-related businesses benefited

substantially from the low interest rate environment that

ended in 2022. All three were adversely impacted when

rates rose last year.

Significant Trends Past Five Years

Noteworthy trends during these five years included:

•Growth in net interest income flattened in 2019 as

net loan growth, especially in mortgage warehouse

lending, was offset by net interest margin declines.

Margin declines continued in 2020 and 2021, though

loan balances increased substantially with the

IBERIABANK merger. Net interest income expanded

again in 2022 as margins improved with the rising-

rate environment.

•2020 and 2021 enjoyed a substantial increase in

noninterest income following the IBERIABANK

merger, especially in relation to consumer mortgage

originations and related services. Fixed income

revenues were high during those years as well. The

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rising rates in 2022 negatively impacted mortgage and

fixed income revenues in 2022.

•The large deposit uptick in 2020 was driven

substantially by the IBERIABANK and 30-branch

transactions. Also in 2020 and 2021, the federal

Paycheck Protection Program (“PPP”) contributed to

deposit growth as proceeds from PPP loans boosted

average deposit account balances. Organic growth in

deposits from core banking clients grew throughout

this period, even when interest rates were extremely

low. That core growth is masked in some years by our

deliberate reductions in market-indexed deposits,

which tend to be higher rate, and in other years by

those large transactions. Deposits in 2022 fell as the

PPP impact receded and competitive pricing (rate)

pressures increased.

•Throughout 2020, and to a lesser extent in 2021,

economic and business disruption related to the

COVID-19 pandemic created substantial challenges

for our clients and for our company.

Exited Businesses

Over the past five years, we have focused primarily on

regional banking and specialty banking products and

services. We have partially or fully exited some smaller

businesses during those years. Exited businesses are

managed in our corporate segment.

2022 Merger Agreement with Toronto-Dominion Bank

On February 27, 2022, FHN entered into an Agreement

and Plan of Merger (the “TD Merger Agreement”) with

The Toronto-Dominion Bank, a Canadian chartered bank

(“TD”), TD Bank US Holding Company, a Delaware

corporation and indirect, wholly owned subsidiary of TD

(“TD-US”), and Falcon Holdings Acquisition Co., a

Delaware corporation and wholly owned subsidiary of TD-

US (“Merger Sub”).

Pursuant to the TD Merger Agreement, FHN and Merger

Sub will merge (the “First Holding Company Merger”),

with FHN continuing as the surviving entity in the merger. 

Following the First Holding Company Merger, at the

election of TD, FHN and TD-US will merge (the “Second

Holding Company Merger” and, together with the First

Holding Company Merger, the “Holding Company

Mergers”), with TD-US continuing as the surviving entity in

the merger.

Upon the terms and subject to the conditions set forth in

the TD Merger Agreement, each share of FHN common

stock, par value $0.625 per share, (“Company Common

Stock”), issued and outstanding immediately prior to the

effective time of the First Holding Company Merger (the

“First Effective Time”) will be converted into the right to

receive $25.00 (USD) per share in cash, without interest. 

Because the transaction did not close on or before

November 27, 2022, shareholders will receive an

additional $0.65 per share of Company Common Stock on

an annualized basis (or approximately 5.4 cents per

month) for the period from November 27, 2022 through

the day immediately prior to the closing. Each outstanding

share of FHN’s preferred stock, series B, C, D, E and F, will

remain issued and outstanding in connection with the First

Holding Company Merger. If TD elects to effect the Second

Holding Company Merger, at the effective time of the

Second Holding Company Merger, each outstanding share

of FHN’s preferred stock will be converted into a share of

a newly created, corresponding series of TD-US preferred

stock having terms as described in the TD Merger

Agreement.

Following the completion of the First Holding Company

Merger, at such time as determined by TD, First Horizon

Bank and TD Bank, N.A., a national banking association

(“TDBNA”) will merge, with TDBNA surviving as a

subsidiary of TD-US (the “Bank Merger” and together with

the Holding Company Mergers, the “Pending TD Merger”).

In connection with the execution of the TD Merger

Agreement, TD purchased from FHN 4,935.694 shares of

non-voting Perpetual Convertible Preferred Stock, Series G

(the “Series G Convertible Preferred Stock”) in a private

placement transaction having an aggregate liquidation

preference and purchase price of approximately $493.5

million, pursuant to a securities purchase agreement

between FHN and TD entered into concurrently with the

execution and delivery of the TD Merger Agreement. The

Series G Convertible Preferred Stock is convertible into up

to 4.9% of the outstanding shares of Company Common

Stock in certain circumstances, including the closing of the

Pending TD Merger or the termination of the TD Merger

Agreement.

Completion of the Pending TD Merger is subject to

customary closing conditions, including approvals from

U.S. and Canadian regulatory authorities. FHN's

shareholders approved the Pending TD Merger on May 31,

2022.

On February 9, 2023, FHN and TD agreed to extend the

outside date to May 27, 2023. Subsequent to the

extension, TD recently informed FHN that TD does not

expect that the necessary regulatory approvals will be

received in time to complete the Pending TD Merger by

May 27, 2023, and that TD cannot provide a new

projected closing date at this time. TD has initiated

discussions with FHN regarding a potential further

extension of the outside date. There can be no assurance

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that an extension will ultimately be agreed or that TD will

satisfy all regulatory requirements so that the regulatory

approvals required to complete the Pending TD Merger

will be received.

Either TD or First Horizon may unilaterally elect to

terminate the TD Merger Agreement in certain

circumstances set forth in the TD Merger Agreement. For

a further discussion of the delay in the Pending TD

Merger, see Risks Related to the Pending TD Merger

beginning on page 31 in Item 1A of this report.

Competition

In all aspects of the businesses in which we engage, we

face substantial competition from banks doing business in

our markets as well as from savings and loan associations,

credit unions, other financial institutions, consumer

finance companies, trust companies, investment

counseling firms, money market and other mutual funds,

insurance companies and agencies, securities firms,

mortgage banking companies, hedge funds, and other

firms offering financial products or services.

Banking Competition

Our regional banking business primarily competes in those

areas within the southern U.S. where we have banking

center locations, summarized in Table 1.2. However,

competition in our industry is trending away from the

traditional geographic footprint model. That trend is

happening throughout the industry, but the rate of change

is highly uneven among different types of clients,

products, and services. In our company, that trend is most

evident in our specialty banking segment.

Our regional banking business serves both consumer and

commercial clients. The consumer businesses remain

strongly linked to our physical banking center locations,

even as our delivery of financial services to consumers is

increasingly focused on popular non-physical delivery

methods, such as online and mobile banking. Online and

mobile banking have contributed to a decline in banking

center usage, but not (so far) an erosion of the link

between banking center versus consumer client location.

Increasingly, however, consumers are able to manage,

through a single institution, their financial accounts at

multiple institutions. Cross-institutional management

features may contribute to a de-linking of consumers to

physical banking center networks.

Our commercial businesses, especially in our specialty

banking segment, also have a geographic linkage, but it is

weaker. Some areas of specialty lending, such as franchise

finance, mortgage warehouse lending, asset-based

lending, and certain other specialty businesses (see Fixed

Income Competition below) are multi-regional or national

in scope rather than being heavily centered on banking

center locations.

Key traditional competitors in many of our markets

include Wells Fargo Bank N.A., Bank of America N.A., First-

Citizens Bank & Trust Company (dba First Citizens Bank),

Synovus Bank, Truist Bank, Regions Bank, JPMorgan Chase

Bank National Association, PNC Bank National Association,

BankUnited, Hancock Whitney Bank, and Pinnacle Bank,

among many others including many community banks and

credit unions.

A number of recent technologies created or operated by

non-banks have been integrated into the financial systems

used by traditional banks, such as the evolution of ATM

cards into debit/credit cards and the evolution of debit/

credit cards into smart phones. These sorts of

incrementally evolutionary technologies often have

expanded the market for banking services overall while

siphoning a portion of the revenues from those services

away from banks. Prior methods of delivering those

services were disrupted, but often at a pace which all but

the weakest banks could accommodate.

Recently, some evolutionary pressures have arisen which

may prove to be less incremental and more disruptive. For

example, in financial planning and wealth management,

companies that are not traditional banks, including both

long-established firms (such as Vanguard) and new ones

(such as Betterment), have developed highly-interactive

systems and applications. These services compete directly

with traditional banks in offering personal financial advice.

The low-cost, high-speed nature of these “robo-advisor”

services can be especially attractive to younger, less-

affluent clients and potential clients. We and other

traditional banks offer similar services, but doing so risks

cannibalizing traditional business models for these

services.

In recent years, certain financial companies or their

affiliates that traditionally were not banks have been able

to compete more directly with the Bank for deposits and

other traditional banking services and products. Increased

fluidity across traditional boundaries is likely to continue.

Non-traditional companies competing with us for

traditional banking products and services include

investment banks, brokerage firms, insurance company

affiliates, peer-to-peer lending arrangers, non-bank

deposit acceptors, companies offering payment

facilitation services (such as PayPal and pre-paid debit

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card issuers), and extremely short-term consumer loan

companies.

Competition for clients related to regional and specialty

banking products and services is most pronounced in rate

pricing (loan rates, loan spreads, and deposit rates),

services pricing, scope of services offered, quality of

service, convenience, and ease of use for self-service areas

such as online and mobile banking. In 2022, rate pricing

competition for deposits was more intense than has been

true in recent years.

Fixed Income Competition

Our fixed income business, which is part of our specialty

banking segment, serves institutional clients, broadly

segregated into depositories (including banks, thrifts, and

credit unions) and non-depositories (including money

managers, insurance companies, governmental units and

agencies, public funds, pension funds, and hedge funds).

Both client groups are widely dispersed geographically,

predominantly within the U.S. We have many competitors

within both groups, including major U.S. and international

securities firms as well as numerous regional and local

firms.

Additional Information About Competition

For additional information on the competitive position of

FHN and the Bank, refer to the General subsection above

within this Item 1. Also, refer to the subsections entitled

Supervision and Regulation and Effect of Governmental

Policies, both of which are relevant to an analysis of our

competitors. Due to the intense competition in the

financial services industry we can make no representation

that our competitive position has or will remain constant,

nor can we predict how it may change in the future.

Human Resources Management

Firstpower Culture

Having a strong culture is critical to our ability to attract

and retain top talent and achieve long-term success. Our

culture—which we call Firstpower—is grounded in our

corporate purpose and values and helps guide the manner

in which we operate our business, serve our clients, care

for our associates and communities and perform for our

shareholders.

Our Purpose, Values, and Commitment capture who we

are today and aspire to be going forward. We hold

ourselves to high standards of ethical conduct, and that

means doing what is right for our business, our associates,

the environment and our communities.

Our Purpose: To help our clients unlock their full potential

with capital and counsel.

Our Values:

•Put Clients First – Go above and beyond to listen,

understand and solve the client’s needs. Follow

through and exceed expectations every step of the

way.

•Care About People – Treat others with respect and

dignity. Foster a culture of collaboration.

Demonstrate kindness and empathy for all.

•Commit to Excellence in Everything We Do – Conduct

business with professionalism and dignity. Embody a

“can do” spirit that gets results for our clients.

•Elevate Equity – Place equity at the center of our

diversity and inclusion efforts. Create accountability

and ensure accessibility and opportunity for all.

•Foster Team Success – Measure wins in terms of “we”

not “me.” Take pride in company success. Be invested

in a shared vision for future growth.

Our Commitment: As teammates and as individuals, we

must own every moment. We listen, understand and

deliver.

Our culture must evolve to reflect the changing needs and

expectations of our workforce. We want our associates to

be inspired by the work we do and empowered to

perform at their best. As we have for many years,

associates were empowered to provide feedback including

through formal surveys and through the Firstpower

Council, an advisory group of associates from across the

company. Using a variety of tools and resources, we also

continued to offer competitive health care benefits,

wellness programs, mentoring, internships, volunteerism,

informal shout-outs and formal recognitions, career

management and continuing education, associate

resource groups, parental and care-giver support, and

other mechanisms to support our associates’ personal and

professional health and development.

An integral part of our Firstpower culture is our

unwavering commitment to diversity, equity, and

inclusion. This commitment starts at the top, as our Board

of Directors oversees our DEI strategy and receives

periodic reports from management on DEI efforts.

Our objective is to not only attract a diverse associate

team, but to create an environment in which different

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	17	2022 FORM 10-K ANNUAL REPORT

backgrounds, opinions, and perspectives are valued. With

an emphasis on elevating equity, we endeavor to reduce

disparities in accessibility and opportunity based on

gender, age, socioeconomic status, sexual orientation,

disability status, veteran status, and race/ethnicity.

We elevate equity through:

•Ensuring representation of diverse talent

•Strengthening leadership capabilities and

accountability

•Fostering inclusion and equality through fairness and

transparency

•Better serving diverse markets and clients

•Investing in the well-being of communities

•Our 10 commitments, which include providing DEI

specific training and providing access to capital for

historically underserved groups.

We made measurable progress in 2022 with the addition

of diverse candidates in leadership roles, the launch of

new Associate Resource Groups, greater use of metrics to

gauge our progress, and the release of a new Corporate

Diversity Statement.

We remain committed to creating a more equitable

society, and that starts with our associates, our clients,

and the communities we serve. We do this by elevating

equity, providing capital and counsel, and committing to

excellence in everything we do.

Year-End Statistical Information

At December 31, 2022*:

•First Horizon had 7,542 associates, or 7,397 full-time-

equivalent associates, not including contract labor for

certain services:

◦68% white, 19% African American, 9% Hispanic, 3%

Asian, and 1% two or more races or ethnicities

◦63% female and 37% male

•Of those, First Horizon had 1,209 corporate managers:

◦78% white, 12% African American, 7% Hispanic, 2%

Asian, and 1% two or more races or ethnicities

◦54% female and 46% male

•Of the managers, First Horizon had the CEO and 8

members of the CEO's Executive Management

Committee:

◦89% white, 11% African American, 0% Hispanic or

Asian, and 0% two or more races or ethnicities

◦56% female and 44% male

__________

*Data compiled from information provided by associates. Percentages

may not add to 100% due to rounding.

Other Business Information

Strategic Transactions

An element of our business strategy is to consider

acquisitions and divestitures that would enhance long-

term shareholder value. Significant acquisitions and

divestitures which closed during the past five years are

described in Significant Developments over the Past Five

Years beginning on page 12 of this report.

The most significant transactions in the past five years are

our merger of equals with IBKC and our 30-branch

purchase, both in 2020. IBKC’s assets comprised roughly

three-sevenths of our combined assets immediately after

closing in July 2020. We completed systems integration for

the IBKC merger in February 2022.

Subsidiaries

FHN’s consolidated operating subsidiaries at

December 31, 2022 are listed in Exhibit 21. Technical and

regulatory details follow:

•The Bank is supervised and regulated as described in

Supervision and Regulation in this Item below.

•The Bank is a government securities dealer. The FHN

Financial division of the Bank is registered with the

SEC as a municipal securities dealer. The FHN

Financial Municipal Advisors division of the Bank, and

the IBERIA Wealth Advisors division of the Bank, each

is registered with the SEC as a municipal adviser.

•Martin & Company, Inc., First Horizon Advisors, Inc.,

and FHN Financial Main Street Advisors, LLC are

registered with the SEC as investment advisers.

•First Horizon Advisors, Inc. and FHN Financial

Securities Corp. are registered as broker-dealers with

the SEC and all states where they conduct business

for which registration is required.

•First Horizon Insurance Services, Inc., FHIS, Inc., and

First Horizon Insurance Agency, Inc., are licensed as

insurance agencies in all states where they do

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	18	2022 FORM 10-K ANNUAL REPORT

business for which licensing is required. First Horizon

Insurance Agency, Inc. is inactive.

•First Horizon Advisors, Inc. is licensed as an insurance

agency in the states where it does business for which

licensing is required for the sale of annuity products.

•Our financial subsidiaries under the Gramm-Leach-

Bliley Act are: FHIS, Inc.; FHN Financial Securities

Corp.; First Horizon Advisors, Inc.; First Horizon

Insurance Agency, Inc.; and First Horizon Insurance

Services, Inc.

Client Concentration

Neither we nor any of our significant subsidiaries is dependent upon a single client or very few clients.

Calendar-Year Seasonality

We do not experience material seasonality. We do

experience seasonal variation in certain revenues,

expenses, and credit trends. Historically, these variations

have somewhat increased certain expenses and

diminished certain revenues for the regional and specialty

banking segments, principally in the first quarter each

year. In addition, we experience seasonal variation in

certain asset and liability balances, principally in the

fourth quarter (consumer mortgages, commercial lending

related to consumer mortgages, and certain associate-

related reserves) and first quarter (consumer mortgages

and commercial lending related to consumer mortgages).

Cyclicality

Banking

Financial services facilitate commercial and consumer

economic activities in critical ways. In many key respects,

modern financial services make modern types and

volumes of economic activity possible. Put simply, we do

well when our clients do well, and vice-versa. As a result,

our banking business is broadly and strongly dependent

on the size and strength of the U.S. economy.

Generally, when the U.S. economy is in an expansionary

phase of the business cycle, our loan balances rise, income

from lending tends to rise (assuming static interest rates

and margins), credit losses tend to fall, and fee income

tends to increase. In a contracting phase, those patterns

tend to reverse. The impact of those factors on our

operating results can be substantial, especially if they

consistently move up or down at the same time.

Our traditional banking businesses are crucially dependent

on the level of interest rates, whether federal monetary

policy is easing or tightening, and on the shape of the

interest rate yield curve. These factors also are cyclical,

and are related in complex ways with the business cycle

mentioned above.

These factors, and their impacts on us, often are mixed

rather than consistently positive or negative. For example:

low interest rates reduce the interest income we earn,

reduce our costs of funding, tend to stimulate economic

activity and loan growth, and, through lower debt service,

tend to ease financial pressure on clients, reducing default

risk. If the yield curve remains relatively steep, with long-

term interest rates noticeably higher than short rates, our

net interest margin will tend not to be significantly

compressed by the lower rate environment, since lower

short rates will keep our deposit costs down while higher

long rates will support the rates we can charge on lending.

But if rates fall low enough (as they have in recent years),

the yield curve will flatten and our margins will suffer.

Moreover, the Federal Reserve tends to lower rates in

response to, or to avoid, a weakening economy. Economic

weakness tends to diminish client borrowing and other

activities which benefit our performance.

Further information on these topics is presented: within

Item 1A (which begins on page 31), in Risk from Economic

Downturns and Changes, Risks Associated with Monetary

Events, Liquidity and Funding Risks, and Interest Rate and

Yield Curve Risks; and, within 2022 MD&A (Item 7), in

Executive Overview (page 59), Interest Rate Risk

Management (page 89), and Market Uncertainties and

Prospective Trends (page 95).

Fixed Income

Our fixed income and capital markets business, reported

as part of our specialty banking segment, is significantly

affected by interest rate cycles which, in turn, are affected

by general economic and business cycles.

In broad terms, the typical impact of Federal Reserve

interest and monetary policy on our fixed income business

is summarized in Table 1.8.

Table 1.8

Typical Impact of Fed Policy on

Fixed Income Performance

	Federal Reserve Policy Phase
	Tightening	Neutral	Easing
Fixed Income Performance Tends to be	Weaker	Average	Stronger

“Tightening” can include actions by the Federal Reserve to

raise short-term interest rates, raise long-term rates,

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tighten credit, shrink the money supply, and decelerate

economic activity. “Easing” can include actions by the

Federal Reserve to lower short-term interest rates, lower

long-term rates, loosen credit, expand the money supply,

and accelerate economic activity. Expectations of policy

actions can have impacts similar to the actions

themselves.

In terms of tightening vs. easing, the Federal Reserve

policy phase sometimes is clearly known, but sometimes is

not. Although Federal Reserve actions at a given time can

consistently support one phase, often they are a mix. For

example, the Federal Reserve may want to flatten the

yield curve by raising short-term rates while lowering

long-term rates, or steepen the curve by taking the

opposite actions. Also, major exogenous factors, such as

the COVID-19 pandemic, can significantly impact the

capital markets and the performance of our fixed income

business. In broad terms, these relationships are

summarized in Table 1.9.

Table 1.9

Key Drivers of

Fixed Income Performance

Driver	If Driver Is:	FI Revenues Tend to Be:
Interest rates	Rising	Lower
	Falling	Higher
Market volatility	Low	Lower
	Moderate	Higher
Yield curve	Flatter	Lower
	Steeper	Higher
Credit spreads	Narrower	Lower
	Wider	Higher
Economy outlook	Positive	Lower
	Negative	Higher

In many circumstances these drivers deliver mixed

impacts on fixed income performance, with some pushing

higher while others push lower, or with some drivers

pushing weakly while others are stronger. If most or all

drivers strongly push in the same direction at the same

time, fixed income performance usually is strongly

impacted. Revenue levels in a strongly “higher” year can

be more than double what they are in a strongly “lower”

year. As a result, fixed income performance can be highly

variable from year to year.

Mortgage-Related Businesses

The strength or weakness of consumer mortgage lending

activity in the U.S. impacts two businesses of ours:

mortgage origination and related services, and

commercial lending to other mortgage lenders.

Mortgage lending activity is strongly linked to interest rate

cycles. Activity tends to be inversely related to prevailing

mortgage rates: when rates are high, home-buying and

refinancing decrease, and when rates are low, home-

buying and refinancing increase. Moreover, expectations

about near-term future mortgage rates can accelerate or

delay those impacts, as borrowers rush to avoid future

rate increases or wait for future rate decreases.

Market Outlook

The two most important market factors in 2023 for FHN

likely will be (i) when the Federal Reserve will decide to

substantially decelerate, and eventually halt, short-term

rate increases, and (ii) whether the U.S. economy will slide

into recession and, if so, how deep and long it will be.

Moreover, early in 2023, we believe a significant cohort of

market participants also are focused now on (iii) when the

Federal Reserve will start to lower short-term rates in

response to factor (ii). Many recent public statements by

Federal Reserve leaders suggest that a focus on factor (iii)

at this time may be premature.

Additional information concerning market uncertainties

and trends appears in Market Uncertainties and

Prospective Trends within 2022 MD&A (Item 7) beginning

on page 95, especially under the caption Inflation,

Recession, and Federal Reserve Policy.

Other Business Information Associated with this Report

For additional information concerning our business, refer to 2022 MD&A (Item 7).

Business Information External to this Report

Our current primary internet address is

www.firsthorizon.com. A link to the Investor Relations

section of our internet website appears near the bottom

of the home page of our website. Near the top of the

Investor Relations homepage there is a "SEC Filings" link in

the banner. Clicking that link makes available to the

public, free of charge, our annual reports on Form 10-K,

quarterly reports on Form 10-Q, current reports on Form

8-K, proxy statements, and amendments thereto as soon

as reasonably practicable after we file such material with,

or furnish such material to, the Securities and Exchange

Commission. Additional information regarding materials

available on our website is provided in Item 10 of this

report beginning on page 203. No information external to

this report and its exhibits, unless specifically noted

otherwise, is incorporated into this report.

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Supervision and Regulation

Scope of this Section

This section describes certain of the material elements of

the regulatory framework applicable to bank and financial

holding companies and their subsidiaries, and to

companies engaged in securities and insurance activities.

It also provides certain specific information about us. To

the extent that the following information describes

statutory and regulatory provisions, it is qualified in its

entirety by express reference to each of the particular

statutory and regulatory provisions. A change in applicable

statutes, regulations, or regulatory policy may have a

material effect on our business.

Overview

The Corporation

First Horizon Corporation is a bank holding company and

financial holding company within the meaning of the Bank

Holding Company Act of 1956, as amended (the “BHCA”),

and is registered with the Federal Reserve. We are subject

to the regulation and supervision of, and to examination

by, the Federal Reserve under the BHCA. We are required

to file with the Federal Reserve annual reports and such

additional information as the Federal Reserve may require

pursuant to the BHCA.

A bank holding company that is not a financial holding

company is limited to engaging in “banking” and activities

found by the Federal Reserve to be “closely related to

banking.” Eligible bank holding companies that elect to

become financial holding companies may affiliate with

securities firms and insurance companies and engage in a

broader range of activities that are “financial in nature.” 

See Financial Activities other than Banking within this

Supervision and Regulation discussion below.

The Federal Reserve may approve an application by a bank

holding company to acquire a bank located outside the

acquirer’s principal state of operations without regard to

whether the transaction is prohibited under state law,

although state law may still impose certain requirements.

See Interstate Branching and Mergers and Community

Reinvestment Act (“CRA”), both within this Supervision

and Regulation discussion below.

The Tennessee Bank Structure Act of 1974, among other

things, prohibits (subject to certain exceptions) a bank

holding company from acquiring a bank for which the

home state is Tennessee (a “Tennessee bank”) if, upon

consummation, the company would directly or indirectly

control 30% or more of the total deposits in insured

depository institutions in Tennessee. As of June 30, 2022,

the FDIC reports that the Bank held approximately 14% of

such deposits.

The Bank

First Horizon Bank, our most significant subsidiary, is a

Tennessee banking corporation subject to the regulation

and supervision of, and to examination by, the TDFI. In

addition to general supervision and examination powers,

the TDFI has the power to approve mergers with the Bank,

the Bank’s issuance of preferred stock or capital notes, the

establishment of banking centers, and many other

corporate actions.

The Bank has chosen to be a member of the Federal

Reserve.  As a result, the Federal Reserve is the Bank’s

primary federal regulator. As a member, the Bank must

buy and hold stock in its district Federal Reserve Bank

equal to 6% of the Bank’s capital stock and surplus. The

Bank is paid a dividend on its investment at a rate which

varies with ten-year U.S. Treasury rates, capped at 6%.

The Bank cannot sell its investment in Federal Reserve

Bank stock, and the investment provides the Bank with no

control over the Federal Reserve System.

Tennessee law requires the Bank, as a member of the

Federal Reserve, to comply with federal capital and many

other regulatory requirements in lieu of, or sometimes in

addition to, state requirements. For that reason, this

Supervision and Regulation section focuses on federal

requirements for many topics related to the Bank,

mentioning state requirements only where significant.

From 1864 until 2019, the Bank was a national banking

association subject to the regulation and supervision of,

and to examination by, the Office of the Comptroller of

the Currency. In 2019, the Bank converted from a national

bank to a Tennessee state bank. Conversion did not

significantly alter the scope of the Bank’s activities:

Tennessee law generally allows a Tennessee state bank to

take any action that a Tennessee-based national bank

could take.

The Bank is insured by, and subject to regulation by, the

FDIC and is subject to regulation in certain respects by the

CFPB. The Bank is also subject to various requirements

and restrictions under federal and state law, including

requirements to maintain reserves against deposits,

restrictions on the types and amounts of loans that may

be made and the interest that may be charged, limitations

on the types of investments that may be made, activities

that may be engaged in, and types of services that may be

offered. Various consumer laws and regulations also affect

the operations of the Bank. In addition, several of the

Bank’s subsidiaries are regulated separately, as discussed

in Subsidiaries within this Item 1 under the Other Business

Information discussion above, which begins on page 18.

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In addition to the impact of regulation, commercial banks

are affected significantly by the actions of the Federal

Reserve as it attempts to control interest rates, money

supply, and credit availability in order to influence the

economy. Also, the Bank and certain of its subsidiaries are

prohibited from engaging in certain tie-in arrangements in

connection with extensions of credit, leases or sales of

property, or furnishing products or services.

The regulatory framework governing banks and the

financial industry is intended primarily to protect

depositors and the Federal Deposit Insurance Fund, not to

protect our Bank or our security holders.

Regulatory Tiers Based on Asset Size

Many rules dealing with critical regulatory topics divide

banks into tiers based largely or entirely on asset size.

Different topics have different cut-off points for the tiers.

Within each topic, different rules apply to the different

tiers.

Cut-off points vary significantly. However, as a rough

generalization, for many regulatory topics the critical cut-

off points are $10 billion, $100 billion, and $250 billion.

Companies with less than $10 billion are less regulated in

several important ways than we are, and companies with

$250 billion or more are regulated much more severely in

many important ways than we are. As a result, under

current law, compliance costs and restrictions grow with

size, they tend to change abruptly as a company crosses to

the next tier, and we are in a middle tier in many respects.

The remainder of this Supervision and Regulation

discussion focuses on current rules which apply to FHN

based on our current asset size.

Large-Bank Supervision Risk Categories

Federal regulators have established four risk-based

categories for applying enhanced prudential standards

(enhanced for larger banks). Category I applies to the

global systemically important companies. Categories II, III,

and IV apply (with certain exceptions) to institutions with

total consolidated assets of at least $700 billion, $250

billion, and $100 billion, respectively. Currently, we and

the Bank are below Category IV’s floor and therefore,

generally, we are not subject to enhanced prudential

standards.

Payment of Dividends

First Horizon Corporation is a legal entity separate and

distinct from First Horizon Bank and other subsidiaries.

Our principal source of cash flow, including cash flow to

pay dividends on our stock or to pay principal (including

premium, if any) and interest on debt securities, is

dividends from the Bank. There are statutory and

regulatory limitations on the payment of dividends by the

Bank to us, as well as by us to our shareholders.

The Corporation

Under Tennessee corporate law, we are not permitted to

pay cash dividends if, after giving effect to such payment,

we would not be able to pay our debts as they become

due in the usual course of business or our total assets

would be less than the sum of our total liabilities plus any

amounts needed to satisfy any preferential rights if we

were dissolving. In addition, in deciding whether or not to

declare a dividend of any particular size, our Board must

consider our current and prospective capital, liquidity, and

other needs, including the needs of the Bank which we are

obligated to support.

The Bank

Under Tennessee corporate law, the Bank (like the

Corporation, discussed above) may not pay a dividend if

the Bank would not be able to pay its debts when due or if

the Bank’s assets would be inadequate, in a dissolution, to

pay liabilities and preferential rights. Similarly, the Bank’s

Board must consider current and prospective needs in

making a decision to declare a dividend.

In addition, in order to pay cash dividends, the Bank must

obtain the prior approval of the Federal Reserve and the

TDFI Commissioner if the total of all dividends declared by

the Bank’s board of directors in any calendar year exceeds

the total of (i) the Bank’s retained net income for that year

plus (ii) the Bank’s retained net income for the preceding

two years, less certain required capital transfers, as

applicable. Below that ceiling, approval generally is not

required (but see Other Factors Affecting Dividends

immediately following this discussion). Applying the

dividend restrictions imposed under applicable federal

and state rules, the Bank’s total amount available for

dividends, without obtaining regulatory approval, was

$0.9 billion at January 1, 2023. The application of those

restrictions to the Bank is discussed in more detail in the

following sections, all of which is incorporated into this

Item 1 by reference: under the caption Liquidity Risk

Management in our 2022 MD&A (Item 7) beginning on

page 91 of this report; and under the caption Restrictions

on dividends in Note 12—Regulatory Capital and

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	22	2022 FORM 10-K ANNUAL REPORT

Restrictions of our 2022 Financial Statements (Item 8),

beginning on page 153.

Other Factors Affecting Dividends

If, in the opinion of the Federal Reserve, we or the Bank

are engaged in or about to engage in an unsafe or

unsound practice (which, depending on the financial

condition of FHN or the Bank, could include the payment

of dividends), the Federal Reserve may require us or the

Bank to cease and desist from that practice. The federal

banking agencies have indicated that paying dividends

that deplete a depository institution’s or holding

company’s capital base to an inadequate level would be

an unsafe and unsound banking practice.

In addition, under the Federal Deposit Insurance Act, an

FDIC-insured depository institution (such as the Bank) may

not make any capital distributions, pay any management

fees to its holding company, or pay any dividend if it is

undercapitalized or if such payment would cause it to

become undercapitalized.

The payment of cash dividends by us or by the Bank also

may be affected or limited by other factors, such as the

requirement to maintain adequate capital above

regulatory guidelines and requirements imposed by debt

covenants. For example, as discussed under Capital

Adequacy within this Supervision and Regulation

discussion below, our ability to pay dividends would be

restricted if its capital ratios fell below minimum

regulatory requirements plus a capital conservation

buffer.

The Federal Reserve generally requires insured banks and

bank holding companies to pay dividends only out of

current operating earnings. The Federal Reserve has

released a supervisory letter advising, among other things,

that a bank holding company should inform the Federal

Reserve and should eliminate, defer, or significantly

reduce its dividends if (i) the bank holding company’s net

income available to shareholders for the past four

quarters, net of dividends previously paid during that

period, is not sufficient to fully fund the dividends; (ii) the

bank holding company’s prospective rate of earnings is

not consistent with the bank holding company’s capital

needs and overall current and prospective financial

condition; or (iii) the bank holding company will not meet,

or is in danger of not meeting, its minimum regulatory

capital adequacy ratios.

Transactions with Affiliates

The Bank’s ability to lend or extend credit to its parent

company or nonbank subsidiaries (including for purposes

of this paragraph, in certain situations, subsidiaries of the

Bank) is restricted. The Bank and its subsidiaries generally

may not extend credit to us or to any other affiliate in an

amount which exceeds 10% of the Bank’s capital stock and

surplus and may not extend credit in the aggregate to us

and all such affiliates in an amount which exceeds 20% of

its capital stock and surplus. Extensions of credit and other

transactions between the Bank and us or such other

affiliates must be on terms and under circumstances,

including credit standards, that are substantially the same

or at least as favorable to the Bank as those prevailing at

the time for comparable transactions with non-affiliated

companies. Further, the type, amount, and quality of

collateral which must secure such extensions of credit is

regulated.

There are similar legal restrictions on: the Bank’s

purchases of or investments in the securities of and

purchases of assets from us or our nonbank subsidiaries;

the Bank’s loans or extensions of credit to third parties

collateralized by the securities or obligations of us or our

nonbank subsidiaries; the issuance of guaranties,

acceptances, and letters of credit on behalf of us or our

nonbank subsidiaries; and certain bank transactions with

us or our nonbank subsidiaries, or with respect to which

we or our nonbank subsidiaries act as agent, participate,

or have a financial interest.

Capital Adequacy

Federal financial industry regulators require that regulated

institutions maintain minimum capital levels. The capital

rules in the U.S. are based on international standards

known as “Basel III.” Those U.S. rules require the

following:

•Common Equity Tier 1 Capital Ratio. For all supervised

financial institutions, including us and the Bank, the

ratio of Common Equity Tier 1 Capital to risk-

weighted assets (“Common Equity Tier 1 Capital

ratio”) must be at least 4.5%. To be “well capitalized”

the Common Equity Tier 1 Capital ratio must be at

least 6.5%. Common Equity Tier 1 Capital consists of

core components of Tier 1 Capital. The core

components consist of common stock plus retained

earnings net of goodwill, other intangible assets, and

certain other required deduction items. At

December 31, 2022, our Common Equity Tier 1

Capital Ratio was 10.17% and the Bank’s was 10.77%.

•Tier 1 Capital Ratio. For all supervised financial

institutions, including us and the Bank, the ratio of

Tier 1 Capital to risk-weighted assets must be at least

6%. To be “well capitalized” the Tier 1 Capital ratio

must be at least 8%. Tier 1 Capital consists of the Tier

1 core components discussed in the bulleted

paragraph immediately above, plus non-cumulative

perpetual preferred stock, a limited amount of

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minority interests in the equity accounts of

consolidated subsidiaries, and a limited amount of

cumulative perpetual preferred stock, net of goodwill,

other intangible assets, and certain other required

deduction items. At December 31, 2022, our Tier 1

Capital Ratio was 11.92% and the Bank’s was 11.20%.

•Total Capital Ratio. For all supervised financial

institutions, including us and the Bank, the ratio of

Total Capital to risk-weighted assets must be at least

8%. To be “well capitalized” the Total Capital ratios

must be at least 10%. At December 31, 2022, our

Total Capital Ratio was 13.33% and the Bank’s was

12.41%.

•Capital Conservation Buffer. If a capital conservation

buffer of an additional 2.5% above the minimum

required Common Equity Tier 1 Capital ratio, Tier 1

Capital ratio, and Total Capital ratio is not maintained,

special restrictions would apply to capital

distributions, such as dividends and stock

repurchases, and on certain compensatory bonuses.

•Leverage Ratio—Base. For all supervised financial

institutions, including us or the Bank, the Leverage

ratio must be at least 4%. To be “well capitalized” the

Leverage ratio must be at least 5%. The Leverage ratio

is Tier 1 Capital divided by quarterly average assets

net of goodwill, certain other intangible assets, and

certain required deduction items. At December 31,

2022, our Leverage ratio was 10.36% and the Bank’s

was 9.76%.

•Leverage Ratio—Supplemental. For the largest

internationally active supervised financial institutions,

not including us or the Bank, a minimum

supplementary Leverage ratio must be maintained

that takes into account certain off-balance sheet

exposures.

We believe that we and the Bank were in compliance with

applicable minimum capital requirements as of

December 31, 2022.

Federal regulators have incorporated market and interest-

rate risk components into its risk-based capital standards.

Those standards explicitly identify concentration of credit

risk and certain risks arising from non-traditional activities,

and the management of such risks, as important

qualitative factors to consider in assessing an institution’s

overall capital adequacy.

Federal regulators’ market risk rules are applicable to

covered institutions—those with aggregate trading assets

and trading liabilities of at least 10% of their total assets

or at least $1 billion. We and the Bank are covered

institutions under the rule. The rules specify the

methodology for calculating the amount of risk-weighted

assets related to trading assets and include, among other

things, the addition of a component for stressed value at

risk. The rule eliminates the use of credit ratings in

calculating specific risk capital requirements for certain

debt and securitization positions. Alternative standards of

creditworthiness are used for specific standardized risks,

such as exposures to sovereign debt, public sector

entities, other banking institutions, corporate debt, and

securitizations. In addition, an 8% capital surcharge

applies to certain covered institutions, not including us or

the Bank.

Moreover, the Federal Reserve has indicated that it

considers a “Tangible Tier 1 Capital Leverage

Ratio” (deducting all intangibles) and other indicators of

capital strength in evaluating proposals for expansion or

new activities.

Failure to meet capital guidelines could subject a bank to a

variety of enforcement remedies, including the

termination of deposit insurance by the FDIC, and to

certain restrictions on its business and in certain

circumstances to the appointment of a conservator or

receiver. See Prompt Corrective Action (PCA) immediately

below for additional information.

In addition, the Bank is required to have a capital structure

that the TDFI determines is adequate, based on TDFI’s

assessment of the Bank’s businesses and risks. The TDFI

may require the Bank to increase its capital, if found to be

inadequate.

Prompt Corrective Action (PCA)

Federal banking regulators must take “prompt corrective

action” regarding FDIC-insured depository institutions that

do not meet minimum capital requirements. For this

purpose, insured depository institutions are divided into

five capital categories. The specific requirements

applicable to us are summarized in Table 1.10.

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Table 1.10

REQUIREMENTS FOR PCA CAPITALIZATION CATEGORIES

Well capitalized	•Common Equity Tier 1 Capital ratio of at least 6.5% •Tier 1 Capital ratio of at least 8% •Total Capital ratio of at least 10% •Leverage ratio of at least 5% •Not subject to a directive, order, or written agreement to meet and maintain specific capital levels
Adequately capitalized	•Common Equity Tier 1 Capital ratio of at least 4.5% •Tier 1 Capital ratio of at least 6% •Total Capital ratio of at least 8% •Leverage ratio of at least 4% •Not subject to a directive, order, or written agreement to meet and maintain specific capital levels
Undercapitalized	Failure to maintain any requirement to be adequately capitalized
Significantly Undercapitalized	Failure to maintain Common Equity Tier 1 Capital ratio of at least 3%, Tier 1 Capital ratio of at least 4%, Total Capital ratio of at least 6%, or a Leverage ratio of at least 3%
Critically Undercapitalized	Failure to maintain a level of tangible equity equal to at least 2% of total assets

At December 31, 2022, the Bank had sufficient capital to

qualify as “well capitalized” under the regulatory capital

requirements discussed above. An institution may be

deemed to be in a capitalization category that is lower

than is indicated by its actual capital position if it receives

an unsatisfactory examination rating. Institutions

generally are not allowed to publicly disclose examination

results.

An FDIC-insured depository institution generally is

prohibited from making any capital distribution (including

payment of dividends) or paying any management fee to

its holding company if the depository institution would

thereafter be undercapitalized. Undercapitalized

depository institutions are subject to restrictions on

borrowing from the Federal Reserve System. In addition,

undercapitalized depository institutions are subject to

growth limitations and are required to submit capital

restoration plans. An insured depository institution’s

holding company must guarantee the capital plan, up to

an amount equal to the lesser of 5% of the depository

institution’s assets at the time it becomes

undercapitalized or the amount of the capital deficiency

when the institution fails to comply with the plan, for the

plan to be accepted by the applicable federal regulatory

authority. The federal banking agencies may not accept a

capital plan without determining, among other things,

that the plan is based on realistic assumptions and is likely

to succeed in restoring the depository institution’s capital.

If a depository institution fails to submit an acceptable

plan, it is treated as if it were significantly

undercapitalized.

Significantly undercapitalized depository institutions may

be subject to a number of requirements and restrictions,

including orders to sell sufficient voting stock to become

adequately capitalized, requirements to reduce total

assets and cessation of receipt of deposits from

correspondent banks.

Critically undercapitalized depository institutions are

subject to appointment of a receiver or conservator,

generally within 90 days of the date on which they

become critically undercapitalized.

Liquidity Coverage Ratio

The liquidity coverage ratio, or LCR, refers to the amount

of liquid assets (cash, cash equivalents, or short-term

securities) banks are required to keep on hand to meet a

hypothetically projected total net cash outflows over a

forward-looking 30-day period of stress. The stressed

outflow estimate is based a standard set of hypothetical

assumptions set forth in regulatory requirements. The LCR

is designed to ensure banks hold a buffer of high-quality

liquid assets so that they can meet their short-term

liquidity needs and remain stable and strong in a stressed

environment. Liquid assets generally provide low income

levels compared to other investments, so a higher LCR

requirement can negatively impact a bank's earnings.

The LCR requirement does not apply to institutions with

assets of less than $100 billion, and so does not apply to

us or the Bank. For larger institutions, the minimum LCR

requirement increases based on a bank’s asset size.

Category IV banks, with at least $100 billion in assets, are

not subject to LCR requirements unless they have at least

$50 billion in weighted short-term wholesale funding.

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Holding Company Structure and Support of Subsidiary Banks

Because we are a holding company, our right to

participate in the assets of any subsidiary upon the latter’s

liquidation or reorganization will be subject to the prior

claims of the subsidiary’s creditors (including depositors in

the case of the Bank), except to the extent that we may be

a creditor with recognized claims against the subsidiary. In

addition, depositors of a bank, and the FDIC as their

subrogee, would be entitled to priority over other

creditors in the event of liquidation of the bank.

Under Federal Reserve policy we are expected to act as a

source of financial strength to, and to commit resources to

support, the Bank. This support may be required at times

even if, absent such Federal Reserve policy, we might not

wish to provide it. In addition, any capital loans by a bank

holding company to any of its subsidiary banks are

subordinate in right of payment to deposits and to certain

other indebtedness of the subsidiary bank. In the event of

a bank holding company’s bankruptcy, any commitment

by the bank holding company to a federal bank regulatory

agency to maintain the capital of a subsidiary bank will be

assumed by the bankruptcy trustee and entitled to a

priority of payment.

Cross-Guarantee Liability

A depository institution insured by the FDIC can be held

liable for any loss incurred by, or reasonably expected to

be incurred by, the FDIC in connection with (i) the default

of a commonly controlled FDIC-insured depository

institution or (ii) any assistance provided by the FDIC to

any commonly controlled FDIC-insured depository

institution “in danger of default.”  “Default” is defined

generally as the appointment of a conservator or receiver

and “in danger of default” is defined generally as the

existence of certain conditions indicating that a default is

likely to occur in the absence of regulatory assistance. The

FDIC’s claim for damages is superior to claims of

shareholders of the insured depository institution or its

holding company but is subordinate to claims of

depositors, secured creditors, and holders of subordinated

debt (other than affiliates) of the commonly controlled

insured depository institution.

Currently the Bank is our only depository institution

subsidiary. If we were to own or operate another

depository institution, any loss suffered by the FDIC in

respect of one subsidiary bank would likely result in

assertion of the cross-guarantee provisions, the

assessment of estimated losses against our other

subsidiary bank(s), and a potential loss of our investment

in our subsidiary banks.

Interstate Branching & Mergers

As mentioned above, the Bank generally must have TDFI’s

approval to establish a new banking center (technically, a

“branch”). For a new banking center located outside of

Tennessee, Tennessee law requires the Bank to comply

with branching laws applicable to the state where the new

banking center will be located. Federal law allows the

Bank to establish or acquire a branch in another state to

the same extent as a bank chartered in that other state

would be allowed to establish or acquire a branch in

Tennessee.

For an interstate merger or acquisition:  the acquiring

bank must be well-capitalized and well-managed;

concentration limits on liabilities and deposits may not be

exceeded; regulators must assess the transaction for

incremental systemic risk; and the acquiring bank must

have at least “satisfactory” standing under the federal

Community Reinvestment Act (discussed immediately

below).

Once a bank has established branches in a state through

de novo or acquired branching or through an interstate

merger transaction, the bank may then establish or

acquire additional branches within that state to the same

extent that a bank chartered in that state is allowed to

establish or acquire branches within the state.

Community Reinvestment Act (“CRA”)

The CRA requires each U.S. bank, consistent with safe and

sound operation, to help meet the credit needs of each

community where the bank accepts deposits, including

low- and moderate-income (“LMI”) communities. The

Federal Reserve assesses the Bank periodically for CRA

compliance, and that assessment is made public. The

Bank’s LMI operations and activities traditionally are

critical focal points in those assessments.

A CRA rating below “satisfactory” can slow or halt a bank’s

plans to expand by branching, acquisition, or merger, and

can prevent a bank holding company from becoming a

financial holding company. In its most recent CRA

assessment, for 2020, the Bank received ratings of "High

Satisfactory" in Lending and in Service, "Outstanding" in

Investment, and "Satisfactory" overall.

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Financial Activities other than Banking

Federal Law

Federal law generally allows financial holding companies

broad authority to engage in activities that are financial in

nature or incidental to a financial activity. These include:

insurance underwriting and brokerage; merchant banking;

securities underwriting, dealing, and market-making; real

estate development; and such additional activities as the

Federal Reserve in consultation with the Secretary of the

Treasury determines to be financial in nature or

incidental. A bank holding company may engage in these

activities directly or through subsidiaries by qualifying as a

“financial holding company.” To qualify as a financial

holding company, a bank holding company must file an

initial declaration with the Federal Reserve, certifying that

all of its subsidiary depository institutions are well-

managed and well-capitalized.

Federal law also permits banks to engage in certain of

these activities through financial subsidiaries. To control

or hold an interest in a financial subsidiary, a bank must

meet the following requirements:

(1)The bank must receive approval from its primary

federal regulator for the financial subsidiary to

engage in the activities.

(2)The bank and its depository institution affiliates must

each be well-capitalized and well-managed.

(3)The aggregate consolidated total assets of all of the

bank’s financial subsidiaries must not exceed the

lesser of: 45% of the bank’s consolidated total assets;

or $50 billion (subject to indexing for inflation).

(4)The bank must have in place adequate policies and

procedures to identify and manage financial and

operational risks and to preserve the separate

identities and limited liability of the bank and the

financial subsidiary.

(5)If the bank is among the 100 largest banks, the bank

must meet the creditworthiness or other criteria

adopted by the Federal Reserve and the U.S.

Secretary of the Treasury from time to time. If this

fifth requirement ceases to be met after a bank

controls or holds an interest in a financial subsidiary,

the bank cannot invest additional capital in that

subsidiary until the requirement again is met.

No new activity may be commenced unless the bank and

all of its depository institution affiliates have at least

“satisfactory” CRA ratings. Certain restrictions apply if the

bank holding company or the bank fails to continue to

meet one or more of the requirements listed above.

In addition, federal law contains a number of other

provisions that may affect the Bank’s operations, including

limitations on the use and disclosure to third parties of

client information.

At December 31, 2022, we are a financial holding

company and the Bank has a number of financial

subsidiaries, as discussed in Subsidiaries within this Item 1

under the Other Business Information discussion, which

begins on page 18.

Tennessee Law

Tennessee law does not expressly restrict the activities of

a bank holding company or its non-bank affiliates.

However, no Tennessee bank may maintain a branch

office on the premises of an affiliate if the affiliate is

engaged in activities that are not permissible for a bank

holding company, a financial holding company, a national

bank, or a national bank subsidiary under federal law.

Tennessee law permits Tennessee banks to establish

subsidiaries and to engage in any activities permissible for

a national bank located in Tennessee, subject to

compliance with Tennessee regulations relating to the

conduct of such activities for the purpose of maintaining

bank safety and soundness.

Interchange Fee Restrictions

Regulations severely cap interchange fees which the Bank may charge merchants for debit card transactions.

Volcker Rule

The Volcker rule (1) generally prohibits banks from

engaging in proprietary trading, which is engaging as

principal (for the bank’s own account) in any purchase or

sale of one or more of certain types of financial

instruments, and (2) limits banks’ ability to invest in or

sponsor hedge funds or private equity funds.

Consumer Regulation by the CFPB

The CFPB adopts and administers significant rules

affecting consumer lending and consumer financial

services. Key rules for the Bank include detailed regulation

of mortgage servicing practices and detailed regulation of

mortgage origination and underwriting practices. The

latter rules, among other things, establish the definition of

a “qualified mortgage” using traditional underwriting

practices involving down payments, credit history, income

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	27	2022 FORM 10-K ANNUAL REPORT

levels and verification, and so forth. The rules do not

prohibit, but do tend to discourage, lenders from

originating non-qualified mortgages.

Late in 2022, a federal appellate court ruled that structural

aspects related to the CFPB's creation (in 2010) and

operation were unconstitutional; the court therefore

invalidated a CFPB rule at issue in that case. If other

federal appellate circuits concur with these rulings, or if

the U.S. Supreme Court affirms them, the legal validity of

CFPB rules and actions generally could be called into

question.

Data Security & Portability

Security & Privacy

Federal law requires banks to implement a comprehensive

information security program that includes administrative,

technical, and physical safeguards. Banks are required to

have appropriate data governance practices and risk

management processes as key functions supporting its

operational resilience.

Data privacy and protection increasingly is a significant

legislative, regulatory, and societal concern. The concern

is driven by major technological and societal shifts in the

past 20 years, led by relatively unregulated firms such as

Amazon.com, Alibaba, Facebook, and Google and their

many clients worldwide. Those firms have gathered large

amounts of personal details about millions of people, and

today have the ability to analyze that data and act on that

analysis very quickly. The firms seek to understand enough

about a person to know what a person wants before the

person does.

Banks (as mentioned above) already are subject to

significant privacy regulations. Probably for that reason,

the banking industry is not at the political center of these

concerns currently. Even so, banks are likely to be affected

by broader legislative and regulatory responses to the

perceived problems. Two prominent responses include

the European Union General Data Protection Regulation

and the California Data Privacy Protection Act. Neither is a

banking industry regulation, but both apply to banks in

relation to certain clients and data. To date, neither has

had a material impact on the Bank.

Portability & Client Control

Federal law restricts the Bank’s ability to share certain

information with affiliates and non-affiliates for marketing

and/or non-marketing purposes, or to contact clients with

marketing offers. Affiliate and non-affiliate sharing

initiated by the Bank generally is permitted with client

consent.

Increasingly, banks are being required to permit, enable,

and support client control of client data, including the

sharing of client data with Bank affiliates and with outside

organizations. These requirements, which still are

evolving, are intended to foster data portability for clients

and greater competition among financial services firms.

However, they also significantly increase data security

risks because they create additional access channels for

bad actors to try to exploit, or they make accessing

existing channels easier or faster.

FDIC Insurance Assessments; DIFA

U.S. bank deposits generally are insured by the Deposit

Insurance Fund (“DIF”), administered by the FDIC. The

system of FDIC insurance premium rates charged consists

of a rate grid structure in which base rates range from 5 to

35 basis points annually, and in 2022 fully adjusted rates

ranged from 2.5 to 45 basis points annually. (A basis point

is equal to 0.01%.) For 2023 the FDIC has implemented a

temporary increase generally equal to 2 basis points; it is

not clear how long the increase will be in effect.

Key factors in the grid include:  the institution’s risk

category (I to IV); whether the institution is deemed large

and highly complex; whether the institution qualifies for

an unsecured debt adjustment; and whether the

institution is burdened with a brokered deposit

adjustment. Other factors can impact the base against

which the applicable rate is applied, including (for

example) whether a net loss is realized.

Insurance of deposits may be terminated by the FDIC

upon a finding that the institution has engaged in unsafe

and unsound practices, is in an unsafe or unsound

condition to continue operations, or has violated any

applicable law, regulation, rule, order, or condition

imposed by a federal bank regulatory agency.

Depositor Preference

Federal law provides that deposits and certain claims for

administrative expenses and associate compensation

against an insured depository institution would be

afforded a priority over other general unsecured claims

against such an institution, including federal funds and

letters of credit, in the “liquidation or other resolution” of

such an institution by any receiver.

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Securities Regulation

Certain of our subsidiaries are subject to various securities

laws and regulations and capital adequacy requirements

promulgated by the regulatory and exchange authorities

of the jurisdictions in which they operate.

Our registered broker-dealer subsidiaries are subject to

the SEC’s net capital rule, Rule 15c3-1. That rule requires

the maintenance of minimum net capital and limits the

ability of the broker-dealer to transfer large amounts of

capital to a parent company or affiliate. Compliance with

the rule could limit operations that require intensive use

of capital, such as underwriting and trading.

Certain of our subsidiaries are registered investment

advisers which are regulated under the Investment

Advisers Act of 1940. Advisory contracts with clients

automatically terminate under these laws upon an

assignment of the contract by the investment adviser

unless appropriate consents are obtained.

Insurance Activities

Certain of our subsidiaries sell various types of insurance

as agent in a number of states. Insurance activities are

subject to regulation by the states in which such business

is transacted. Although most of such regulation focuses on

insurance companies and their insurance products,

insurance agents and their activities are also subject to

regulation by the states, including, among other things,

licensing and marketing and sales practices.

Compensation & Risk Management

The Federal Reserve has issued guidance intended to

ensure that incentive compensation arrangements at

financial organizations take into account risk and are

consistent with safe and sound practices. The guidance is

based on three “key principles” calling for incentive

compensation plans to:  appropriately balance risks and

rewards; be compatible with effective controls and risk

management; and be backed up by strong corporate

governance. In response: we operate an enhanced risk

management process for assessing risk in incentive

compensation plans; several key incentive programs use a

net profit approach rather than a revenues-only approach;

and mandatory deferral features are used in several key

programs, including an executive program.

In 2016 federal agencies proposed regulations which could

significantly change the regulation of incentive

compensation programs at financial institutions. The

proposal would create four tiers of institutions based on

asset size. Institutions in the top two tiers would be

subject to rules much more detailed and proscriptive than

are currently in effect. If interpreted aggressively by the

regulators, the proposed rules could be used to prevent,

as a practical matter, larger institutions from engaging in

certain lines of business where substantial commission

and bonus pool arrangements are the norm. In the 2016

proposal, the top two tiers included institutions with more

than $50 billion of assets. We and the Bank currently

would fall into the lower of those top two tiers. However,

prompted by post-2016 legislation which significantly

raised several statutory asset-size tiers, if this proposal

were finalized today, the $50 billion floor might be raised

significantly, allowing us to remain in the third tier. We

cannot predict what final rules may be adopted, nor how

they may be implemented.

Effect of Government Policies & Proposals

The Bank is affected by the policies of regulatory

authorities, including the Federal Reserve, the TDFI, and

the CFPB. See Supervision and Regulation beginning on

page 21 for additional information.

The Federal Reserve also sets and manages monetary

policy for the U.S. In this latter role, the Federal Reserve’s

mandate from Congress is to pursue price stability and full

employment.

Among the instruments of monetary policy used by the

Federal Reserve are: purchases and sales of U.S.

government and other securities in the marketplace;

changes in the discount rate, which is the rate any

depository institution must pay to borrow from the

Federal Reserve; changes in the reserve requirements of

depository institutions; changes in the rate paid on banks’

required and excess reserve deposits at the Federal

Reserve; and changes in the federal funds rate, which is

the rate at which depository institutions lend balances to

each other overnight. These instruments are intended to

influence economic and monetary growth, interest rate

levels, and inflation.

The monetary policies of the Federal Reserve and other

governmental policies have had a significant effect on the

operating results of commercial banks in the past and are

expected to continue to do so in the future. Because of

changing conditions in the national and international

economies and in the money markets, as well as the result

of actions by monetary and fiscal authorities, it is not

possible to predict with certainty future changes in

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	29	2022 FORM 10-K ANNUAL REPORT

interest rates, deposit levels, loan demand, or the

business and results of our operations, or whether

changing economic conditions will have a positive or

negative effect on operations and earnings. Additional

information concerning monetary policy changes appears: 

under the caption Monetary Policy Shifts within the

Significant Business Developments section of Item 1,

which begins on page 12; under the caption Risks

Associated with Monetary Events beginning on page 39

within Item 1A; and under the caption Federal Reserve

Policy in Transition within the Market Uncertainties and

Prospective Trends section of our 2022 MD&A (Item 7),

which begins on page 95.

Bills occasionally are introduced in the United States

Congress, the Tennessee General Assembly and other

state legislatures, and regulations occasionally are

proposed by our regulatory agencies, any of which could

affect our businesses, financial results, and financial

condition.

We are not able to predict what, if any, changes that

Congress, state legislatures, or the regulatory agencies will

enact or implement in the future, nor the impact that

those actions will have upon us.

Sources & Availability of Funds

Information concerning the sources and availability of funds for our businesses can be found in our 2022 MD&A (Item 7),

including the subsection entitled Liquidity Risk Management beginning on page 91, which material is incorporated herein by

reference.

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Item 1A.Risk Factors

This Item outlines specific risks that could affect the ability

of our various businesses to compete, change our risk

profile, or materially impact our operating results or

financial condition. Our operating environment continues

to evolve and new risks continue to emerge. To address

that challenge we have a risk management governance

structure that oversees processes for monitoring evolving

risks and oversees various initiatives designed to manage

and control our potential exposure

This Item highlights risks that could impact us in material

ways by causing future results to differ materially from

past results, by causing future results to differ materially

from current expectations, or by causing material changes

in our financial condition. In this Item we have outlined

risks that we believe are important to us at the present

time. However, other risks may prove to be important in

the future, and new risks may emerge at any time. We

cannot predict all potential developments that could

materially affect our financial performance or condition.

TABLE OF ITEM 1A TOPICS

Topic	Page			Topic	Page
Risks related to the Pending TD Merger	31			Risks of Expense Control	44
Traditional Competition Risks	34			Geographic Risks	44
Traditional Strategic & Macro Risks	34			Insurance	45
Industry Disruption	35			Liquidity & Funding Risks	45
Operational Risks	36			Credit Ratings	46
Risks from Economic Downturns & Changes	38			Interest Rate & Yield Curve Risks	47
Risks Associated with Monetary Events	39			Asset Inventories & Market Risks	48
Risks Related to Businesses We May Exit	40			Mortgage Business Risks	49
Reputation Risks	40			Pre-2009 Mortgage Business Risks	50
Credit Risks	40			Accounting & Tax Risks	50
Service Risks	42			Share Owning & Governance Risks	51
Regulatory, Legislative, and Legal Risks	42

Risks Related to the Pending TD Merger

See 2022 Merger Agreement with Toronto-Dominion Bank

beginning on page 15 for further information.

Receipt of regulatory approvals for the Pending TD

Merger has taken longer than originally anticipated, and

TD does not expect that the necessary regulatory

approvals will be received in time to complete the

Pending TD Merger by the current outside date of May

27, 2023. On February 9, 2023, FHN and TD agreed to

extend the outside date to May 27, 2023. Subsequent to

the extension, TD recently informed FHN that TD does not

expect that the necessary regulatory approvals will be

received in time to complete the Pending TD Merger by

May 27, 2023, and that TD cannot provide a new

projected closing date at this time. If the Pending TD

Merger does not close by May 27, 2023, then an

amendment to the Merger Agreement will be required to

further extend the outside termination date. TD has

initiated discussions with FHN regarding a potential

further extension of the outside date. There can be no

assurance that an extension will ultimately be agreed or

that TD will satisfy all regulatory requirements so that the

regulatory approvals required to complete the Pending TD

Merger will be received.

Regulatory approvals may not be received, have taken

longer than expected, and may impose conditions that

are not presently anticipated. Before the Pending TD

Merger may be completed, various approvals, consents,

and non-objections must be obtained from the Federal

Reserve, the Office of the Comptroller of the Currency,

TD’s primary federal banking regulator, and various other

regulatory, antitrust, and other authorities in the United

States and Canada. In determining whether to grant these

approvals, such regulatory authorities consider a variety of

factors, including the regulatory standing of each party.

These approvals have taken longer to receive than

originally anticipated and could be further delayed or not

obtained at all, including due to: an adverse development

in either party’s regulatory standing or in any other factors

considered by regulators when granting such approvals;

governmental, political or community group inquiries,

ITEM 1A. RISK FACTORS
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investigations or opposition; or changes in legislation or

the political environment generally. The Federal Reserve

has stated that if material weaknesses are identified by

examiners before a banking organization applies to

engage in expansionary activity, the Federal Reserve will

expect the banking organization to resolve all such

weaknesses before applying for such expansionary

activity. The Federal Reserve has also stated that if issues

arise during the processing of an application for

expansionary activity, it will expect the applicant banking

organization to withdraw its application pending

resolution of any supervisory concerns.

The approvals that are granted may impose terms and

conditions, limitations, obligations, or costs, or may place

restrictions on the conduct of the combined company’s

business, or may require changes to the terms of the

transactions contemplated by the TD Merger Agreement

and related Bank Merger Agreement. Regulators may

impose such conditions, limitations, obligations, or

restrictions, and, if imposed, such conditions, limitations,

obligations, or restrictions may have the effect of delaying

the completion of any of the transactions contemplated

by the TD Merger Agreement and Bank Merger

Agreement, imposing additional material costs on us. In

addition, such conditions, terms, obligations, or

restrictions, if imposed, may result in the delay or

abandonment of the Pending TD Merger. Additionally, the

completion of the Pending TD Merger is conditioned on

the absence of certain orders, injunctions, or decrees by

any court or regulatory agency of competent jurisdiction

that would prohibit or make illegal the completion of any

of the transactions contemplated by the TD Merger

Agreement and related Bank Merger Agreement. There

can be no assurance that regulators will not impose such

conditions, limitations, obligations or other restrictions.

In addition, despite each party's commitment to use its

reasonable best efforts to comply with conditions

imposed by regulators, under the terms of TD Merger

Agreement and related Bank Merger Agreement, neither

we nor TD will be required, and neither party will be

permitted without the prior written consent of the other

party, to take actions or agree to conditions that would

reasonably be expected to have a material adverse effect

on the combined company and its subsidiaries, taken as a

whole, after giving effect to the mergers.

The TD Merger Agreement may be terminated in

accordance with its terms, and the Pending TD Merger

may not be completed. The TD Merger Agreement is

subject to a number of conditions which must be fulfilled

in order to complete the Pending TD Merger. Those

conditions include: (i) the approval of the Pending TD

Merger by the requisite vote of our shareholders; (ii) the

receipt of all required regulatory approvals which are

necessary to close the Pending TD Merger and the

expiration of all statutory waiting periods without the

imposition of any materially burdensome regulatory

condition; (iii) the absence of any order, injunction,

decree, or other legal restraint preventing the completion

of the Pending TD Merger or any of the other transactions

contemplated by the TD Merger Agreement or by the

related Bank Merger Agreement, or making the

completion of the Pending TD Merger illegal; (iv) subject

to certain exceptions, the accuracy of the representations

and warranties of each party, generally subject to a

material adverse effect qualification; and (v) the prior

performance in all material respects by each party of the

obligations required to be performed by it at or prior to

the closing date. The requisite vote described in (i) above

was received on May 31, 2022.

The conditions to the closing may not be fulfilled in a

timely manner or at all, and, accordingly, the Pending TD

Merger might not be completed. In addition, the parties

can mutually decide to terminate TD Merger Agreement

at any time. For additional information concerning the

need to meet all conditions to closing the Pending TD

Merger and the risk of termination, see the first paragraph

above under Risks Related to the Pending TD Merger

within this Item 1A.

Failure to complete the Pending TD Merger could

negatively impact our stock price, result in litigation and

result in significant dilution due to the terms of the

Series G preferred stock issued to TD.  If the Pending TD

Merger is not completed for any reason, including as a

result of failure to obtain all needed regulatory approvals,

there may be various adverse consequences and we may

experience negative reactions from the financial markets

and from our clients and associates.

For example, our business may be impacted adversely by

the failure to pursue other beneficial opportunities due to

the focus of management on the Pending TD Merger.

Additionally, if the TD Merger Agreement is terminated or

there is a significant further delay in the receipt of the

regulatory approvals required to complete the pending

transaction, the market price of our common stock could

decline. After announcement of the Pending TD Merger

on February 28, 2022, the market price of our common

stock increased markedly to reflect the consideration to

be paid under the TD Merger Agreement. Termination of

the Pending TD Merger, or the market's perception that

termination is a significant risk, likely would have a

negative effect on the market price of our common stock.

In connection with the execution of the TD Merger

Agreement, on February 28, 2022, First Horizon issued and

sold to TD 4,935.6945 shares of First Horizon series G

preferred stock, a new series of preferred stock of First

Horizon issued in connection with the Pending TD Merger.

At the effective time, each share of First Horizon series G

preferred stock, issued and outstanding immediately prior

to the effective time will automatically be converted into

such number of common shares of First Horizon as have a

value at the effective time of $100,000.00. In the event

that the TD Merger Agreement is terminated under

certain circumstances relating to the failure to receive a

requisite regulatory approval, the First Horizon series G

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preferred stock will convert into approximately 19.7

million shares of First Horizon common stock (4,000

shares of First Horizon common stock per share of First

Horizon series G preferred stock). If the TD Merger

Agreement is terminated for any other reason, the First

Horizon series G preferred stock will convert into

approximately 27.5 million shares of First Horizon

common stock (5,574.136 shares of First Horizon common

stock per share of First Horizon series G preferred stock).

In no event will the shares of First Horizon series G

preferred stock be convertible into shares of First Horizon

common stock representing more than 4.9% of the total

issued and outstanding shares of First Horizon common

stock (taking into account shares resulting from such

conversion).

We also could be subject to litigation related to any failure

to complete the Pending TD Merger or to proceedings

commenced against us to perform our obligations under

the TD Merger Agreement. If the TD Merger Agreement is

terminated under certain circumstances, we may be

required to pay to TD a termination fee of up to $435.5

million.

We have incurred and expect to continue to incur

substantial expenses in connection with the completion of

the transactions contemplated by the TD Merger

Agreement and related Bank Merger Agreement. If the

Pending TD Merger is not completed, we would have paid

a large portion of these expenses without realizing the

expected benefits of the Pending TD Merger.

The Pending TD Merger, including the need to further

extend the TD Merger Agreement outside date, may

adversely affect our business, financial condition, and

results of operations. Uncertainty about the effect of the

Pending TD Merger on our associates, clients, and other

parties has had an adverse effect on our business and

results of operations in 2022, and may have an ongoing

adverse effect on our business, financial condition, and

results of operations regardless of whether the Pending

TD Merger is completed. These risks to our business

include, among others, the following, all of which may be

exacerbated by the current delay in the completion of the

Pending TD Merger:

•the impairment of our ability to attract, retain, and

motivate our associates, especially high-performing

associates approached by competitors;

•the diversion of significant management time and

attention from ongoing business operations towards

the completion of the Pending TD Merger;

•difficulties maintaining relationships with clients,

suppliers and other business partners;

•delays or deferments of certain business decisions by

our clients, suppliers and other business partners;

•the inability to pursue alternative business

opportunities or make appropriate changes to our

business because the TD Merger Agreement requires

us to, subject to certain exceptions, conduct its

business in the ordinary course of business and to not

engage in certain kinds of transactions prior to the

completion of the Pending TD Merger without the

prior written consent of TD (such consent not to be

unreasonably conditioned, withheld or delayed), even

if such actions could prove beneficial;

•potential litigation relating to the Pending TD Merger

and the costs and uncertainties related thereto; and

•the incurrence of significant unexpected costs,

expenses, and fees for professional services and other

transaction costs in connection with the Pending TD

Merger.

Since announcement of the Pending TD Merger, we have

experienced many of these impacts, though none has

been material to date. Although impacts from the last

item—merger preparation expenses—are unavoidable

and were a significant "notable item" impacting our 2022

earnings, unexpected expenses have not been significant

to date. Although each of the other items in this list has

the potential to become significant, we believe the most

significant to date, and the one with the most adverse

potential as the transaction continues to be delayed, is the

first item—competitors poaching high-performing

associates. In 2022 we put a retention award program in

place that we believe has been reasonably effective to

date, but associate loss has occurred, and we believe the

risk of significant associate loss will grow as delay

continues.

Shareholder litigation could prevent or delay the

completion of the Pending TD Merger or otherwise

negatively impact our business and operations. One or

more of our shareholders may file new lawsuits against us

and/or our directors and officers in connection with the

Pending TD Merger. As previously disclosed, eleven

shareholder suits were filed in 2022 but have since been

dismissed, and none have materially impacted the

Pending TD Merger. One of the conditions to the closing is

that no order, injunction, or decree issued by any court or

governmental entity of competent jurisdiction or other

legal restraint preventing the consummation of the

Pending TD Merger or any of the other transactions

contemplated by the TD Merger Agreement and related

Bank Merger Agreement be in effect. If any plaintiff were

successful in obtaining an injunction prohibiting us from

completing the Pending TD Merger, then such injunction

may delay or prevent the effectiveness of the Pending TD

Merger and could result in significant costs to us, including

any cost associated with the indemnification of directors

and officers of each company. If a new lawsuit is filed, we

may incur costs in connection with the defense or

settlement of any shareholder lawsuits filed in connection

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with the Pending TD Merger. Such litigation could have an

adverse effect on our financial condition and results of

operations and could prevent or delay the completion of

the Pending TD Merger.

The TD Merger Agreement contains provisions that could

discourage a potential competing acquirer that might be

willing to pay more to acquire or merge with us. The TD

Merger Agreement contains provisions that restrict our

ability to, among other things, initiate, solicit, knowingly

encourage or knowingly facilitate, inquiries or proposals

with respect to, or, subject to certain exceptions generally

related to the exercise of fiduciary duties by our board of

directors, engage in any negotiations concerning, or

provide any confidential or nonpublic information or data

relating to, any alternative acquisition proposals. These

provisions, which include a termination fee of up to

$435.5 million payable by us under certain circumstances,

might discourage a potential competing acquirer that

might have an interest in acquiring all or a significant part

of us from considering or proposing that acquisition even

if, in the case of a potential acquisition of us, it were

prepared to pay consideration with a higher per share

price to our shareholders than what is contemplated in

the Pending TD Merger, or might result in a potential

competing acquirer proposing to pay a lower per share

price to acquire us than it might otherwise have proposed

to pay.

Traditional Competition Risks

We are subject to intense competition for clients, and

the nature of that competition is changing quickly. Our

primary areas of competition include: consumer and

commercial deposits, commercial loans, consumer loans

including home mortgages and lines of credit, financial

planning and wealth management, fixed income products

and services, and other consumer and commercial

financial products and services. Our competitors in these

areas include national, state, and non-US banks, savings

and loan associations, credit unions, consumer finance

companies, trust companies, investment counseling firms,

money market and other mutual funds, insurance

companies and agencies, securities firms, mortgage

banking companies, hedge funds, and other financial

services companies that serve in our markets. The

emergence of non-traditional, disruptive service providers

(see Industry Disruption within this Item 1A beginning on

page 35) has intensified the competitive environment.

Some competitors are traditional banks, subject to the

same regulatory framework as we are, while others are

not banks and in many cases experience a significantly

different or reduced degree of regulation. Examples of

less-regulated activities include check-cashing services,

independent ATM services, and “peer-to-peer” lending,

where investors provide debt financing or other capital

directly to borrowers.

Competitive pressures shift with the business and rate

environment. Over much of 2020 and 2021, with deposits

relatively abundant, the competitive focus on lending and

fee-based services was relatively high. With rising rates

and the cessation of pandemic relief funds, obtaining and

maintaining deposits has become more significant.

We expect that competition will continue to grow more

intense with respect to most of our products and

services. Heightened competition tends to put downward

pressure on revenues from affected items, upward

pressure on marketing and other promotional costs, or

both. For additional information regarding competition for

clients, refer to Competition within Item 1 beginning on

page 16 of this report.

We compete for talent. Our most significant competitors

for clients also tend to be our most significant competitors

for top talent. See Operational Risks below within this

Item 1A for additional information concerning this risk.

We compete to raise capital in the equity and debt

markets. See Liquidity and Funding Risks beginning on

page 45 of this Item 1A for additional information

concerning this risk.

Traditional Strategic & Macro Risks

We may be unable to successfully implement our

strategy to operate and grow our regional and specialty

banking businesses. Although our current strategy is

expected to evolve as business conditions change, in 2023

our primary strategies are to (1) invest resources in our

banking businesses, (2) seek to exploit growth

opportunities, especially within the markets we serve, and

(3) seek to exploit opportunities to cut cost without

significant revenue impact. Organic growth is expected to

be coordinated with a focus on strong and stable returns

on capital.

Organically, over the past several years we enhanced our

market share in our regional banking markets with

targeted hires and marketing, and we invested resources

in specialty commercial lending and private client banking.

After the completion of the IBKC merger in 2020, we

started to invest significantly in new platforms and

processes to modernize legacy operations, provide a

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better client experience, reduce ongoing operating costs,

and support future growth of the combined franchise. We

expect investments of that sort to continue in 2023,

consistent with limitations imposed by the TD Merger

Agreement. Investments of that sort have been expensive

in the near term; although we believe they are necessary

for our future and are appropriate for our company at this

time, the financial returns on these investments are highly

uncertain.

In the future more generally, we expect to continue to

nurture profitable organic growth. We may pursue

acquisitions or strategic transactions if appropriate

opportunities, within or outside of our current markets,

present themselves.

The TD Merger Agreement restricts us from making

certain acquisitions and taking other specified actions

without the consent of TD, and requires us to operate in

the ordinary course of business. These restrictions may

prevent us from pursuing attractive business

opportunities that may arise prior to the completion of

the Pending TD Merger or may otherwise adversely affect

our ongoing business and operations. See Risks Related to

the Pending TD Merger beginning on page 31 for a

discussion of additional risks related to the Pending TD

Merger.

Failure to achieve one or more key elements needed for

successful organic growth would adversely affect our

business and earnings. We believe that the successful

execution of organic growth depends upon a number of

key elements, including:

•our ability to attract and retain clients in our banking

market areas;

•our ability to achieve and maintain growth in our

earnings while pursuing new business opportunities;

•our ability to maintain a high level of client service

while optimizing our physical banking center count

due to changing client demand, all while expanding

our remote banking services and expanding or

enhancing our information processing, technology,

compliance, and other operational infrastructures

effectively and efficiently;

•our ability to manage the liquidity and capital

requirements associated with growth, especially

organic growth and cash-funded acquisitions; and

•our ability to manage effectively and efficiently the

changes and adaptations necessitated by a complex,

burdensome, and evolving regulatory environment.

We have in place strategies designed to achieve those

elements that are significant to us at present. Our

challenge is to execute those strategies and adjust them,

or adopt new strategies, as conditions change.

A type of strategic acquisition—a so-called “merger of

equals” where the company we nominally acquire has

similar size, operating contribution, or value—presents

unique opportunities but also unique risks. Those special

risks include:

•the potential for elevated and duplicative operating

expenses if we are unable to integrate the two

companies efficiently in a reasonable amount of time;

and

•the potential for a significant increase in the time

horizon that may be needed before substantial

economies of scale can be realized or substantial

revenue synergies can be developed effectively.

The IBKC merger presented those risks. In fact, the

completion of systems integration was delayed several

months, resulting in increased integration expense.

Although the proximate reason for the delay was a

hurricane event impacting key markets, the length of the

delay likely would have been less if we had merely been

integrating a small bank's systems with ours.

Industry Disruption

Through technological innovations and changes in client

habits, the manner in which clients use financial services

continues to change at a rapid pace. We provide a large

number of services remotely (online and mobile), and

physical banking center utilization has been in long-term

decline throughout the industry for many years.

Technology has helped us reduce costs and improve

service, but also has weakened traditional geographic and

relationship ties, and has allowed disruptors to enter

traditional banking areas.

Through digital marketing and service platforms, many

banks are making client inroads unrelated to physical

presence. This competitive risk is especially pronounced

from the largest U.S. banks, and from online-only banks,

due in part to the investments they are able to sustain in

their digital platforms.

Companies as disparate as PayPal (an online payment

clearinghouse) and Starbucks (a large chain of cafes)

provide payment and exchange services which compete

directly with banks in ways not possible traditionally.

The nature of technology-driven disruption to our

industry is changing, in some cases seeking to displace

traditional financial service providers rather than merely

enhance traditional services or their delivery. A number

of recent technologies have worked with the existing

financial system and traditional banks, such as the

evolution of ATM cards into debit/credit cards and the

evolution of debit/credit cards into smart phones. These

sorts of technologies often have expanded the market for

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	35	2022 FORM 10-K ANNUAL REPORT

banking services overall while siphoning a portion of the

revenues from those services away from banks and

disrupting prior methods of delivering those services. But

some recent innovations may tend to replace traditional

banks as financial service providers rather than merely

augment those services.

For example, companies which claim to offer applications

and services based on artificial intelligence compete much

more directly with traditional financial services companies

in areas involving personal advice, including high-margin

services such as financial planning and wealth

management. The low-cost, high-speed nature of these

“robo-advisor” services can be especially attractive to

younger, less-affluent clients and potential clients, as well

as persons interested in “self-service” investment

management. Other industry changes, such as zero-

commission securities trading offered by certain large

firms, may amplify this trend.

Similarly, inventions based on blockchain technology

eventually may be the foundation for greatly enhancing

transactional security throughout the banking industry,

but also eventually may decentralize financial services,

reducing the demand for banks as secure deposit-keepers

and financial intermediaries.

We believe that, over the course of the technology-

driven evolution of our industry which is well underway,

the “winners” will be those institutions which can know

their clients and make those clients feel they are known,

even when many clients increasingly do not visit banking

centers or have face-to-face live interaction. Two keys to

achieving a psychological connection with such clients are

(1) data management and analytics, using artificial

intelligence processes, which allow an institution to

provide a differentiated, personalized experience for the

client at the point of interaction, and (2) seamless

integration of real-time client contact with a human being

through voice, chat, or other means.

A critical factor in successful data analytics, allowing real-

time differentiated interaction with clients, is how

traditionally uncaptured, unstructured, or siloed data is

acquired, managed, and accessed. While many banks are

attempting to address this business need in various ways,

it remains unclear which approaches will be successful in

the long run. In addition, external vendors are developing

processes to provide solutions. A basic challenge for all

these efforts is how to integrate analysis of extremely

disparate forms of data and utilize that analysis in each

client contact in a manner which most clients not only

accept, but value.

Developing workable proprietary solutions to the data

analytics challenges ahead of competitors requires

substantial investment in information technology

systems and innovation. Even with a substantial IT

budget, we cannot outspend, or even come close to

matching, the largest U.S. banking institutions. Therefore,

like most U.S. banks, our strategy must be focused on

leveraging products and solutions which are within our

means, including those developed by external vendors.

Our goal must be to keep pace with industry

developments with a focus on improving the client’s

differentiated experience with us by recognizing and

responding to client needs.

Technological innovation has tended to reduce barriers to

entry based on cost. Put another way, once someone finds

a new, better method to accomplish a task in our industry,

often others are able to replicate or improve on that

method, sometimes quite rapidly. Key risks for us,

therefore, are whether we will be able: to catch up to

breakthroughs quickly enough to avoid client attrition; to

adopt and enhance breakthroughs frequently enough, and

without significant technical failures, to attract clients

from competitors; and, if we are able to truly innovate, to

press our advantage quickly before competitors adopt it.

To thrive as our industry is disrupted, we will need to

continue to embrace some of the attitudes of a

technology company, and shed some of the traditional

attitudes often associated with banking. This has

required, and will continue to require, an evolution in our

corporate culture which, in turn, creates implementation

risk. In this evolutionary process it is critical that we not

lose sight of how our clients experience working with us

and our systems, including those clients who still want

traditionally-delivered services, those who seek and

embrace the latest innovations, and those who just want

services to be convenient, personalized, and

understandable.

Just as disruptive business changes driven by new

technologies and new client preferences can adversely

impact us and our entire industry, similar events can

adversely impact our commercial clients. In time, a major

business disruption can cause dominant businesses to fail,

and can shrink or even end entire lines of business. An

example of this is the business failure of the Blockbuster

video distribution chain and most other video distribution

stores, and the rise of Netflix and similar services. Many

other examples of this kind of process are ongoing today

in many industries, including publishing, retail sales, news,

and the creation as well as distribution of audio and video

entertainment. To the extent disruptions impact our

clients, we may experience elevated loan losses and loss

of ongoing business which we may not be able to

recapture with new clients.

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Operational Risks

Fraud is a major, and increasing, operational risk for us

and all banks. Two traditional areas—deposit fraud (check

forging, check kiting, wire fraud, etc.) and loan fraud—

continue to be major sources of fraud attempts and actual

loss. The methods used to perpetrate and combat fraud

continue to evolve as technology changes. In addition to

cybersecurity risk (discussed below), new technologies

have made it easier for bad actors to obtain and use client

personal information, mimic communications and

signatures, and otherwise create false instructions and

documents that appear genuine.

Our anti-fraud actions are both preventive (anticipating

lines of attack, educating associates and clients, etc.) and

responsive (detecting, halting, and remediating actual

attacks). Our regulators require us to report actual and

suspected fraud promptly, and regulators often advise

banks of new schemes so that the entire industry can

adapt as quickly as possible. However, some level of fraud

loss is unavoidable, and the risk of a major loss cannot be

eliminated.

Our ability to conduct and grow our businesses is

dependent in part upon our ability to create, maintain,

expand, and evolve an appropriate operational and

organizational infrastructure, manage expenses, and

recruit and retain personnel with the ability to manage a

complex business. Operational risk can arise in many

ways, including:  errors related to failed or inadequate

physical, operational, information technology, or other

processes; faulty or disabled computer or other

technology systems; fraud, theft, physical security

breaches, electronic data and related security breaches, or

other criminal conduct by associates or third parties; and

exposure to other external events. Inadequacies may

present themselves in myriad ways. Actions taken to

manage one risk may be ineffective against others. For

example, information technology systems may be

insufficiently redundant to withstand a fire, incursion,

malware, or other major casualty, and they may be

insufficiently adaptable to new business conditions or

opportunities. Efforts to make systems more robust may

make them less adaptable, and vice-versa. Also, our

efforts to control expenses, which is a significant priority

for us, increases our operational challenges as we strive to

maintain client service and compliance at high quality and

low cost.

An information technology security (cybersecurity)

breach or other incident can cause significant damage,

and can be difficult to detect even after it occurs. Among

other things, that damage can occur due to outright theft,

loss or extortion of our funds or our clients’ funds, fraud

or identity theft perpetrated on clients, loss of confidential

or proprietary information, business disruption, or

adverse publicity associated with a breach or incident and

its potential effects. Perpetrators potentially can be

associates, clients, and certain vendors, all of whom

legitimately have access to some portion of our systems,

as well as outsiders with no legitimate access.

Cybersecurity incidents happen frequently; they are an

unavoidable part of doing business. Often, but not

always, we detect and block the attempt. Often, but not

always, the number of clients impacted is modest and our

loss is minimal or none. However, even with significant

loss prevention and mitigation systems, the risk of a

financially or reputationally significant incursion cannot be

eliminated. Given the high volume of daily transactions in

modern banking, the question is not whether we will

experience a significant and costly incursion, but when.

For that reason, the key goals of our processes are: block

or prevent as many incursions as is practical, and detect/

mitigate rapidly those that get through. The difference

between a minor and a major incursion often comes down

to how quickly it is detected and countered.

Common categories of cybersecurity incidents relevant to

us, as a bank, include: account takeover, client spoofing,

and payment fraud; ransomware and other malware;

client interface attacks (attempts to shut down or slow

down our website or mobile app); and cloud (remote

server) incursions. Common vulnerabilities include: clients

and associates that fall victim to malicious emails or other

communications and inappropriately share credentials

allowing access to accounts or systems; older software or

systems that do not have up-to-date security and are not

sufficiently isolated from other systems; third-party

software vulnerabilities; and third-party systems

vulnerabilities. We believe the bad actors have a range of

motivations, including: illegal profit; politically or

geopolitically motivated disruption; and vandalism. Bad

actors can range from amateurs to criminal organizations

to nation-states.

Because of the potential for very serious consequences

associated with these risks, our electronic systems and

their upgrades need to address internal and external

security concerns to a high degree, and our systems must

comply with applicable banking and other regulations

pertaining to bank safety and client protection. Although

many of our defenses are systemic and highly technical,

others are much older and more basic. For example,

periodically we train all our associates to recognize red

flags associated with fraud, theft, and other electronic

crimes, and we educate our clients as well through regular

and episodic security-oriented communications. We

expect our systems and regulatory requirements will

continue to evolve as technology and criminal techniques

also continue to evolve.

The operational functions we outsource to third parties

may experience similar disruptions that could adversely

impact us and over which we may have limited control

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and, in some cases, limited ability to obtain an alternate

vendor quickly. To the extent we rely on third party

vendors to perform or assist operational functions, the

challenge of managing the associated risks may become

more difficult. We manage this risk by assessing the

adequacy of cybersecurity prevention and detection

systems and programs of critical vendors.

The operational functions of business counterparties, or

businesses with which we have no relationship, may

experience disruptions that could adversely impact us

and over which we may have limited or no control.

Although these events cannot be predicted individually,

over time and in the aggregate they happen as surely as

loan losses. For example, when a major U.S. consumer-

oriented firm experiences a data systems incursion

resulting in the theft of credit and debit card information,

online account information, and other data, it impacts

thousands or sometimes millions of people. Frequently,

many of those affected are our clients. Although our

systems are not breached by these third-party incursions,

they can increase account fraud and can cause us to take

costly steps to avoid significant theft loss to our Bank and

our clients. Our ability to recoup our losses may be limited

legally or practically in many situations. Possible points of

incursion or disruption not within our control include

retailers, utilities, insurers, health care service providers,

internet service and electronic mail providers, social

media portals, distant-server (“cloud”) service providers,

electronic data security providers, telecommunications

companies, and smart phone manufacturers.

Failure to build and maintain, or outsource, the

necessary operational infrastructure, failure of that

infrastructure to perform its functions, or failure of our

disaster preparedness plans if primary infrastructure

components suffer damage, can lead to risk of loss of

service to clients, legal actions, and noncompliance with

applicable regulatory standards. Additional information

concerning operational risks and our management of

them, all of which is incorporated into this Item 1A by this

reference, appears under the caption Operational Risk

Management beginning on page 90 of our 2022 MD&A

(Item 7).

The delivery of financial services to clients and others

increasingly depends upon technologies, systems, and

multi-party infrastructures which are new, creating or

enhancing several risks discussed elsewhere. Examples of

the risks created or enhanced by the widespread and

rapid adoption of relatively untested technologies include:

security incursions; operational malfunctions or other

disruptions; and legal claims of patent or other intellectual

property infringement.

Competition for talent is substantial and increasing.

Moreover, revenue growth in some business lines

increasingly depends upon top talent. In recent years the

cost to us of hiring and retaining top revenue-producing

talent has increased, and that trend is likely to continue.

The primary tools we use to attract and retain talent are: 

salaries; commission, incentive, and retention

compensation programs; retirement benefits; change in

control severance benefits; health and other welfare

benefits; and our corporate culture. To the extent we are

unable to use these tools effectively, we face the risk that,

over time, our best talent will leave us and we will be

unable to replace those persons effectively.

Incentives might operate poorly or have unintended

adverse effects. Incentive programs are difficult to design

well, and even if well-designed often they must be

updated to address changes in our business. A poorly

designed incentive program—where goals are too

difficult, too easy, or not well related to desired outcomes

—could provide little useful motivation to key associates,

could increase turnover, and could impact client

retention. Moreover, even where those pitfalls are

avoided, incentive programs may create unintended

adverse consequences. For example, a program focused

entirely on revenue production, without proper controls,

may result in costs growing faster than revenues.

We face the risk that our competitors may seek to use

the Pending TD Merger to target our clients and top

talent. See Risks Related to the Pending TD Merger

beginning on page 31 for a discussion of additional risks

related to the Pending TD Merger.

Risks from Economic Downturns & Changes

Generally, in an economic downturn, our realized credit

losses increase, demand for our products and services

declines, and the credit quality of our loan portfolio

declines. Delinquencies and realized credit losses

generally increase during economic downturns due to an

increase in liquidity problems for clients and downward

pressure on collateral values. Likewise, demand for loans

(at a given level of creditworthiness), deposit and other

products, and financial services may decline during an

economic downturn, and may be adversely affected by

other national, regional, or local economic factors that

impact demand for loans and other financial products and

services. Such factors include, for example, changes in

employment rates, interest rates, real estate prices, or

expectations concerning rates or prices. Accordingly, an

economic downturn or other adverse economic change

(local, regional, national, or global) can hurt our financial

performance in the form of higher loan losses, lower loan

production levels, lower deposit levels, compression of

our net interest margin, and lower fees from transactions

and services. Those effects can continue for many years

after the downturn technically ends.

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Because all banks are sensitive to the risk of downturns,

the stock prices of all banks typically decline, sometimes

substantially, if the market believes that a downturn has

become more likely or is imminent. This effect can and

often does occur indiscriminately, initially without much

regard to different risk postures of different banks.

Risks Associated with Monetary Events

In recent years, the Federal Reserve has implemented

and reversed significant economic strategies that have

impacted interest rates, inflation, asset values, and the

shape of the yield curve. These strategies have had, and

will continue to have, a significant impact on our

business and on many of our clients. To illustrate: in

response to the recession in 2008-09 and the following

uneven recovery, the Federal Reserve implemented a

series of domestic monetary initiatives designed to lower

rates and make credit easier to obtain. The Federal

Reserve changed course in 2015, raising rates several

times through 2018. The last raise in 2018 was

accompanied by a substantial and broad stock market

decline. In 2019, the Federal Reserve began to lower rates.

In 2020, in response to economic disruption associated

with the COVID-19 pandemic, the Federal Reserve quickly

reduced short-term rates to extremely low levels and

acted to influence the markets to reduce long-term rates

as well. During 2021, the Federal Reserve significantly

reduced its "easing" actions that held down long-term

rates. During 2022, the Federal Reserve switched to a

tightening policy. It raised short term rates significantly

and rapidly over most of the year. Those actions triggered

a significant decline in the values of most categories of

U.S. stocks and bonds; significantly raised recessionary

expectations for the U.S.; and inverted the yield curve in

the U.S. for much of the last two quarters of 2022. For

2023, the Federal Reserve has not yet indicated when it

will stop, or at least pause, raising short term rates,

although the rate of increases has slowed.

Additional information concerning monetary policy risks is

presented: under the caption Cyclicality within the Other

Business Information section of Item 1, which starts on

page 18; within the Effect of Governmental Policies and

Proposals section of Item 1 beginning on page 29; in

Interest Rate and Yield Curve Risks beginning on page 47;

and under the caption Federal Reserve Policy in Transition

within the Market Uncertainties and Prospective Trends

section of our 2022 MD&A (Item 7), beginning on page 95.

Federal Reserve strategies can, and often are intended

to, affect the domestic money supply, inflation, interest

rates, and the shape of the yield curve. Effects on the

yield curve often are most pronounced at the short end of

the curve, which is of particular importance to us and

other banks. Among other things, easing strategies are

intended to lower interest rates, encourage borrowing,

expand the money supply, and stimulate economic

activity, while tightening strategies are intended to

increase interest rates, discourage borrowing, tighten the

money supply, and restrain economic activity. However,

as noted above, in 2022 short term rates rose faster than

long term rates to the point that the yield curve inverted

for much of the final two quarters of the year. This sort of

phenomenon—where short term rates are raised more

strongly and rapidly than long-term rates can follow—is

relatively common. It is not clear when long term rates are

likely to catch up.

Many external factors may interfere with the effects of

the Federal Reserve's plans or cause them to be changed,

perhaps quickly. Such factors include significant economic

trends or events as well as significant international

monetary policies and events. Such strategies also can

affect the U.S. and world-wide financial systems in ways

that may be difficult to predict. Risks associated with

interest rates and the yield curve are discussed in this

Item 1A under the caption Interest Rate and Yield Curve

Risks beginning on page 47.

We may be adversely affected by economic and political

situations outside the U.S. The U.S. economy, and the

businesses of many of our clients, are linked significantly

to economic and market conditions outside the U.S.,

especially in North and Central America, Europe, and Asia,

and increasingly in South America. Although our direct

exposure to non-US-dollar-denominated assets or non-US

sovereign debt is insignificant, in the future major adverse

events outside the U.S. could have a substantial indirect

adverse impact upon us. Key potential events which could

have such an impact include (1) sovereign debt default

(default by one or more governments in their borrowings),

(2) bank and/or corporate debt default, (3) market and

other liquidity disruptions, and, if stresses become

especially severe, (4) the collapse of governments,

alliances, or currencies, and (5) military conflicts. The

methods by which such events could adversely affect us

are highly varied but broadly include the following:  an

increase in our cost of borrowed funds or, in a worst case,

the unavailability of borrowed funds through conventional

markets; impacts upon our hedging and other

counterparties; impacts upon our clients; impacts upon

the U.S. economy, especially in the areas of employment

rates, real estate values, interest rates, and inflation/

deflation rates; and impacts upon us from our regulatory

environment, which can change substantially and

unpredictably from possible political response to major

financial disruptions.

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Risks Related to Businesses We May Exit

We may be unable to successfully implement a

disposition or wind-down of businesses or units which no

longer fit our strategic plans. We consider possible

closures and divestitures as we continue to adapt to a

changing business and regulatory environment. Actions of

this sort typically are elevated in the first few years after a

significant merger. For example, in 2021 we closed/

consolidated several dozen banking locations in the wake

of the 2020 IBKC merger, and we divested our title

insurance business in 2022. Key risks associated with

exiting a business include:

•our ability to price a sale transaction appropriately

and otherwise negotiate acceptable terms;

•our ability to identify and implement key client,

personnel, technology systems, and other transition

actions to avoid or minimize negative effects on

retained businesses;

•our ability to mitigate the loss of any pretax income

that the exited business produced;

•our ability to assess and manage any loss of synergies

that the exited business had with our retained

businesses; and

•our ability to manage capital, liquidity, and other

challenges that may arise if an exit results in

significant legacy cash expenditures or financial loss.

Reputation Risks

Our ability to conduct and grow our businesses, and to

obtain and retain clients, is highly dependent upon

external perceptions of our business practices and

financial stability. Our reputation is, therefore, a key asset

for us. Our reputation is affected principally by our

business practices and how those practices are perceived

and understood by others. Adverse perceptions regarding

the practices of our competitors, or our industry as a

whole, also may adversely impact our reputation. In

addition, negative perceptions relating to parties with

whom we have important relationships may adversely

impact our reputation. Senior management oversees

processes for reputation risk monitoring, assessment, and

management.

Damage to our reputation could hinder our ability to

access the capital markets or otherwise impact our

liquidity, could hamper our ability to attract new clients

and retain existing ones, could impact the market value of

our stock, could create or aggravate regulatory difficulties,

and could undermine our ability to attract and retain

talented associates, among other things. Adverse impacts

on our reputation, or the reputation of our industry, also

may result in greater regulatory and/or legislative

scrutiny, which may lead to laws or regulations that

change or constrain our business or operations. Events

that result in damage to our reputation also may increase

our litigation risk.

Political and social fragmentation in the U.S., combined

with access to social media platforms, can increase

reputation risk in ways that might not be easily avoided

by traditional means. The predominant culture within the

banking industry remains traditional: in order to preserve

their business reputations, banks generally prefer to avoid

direct, public involvement in political or social

controversy. Increasingly, though, certain groups—having

highly specific political or social agendas and with the

ability to communicate their views effectively using social

media platforms—have made it more difficult to maintain

a traditional approach. One group, for example, may

publicly criticize a bank for having, as a client, a business

which “exploits” persons of limited financial means, while

another group may criticize a bank for failing to have, as a

client, the same business which “serves” such persons in

neighborhoods that many businesses avoid. As another

example, a group may demand that a bank cease doing

business with a specific business client based on the

client’s industry or a specific business practice because

that industry or practice, though legal, is objectionable to

that group. While the potential for such demands has

always existed, special interest groups today are more

able and willing to publicize their criticisms, and some are

willing to use factual exaggerations and inflammatory

language in stating their views to the public. Those

criticisms, in turn, ultimately may be acted upon by

legislators or regulators.

Credit Risks

We face the risk that our clients may not repay their

loans and that the realizable value of collateral may be

insufficient to avoid a charge-off. We also face risks that

other counterparties, in a wide range of situations, may

fail to honor their obligations to pay us. In our business

some level of credit charge-offs is unavoidable and overall

levels of credit charge-offs can vary substantially over

time. For example, net charge-offs were $13 million in

2017 and remained historically very low through 2019. In

2020, net charge-offs unexpectedly rose to $120 million,

driven strongly by the COVID-induced recession starting in

March. Net charge-offs in 2021 fell sharply to $2 million, a

very low level historically. We believe this favorable

outcome was substantially affected by our client selection

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and underwriting processes, along with our willingness to

work with borrowers throughout the pandemic. Net

charge-offs rose in 2022 to a more normal, but still low,

$59 million. If the U.S. experiences an economic recession

in 2023, net charge offs in the coming year could increase

substantially.

Our ability to manage credit risks depends primarily upon

our ability to assess the creditworthiness of loan clients

and other counterparties and the value of any collateral,

including real estate, among other things. We further

manage credit risk by diversifying our loan portfolio, by

managing its granularity, by following per-relationship

lending limits, and by recording and managing an

allowance for loan and lease losses based on the factors

mentioned above and in accordance with applicable

accounting rules. We further manage other counterparty

credit risk in a variety of ways, some of which are

discussed in other parts of this Item 1A and all of which

have as a primary goal the avoidance of having too much

risk concentrated with any single counterparty.

We record loan charge-offs in accordance with accounting

and regulatory guidelines and rules. As indicated in this

Item 1A under the caption Accounting & Tax Risks

beginning on page 50, these guidelines and rules could

change and cause provision expense or charge-offs to be

more volatile, or to be recognized on an accelerated basis,

for reasons not always related to the underlying

performance of our portfolio. In fact, starting in 2020,

such an accounting change was made and, when the

COVID recession occurred starting in March, provision for

credit losses significantly increased. Moreover, the SEC or

PCAOB could take accounting positions applicable to our

holding company that may be inconsistent with those

taken by the Federal Reserve or other banking regulators.

A significant challenge for us is to keep the credit and

other models and approaches we use to originate and

manage loans updated to take into account changes in the

competitive environment, in real estate prices and other

collateral values, in the economy, and in the regulatory

environment, among other things, based on our

experience originating loans and servicing loan portfolios.

Changes in modeling could have significant impacts upon

our reported financial results and condition. In addition,

we use those models and approaches to manage our loan

portfolios and lending businesses. To the extent our

models and approaches are not consistent with underlying

real-world conditions, our management decisions could be

misguided or otherwise affected with substantial adverse

consequences to us. A recent example of challenges we

face in modeling stems from the COVID-19 pandemic and

its related impacts on clients, the economy, and

governmental interventions and accommodations.

The recent low-interest rate environment (which ended

in 2022) elevated the traditional challenge for lenders

and investors to balance taking on higher risk against the

desire for higher income or yield. This challenge applied

not only to credit risk in lending activities but also to

default and rate risks regarding investments. Even though

short term rates are higher in 2023, long term rates

continue to lag, and in any case that traditional risk-

versus-yield challenge remains in place.

As interest rates rise, default risk likely also will rise. As

borrowers’ obligations to pay interest increase, financial

weaknesses generally become more evident. Initially this

results in lower consumer credit scores and lower

commercial loan grading, and later results in higher

default rates. This effect can be amplified or hastened if

the rate hikes are accompanied by recession. With or

without a recession, the full effects of the recent rate

hikes are not yet fully reflected in loan default rates.

Realized credit losses tend to increase and decrease in a

cyclical manner, although the duration and timing of any

given credit cycle is impossible to predict accurately.

Through 2019 we and other U.S. banks experienced an

extended period of very low credit losses. That trend

appears to have reversed starting in 2022, which may

signal the start of a new cycle. We cannot predict how

long the new cycle will run or how high credit losses will

reach.

The credit cycle was disrupted by COVID-19. Our

expectation for loan losses in 2020 rose sharply with the

COVID-19 pandemic and its recession, though in many

cases actual losses, reflected in net charge offs, did not

later materialize. Our expectations for credit loss abated

dramatically in 2021, and significant amounts of the 2020

loss reserves were released, resulting in provision credits

(negative expenses). We do not know what the new

“normal” level of provision for credit loss will be once the

impacts of the pandemic have fully ended, or what long-

term impact the pandemic will have on the credit cycle.

The low provision and net charge-off levels experienced

before 2020, and in 2021, were historically unusual and

might not be repeated. It is extremely difficult for banks,

and for investors, to know when an uptick in credit loss is

merely idiosyncratic or instead portends a major credit

cycle change.

The composition of our loans inherently increases our

sensitivity to certain credit risks. At December 31, 2022,

approximately 55% of total loans and leases consisted of

the commercial, financial, and industrial (C&I) portfolio,

while approximately 21% consisted of the consumer real

estate portfolio.

Two large components of the C&I portfolio at year end

were loans to finance and insurance companies and loans

to mortgage companies. Taken together, approximately

20% of the C&I portfolio was sensitive to impacts on the

financial services industry. As discussed elsewhere in this

Item 1A with respect to our company, the financial

services industry is more sensitive to interest rate and

yield curve changes, monetary policy, regulatory policy,

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changes in real estate and other asset values, and changes

in general economic conditions, than many other

industries. Negative impacts on the industry could

dampen new lending in these lines of business and could

create credit impacts for the loans in our portfolio.

The consumer real estate portfolio contains a number of

concentrations which affect credit risk assessment of the

portfolio.

•Product concentration. The consumer real estate

portfolio consists primarily of consumer installment

loans, and much of the remainder consists of home

equity lines of credit.

•Collateral concentration. This entire category is

secured by residential real estate. Approximately 12%

of the consumer real estate portfolio consists of loans

secured on a second-lien basis.

•Geographic concentration. At year end, about 61% of

the consumer real estate portfolio related to clients in

three states: Florida, Tennessee, and Louisiana.

The consumer real estate category is highly sensitive to

economic impacts on consumer clients and on residential

real estate values. Job loss or downward job migration, as

well as significant life events such as divorce, death, or

disability, can significantly impact credit evaluations of the

portfolio. Also, regulatory changes, discussed above and

elsewhere in this Item 1A, are more likely to affect the

consumer category and our accounting estimates of credit

loss than other loan types.

Volatility in the oil and gas industry can impact us. At

year-end, approximately 2% of our total loans were

directly related to the oil and gas industry. In addition to

general credit and other risks mentioned elsewhere in this

Item 1A, these businesses and their related assets are

sensitive to a number of factors specific to that industry.

Key among those is global demand for energy and other

products from oil and gas in relation to supply. The

shifting balance between demand and supply is expressed

most simply in prices. Significant oil-price volatility, such

as that experienced in 2020-2022, can and often does

impact our overall business in this industry by increasing

provisioning and charge-offs, and by reducing demand for

loans. Another set of risks specific to that industry relate

to environmental concerns, including the risks of

increased regulation or other governmental intervention,

and the risks of adverse changes in consumption habits or

public perceptions generally.

Additional information concerning credit risks and our

management of them is set forth under the caption Asset

Quality beginning on page 69 of our 2022 MD&A (Item 7).

Service Risks

We provide a wide range of services to clients, and the

provision of these services may create claims against us

that we provided them in a manner that harmed the

client or a third party, or was not compliant with

applicable laws or rules. Our services include lending,

loan servicing, fiduciary, custodial, depositary, funds

management, insurance, and advisory services, among

others. We manage these risks primarily through training

programs, compliance programs, and supervision

processes. Additional information concerning these risks

and our management of them, all of which is incorporated

into this Item 1A by this reference, appears under the

captions Operational Risk Management and Compliance

Risk Management, beginning on page 90 of our 2022

MD&A (Item 7).

Regulatory, Legislative, & Legal Risks

The regulatory environment continues to be challenging.

We operate in a heavily regulated industry. Our regulatory

burdens, including both operating restrictions and ongoing

compliance costs, are substantial.

We are subject to many banking, deposit, insurance,

securities brokerage and underwriting, investment

management, and consumer lending regulations in

addition to the rules applicable to all companies publicly

traded in the U.S. securities markets and, in particular, on

the New York Stock Exchange. Failure to comply with

applicable regulations could result in financial, structural,

and operational penalties. In addition, efforts to comply

with applicable regulations may increase our costs and/or

limit our ability to pursue certain business opportunities.

See Supervision and Regulation within Item 1 of this

report, beginning on page 21, for additional information

concerning financial industry regulations. Federal and

state regulations significantly limit the types of activities in

which we, as a financial institution, may engage. In

addition, we are subject to a wide array of other

regulations that govern other aspects of how we conduct

our business, such as in the areas of employment and

intellectual property. Federal and state legislative and

regulatory authorities increasingly consider changing

these regulations or adopting new ones. Such actions

could further limit the amount of interest or fees we can

charge, could further restrict our ability to collect loans or

realize on collateral, could affect the terms or profitability

of the products and services we offer, or could materially

affect us in other ways.

The following paragraphs highlight certain specific

important risk areas related to regulatory matters

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currently. These paragraphs do not describe these risks

exhaustively, and they do not describe all such risks that

we face currently. Moreover, the importance of specific

risks will grow or diminish as circumstances change.

We and our Bank both are required to maintain certain

regulatory capital levels and ratios. U.S. capital standards

are discussed in Item 1 of this report, in tabular and

narrative form, under the caption Capital Adequacy within

the Supervision & Regulation section of Item 1 which

starts on page 21. Pressures to maintain appropriate

capital levels and address business needs in a changing

economy may lead to actions that could be dilutive or

otherwise adverse to our shareholders. Such actions could

include:  reduction or elimination of dividends; the

issuance of common or preferred stock, or securities

convertible into stock; or the issuance of any class of stock

having rights that are adverse to those of the holders of

our existing classes of common or preferred stock.

Additional information concerning these risks and our

management of them, all of which is incorporated into

this Item 1A by this reference, appears: under the captions

Capital Adequacy and Prompt Corrective Action (PCA)

within the Supervision & Regulation section of Item 1

which starts on page 21; under the captions Capital,

Capital Risk Management and Adequacy, and Market

Uncertainties and Prospective Trends beginning on pages

83, 90, and 95, respectively, of our 2022 MD&A (Item);

and under the caption Regulatory Capital in Note 12—

Regulatory Capital and Restrictions, beginning on page

153 of our 2022 Financial Statements (Item 8).

Regulation of banks is tiered based on asset size; we are

close to reaching $100 billion, which is the next tier

above us. Regulatory restrictions and costs tend to

increase based on asset tier. The two most significant

impacts on us of crossing the $100 billion threshold are:

becoming subject to Category IV enhanced prudential

standards; and becoming at-risk for being subject to a

liquidity coverage ratio requirement. Additional

information appears in the Supervision & Regulation

section of Item 1 which starts on page 21.

Legal disputes are an unavoidable part of business, and

the outcome of pending or threatened litigation cannot

be predicted with any certainty. We face the risk of

litigation from clients, associates, vendors, contractual

parties, and other persons, either singly or in class actions,

and from federal or state regulators. Matters of that sort

are pending currently. It is unlikely we will ever experience

a time when no litigation matter is outstanding. We

manage litigation risks through internal controls,

personnel training, insurance, litigation management, our

compliance and ethics processes, and other means.

However, the commencement, outcome, and magnitude

of litigation cannot be predicted or controlled with any

certainty.

Typically, we are unable to estimate our loss exposure

from legal claims until relatively late in the litigation

process, which can make our financial recognition of loss

from litigation unpredictable and highly uneven from

one period to the next. For most of our pending legal

matters we have established either no accrual (reserve) or

no significant reserve. Financial accounting guidance

requires that litigation loss be both estimable and

probable before a reserve may be established (recorded

as a liability on our balance sheet). Under that guidance,

reserves typically are not established for most litigation

matters until after preliminary motions to dismiss or to

narrow the case are resolved, after discovery is

substantially in process, and (in many cases) after

preliminary overtures regarding settlement have

occurred. Potentially significant cases often are pending

for years before any loss is recognized and a reserve is

established. Moreover, many cases experience relatively

little progress toward resolution for a long period followed

by a brief period of rapid development. Lastly, although

most cases are resolved with little or no loss to us, for the

others our loss typically is recognized either all at once

(near the time of resolution) or very unevenly over the life

of the case.

Additional information concerning litigation risks and our

management of them, all of which is incorporated into

this Item 1A by this reference, appears: under the caption

Pre-2009 Mortgage Business Risks beginning on page 50;

under the captions Repurchase Obligations, Market

Uncertainties and Prospective Trends, and Contingent

Liabilities beginning on pages 95, 95, and 101,

respectively, of our 2022 MD&A (Item 7); and under the

caption Contingencies in Note 16—Contingencies and

Other Disclosures, beginning on page 160 of our 2022

Financial Statements (Item 8).

Political dysfunction and volatility within the federal

government, both at the regulatory and Congressional

levels, creates significant potential for major and abrupt

shifts in federal policy regarding bank regulation, taxes,

and the economy, any of which could have significant

impacts on our business and financial performance.

Moreover, political conflict within and among branches of

government, and within and among government agencies,

can rise to a level where day-to-day functions could be

interrupted or impaired.

Data privacy is becoming a major political concern. The

laws governing it are new, and are likely to evolve and

expand. Many non-regulated, non-banking companies

have gathered large amounts of personal details about

millions of people, and have the ability to analyze that

data and act on that analysis very quickly. This situation

has prompted governmental responses. Two prominent

responses are the European Union General Data

Protection Regulation and the California Consumer Privacy

Act. Neither is a banking industry regulation, but both

apply to banks in relation to certain clients. Further

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general regulation to protect data privacy appears likely.

Banks in the U.S. already operate under privacy-protection

laws and rules, but banking industry regulations in this

area might be enlarged in response to this concern.

Public expectations concerning corporate controls on

emissions of carbon dioxide, methane, and other

greenhouse gases could increase our operating costs in

the future without a corresponding increase in revenue,

could curtail some aspects of our business, or both. At

present, environmental regulations do not require us to

monitor the direct or indirect greenhouse gas emissions

associated with building, operating, or maintaining our

physical facilities, nor are we taxed or fined in relation to

those emissions, because such gases generally are not

considered to be pollutants under U.S. federal law.

Changing expectations could pressure us to physically

measure, monitor, and curtail direct emissions and to

estimate indirect emissions or impacts, and eventually

could result in legal requirements to take those actions or

to pay for measured or estimated emissions. For example,

recently we engaged a third party to estimate our

location-based emissions, even though not legally

required. Whether or not legally required, any such

actions that we take increase our operating costs. In

addition, such expectations could pressure us to

discontinue business relationships with certain clients, or

groups of clients, that have suboptimal reputations for

emissions.

Although currently no bank regulatory proposal

applicable to us has been published, future regulations

could discourage us from lending to or serving clients in

certain industries judged to be environmentally high-risk,

even if those elevated risk factors have a long time

horizon or are speculative for other reasons. Changes of

that sort could curtail our ability to pursue profitable

business opportunities.

General regulation of greenhouse gas emissions, carbon

taxation schemes, government subsidies for "green"

industries over carbon-intensive ones, and other such

political/governmental actions could substantially and

directly impact us or our clients. Even if we are not

directly impacted in any significant manner by such

actions, impacts on clients could have a significant impact

on us.

Risks of Expense Control

Our ability to successfully manage expenses is important

to our long-term success, but in part is subject to risks

beyond our control. Many factors can influence the

amount of our expenses, as well as how quickly they grow.

As our businesses change—whether by acquisition,

expansion, or contraction—additional expenses can arise

from asset purchases, structural reorganization, evolving

business strategies, and changing regulations, among

other things.

We manage controllable expenses and risk through a

variety of means, including selectively outsourcing or

multi-sourcing various functions and procurement

coordination and processes. In recent years we have

actively sought to make strategic businesses more

efficient primarily by investing in technology, re-thinking

and right-sizing our physical facilities, and re-thinking and

right-sizing our workforce and incentive programs. These

efforts usually entail additional near-term expenses in the

form of technology purchases and implementation, facility

closure or renovation costs, and severance costs, while

expected benefits typically are realized with some

uncertainty in the future.

We have also focused on the economic profit generated

by our business activities and prospects. Economic profit

analysis attempts to relate ordinary profit to the capital

employed to create that profit with the goal of achieving

higher (more efficient) returns on capital employed

overall. Activities with higher capital usage bear a greater

burden in economic profit analysis. The process is

intended to allow us to more efficiently manage

investment and utilization of resources. Economic profit

analysis involves significant judgment regarding capital

allocation. Mistakes in those judgments could result in a

mis-allocation of resources and diminished profitability

over the long run.

Despite our efforts, our costs could rise due to adverse

structural changes, market shifts, or inflationary

pressures. For example: in 2021 and 2022, compensation

costs rose markedly due to high-demand/low-supply

circumstances beyond our control.

Geographic Risks

We are subject to risks of operating in various

jurisdictions. To a significant degree our banking business

is exposed to economic, regulatory, natural disaster, and

other risks that primarily impact the south-eastern and

south-central U.S. states where we do most of our

regional banking business. If those regions of the U.S.

were to experience adversity not shared by other parts of

the country, we are likely to experience adversity to a

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degree not shared by those competitors which have a

broader or different regional footprint. Examples of these

kinds of risks include: earthquakes in Memphis; hurricanes

in Florida, Louisiana, the Carolina coasts, or the Texas

coast; a major change in health insurance laws impacting

the many healthcare companies in middle Tennessee; and

automotive industry plant closures.

We have international assets, mainly in the form of loans

and letters of credit. Holding non-U.S. assets creates a

number of risks:  the risk that taxes, fees, prohibitions,

and other barriers and constraints may be created or

increased by the U.S. or other countries that would impact

our holdings; the risk that currency exchange rates could

move unfavorably so as to diminish the U.S. dollar value of

assets, or to enlarge the U.S. dollar value of liabilities; and

the risk that legal recourse against foreign counterparties

may be limited in unexpected ways. Our ability to manage

those and other risks depends upon a number of factors,

including: our ability to recognize and anticipate

differences in legal, cultural, and other expectations

applicable to clients, regulators, vendors, and other

business partners and counterparties; and our ability to

recognize and manage any exchange rate risks to which

we are exposed.

Insurance

Our property and casualty insurance may not cover, or

may be inadequate to fully cover, the risks that we face,

and we may be adversely affected by a default by

insurers. We use insurance to manage a number of risks,

including damage or destruction of property as well as

legal and other liability. Not all such risks are insured, in

any given insured situation our insurance may be

inadequate to cover all loss, and many risks we face are

uninsurable. For those risks that are insured, we also face

the risks that the insurer may default on its obligations or

that the insurer may refuse to honor them. We treat the

risk of default as a type of credit risk, which we manage by

reviewing the insurers that we use and by striving to use

more than one insurer when practical. The risk of refusal,

whether due to honest disagreement or bad faith, is

inherent in any contractual situation.

A portion of our consumer loan portfolio involves

mortgage default insurance. If a default insurer were to

experience a significant credit downgrade or were to

become insolvent, that could adversely affect the carrying

value of loans insured by that company, which could result

in an immediate increase in our loan loss provision or

write-down of the carrying value of those loans on our

balance sheet and, in either case, a corresponding impact

on our financial results. If many default insurers were to

experience downgrades or insolvency at the same time,

the risk of a financial impact would be amplified.

We own certain bank-owned life insurance policies as

assets on our balance sheet. Some of those policies are

“general account” and others are “separate account.” The

general account policies are subject to the risk that the

carrier might experience a significant downgrade or

become insolvent. The separate account policies are less

susceptible to carrier risk, but do carry a higher risk of

value fluctuations in securities which underlie those

policies. Both risks are managed through periodic reviews

of the carriers and the underlying security values.

However, particularly for the general account policies, our

ability to liquidate a policy in anticipation of an adverse

carrier event is significantly limited by applicable

insurance contracts and regulations as well as by a

substantial tax penalty which could be levied upon early

policy termination.

When we self-insure certain exposures, our estimates of

future expenditures may be inadequate for the actual

expenditures that occur. For example, we self-insure our

associate health-insurance benefit program. We estimate

future expenditures and establish accruals (reserves)

based on the estimates. If actual expenditures were to

exceed our estimates in a future period, our future

expenses could be adversely and unexpectedly increased.

Liquidity & Funding Risks

Liquidity is essential to our business model and a lack of

liquidity, or an increase in the cost of liquidity, may

materially and adversely affect our businesses, results of

operations, financial condition, and cash flows. In

general, the costs of our funding directly impact our costs

of doing business and, therefore, can positively or

negatively affect our financial results. Our funding

requirements in 2022 were met principally by deposits, by

financing from other financial institutions, and by funds

obtained from the capital markets.

Deposits traditionally have provided our most affordable

funds and by far the largest portion of funding. However,

deposit trends can shift with economic conditions. If

interest rates fall, deposit levels in our Bank might fall,

perhaps fairly quickly if a tipping point is reached, as

depositors become more comfortable with risk and seek

higher returns in other vehicles. This could pressure us to

raise interest we pay on our deposits, which could shrink

our net interest margin if loan rates do not rise

correspondingly.

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	45	2022 FORM 10-K ANNUAL REPORT

The extremely low interest rate environment of the past

several years ended in 2022. Contrary to the expectations

outlined in the paragraph above, deposit levels prior to

2022 climbed, possibly buoyed by the severe volatility

experienced by the stock markets in 2018-2020 coupled

with Federal pandemic assistance, particularly direct cash

payments to most citizens, in 2020 and 2021. Although

significant market volatility resumed in 2022, and we have

generally raised deposit interest rates to attract and

maintain clients, we do not expect deposit levels to rise

appreciably in 2023, and in fact there is significant risk

levels will fall, especially if Federal Reserve "tightening"

actions push the economy into recession and push

unemployment rates higher.

Deposit levels may be affected, fairly quickly, by changes

in monetary policy. The Federal Reserve currently is

pursuing a tightening policy. The Federal Reserve has

indicated it intends to continue tightening based on

economic events during the year, including inflationary

pressures, employment data, and overall economic

activity. Additional information concerning monetary

policy changes appears under the caption Risks Associated

with Monetary Events beginning on page 39 within this

Item 1A, and under the caption Federal Reserve Policy in

Transition within the Market Uncertainties and

Prospective Trends section of 2022 MD&A (Item 7), which

begins on page 95.

The market among banks for deposits may be impacted

by regulatory funding and liquidity requirements.

Regulatory rules generally provide favorable treatment for

core deposits. Institutions with less than $100 billion of

assets are not required to maintain a minimum Liquidity

Coverage ratio. At or above $100 billion, the requirement

increases with size and certain activities. The largest

banks, which must maintain the highest minimum ratio,

may be incented to compete for core deposits vigorously.

Although mid-sized banks, like ours, are only lightly

impacted by this rule, if some large banks in our markets

take aggressive actions we could lose deposit share or be

compelled to adjust our deposit pricing and practices in

ways that could increase our costs.

We also depend upon financing from private institutional

or other investors by means of the capital markets. In

2020 we issued and sold $150 million of preferred stock,

along with a total of $1.3 billion of senior and

subordinated notes. In 2021, we issued and sold another

$150 million of preferred stock. We believe we could

access the capital markets again if we desired to do so,

though the Pending TD Merger likely would complicate

such a transaction. Risk remains, however, that capital

markets may become unavailable to us for reasons

beyond our control.

A number of more general factors could make funding

more difficult, more expensive, or unavailable on

affordable terms. These include, but are not limited to,

our financial results, organizational or political changes,

adverse impacts on our reputation, changes in the

activities of our business partners, disruptions in the

capital markets, specific events that adversely impact the

financial services industry, counterparty availability,

changes affecting our loan portfolio or other assets,

changes affecting our corporate and regulatory structure,

interest rate fluctuations, ratings agency actions, general

economic conditions, and the legal, regulatory,

accounting, and tax environments governing our funding

transactions. In addition, our ability to raise funds is

strongly affected by the general state of the U.S. and

world economies and financial markets as well as the

policies and capabilities of the U.S. government and its

agencies, and may remain or become increasingly difficult

due to economic and other factors beyond our control.

Changes associated with LIBOR also may impact our

funding ability; see Interest Rate and Yield Curve Risks

beginning on page 47.

Events affecting interest rates, markets, and other

factors may adversely affect the demand for our

products and services in our fixed income business. As a

result, disruptions in those areas may adversely impact

our earnings in that business unit.

Credit Ratings

Our credit ratings directly affect the availability and cost

of our unsecured funding. Our holding company (the

Corporation) and our Bank currently receive ratings from

several rating agencies for unsecured borrowings. A rating

below investment grade typically reduces availability and

increases the cost of market-based funding. A debt rating

of Baa3 or higher by Moody’s Investors Service, or BBB- or

higher by Fitch Ratings, is considered investment grade for

many purposes. At December 31, 2022, both rating

agencies rated the unsecured senior debt of the

Corporation and of the Bank as investment grade. To the

extent that in the future we depend on institutional

borrowing and the capital markets for funding and capital,

we could experience reduced liquidity and increased cost

of unsecured funding if our debt ratings were lowered,

particularly if lowered below investment grade. In

addition, other actions by ratings agencies can create

uncertainty about our ratings in the future and thus can

adversely affect the cost and availability of funding,

including placing us on negative outlook or on watchlist.

Please note that a credit rating is not a recommendation

to buy, sell, or hold securities, is subject to revision or

withdrawal at any time, and should be evaluated

independently of any other rating.

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Reductions in our credit ratings could result in

counterparties reducing or terminating their

relationships with us. Some parties with whom we do

business may have internal policies restricting the

business that can be done with financial institutions, such

as the Bank, that have credit ratings lower than a certain

threshold.

Reductions in our credit ratings could allow some

counterparties to terminate and immediately force us to

settle certain derivatives agreements, and could force us

to provide additional collateral with respect to certain

derivatives agreements. Under our margin agreements,

we are required to post collateral in the amount of our

derivative liability positions with derivative

counterparties. FHN could be asked to post collateral of an

undetermined amount based on changes in credit ratings

and derivative value.

Interest Rate & Yield Curve Risks

We are subject to interest rate risk because a significant

portion of our business involves borrowing and lending

money, and investing in financial instruments. A

considerable portion of our funding comes from short-

term and demand deposits, while a sizeable portion of our

lending and investing is in medium-term and long-term

instruments. Changes in interest rates directly impact our

revenues and expenses, and could expand or compress

our net interest margin. We actively manage our balance

sheet to control the risks of a reduction in net interest

margin brought about by ordinary fluctuations in rates. In

addition, our fixed income business tends to perform

better when rates decline or markets are volatile, which

tends to partially offset net interest margin compression.

A flat or inverted yield curve may reduce our net interest

margin and adversely affect our lending and fixed income

businesses. The yield curve is a reflection of interest rates,

at various maturities, applicable to assets and liabilities.

The yield curve is steep when short-term rates are much

lower than long-term rates; it is flat when short-term rates

and long-term rates are nearly the same; and it is inverted

when short-term rates exceed long-term rates.

Historically, the yield curve is usually upward sloping

(higher rates for longer terms). However, the yield curve

can be relatively flat or inverted (downward sloping).

Inversion normally is rare, but has happened several times

in the past few years, and in fact was common in the

second half of 2022 and early 2023. A flat or inverted yield

curve tends to decrease net interest margin, which would

adversely impact our lending businesses, and it tends to

reduce demand for long-term debt securities, which

would adversely impact the revenues of our fixed income

business. During late 2022 our net interest margin overall

did not compress, but actually expanded, as we were able

to increase average loan rates faster than average funding

rates. In 2023 there is significant risk, especially if

inversion remains common and a recession begins, that

our net interest margin could compress.

Market-indexed deposit products are very sensitive to

changes in short-term rates, and our use of them

increases our exposure to such changes. If market rates

rise, an increase in those deposit rates may be necessary

before we are able to effect similar increases in loan rates.

Generally we try to moderate our use of these products

when rates are rising, and we followed that guideline in

2022.

Expectations by the market regarding the direction of

future interest rate movements can impact the demand

for and value of our fixed income investments, and can

impact the revenues of our fixed income business. This

risk is most apparent during times when strong

expectations have not yet been reflected in market rates,

or when expectations are especially weak or uncertain.

Over a business cycle period of many years, substantial

revenue reduction in fixed income is unavoidable during

the "down" part of the cycle. The most recent revenue

reduction occurred in 2022, and we cannot predict when

it will end.

The discontinuance of LIBOR as a viable benchmark rate

may adversely affect our business and our operating

results. In 2017, the Chief Executive of the United

Kingdom Financial Conduct Authority ("FCA"), which

regulates the London InterBank Offered Rate ("LIBOR"),

announced that it intends to halt persuading or

compelling banks to submit rates for the calculation of

LIBOR. In 2021, the FCA announced that tenors of U.S.

dollar ("USD") LIBOR will no longer be published as

follows:

•One week and 2-month USD LIBOR has not been

published since December 31, 2021; and

•All other USD LIBOR tenors (e.g., overnight, 1-month,

3-month, 6-month and 12-month tenors) will not be

published after June 30, 2023.

In the U.S., multiple alternative reference rates have

become accepted alternatives to LIBOR. These alternatives

include:

SOFR. The Alternative Reference Rates Committee

(“ARRC”) is a group of private-market participants

convened by the Federal Reserve Board and the Federal

Reserve Bank of New York ("New York Fed") to help

ensure a successful transition from USD LIBOR to a more

robust reference rate. The ARRC has recommended the

Secured Overnight Financing Rate (“SOFR”) as its

preferred alternative. SOFR is published by the New York

Fed but is not directly comparable to LIBOR and cannot

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easily or simply be substituted for it in outstanding

instruments. Key differences between the two are: SOFR is

based on secured lending, LIBOR is not; and SOFR

historically has been published only as an overnight rate,

while LIBOR is published in many short-term forward

looking maturity tenors. Recently, forward-looking "Term

SOFR" rates have been published in several tenors to

address the second difference.

AMERIBOR. Another alternative, the American Interbank

Offered Rate (“AMERIBOR”) Index, is produced by the

American Financial Exchange. AMERIBOR is based on

actual transaction data involving credit decisions by many

financial institutions, on an unsecured basis.

BSBY. The Bloomberg short-term bank yield index ("BSBY")

is a proprietary rate index calculated and published by

Bloomberg Index Services Limited. BSBY is based on actual

transaction data involving unsecured credit.

FHN ceased originating new loans using LIBOR, and began

making all three of those alternatives available to most

commercial clients, in late 2021. For consumer adjustable

rate mortgages, FHN offers only SOFR as the reference

rate, which FHN believes has become the leading

alternative in the U.S. for that category of loans.

Outstanding loans affected by the discontinuance of LIBOR

have been and are being transitioned to new reference

rates if maturing later than the applicable discontinuance

date, through client agreed-upon amendments or

pursuant to fallback language in the loan documentation

and in recent federal legislation. These transitions began

late in 2021 and will conclude in 2023. New loans have

been and continue to be originated using non-LIBOR

reference rates.

A few instruments issued by us, including certain series

of preferred stock and certain trust preferred obligations,

have floating rate terms based on LIBOR, or have fixed

rates that later will convert to floating rate terms based

on LIBOR. We have risk that an adverse outcome of the

LIBOR transition could increase our interest, dividend, and

other costs relative to those instruments.

Additional information concerning the risks associated

with LIBOR discontinuance and our management of them,

all of which is incorporated into this Item 1A by this

reference, appears under the caption LIBOR and Reference

Rate Reform within the Market Uncertainties and

Prospective Trends section of our 2022 MD&A (Item 7),

which begins on page 95.

Asset Inventories & Market Risks

The trading securities inventories and loans held for sale

in our fixed income business are subject to market and

credit risks. In the course of that business we hold trading

securities inventory and loan positions for purposes of

distribution to clients, and we are exposed to certain

market risks attributable principally to interest rate risk

and credit risk associated with those assets. We manage

the risks of holding inventories of securities and loans

through certain market risk management policies and

procedures, including, for example, hedging activities and

Value-at-Risk (“VaR”) limits, trading policies, modeling,

and stress analyses. Average fixed income trading

securities (long positions) were $1.4 billion for 2022, 2021,

and 2020. Average fixed income trading liabilities (short

positions) were $480 million, $540 million, and $457

million for 2022, 2021, and 2020, respectively. Average

loans held for sale in our fixed income business were $693

million, $563 million, and $554 million for 2022, 2021, and

2020. Additional information concerning these risks and

our management of them, all of which is incorporated into

this Item 1A by this reference, appears under the caption

Market Risk Management beginning on page 87 of our

2022 MD&A (Item 7).

Declines, disruptions, or precipitous changes in markets

or market prices can adversely affect our fees and other

income sources. We earn fees and other income related

to our brokerage business and our management of assets

for clients. Declines, disruptions, or precipitous changes in

markets or market prices can adversely affect those

revenue sources.

Significant changes to the securities market’s

performance can have a material impact upon our assets,

liabilities, and financial results. We have a number of

assets and obligations that are linked, directly or

indirectly, to major securities markets. Significant changes

in market performance can have a material impact upon

our assets, liabilities, and financial results.

An example of that linkage is our obligation to fund our

pension plan so that it may satisfy benefit claims in the

future. Our pension funding obligations generally depend

upon actuarial estimates of benefits claims, the discount

rate used to estimate the present values of those claims,

and estimates of plan asset values. Our obligations to fund

the plan can be affected by changes in any of those three

factors. Accordingly, our obligations diminish if the plan’s

investments perform better than expectations or if

estimates are changed anticipating better performance,

and can grow if those investments perform poorly or if

expectations worsen. A rise in interest rates is likely to

negatively impact the values of fixed income assets held in

the plan, but would also result in an increase in the

discount rate used to measure the present value of future

benefit payments. Similarly, our obligations can be

impacted by changes in mortality tables or other actuarial

inputs.  We manage the risk of rate changes by investing

plan assets in fixed income securities having maturities

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	48	2022 FORM 10-K ANNUAL REPORT

aligned with the expected timing of payouts. Because

there are no new participants, the actuarial-input risk

should slowly diminish over time.

Changes in our funding obligation generally translate into

positive or negative changes in our pension expense over

time, which in turn affects our financial performance. Our

obligations and expenses relative to the plan can be

affected by many other things, including changes in our

participating associate population and changes to the plan

itself. Although we have taken actions intended to

moderate future volatility in this area, risk of some level of

volatility is unavoidable.

Our hedging activities may be ineffective, may not

adequately hedge our risks, and are subject to credit risk.

In the normal course of our businesses we attempt to

create partial or full economic hedges of various, though

not all, financial risks. For example: our fixed income unit

manages interest rate risk on a portion of its trading

portfolio with short positions, futures, and options

contracts; we hedge the risk of interest rate movements

related to the gap between the time we originate

mortgage loans and the time we sell them; and we use

derivatives, including swaps, swaptions, caps, forward

contracts, options, and collars, that are designed to

moderate the impact on earnings as interest rates change.

Generally, in the last example these hedged items include

certain term borrowings and certain held-to-maturity

loans.

Hedging creates certain risks for us, including the risk that

the other party to the hedge transaction will fail to

perform (counterparty risk, which is a type of credit risk),

and the risk that the hedge will not fully protect us from

loss as intended (hedge failure risk). Unexpected

counterparty failure or hedge failure could have a

significant adverse effect on our liquidity and earnings.

Mortgage Business Risks

Two of our mortgage-related businesses—mortgage

origination and lending to mortgage companies—are

highly sensitive to interest rates and rate cycles. When

rates are higher, client activity (and our related income)

tends to be muted. Lower rates tend to foster higher

activity. The U.S. experienced extremely low interest rates

for several years, ending in early 2022. Rising rates in 2022

substantially curtailed our income from these businesses.

For example, by late 2022 consumer mortgage

refinancings fell to extremely low levels. Rates are likely to

continue to rise in 2023, and further reductions in income

from our mortgage-related businesses are possible.

Additional information concerning rates and their impacts

upon us is presented: under the caption Cyclicality within

the Other Business Information section of Item 1, which

starts on page 18; in Risks Associated with Monetary

Events beginning on page 39; in Interest Rate and Yield

Curve Risks beginning on page 47; and under the caption

Federal Reserve Policy in Transition within the Market

Uncertainties and Prospective Trends section of our 2022

MD&A (Item 7), beginning on page 95.

We have contractual risks from our mortgage business.

Our traditional mortgage business primarily consists of

helping clients obtain home mortgages which we sell,

rather than hold, or which qualify for a government-

guarantee program. The mortgage terms conform to the

requirements of the mortgage buyers or government

agencies, and we make representations to those buyers or

agencies concerning conformity of each mortgage at

origination. Although the buyers and agencies generally

take the risk that a mortgage defaults, we retain the risk

that our representations were materially incorrect. In such

a case, the buyer or agency generally has the power to

force us to take the loan back for its face value, or to make

the buyer or agency whole for loss.

Some government mortgage programs could impose

penalties on us for misrepresentations at the time of

obtaining benefits under the program. Penalties can be

severe, up to three times the agency’s loss. As a result,

mortgage origination processes need to emphasize being

thorough and correct, in compliance with all agency

standards. Those processes tend to slow the mortgage

lending process for clients, and increase the complexity of

the paperwork.

The mortgage servicing business creates regulatory risks. 

Servicing requires continual interaction with consumer

clients. Federal, state, and sometimes local laws regulate

when and how we interact with consumer clients. The

requirements can be complex and difficult for us to

administer, especially if a client is having difficulty with the

mortgage loan. Failure to follow the applicable rules can

result in significant penalties or other loss for us.

The mortgage servicing business creates financial

reporting valuation risks. Our contractual right to service

a loan generally is viewed as an asset for financial

reporting purposes. Servicing rights are initially recognized

at fair value, which affects the gains recognized upon sale

of the related loans. Thereafter, servicing rights are

amortized and  reviewed for impairment. The valuations

of servicing rights are dependent upon a number of inputs

and assumptions that require management judgment. If

our servicing rights become large in relation to our overall

size, especially in volatile times, the impact of valuation

changes can be significant and difficult to predict.

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Pre-2009 Mortgage Business Risks

We have risks from the mortgage-related businesses

legacy First Horizon exited in 2008, including mortgage

loan repurchase and loss-reimbursement risk, claims of

improper foreclosure practices, and claims of non-

compliance with contractual and regulatory

requirements. In 2008 we exited our national mortgage

and related lending businesses. We retain the risk of

liability to clients and contractual parties with whom we

dealt in the course of operating those businesses.

Additional information concerning risks related to our

former mortgage businesses and our management of

them, all of which is incorporated into this Item 1A by this

reference, is set forth: under the captions Repurchase

Obligations beginning on page 95, and Contingent

Liabilities beginning on page 101, of our 2022 MD&A (Item

7); and under the captions Exposures from pre-2009

Mortgage Business and Mortgage Loan Repurchase and

Foreclosure Liability, both within Note 16—Contingencies

and Other Disclosures of our 2022 Financial Statements

(Item 8), which Note begins on page 160.

Accounting & Tax Risks

The preparation of our consolidated financial statements

in conformity with U.S. generally accepted accounting

principles requires management to make significant

estimates that affect the financial statements. The

estimate that is consistently one of our most critical is the

level of the allowance for credit losses. However, other

estimates can be highly significant at discrete times or

during periods of varying length, for example the

valuation (or impairment) of our deferred tax assets.

Estimates are made at specific points in time. As actual

events unfold, estimates are adjusted accordingly. Due to

the inherent nature of these estimates, it is possible that,

at some time in the future, we may significantly increase

the allowance for credit losses and/or sustain credit losses

that are significantly higher than the provided allowance,

or we may recognize a significant provision for impairment

of assets, or we may make some other adjustment that

will differ materially from the estimates that we make

today. Moreover, in some cases, especially concerning

litigation and other contingency matters where critical

information is inadequate, often we are unable to make

estimates until fairly late in a lengthy process.

A significant merger or acquisition requires us to make

many estimates, including the fair values of acquired

assets and liabilities. With larger transactions, fair value

and other estimations can take up to four quarters to

finalize. These estimates, and their revisions, can have a

substantial effect on the presentation of our financial

condition and operating results after the transaction

closes. In addition, the excess of the value “paid” by us in

the merger or acquisition over the fair value of the assets

acquired, net of liabilities assumed, is recorded as

goodwill. Goodwill is subject to periodic impairment

assessment, a process that can result in impairment

expense which may be significant and sudden.

Changes in accounting rules can significantly affect how

we record and report assets, liabilities, revenues,

expenses, and earnings. Although such changes generally

affect all companies in a given industry, in practice

changes sometimes have a disparate impact due to

differences in the circumstances or business operations of

companies within the same industry.

One such accounting change, ASU 2016-13,

“Measurement of Credit Losses on Financial

Instruments,” substantially impacts the measurement

and recognition of credit losses for certain assets,

including most loans. Under ASU 2016-13, when we

make or acquire a new loan, we are required to recognize

immediately the “current expected credit loss,” or “CECL,”

of that loan. We will also re-evaluate CECL each quarter

that the loan is outstanding. CECL is the difference

between our cost and the net amount we expect to collect

over the life of the loan using certain estimation methods

that incorporate macroeconomic forecasts and our

experience with other, similar loans. In contrast, the

pre-2020 accounting standard delayed recognition until

loss was “probable” (very likely). We adopted ASU

2016-13 and CECL accounting starting in 2020, with the

impact on regulatory capital having a phase-in period.

Starting in 2020, recognition of estimated credit loss was

significantly accelerated compared to pre-CECL practice,

which was aggravated by the actual and projected effects

of the pandemic. That acceleration could happen again,

especially if a recession occurs or is expected to occur.

Additional information concerning ASU 2016-13 appears

in Note 1—Significant Accounting Policies within our 2022

Financial Statements (Item 8) beginning on page 119, and

in Item 1 under the caption CECL Accounting and

COVID-19 within the section entitled Significant Business

Developments Over Past Five Years, which begins on page

12, all of which information is incorporated into this Item

1A by reference.

In comparison with former (pre-2020) standards, CECL

accounting likely will continue to: result in a significant

increase in our provision for credit losses (expense) and

allowance (reserve) during any period of loan growth,

including organic growth and growth created by

acquisition or merger; through the increased provision,

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adversely impact our earnings and, correspondingly, our

regulatory capital levels; and enhance volatility in loan

loss provision and allowance levels from quarter to

quarter and year to year, especially during times when

the economy is in transition or experiencing significant

volatility. Moreover, once fully phased in, CECL creates an

incentive for banks to reduce new lending in the “down”

part of the economic cycle in order to reduce loss

recognition and conserve regulatory capital. That perverse

incentive could, nationwide, prolong a down cycle in the

economy and delay a recovery.

Changes in regulatory rules can create significant

accounting impacts for us. Because we operate in a

regulated industry, we prepare regulatory financial

reports based on regulatory accounting standards.

Changes in those standards can have significant impacts

upon us in terms of regulatory compliance. In addition,

such changes can impact our ordinary financial reporting,

and uncertainties related to regulatory changes can create

uncertainties in our financial reporting.

Our controls and procedures may fail or be

circumvented. Internal controls, disclosure controls and

procedures, and corporate governance policies and

procedures (“controls and procedures”) must be effective

in order to provide assurance that financial reports are

materially accurate. A failure or circumvention of our

controls and procedures or failure to comply with

regulations related to controls and procedures could have

a material adverse effect on our business, financial

condition and results of operations.

Share Owning & Governance Risks

The principal source of cash flow to pay dividends on our

stock, as well as service our debt, is dividends and

distributions from the Bank, and the Bank may become

unable to pay dividends to us without regulatory

approval. First Horizon Corporation primarily depends

upon common dividends from the Bank for cash to fund

dividends we pay to our common and preferred

shareholders, and to service our outstanding debt.

Regulatory constraints might constrain or prevent the

Bank from declaring and paying dividends to us in 2023

without regulatory approval. Applying the dividend

restrictions imposed under applicable federal and state

rules, the Bank’s total amount available for dividends,

without obtaining regulatory approval, was $0.9 billion at

January 1, 2023.

Also, we are required to provide financial support to the

Bank. Accordingly, at any given time a portion of our funds

may need to be used for that purpose and therefore

would be unavailable for dividends.

Furthermore, the Federal Reserve has issued policy

statements generally requiring insured banks and bank

holding companies only to pay dividends out of current

operating earnings. The Federal Reserve has released a

supervisory letter advising bank holding companies,

among other things, that as a general matter a bank

holding company should inform the Federal Reserve and

should eliminate, defer or significantly reduce its

dividends if (i) the bank holding company’s net income

available to shareholders for the past four quarters, net of

dividends previously paid during that period, is not

sufficient to fully fund the dividends; (ii) the bank holding

company’s prospective rate of earnings is not consistent

with the bank holding company’s capital needs and overall

current and prospective financial condition; or (iii) the

bank holding company will not meet, or is in danger of not

meeting, its minimum regulatory capital adequacy ratios.

Our shareholders may suffer dilution if we raise capital

through public or private equity financings to fund our

operations, to increase our capital, or to expand. If we

raise funds by issuing equity securities or instruments that

are convertible into equity securities, the percentage

ownership of our current common shareholders will be

reduced, the new equity securities may have rights and

preferences superior to those of our common or

outstanding preferred stock, and additional issuances

could be at a sales price which is dilutive to current

shareholders. We may also issue equity securities directly

as consideration for acquisitions we may make that would

be dilutive to shareholders in terms of voting power and

share-of-ownership, and could be dilutive financially or

economically.

The IBKC merger, for example, resulted in a significant

increase in our outstanding shares. In 2020, we issued to

former IBKC shareholders common shares representing

about 44% of our post-closing outstanding shares.

Our issuance of preferred stock raises regulatory capital

without issuing common shares, but creates or expands

our general obligation to pay all preferred dividends

ahead of any common dividends. Currently we have

seven series of preferred stock outstanding, one issued by

the Bank and six by First Horizon Corporation. Subject to

capital needs and market conditions, additional series may

be issued in the future.

Provisions of Tennessee law, and certain provisions of

our charter and bylaws, could make it more difficult for a

third party to acquire control of us or could have the

effect of discouraging a third party from attempting to

acquire control of us. These provisions could make it

more difficult for a third party to acquire us even if an

acquisition might be at a price attractive to many of our

shareholders. In addition, federal banking laws prohibit

non-financial-industry companies from owning a bank,

ITEM 1A. RISK FACTORS
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	51	2022 FORM 10-K ANNUAL REPORT

and require regulatory approval of any change in control

of a bank.

Certain legal rights of holders of our common stock and

of depositary shares related to our preferred stock to

pursue claims against us or the depositary, as applicable,

are limited by our bylaws and by the terms of the deposit

agreements. Our bylaws provide that, unless we consent

in writing to an alternative forum, a state or federal court

located within Shelby County in the State of Tennessee

will be the sole and exclusive forum for (i) any derivative

action or proceeding brought in our right or name, (ii) any

action asserting a claim of breach of a fiduciary duty owed

by any director, officer or other associate of ours to us or

our shareholders, (iii) any action asserting a claim against

us or any director, officer or other associate of ours arising

pursuant to any provision of the Tennessee Business

Corporation Act, of our charter or bylaws or (iv) any action

asserting a claim against us or any director, officer or

other associate of ours that is governed by the internal

affairs doctrine. In addition, each deposit agreement

between us and the depositary, which governs the rights

of the depositary shares related to our Series B, C, and D

preferred stock (respectively), provides that any action or

proceeding arising out of or relating in any way to the

deposit agreement may only be brought in a state court

located in the State of New York or in the United States

District Court for the Southern District of New York.

The foregoing exclusive forum clauses may have the effect

of discouraging lawsuits against us or our directors,

officers or other associates, or against the depositary, as

applicable. Exclusive forum clauses may also lead to

increased costs to bring a claim, or may limit the ability of

holders of our common stock or depositary shares to bring

a claim in a judicial forum they find favorable.

In addition, the exclusive forum clauses in our bylaws and

deposit agreements could apply to actions or proceedings

that may arise under the federal securities laws,

depending on the nature of the claim alleged. To the

extent these exclusive forum clauses restrict the courts in

which holders of our common stock or depositary shares

may bring claims arising under the federal securities laws,

there is uncertainty as to whether a court would enforce

such provisions. These exclusive forum provisions do not

mean that holders of our common stock or depositary

shares have waived our obligations to comply with the

federal securities laws and the rules and regulations

thereunder.

ITEM 1A. RISK FACTORS
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	52	2022 FORM 10-K ANNUAL REPORT

Item 1B.Unresolved Staff Comments

Not applicable.

Item 2.Properties

We own or lease no single physical property that we

consider to be materially important to our financial

condition or results from operations.

Our banking centers, our fixed income and capital markets

offices, our wealth management offices, and our loan

origination, processing, and other physical offices, in the

aggregate, remain important to our ability to deliver

financial services to a large portion of our clients. For

many years, banking center usage by clients has slowly

declined, and for many years we have consolidated

banking center locations in response to changing

utilization patterns. We expect that long-term trend to

continue. Information concerning our business locations,

including banking center and other client-facing facilities,

at year-end 2022 is provided under the caption Principal

Businesses, Brands, & Locations within the Our Businesses

section of Item 1 of this report, which begins on page 9;

that information is incorporated into this Item 2 by this

reference.

In addition to the banking centers and other offices

mentioned in Item 1, we own or lease other offices and

office buildings, such as our headquarters building at 165

Madison Avenue in downtown Memphis, Tennessee.

Although some of these other offices contain banking

centers or other client-facing offices, primarily they are

used for operational and administrative functions. Our

operational and administrative offices are located in

several cities where we have banking centers.

At December 31, 2022, we believe our physical properties

are suitable and adequate for the businesses we conduct.

Item 3.Legal Proceedings

The Contingencies section from Note 16—Contingencies and Other Disclosures, beginning on page 160 of this report within

our 2022 Financial Statements (Item 8), is incorporated herein by reference.

Item 4.Mine Safety Disclosures

Not applicable.

ITEM 1B. UNRESOLVED STAFF COMMENTS  AND  ITEM 2. PROPERTIES
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	53	2022 FORM 10-K ANNUAL REPORT

Supplemental Part I Information

Executive Officers of the Registrant

The following is a list of our executive officers, as defined

by Securities and Exchange Commission rules, along with

certain supplemental information, all presented as of

February 20, 2023. The executive officers generally are

elected at the April meeting of our Board of Directors

(following the annual meeting of shareholders) for a term

of one year and until their successors are elected and

qualified.

Name & Age	Current (Year First Elected to Office) and Recent Offices & Positions
Terry L. Akins Age: 59	Senior Executive Vice President—Chief Risk Officer of First Horizon & the Bank (2020) Following the closing of the merger of equals between First Horizon and IBKC, Ms. Akins assumed the role of Senior Executive Vice President—Chief Risk Officer of First Horizon and the Bank. Prior to the merger, she had several roles with IBERIABANK Corporation and IBERIABANK starting in 2002, the most recent of which was Senior Executive Vice President and Chief Risk Officer (2017-2020).
Elizabeth A. Ardoin Age: 53	Senior Executive Vice President—Chief Communications Officer of First Horizon & the Bank (2020) Following the closing of the merger of equals between First Horizon and IBKC, Ms. Ardoin assumed the role of Senior Executive Vice President—Chief Communications Officer of First Horizon and the Bank. Prior to the merger, she had several roles with IBERIABANK Corporation and IBERIABANK starting in 2002, the most recent of which was Senior Executive Vice President and Director of Communications (2002-2020), which included marketing, public relations, human resources, and corporate real estate, and she served as chief of staff to the CEO.
Hope Dmuchowski Age: 44 Principal Financial Officer	Senior Executive Vice President—Chief Financial Officer of First Horizon & the Bank (2021) Ms. Dmuchowski was elected to her current position in November 2021. Previously, she was Executive Vice President, Head of Financial Planning and Analysis and Management Reporting for Truist Financial Corp. (Sept.-Nov. 2021); Executive Vice President, Chief Financial Officer Corporate Banking, Commercial Banking and Corporate Groups for Truist (2019-2021); Executive Vice President, Chief Financial Officer Group Director for BB&T Corp. (2017-2019); and Sr. Vice President, Chief Financial and Operations Officer—Enterprise Operations Services for BB&T (2013-2017). Her career with BB&T, a predecessor of Truist, started in 2007.
Jeff L. Fleming Age: 61 Principal Accounting Officer	Executive Vice President—Chief Accounting Officer and Corporate Controller of First Horizon & the Bank (2012) Mr. Fleming assumed the role of Executive Vice President—Chief Accounting Officer and Corporate Controller in 2012. Previously, starting in 1984, he held several positions with us, most recently (before his current role) Executive Vice President—Corporate Controller (2010-2011).
D. Bryan Jordan Age: 61 Principal Executive Officer	President and Chief Executive Officer (2008) and Chairman of the Board (2012-2020 and since 2022) of First Horizon & the Bank Mr. Jordan became President and Chief Executive Officer in 2008. He was Chairman of the Board from 2012 until we closed the merger of equals between First Horizon and IBKC in 2020. He resumed being Chairman in 2022 on the second anniversary of the IBKC merger. From 2007 until 2008 Mr. Jordan was Executive Vice President and Chief Financial Officer of First Horizon and the Bank. From 2000 until 2002 Mr. Jordan was Comptroller, and from 2002 until 2007 Mr. Jordan was Chief Financial Officer, of Regions Financial Corp. During that time he was also an Executive Vice President and a Senior Executive Vice President of Regions.
Tammy S. LoCascio Age: 54	Senior Executive Vice President—Chief Operating Officer of First Horizon & the Bank (2021) Following the closing of the merger of equals between First Horizon and IBKC in 2020, Ms. LoCascio assumed the role of Senior Executive Vice President—Chief Human Resources Officer of First Horizon and the Bank. Prior to the merger, starting in 2011, she served in several roles with the Bank, most recently Executive Vice President—Consumer Banking (2017-2020). In that role she led the retail, private client/wealth management, mortgage, and small business units.

SUPPLEMENTAL  PART I  INFORMATION
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	54	2022 FORM 10-K ANNUAL REPORT

Name & Age	Current (Year First Elected to Office) and Recent Offices & Positions
David T. Popwell Age: 63	President—Specialty Banking of First Horizon & the Bank (2020) Following the closing of the merger of equals between First Horizon and IBKC, Mr. Popwell assumed the role of President—Specialty Banking of First Horizon and the Bank. Prior to the merger, starting in 2007, he served in several roles, the most recent of which (before his current role) was President—Regional Banking (2013-2020). From 2004 to 2007 Mr. Popwell was President of SunTrust Bank—Memphis, and prior to that was an Executive Vice President of National Commerce Financial Corp.
Anthony J. Restel Age: 53	President—Regional Banking of First Horizon & the Bank (2021) Following the closing of the merger of equals between First Horizon and IBKC in 2020, Mr. Restel assumed the role of Senior Executive Vice President—Chief Operating Officer of First Horizon and the Bank. From July to November 2021, Mr. Restel also acted as interim Chief Financial Officer. Prior to the merger, he had several roles with IBERIABANK Corporation and IBERIABANK starting in 2001, the most recent of which was Vice Chairman and Chief Financial Officer (2005-2020). During his tenure as Chief Financial Officer, Mr. Restel also served as Chief Credit Officer of IBERIABANK (2007-2009).
Susan L. Springfield Age: 58	Senior Executive Vice President—Chief Credit Officer of First Horizon & the Bank (2013) Ms. Springfield assumed the role of Executive Vice President—Chief Credit Officer of First Horizon & the Bank in 2013, with “Senior” added to her title in 2020. Previously, starting in 1998, she served the Bank in several roles, the most recent of which (before her current role) was Executive Vice President— Commercial Banking (2011-2013).

Selected Other Corporate Officers

Clyde A. Billings, Jr.

Senior Vice President, Assistant

General Counsel, and Corporate

Secretary

Dane P. Smith

Senior Vice President

Corporate Treasurer

SUPPLEMENTAL  PART I  INFORMATION
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	55	2022 FORM 10-K ANNUAL REPORT

PART  II

Item 5.Market for the Registrant's Common

Equity, Related Stockholder Matters,

and Issuer Purchases of Equity

Securities

Market for Our Common Stock; Common Shareholders

Our sole class of common stock, $0.625 par value, is listed

and trades on the New York Stock Exchange LLC under the

symbol FHN. At December 31, 2022, there were

approximately 9,002 shareholders of record of our

common stock.

Sales of Unregistered Common and Preferred Stock

Common Stock. Not applicable.

Preferred Stock. Not applicable.

Repurchases by Us of Our Common Stock

Under authorizations from our Board of Directors, we may

repurchase common shares from time to time for general

purposes and for our stock option and other

compensation plans, subject to market conditions,

accumulation of excess equity, prudent capital

management, and legal and regulatory restrictions. We

evaluate the level of capital and take action designed to

generate or use capital as appropriate for the interests of

the shareholders.

Additional information concerning repurchase activity

during the final three months of 2022 is presented in

Tables 7.21a and 7.21b, and the surrounding notes and

other text under the caption Common Stock Purchase

Programs beginning on page 85 of our 2022 MD&A (Item

7), which information is incorporated herein by this

reference.

Total Shareholder Return Performance Graph

The “Total Shareholder Return 2017-2022” performance

graph appearing on the next page, along with Table 5.1, is

“furnished” and not “filed” as part of this report, and is not

deemed to be soliciting material. Notwithstanding

anything to the contrary set forth in this report or in any of

our previous filings under the Securities Act of 1933, as

amended, or the Securities Exchange Act of 1934, as

amended, that might incorporate future filings by

reference, including this report in whole or in part, neither

the “Total Shareholder Return 2017-2022” performance

graph nor Table 5.1 shall be incorporated by reference into

any such filings.

The “Total Shareholder Return 2017-2022” performance

graph compares the yearly percentage change in our

cumulative total shareholder return with returns based on

the Standards and Poor’s 500 and Keefe, Bruyette &

Woods (KBW) Nasdaq and Regional Bank Indices. The

graph assumes $100 is invested on December 31, 2017

and dividends are reinvested. Returns are market-

capitalization weighted.

At year-end 2019 and earlier, First Horizon was included in

the KBW Regional Bank Index. At year-end 2020 and later,

First Horizon is included in the KBW Nasdaq Bank Index.

The change in index resulted from the merger of equals in

2020 between First Horizon and IBERIABANK Corporation.

ITEM 5. MARKET FOR COMMON EQUITY, STOCKHOLDER MATTERS, & EQUITY PURCHASES  AND  ITEM 6.
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	56	2022 FORM 10-K ANNUAL REPORT

 

Table 5.1 

TOTAL SHAREHOLDER RETURN DATA

	2017	2018	2019	2020	2021	2022
First Horizon Corporation	$100.00	$67.66	$88.25	$72.21	$95.77	$147.43
S&P 500 Index	100.00	95.61	125.70	148.81	191.48	156.77
KBW Nasdaq Bank Index (BKX)	100.00	82.29	112.01	100.47	138.99	109.25
KBW Regional Bank Index (KRX)	100.00	82.51	102.20	93.33	127.53	118.71

Data source: Bloomberg

Item 6.[reserved]

ITEM 5. MARKET FOR COMMON EQUITY, STOCKHOLDER MATTERS, & EQUITY PURCHASES  AND  ITEM 6.
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	57	2022 FORM 10-K ANNUAL REPORT

Item 7.Management's Discussion and Analysis

of Financial Condition and Results of

Operations

TABLE OF ITEM 7 TOPICS

Introduction	59
Executive Overview	59
Results of Operations	61
Analysis of Financial Condition	67
Capital	83
Risk Management	86
Repurchase Obligations	95
Market Uncertainties and Prospective Trends	95
Critical Accounting Policies & Estimates	99
Non-GAAP Information	101

ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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	58	2022 FORM 10-K ANNUAL REPORT

Introduction

First Horizon Corporation (NYSE common stock trading

symbol “FHN”) is a financial holding company

headquartered in Memphis, Tennessee. FHN’s principal

subsidiary, and only banking subsidiary, is First Horizon

Bank. Through the Bank and other subsidiaries, FHN offers

regional banking, mortgage lending, specialized

commercial lending, commercial leasing and equipment

financing, brokerage, wealth management, capital

markets, and other financial services to commercial,

consumer, and governmental clients throughout the U.S.

At December 31, 2022, FHN had over 450 business

locations in 24 states, including over 400 banking centers

in 12 states, and employed more than 7,500 associates.

This MD&A should be read in conjunction with the

accompanying audited Consolidated Financial Statements

and Notes to the Consolidated Financial Statements in

Part II, Item 8 of this Form 10-K, as well as with the other

information contained in this report.

Executive Overview

Merger Agreement with Toronto-Dominion Bank

On February 27, 2022, FHN entered into an Agreement

and Plan of Merger (the “TD Merger Agreement”) with

The Toronto-Dominion Bank, a Canadian chartered bank

(“TD”), TD Bank US Holding Company, a Delaware

corporation and indirect, wholly owned subsidiary of TD

(“TD-US”), and Falcon Holdings Acquisition Co., a

Delaware corporation and wholly owned subsidiary of TD-

US (“Merger Sub”).

Pursuant to the TD Merger Agreement, FHN and Merger

Sub will merge (the “First Holding Company Merger”),

with FHN continuing as the surviving entity in the merger. 

Following the First Holding Company Merger, at the

election of TD, FHN and TD-US will merge (the “Second

Holding Company Merger” and, together with the First

Holding Company Merger, the “Holding Company

Mergers”), with TD-US continuing as the surviving entity in

the merger.

Upon the terms and subject to the conditions set forth in

the TD Merger Agreement, each share of FHN common

stock, par value $0.625 per share, (“Company Common

Stock”), issued and outstanding immediately prior to the

effective time of the First Holding Company Merger (the

“First Effective Time”) will be converted into the right to

receive $25.00 (USD) per share in cash, without interest.

Because the transaction did not close on or before

November 27, 2022, shareholders will receive an

additional $0.65 per share of Company Common Stock on

an annualized basis (or approximately 5.4 cents per

month) for the period from November 27, 2022 through

the day immediately prior to the closing. Each outstanding

share of FHN’s preferred stock, series B, C, D, E and F, will

remain issued outstanding in connection with the First

Holding Company Merger. If TD elects to effect the Second

Holding Company Merger, at the effective time of the

Second Holding Company Merger, each outstanding share

of FHN’s preferred stock will be converted into a share of

a newly created, corresponding series of TD-US having

terms as described in the TD Merger Agreement.

Following the completion of the First Holding Company

Merger, at such time as determined by TD, First Horizon

Bank and TD Bank, N.A., a national banking association

(“TDBNA”) will merge, with TDBNA surviving as a

subsidiary of TD-US (the “Bank Merger” and together with

the Holding Company Mergers, the “Pending TD Merger”).

In connection with the TD Merger Agreement, TD

purchased from FHN shares of non-voting Perpetual

Convertible Preferred Stock, Series G, a new series of

preferred stock of FHN (the “Series G Convertible

Preferred Stock”) in a private placement transaction

having an aggregate liquidation preference and purchase

price of approximately $494 million, pursuant to a

securities purchase agreement between FHN and TD

entered into concurrently with the execution and delivery

of the TD Merger Agreement. The Series G Convertible

Preferred Stock is convertible into up to 4.9% of the

outstanding shares of Company Common Stock in certain

circumstances, including the closing of the Pending TD

Merger or the termination of the TD Merger Agreement.

The Pending TD Merger is subject to customary closing

conditions, including approvals from U.S. and Canadian

regulatory authorities. FHN's shareholders approved the

Pending TD Merger on May 31, 2022.

On February 9, 2023, FHN and TD agreed to extend the

outside date to May 27, 2023. Subsequent to the

extension, TD recently informed FHN that TD does not

expect that the necessary regulatory approvals will be

received in time to complete the Pending TD Merger by

May 27, 2023, and that TD cannot provide a new

projected closing date at this time. TD has initiated

discussions with FHN regarding a potential further

extension of the outside date. There can be no assurance

that an extension will ultimately be agreed or that TD will

satisfy all regulatory requirements so that the regulatory

approvals required to complete the Pending TD Merger

will be received.

ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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	59	2022 FORM 10-K ANNUAL REPORT

Either TD or First Horizon may unilaterally elect to

terminate the TD Merger Agreement in certain

circumstances set forth in the TD Merger Agreement.

Refer to 2022 Merger Agreement with Toronto-Dominion

Bank in Item 1, beginning on page 15, for additional

information.

2022 Financial Performance Summary

FHN reported net income available to common

shareholders of $868 million, or $1.53 per diluted share,

compared to net income of $962 million, or $1.74 per

diluted share in 2021.

Net interest income of $2.4 billion increased $398 million

from 2021 reflecting the benefit of higher rates partially

offset by higher funding costs. The net interest margin

increased 62 basis points to 3.10% compared to 2.48% in

2021. Earning asset yields increased 79 basis points while

the cost of interest-bearing liabilities increased 30 basis

points.

Provision for credit losses increased to $95 million

compared to a benefit of $310 million in 2021, largely

reflecting the impact of loan growth and deterioration in

the macroeconomic forecast.

Noninterest income of $815 million decreased $261

million from 2021, largely driven by lower fixed income

and mortgage banking and title income.

Noninterest expense of $2.0 billion decreased $143

million from 2021 largely attributable to lower personnel

expense.

Period-end loans and leases of $58.1 billion increased $3.2

billion from December 31, 2021 reflecting commercial

loan growth of $1.8 billion, or 4%, and consumer loan

growth of $1.4 billion, or 12%. Commercial loan growth

was tempered by a decrease of $2.3 billion in loans to

mortgage companies and a decrease of $962 million in

PPP loans.

Period-end deposits of $63.5 billion decreased $11.4

billion, or 15%, from December 31, 2021 driven by a $7.0

billion decrease in interest-bearing deposits and a $4.4

billion decrease in noninterest-bearing deposits. The

decline in deposit balances largely reflects the continued

downward trend from mid-2021 highs driven by elevated

liquidity related to the COVID-19 pandemic.

Tier 1 risk-based capital and total risk-based capital ratios

at December 31, 2022 were 11.92% and 13.33%,

respectively, compared to 11.04% and 12.34% at

December 31, 2021. The CET1 ratio was 10.17% at

December 31, 2022 compared to 9.92% at December 31,

2021.

Table 7.1

KEY PERFORMANCE INDICATORS

	For the years ended December 31,
(Dollars in millions, except per share data)	2022		2021		2020
Pre-provision net revenue (a)	$1,254		$974		$1,436
Diluted earnings per common share	$1.53		$1.74		$1.89
Return on average assets  (b)	1.08%		1.15%		1.33%
Return on average common equity (c)	11.81%		12.53%		13.66%
Return on average tangible common equity (a) (d)	15.58%		16.46%		19.03%
Net interest margin (e)	3.10%		2.48%		2.86%
Noninterest income to total revenue (f)	24.99%		34.77%		47.41%
Efficiency ratio (g)	61.24%		68.56%		54.37%
Allowance for loan and lease losses to total loans and leases	1.18%		1.22%		1.65%
Net charge-offs (recoveries) to average loans and leases	0.11%		—%		0.26%
Total period-end equity to period-end assets	10.83%		9.53%		9.86%
Tangible common equity to tangible assets (a)	7.12%		6.73%		6.89%
Cash dividends declared per common share	$0.60		$0.60		$0.60
Book value per common share	$13.48		$14.39		$13.59
Tangible book value per common share (a)	$10.23		$11.00		$10.23
Common equity Tier 1	10.17%		9.92%		9.68%
Market capitalization	$13,159		$8,713		$7,082

(a)Represents a non-GAAP measure which is reconciled in the non-GAAP to GAAP reconciliation in Table 7.29.

(b)Calculated using net income divided by average assets.

(c)Calculated using net income available to common shareholders divided by average common equity.

ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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	60	2022 FORM 10-K ANNUAL REPORT

(d)Calculated using net income available to common shareholders divided by average tangible common equity.

(e)Net interest margin is computed using total net interest income adjusted to an FTE basis assuming a statutory federal income tax rate

of 21% and, where applicable, state income taxes.

(f)Ratio is noninterest income excluding securities gains (losses) to total revenue excluding securities gains (losses).

(g)Ratio is noninterest expense to total revenue excluding securities gains (losses).

Results of Operations—2022 compared to 2021

Net Interest Income

Net interest income is FHN's largest source of revenue and

is the difference between the interest earned on interest-

earning assets (generally loans, leases and investment

securities) and the interest expense incurred in

connection with interest-bearing liabilities (generally

deposits and borrowed funds). The level of net interest

income is primarily a function of the difference between

the effective yield on average interest-earning assets and

the effective cost of interest-bearing liabilities. These

factors are influenced by the pricing and mix of interest-

earning assets and interest-bearing liabilities which, in

turn, are impacted by external factors such as local

economic conditions, competition for loans and deposits,

the monetary policy of the FRB and market interest rates.

Net interest income of $2.4 billion in 2022 increased $398

million, or 20%, from 2021 largely driven by higher earning

asset yields partially offset by higher interest-bearing

liability costs.

FHN's net interest margin increased 62 basis points to

3.10% in 2022 compared to 2021 and the net interest

spread increased 49 basis points to 2.85% over the same

period. Net interest margin and net interest spread were

favorably impacted by a 79 basis point increase in earning

asset yields, largely reflecting the impact of higher interest

rates and lower levels of excess cash. The higher yield on

earning assets was partially offset by a 30 basis point

increase in the cost of interest-bearing liabilities largely

driven by higher deposit costs.

Total average earning assets decreased $3.4 billion in

2022 largely from a decrease in interest-bearing deposits

with banks partially offset by an increase in investment

securities.

The following table presents the major components of net

interest income and net interest margin:

ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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	61	2022 FORM 10-K ANNUAL REPORT

Table 7.2

AVERAGE BALANCES, NET INTEREST INCOME AND YIELDS/RATES

(Dollars in millions)		2022						2021						2020
Assets:		Average Balance		Interest Income/ Expense		Yield/ Rate		Average Balance		Interest Income/ Expense		Yield/ Rate		Average Balance		Interest Income/ Expense		Yield/ Rate
Loans and leases:
Commercial loans and leases		$43,691		$1,823		4.18%		$44,325		$1,498		3.38%		$36,146		$1,324		3.66%
Consumer loans		12,261		479		3.89		11,973		469		3.92		10,037		407		4.05
Total loans and leases		55,952		2,302		4.11		56,298		1,967		3.49		46,183		1,731		3.75
Loans held for sale		884		39		4.41		956		33		3.44		835		30		3.60
Investment securities		9,976		200		2.01		8,623		123		1.43		6,464		106		1.64
Trading securities		1,438		58		4.04		1,366		30		2.17		1,433		35		2.44
Federal funds sold		191		4		2.09		37		—		0.15		42		—		0.21
Securities purchased under agreements to resell (a)		522		6		1.12		584		—		(0.09)		505		2		0.45
Interest-bearing deposits with banks		8,672		87		1.00		13,123		17		0.13		3,006		5		0.14
Total earning assets / Total interest income		$77,635		$2,696		3.47%		$80,987		$2,170		2.68%		$58,468		$1,909		3.26%
Cash and due from banks		1,217						1,261						852
Goodwill and other intangible assets, net		1,777						1,836						1,696
Premises and equipment, net		636						712						604
Allowance for loan and lease losses		(648)						(834)						(700)
Other assets		3,600						3,647						3,426
Total assets		$84,217						$87,609						$64,346
Liabilities and Shareholders' Equity:
Interest-bearing deposits:
Savings		$24,292		$94		0.39%		$27,283		$36		0.13%		$19,780		$82		0.41%
Other interest-bearing deposits		15,641		72		0.47		15,688		20		0.13		11,973		31		0.26
Time deposits		2,963		18		0.60		4,281		25		0.57		4,347		39		0.90
Total interest-bearing deposits		42,896		184		0.43		47,252		81		0.17		36,100		152		0.42
Federal funds purchased		699		11		1.56		949		1		0.12		862		3		0.34
Securities sold under agreements to repurchase		881		7		0.77		1,235		4		0.30		1,109		6		0.50
Trading liabilities		480		12		2.56		540		6		1.11		457		6		1.24
Other short-term borrowings		229		5		2.26		124		—		0.09		626		5		0.84
Term borrowings		1,596		72		4.51		1,645		72		4.37		1,578		64		4.02
Total interest-bearing liabilities / Total interest expense		$46,781		$291		0.62%		$51,745		$164		0.32%		$40,732		$236		0.58%
Noninterest-bearing deposits		26,851						25,879						15,779
Other liabilities		2,006						1,506						1,226
Total liabilities		75,638						79,130						57,737
Shareholders' equity		8,284						8,184						6,314
Noncontrolling interest		295						295						295
Total shareholders' equity		8,579						8,479						6,609
Total liabilities and shareholders' equity		$84,217						$87,609						$64,346
Net earnings assets / Net interest income (TE)  / Net interest spread		$30,854		$2,405		2.85%		$29,242		$2,006		2.36%		$17,736		$1,673		2.68%
Taxable equivalent adjustment				(13)		0.25				(12)		0.12				(11)		0.18
Net interest income / Net interest margin (b)				$2,392		3.10%				$1,994		2.48%				$1,662		2.86%

(a) Negative yield is driven by negative market rates on reverse repurchase agreements.

(b) Calculated using total net interest income adjusted for FTE assuming a statutory federal income tax rate of 21%, and where applicable, state income taxes.

ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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	62	2022 FORM 10-K ANNUAL REPORT

The following table presents the change in interest income and interest expense due to changes in both average volume and

average rate.

Table 7.3

ANALYSIS OF CHANGES IN NET INTEREST INCOME

		2022 Compared to 2021						2021 Compared to 2020
		Increase (Decrease) Due to (a)						Increase (Decrease) Due to (a)
(Dollars in millions)		Rate (b)		Volume (b)		Total		Rate (b)		Volume (b)		Total
Interest income:
Loans and leases		$347		$(12)		$335		$(119)		$354		$235
Loans held for sale		9		(3)		6		(1)		4		3
Investment securities		56		21		77		(15)		31		16
Trading securities		27		1		28		(4)		(1)		(5)
Other earning assets:
Federal funds sold		3		1		4		—		—		—
Securities purchased under agreements to resell		6		—		6		(3)		1		(2)
Interest-bearing deposits with banks		77		(8)		69		—		13		13
Total other earning assets		86		(7)		79		(3)		14		11
Total change in interest income - earning assets		$525		$—		$525		$(142)		$402		$260
Interest expense:
Interest-bearing deposits:
Savings		$63		$(5)		$58		$(69)		$23		$(46)
Time deposits		1		(8)		(7)		(14)		—		(14)
Other interest-bearing deposits		53		(1)		52		(19)		8		(11)
Total interest-bearing deposits		117		(14)		103		(102)		31		(71)
Federal funds purchased		10		—		10		(2)		—		(2)
Securities sold under agreements to repurchase		4		(1)		3		(3)		—		(3)
Trading liabilities		7		(1)		6		(1)		1		—
Other short-term borrowings		5		—		5		1		(5)		(4)
Term borrowings		2		(2)		—		5		3		8
Total change in interest expense - interest-bearing liabilities		145		(18)		127		(102)		30		(72)
Net interest income		$380		$18		$398		$(40)		$372		$332

(a) The changes in interest due to both rate and volume have been allocated to change due to rate and change due to volume in proportion to the absolute

amounts of the changes in each.

(b)Variances are computed on a line-by-line basis and are non-additive.

ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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	63	2022 FORM 10-K ANNUAL REPORT

Provision for Credit Losses

Provision for credit losses includes the provision for loan

and lease losses and the provision for unfunded lending

commitments. The provision for credit losses is the

expense necessary to maintain the ALLL and the accrual

for unfunded lending commitments at levels appropriate

to absorb management’s estimate of credit losses

expected over the life of the loan and lease portfolio and

the portfolio of unfunded loan commitments.

Provision for credit losses increased to $95 million in 2022,

compared to a benefit of $310 million in 2021. The

increase in provision during 2022 was reflective of loan

growth and deterioration in the macroeconomic forecast.

The provision benefit in 2021 reflected an improved

macroeconomic outlook, positive credit grade migration,

and lower loan balances.

For additional information about general asset quality

trends refer to the Asset Quality section in this MD&A.

Noninterest Income

The following table presents the significant components of noninterest income for each of the periods presented:

Table 7.4

NONINTEREST INCOME

								2022 vs. 2021				2021 vs. 2020
(Dollars in millions)		2022		2021		2020		$ Change		% Change		$ Change		% Change
Noninterest income
Fixed income		$205		$406		$423		$(201)		(50)%		$(17)		(4)%
Deposit transactions and cash management		171		175		148		(4)		(2)		27		18
Brokerage, management fees and commissions		92		88		66		4		5		22		33
Card and digital banking fees		84		78		60		6		8		18		30
Mortgage banking and title income		68		154		129		(86)		(56)		25		19
Other service charges and fees		54		44		26		10		23		18		69
Trust services and investment management		48		51		39		(3)		(6)		12		31
Securities gains (losses), net		18		13		(6)		5		38		19		NM
Purchase accounting gain		—		(1)		533		1		100		(534)		100
Other income		75		68		74		7		10		(6)		(8)
Total noninterest income		$815		$1,076		$1,492		$(261)		(24)%		$(416)		(28)%

NM – Not meaningful

Noninterest income of $815 million decreased

$261 million from $1.1 billion in 2021, largely reflecting

declines in fixed income and mortgage banking and title

income. Noninterest income represented 25% and 35% of

total revenue for 2022 and 2021, respectively.

Fixed income declined $201 million, or 50%, for 2022

compared to 2021. Fixed income product revenue

decreased $203 million, largely driven by macroeconomic

uncertainty and volatility and the impact of increasing

interest rates. Revenue from other products increased $2

million, largely driven by higher fees from loan sales.

Mortgage banking and title income of $68 million

decreased $86 million from $154 million in 2021 driven by

lower origination volume given the impact of higher long-

term rates, partially offset by a $12 million gain on sale of

mortgage servicing rights.

Noninterest income results also reflect a decline of $30

million in deferred compensation income largely driven by

equity market valuations relative to the prior year and a

gain of $22 million from the sale of FHN's title services

business in 2022.

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	64	2022 FORM 10-K ANNUAL REPORT

Noninterest Expense

The following table presents the significant components of noninterest expense for each of the periods presented:

Table 7.5

NONINTEREST EXPENSE

								2022 vs. 2021				2021 vs. 2020
(Dollars in millions)		2022		2021		2020		$ Change		% Change		$ Change		% Change
Noninterest expense
Personnel expense		$1,101		$1,210		$1,033		$(109)		(9)%		$177		17%
Net occupancy expense		128		137		116		(9)		(7)		21		18
Computer software		113		116		85		(3)		(3)		31		36
Operations services		87		80		56		7		9		24		43
Legal and professional fees		62		68		84		(6)		(9)		(16)		(19)
Contract employment and outsourcing		54		67		24		(13)		(19)		43		NM
Amortization of intangible assets		51		56		40		(5)		(9)		16		40
Advertising and public relations		50		37		18		13		35		19		NM
Equipment expense		45		47		42		(2)		(4)		5		12
Communications and delivery		37		37		31		—		—		6		19
Contributions		7		14		41		(7)		(50)		(27)		(66)
Impairment of long-lived assets		—		34		7		(34)		(100)		27		NM
Other expense		218		193		141		25		13		52		37
Total noninterest expense		$1,953		$2,096		$1,718		$(143)		(7)%		$378		22%

NM - Not meaningful

Noninterest expense of $2.0 billion decreased $143

million, or 7%, from 2021. Personnel expense of

$1.1 billion decreased $109 million from 2021 largely

attributable to lower incentive-based compensation and

deferred compensation costs. Contract employment and

outsourcing expense decreased $13 million from 2021 and

occupancy expense decreased $9 million largely reflecting

the benefit of IBKC merger cost savings.

Noninterest expense results also reflect a decrease tied to

$34 million in impairment of long-lived assets in 2021

related to merger integration efforts associated with

reduction of leased office space and banking center

optimization.

The $25 million increase in other expense in 2022 was

largely attributable to $22 million in derivative valuation

adjustments on prior Visa Class B share sales.

Total merger and integration expense was $136 million for

2022 compared to $187 million for 2021.

Income Taxes

FHN recorded income tax expense of $247 million in 2022

compared to $274 million in 2021, resulting in an effective

tax rate of 21.3% and 21.4% respectively.

FHN’s effective tax rate is favorably affected by recurring

items such as bank-owned life insurance, tax-exempt

income, and tax credits and other tax benefits from tax

credit investments. The effective rate is unfavorably

affected by the non-deductibility of portions of: FDIC

premium, executive compensation and merger expenses.

FHN's effective tax rate also may be affected by items that

may occur in any given period but are not consistent from

period to period, such as changes in unrecognized tax

benefits. The rate also may be affected by items resulting

from business combinations.

A deferred tax asset or deferred tax liability 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 current enacted

statutory tax rates to these temporary differences in

future years. FHN’s net DTA were $313 million and

$52 million at December 31, 2022 and 2021, respectively.

As of December 31, 2022, FHN had deferred tax asset

balances related to federal and state income tax

carryforwards of $34 million and $2 million, which will

expire at various dates. Refer to Note 14 - Income Taxes

for additional information.

FHN’s gross DTA after valuation allowance was $761

million and $448 million as of December 31, 2022 and

ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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	65	2022 FORM 10-K ANNUAL REPORT

2021, respectively. Based on current analysis, FHN

believes that its ability to realize the DTA is more likely

than not. FHN monitors its DTA and the need for a

valuation allowance on a quarterly basis. A significant

adverse change in FHN’s taxable earnings outlook could

result in the need for a valuation allowance.

FHN and its eligible subsidiaries are included in a

consolidated federal income tax return. FHN files separate

returns for subsidiaries that are not eligible to be included

in a consolidated federal income tax return. Based on the

laws of the applicable states where it conducts business

operations, FHN either files consolidated, combined, or

separate returns. The statute of limitations for FHN’s

consolidated federal income tax returns remains open for

tax years 2019 through 2021. Additionally, 2016 – 2018

could be subject to limited review related to refund claims

filed. IBKC's federal consolidated tax returns for 2016,

2017 and 2018 are currently under examination by the

IRS. On occasion, as federal or state auditors examine the

tax returns of FHN and its subsidiaries, FHN may extend

the statute of limitations for a reasonable period.

Otherwise, the statutes of limitations remain open only

for tax years in accordance with federal and state statutes.

See Note 14 - Income Taxes for additional information.

Business Segment Results

FHN's reportable segments include Regional Banking,

Specialty Banking, and Corporate. See Note 19 - Business

Segment Information for additional disclosures related to

FHN's segments.

Regional Banking

The Regional Banking segment generated pre-tax income

of $1.1 billion in 2022 compared to $1.3 billion in 2021, a

decrease of $222 million, largely driven by a $323 million

increase in provision for credit losses. The increase in

provision was the result of loan growth and deterioration

in the macroeconomic forecast. Results also reflect a $196

million increase in revenue, largely from higher net

interest income, and a $95 million increase in noninterest

expense largely tied to higher personnel expense and

fraud losses.

Net interest income of $2.0 billion increased $190 million

reflecting the benefit of higher interest rates and average

loan balances, partially offset by higher funding costs.

Specialty Banking

Pre-tax income of $414 million in the Specialty Banking

segment decreased $296 million compared to 2021 driven

by a $349 million decrease in revenue and a $78 million

increase in provision for credit losses, offset by a $131

million decrease in noninterest expense.

The decline in revenue was primarily attributable to lower

fixed income and mortgage banking and title income.

Fixed income of $205 million decreased $201 million,

largely driven by macroeconomic uncertainty and volatility

and the impact of increasing interest rates. Mortgage

banking and title income of $68 million decreased $84

million largely driven by a decline in mortgage sales

volume and margin compression as well as the divestiture

of the title services business.

The increase in provision for credit losses was primarily

attributable to loan growth and deterioration in the

macroeconomic forecast.

Noninterest expense decreased largely due to a decline in

personnel expense tied to a decrease in incentive-based

compensation.

Corporate

Pre-tax loss for the Corporate segment of $325 million for

2022 improved $393 million compared to 2021.

Net interest expense decreased $271 million reflecting the

impact of funds transfer pricing. Noninterest income of

$60 million increased $19 million compared to the prior

year. Noninterest income results reflect the impact of a

$26 million loss on retirement of legacy IBKC trust

preferred securities in 2021, the $22 million gain on sale

of the title services business in 2022, and higher securities

gains. These increases were partially offset by lower

deferred compensation income of $30 million.

Noninterest expense of $279 million for 2022 decreased

$107 million compared to 2021 largely reflecting lower

deferred compensation expense in the current year, as

well as the impact of impairments on long-lived assets

related to acquisition integration efforts in 2021. Merger

and integration expenses were $136 million compared to

$187 million in 2021.

Results of Operations—2021 compared to 2020

For a description of FHN's results of operations for 2021, see Results of Operations - 2021 compared to 2020 in Item 7 in the

2021 Form 10-K, as amended, which is incorporated herein by reference.

ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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	66	2022 FORM 10-K ANNUAL REPORT

Analysis of Financial Condition

Investment Securities

The following table presents the carrying value of securities by category as of December 31 for the years indicated:

Table 7.6

COMPOSITION OF SECURITIES PORTFOLIO

	2022				2021
(Dollars in millions)	Balance		Mix		Balance		Mix
Securities available for sale:
Government agency issued MBS and CMO	$7,076		69%		$7,312		78%
Other U.S. government agencies (a)	1,163		12		850		9
States and municipalities	597		6		545		6
Total securities available for sale	$8,836		87%		$8,707		93%
Securities held to maturity:
Government agency issued MBS and CMO	$1,371		13%		$712		7%
Total investment securities	$10,207		100%		$9,419		100%

(a) Includes securities issued by government sponsored entities which are not backed by the full faith and credit of the U.S. Government.

FHN’s investment portfolio consists principally of debt

securities available for sale. FHN maintains a highly-rated

securities portfolio consisting primarily of government

agency issued mortgage-backed securities and

collateralized mortgage obligations. The securities

portfolio provides a source of income and liquidity and is

an important tool used to balance the interest rate risk of

the loan and deposit portfolios. The securities portfolio is

periodically evaluated in light of established ALM

objectives, changing market conditions that could affect

the profitability of the portfolio, the regulatory

environment, and the level of interest rate risk to which

FHN is exposed. These evaluations may result in steps

taken to adjust the overall balance sheet positioning.

Investment securities were $10.2 billion and $9.4 billion

on December 31, 2022 and 2021, representing 13% and

11% of total assets, respectively. See Note 2 - Investment

Securities for more information about the securities

portfolio.

The following table presents an analysis of the amortized

cost, remaining contractual maturities, and weighted-

average yields by contractual maturity for the debt

securities portfolio.

ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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	67	2022 FORM 10-K ANNUAL REPORT

Table 7.7

CONTRACTUAL MATURITIES OF INVESTMENT SECURITIES

	As of December 31, 2022
					After 1 year				After 5 years
	Within 1 year				Within 5 years				Within 10 years				After 10 years
(Dollars in millions)	Amount		Yield (b)		Amount		Yield (b)		Amount		Yield (b)		Amount		Yield (b)
Securities available for sale:
Government agency issued MBS and CMO (a)	$17		2.53	%	$702		1.80	%	$1,217		1.87	%	$6,203		2.04	%
Other U.S. government agencies	30		2.51		13		1.44		234		1.97		1,048		2.74
States and municipalities	13		0.38		107		0.82		160		1.62		378		2.90
Total securities available for sale	$60		2.05	%	$822		1.67	%	$1,611		1.86	%	$7,629		2.18	%
Securities held to maturity:
Government agency issued MBS and CMO (a)	$—		—	%	$50		3.34	%	$265		3.52	%	$1,056		2.78	%
Total securities held to maturity	$—		—	%	$50		3.34	%	$265		3.52	%	$1,056		2.78	%

(a)Represents government agency-issued mortgage-backed securities and collateralized mortgage obligations which, when adjusted for early pay downs,

have an estimated average life of 6 years.

(b)Weighted average yields were calculated using amortized cost on a fully-taxable equivalent basis, assuming a 24% tax rate where applicable.

Loans and Leases

Period-end loans and leases increased $3.2 billion, or 6%,

to $58.1 billion as of December 31, 2022, driven by a $1.8

billion increase in commercial loans and a $1.4 billion

increase in consumer loans. Average loans and leases

decreased to $56.0 billion in 2022 compared to $56.3

billion in 2021, primarily driven by a $634 million decrease

in commercial loans, offset by a $288 million increase in

consumer loans.

The following table provides detail regarding FHN's loans

and leases:

Table 7.8

 LOANS AND LEASES

(Dollars in millions)		2022		Percent  of total		2022  Growth Rate		2021		Percent  of total		2021 Growth Rate		2020		Percent  of total		2020 Growth Rate (b)
Commercial:
Commercial, financial, and industrial (a)		$31,781		55%		2%		$31,068		57%		(6)%		$33,104		57%		65%
Commercial real estate		13,228		23		9		12,109		22		(1)		12,275		21		183
Total commercial		45,009		78		4		43,177		79		(5)		45,379		78		86
Consumer:
Consumer real estate		12,253		21		14		10,772		20		(8)		11,725		20		90
Credit card and other		840		1		(8)		910		1		(19)		1,128		2		127
Total consumer		13,093		22		12		11,682		21		(9)		12,853		22		93
Total loans and leases		$58,102		100%		6%		$54,859		100%		(6)%		$58,232		100%		87%

(a) Includes equipment financing loans and leases.

(b) 2020 includes the impact of the IBKC merger and Truist Bank branch acquisition.

C&I loans are the largest component of the loan and lease

portfolio, comprising 55% and 57% of total loans and

leases at year-end 2022 and 2021, respectively. C&I loans

increased 2%, or $713 million, from 2021, largely driven by

growth in the finance and insurance, real estate rental and

leasing, and wholesale trade industry sectors. These

increases were partially offset by declines of $2.3 billion in

loans to mortgage companies and $962 million in PPP

loans. Commercial real estate loans increased 9% to $13.2

billion in 2022, largely driven by growth in industrial and

ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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	68	2022 FORM 10-K ANNUAL REPORT

multi-family property loans. Consumer loans increased

12%, or $1.4 billion, from the end of 2021, largely driven

by growth in real estate installment loans.

The following table provides detail of the contractual

maturities of loans and leases at December 31, 2022.

Table 7.9

CONTRACTUAL MATURITIES OF LOANS AND LEASES

(Dollars in millions)	Within 1 Year		After 1 Year Within 5 Years		After 5 Years Within 15 Years		After 15 Years		Total
Commercial, financial, and industrial	$6,282		$16,626		$7,947		$926		$31,781
Commercial real estate	2,013		7,753		3,418		44		13,228
Consumer real estate	93		315		1,579		10,266		12,253
Credit card and other	264		357		69		150		840
Total loans and leases	$8,652		$25,051		$13,013		$11,386		$58,102
For maturities over one year at fixed interest rates:
Commercial, financial, and industrial			$3,802		$5,018		$703		$9,523
Commercial real estate			2,148		1,347		39		3,534
Consumer real estate			224		1,350		3,393		4,967
Credit card and other			81		53		126		260
Total loans and leases at fixed interest rates			$6,255		$7,768		$4,261		$18,284
For maturities over one year at floating interest rates:
Commercial, financial, and industrial			$12,824		$2,929		$223		$15,976
Commercial real estate			5,605		2,071		5		7,681
Consumer real estate			91		229		6,873		7,193
Credit card and other			276		16		24		316
Total loans and leases at floating interest rates			$18,796		$5,245		$7,125		$31,166
Total maturities over one year			$25,051		$13,013		$11,386		$49,450

Because of various factors, the contractual maturities of

consumer loans are not indicative of the actual lives of

such loans. A significant component of FHN’s loan

portfolio consists of consumer real estate loans, a majority

of which are home equity lines of credit and home equity

installment loans. These loans have an initial period where

the borrower is only required to pay the periodic interest.

After the interest-only period, the loan will require the

payment of both principal and interest over the remaining

term. Numerous factors can contribute to the actual life of

a home equity line or installment loan. As a result, the

actual average life of home equity lines and loans is

difficult to predict and changes in any of these factors

could result in changes in projections of average lives.

Loans Held for Sale

In 2020, FHN obtained IBKC's mortgage banking

operations which includes origination and servicing of

residential first lien mortgages that conform to standards

established by GSEs that are major investors in U.S. home

mortgages but can also consist of junior lien and jumbo

loans secured by residential property. These non-

conforming loans are primarily sold to private companies

that are unaffiliated with the GSEs on a servicing-released

basis. For further detail, see Note 7 - Mortgage Banking

Activity.

The legacy FHN loans HFS portfolio consists of small

business, other consumer loans, mortgage warehouse,

USDA, and home equity loans.

On December 31, 2022, loans HFS were $590 million, a

$582 million decrease compared to December 31, 2021,

largely driven by lower mortgage origination volume given

the impact of higher long-term rates. Held-for-sale

consumer mortgage loans secured by residential real

estate in process of foreclosure totaled $3 million for both

December 31, 2022 and 2021.

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Asset Quality

Loan and Lease Portfolio Composition

FHN groups its loans into portfolio segments based on

internal classifications reflecting the manner in which the

ALLL is established and how credit risk is measured,

monitored, and reported. From time to time, and if

conditions are such that certain subsegments are uniquely

affected by economic or market conditions or are

experiencing greater deterioration than other

components of the loan portfolio, management may

determine the ALLL at a more granular level. Commercial

loans are composed of C&I loans and CRE loans. Consumer

loans are composed of consumer real estate loans and

credit card and other loans. FHN has a concentration of

residential real estate loans of 21% and 20% of total loans

in 2022 and 2021, respectively. Industry concentrations

are discussed under the C&I heading below.

Underwriting Policies and Procedures

The following sections describe each portfolio as well as

general underwriting procedures for each. As economic

and real estate conditions develop, enhancements to

underwriting and credit policies and procedures may be

necessary or desirable. Loan policies and procedures for

all portfolios are reviewed by credit risk working groups

and management risk committees comprised of business

line managers and credit administration professionals as

well as by various other reviewing bodies within FHN.

Policies and procedures are approved by key executives

and/or senior managers leading the applicable credit risk

working groups as well as by management risk

committees.

The credit risk working groups and management risk

committees strive to ensure that the approved policies

and procedures address the associated risks and establish

reasonable underwriting criteria that appropriately

mitigate risk. Policies and procedures are reviewed,

revised and re-issued periodically at established review

dates or earlier if changes in the economic environment,

portfolio performance, the size of portfolio or industry

concentrations, or regulatory guidance warrant an earlier

review.

Commercial Loan and Lease Portfolios

FHN’s commercial loan approval process grants lending

authority based upon job description, experience, and

performance. The lending authority is delegated to the

business line (Market Managers, Departmental Managers,

Regional Presidents, Relationship Managers (RM) and

Portfolio Managers (PM)) and to Credit Risk Managers.

While individual limits vary, the predominant amount of

approval authority is vested with the Credit Risk

Management function. Portfolio, industry, and borrower

concentration limits for the various portfolios are

established by executive management and approved by

the Risk Committee of the Board.

FHN’s commercial lending process incorporates an RM

and a PM for most commercial credits. The RM is primarily

responsible for communications with the borrower and

maintaining the relationship, while the PM is responsible

for assessing the credit quality of the borrower, beginning

with the initial underwriting and continuing through the

servicing period. Other specialists and the assigned RM/

PM are organized into units called deal teams. Deal teams

are constructed with specific job attributes that facilitate

FHN’s ability to identify, mitigate, document, and manage

ongoing risk. PMs and credit analysts provide enhanced

analytical support during loan origination and servicing,

including monitoring of the financial condition of the

borrower and tracking compliance with loan agreements.

Loan closing officers and the construction loan

management unit specialize in loan documentation and

the management of the construction lending process. FHN

strives to identify problem assets early through

comprehensive policies and guidelines, targeted portfolio

reviews, more frequent servicing on lower rated

borrowers, and an emphasis on frequent grading. For

smaller commercial credits, generally $5 million or less,

and income-producing CRE credits greater than $10

million to non-professional real estate developers and

smaller professional real estate investors/developers, FHN

utilizes a centralized underwriting unit in order to

originate and grade small business loans more efficiently

and consistently.

FHN may utilize availability of guarantors/sponsors to

support commercial lending decisions during the credit

underwriting process and when determining the

assignment of internal loan grades. Reliance on the

guaranty as a viable secondary source of repayment is a

function of an analysis proving capability to pay, factoring

in, among other things, liquidity and direct/indirect cash

flows. FHN also considers the volume and amount of

guaranties provided for all global indebtedness and the

likelihood of realization. FHN presumes a guarantor’s

willingness to perform until there is any current or prior

indication or future expectation that the guarantor may

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not willingly and voluntarily perform under the terms of

the guaranty. In FHN’s risk grading approach, it is deemed

that financial support becomes necessary generally at a

point when the loan would otherwise be graded

substandard, reflecting a well-defined weakness. At that

point, provided willingness and capacity to support are

appropriately demonstrated, a strong, legally enforceable

guaranty can mitigate the risk of default or loss, justify a

less severe rating, and consequently reduce the level of

allowance or charge-off that might otherwise be deemed

appropriate.

C&I

The C&I portfolio totaled $31.8 billion and $31.1 billion as

of December 31, 2022 and 2021, respectively, and is

comprised of loans used for general business purposes.

Products offered in the C&I portfolio include term loan

financing of owner-occupied real estate and fixed assets,

direct financing and sales-type leases, working capital lines

of credit, and trade credit enhancement through letters of

credit.

Income-producing C&I loans are underwritten in

accordance with a well-defined credit origination process.

This process includes applying minimum underwriting

standards as well as separation of origination and credit

approval roles on transaction sizes over PM authorization

limits. Underwriting typically includes due diligence of the

borrower and the applicable industry of the borrower,

analysis of the borrower’s available financial information,

identification and analysis of the various sources of

repayment and identification of the primary risk

attributes. Stress testing the borrower’s financial capacity,

adherence to loan documentation requirements, and

assigning credit risk grades using internally developed

scorecards are also used to help quantify the risk when

appropriate. Underwriting parameters also include loan-

to-value ratios which vary depending on collateral type,

use of guaranties, loan agreement requirements, and

other recommended terms such as equity requirements,

amortization, and maturity. Approval decisions also

consider various financial ratios and performance

measures of the borrowers, such as cash flow and balance

sheet leverage, liquidity, coverage of fixed charges, and

working capital. Additionally, approval decisions consider

the capital structure of the borrower, sponsorship, and

quality/value of collateral. Generally, guideline and policy

exceptions are identified and mitigated during the

approval process. Pricing of C&I loans is based upon the

determined credit risk specific to the individual borrower.

Historically, these loans typically have had variable rates

tied to the LIBOR or prime rate of interest plus or minus

the appropriate margin. However, with the cessation of

LIBOR, FHN no longer references LIBOR in new loan

contracts, and the existing portfolio of loans tied to LIBOR

is being repriced to alternative reference rates.

Excluding PPP loans, C&I growth was $1.7 billion, or 6%.

The largest geographical concentrations of balances as of

December 31, 2022 were in Tennessee (21%), Florida

(13%), Texas (11%), North Carolina (7%), Louisiana (7%),

California (5%), and Georgia (5%), with no other state

representing more than 5% of the portfolio.

The following table provides the composition of the C&I

portfolio by industry as of December 31, 2022 and 2021.

For purposes of this disclosure, industries are determined

based on the NAICS industry codes used by Federal

statistical agencies in classifying business establishments

for the collection, analysis, and publication of statistical

data related to the U.S. business economy.

Table 7.10

C&I PORTFOLIO BY INDUSTRY

		December 31, 2022				December 31, 2021
(Dollars in millions)		Amount		Percent		Amount		Percent
Industry:
Finance and insurance		$4,120		13%		$3,483		11%
Real estate rental & leasing (a)		3,277		10		2,771		9
Health care and social assistance		2,657		8		2,413		8
Loans to mortgage companies		2,258		7		4,518		15
Accommodation & food service		2,238		7		2,221		7
Wholesale trade		2,212		7		1,845		6
Manufacturing		2,206		7		1,950		6
Retail trade		1,835		6		1,532		5
Energy		1,364		4		1,325		4
Other (professional, construction, transportation, etc) (b)		9,614		31		9,010		29
Total C&I loan portfolio		$31,781		100%		$31,068		100%

(a)Leasing, rental of real estate, equipment, and goods.

(b)Industries in this category each comprise less than 5% for 2022.

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Industry Concentrations

Loan concentrations are considered to exist for a financial

institution when there are loans to numerous borrowers

engaged in similar activities that would cause them to be

similarly impacted by economic or other conditions. Loans

to mortgage companies and borrowers in the finance and

insurance industry were 20% of FHN’s C&I loan portfolio

as of December 31, 2022, and as a result could be affected

by items that uniquely impact the financial services

industry. As of December 31, 2022, FHN did not have any

other concentrations of C&I loans in any single industry of

10% or more of total loans.

Loans to Mortgage Companies

Loans to mortgage companies include non-revolving

commercial lines of credit to qualified mortgage

companies primarily for the temporary warehousing of

eligible mortgage loans prior to the borrower's sale of

those mortgage loans to third party investors. Loans to

mortgage companies were 7% of the C&I portfolio as of

December 31, 2022 and 15% of the C&I portfolio as of

December 31, 2021. This portfolio generally fluctuates

with mortgage rates and seasonal factors and includes

balances related to both home purchase and refinance

activity. Generally, new loan originations to mortgage

lenders increase when there is a decline in mortgage rates

and decrease when rates rise; in 2022, rates rose. In

periods of economic uncertainty, this trend may not occur

even if interest rates are declining. In 2022, approximately

73% of the loan originations were home purchases and

27% were refinance transactions.

Finance and Insurance

The finance and insurance component represented 13% of

the C&I portfolio as of December 31, 2022 compared to

11% at the end of 2021 and includes TRUPs (i.e., long-term

unsecured loans to bank and insurance-related

businesses), loans to bank holding companies, and asset-

based lending to consumer finance companies. As of

December 31, 2022, asset-based lending to consumer

finance companies represents approximately $2.0 billion

of the finance and insurance component.

Paycheck Protection Program

In 2020, Congress created the Paycheck Protection

Program (PPP) in response to the economic disruption

associated with the COVID-19 pandemic. Under the PPP,

qualifying businesses could receive loans from private

lenders, such as FHN, that are fully guaranteed by the

Small Business Administration. These loans potentially are

partly or fully forgivable, depending upon the borrower’s

use of the funds and maintenance of employment levels.

To the extent forgiven, the borrower is relieved from

payment while the lender is still paid from the program.

As of December 31, 2022 and 2021, the C&I portfolio

included $76 million and $1.0 billion, respectively, in PPP

loans. Due to the government guarantee and forgiveness

provisions, PPP loans are considered to have no credit risk

and do not affect the amount of provision and ALLL

recorded. As a result, no ALLL was recorded for PPP loans

as of December 31, 2022 and 2021 and for regulatory

capital purposes these loans have been assigned a risk

weight of zero.

For these loans, there were remaining net lender fees of

less than $1 million to be paid to FHN as of December 31,

2022. During 2022, FHN continued to work with its clients

that have applied for and received PPP loan forgiveness.

Through December 31, 2022, over $5 billion of the original

$6 billion in PPP loans originated by FHN and by

IBERIABANK prior to the merger had been forgiven by the

SBA.

Commercial Real Estate

The CRE portfolio totaled $13.2 billion as of December 31,

2022, a $1.1 billion, or 9%, increase compared to

December 31, 2021.

The CRE portfolio includes both financings for commercial

construction and non-construction loans. This portfolio

contains loans, draws on lines, and letters of credit to

commercial real estate developers for the construction

and mini-permanent financing of income-producing real

estate.

Residential CRE loans include loans to residential builders

and developers for the purpose of constructing single-

family homes, condominiums, and town homes, and on a

limited basis, for developing residential subdivisions. After

the fulfillment of existing commitments over the near

term, the residential CRE class will be in a wind-down

state with the expectation of full runoff in the foreseeable

future.

Income-producing CRE loans

Income-producing CRE loans are underwritten in

accordance with credit policies and underwriting

guidelines that are reviewed at least annually and revised

as necessary based on market conditions. Loans are

underwritten based upon project type, size, location,

sponsorship, and other market-specific data. Generally,

minimum requirements for equity, debt service coverage

ratios, and level of pre-leasing activity are established

based on perceived risk in each subcategory. Loan-to-

value (value is defined as the lower of cost or market)

limits are set below regulatory prescribed ceilings and

generally range between 50% and 80% depending on the

underlying product set. Term and amortization

requirements are set based on prudent standards for

interim real estate lending. Equity requirements are

established based on the quality and liquidity of the

primary source of repayment. For example, more equity

would be required for a speculative construction project

or land loan than for a property fully leased to a credit

tenant or a roster of tenants. Typically, a borrower must

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have at least 15% of cost invested in a project before FHN

will provide loan funding. Income properties are required

to achieve a debt service coverage ratio greater than or

equal to 125% at inception or stabilization of the project

based on loan amortization and a minimum underwriting

interest rate. Some product types that possess a greater

risk profile require a higher level of equity, as well as a

higher debt service coverage ratio threshold. A proprietary

minimum underwriting interest rate is used to calculate

compliance with underwriting standards. Generally,

specific levels of pre-leasing must be met for construction

loans on income properties. A global cash flow analysis is

performed at the sponsor level. A large minority of the

portfolio is on a floating rate basis tied to LIBOR. However,

since January 1, 2022, no new loan contracts reference

LIBOR, and the existing portfolio of loans tied to LIBOR is

being repriced to alternative reference rates.

The credit administration and ongoing monitoring consists

of multiple internal control processes. Construction loans

are closed by a centralized control unit and construction

loan management is administered centrally for loans $3

million and over. Underwriters and credit approval

personnel stress the borrower’s/project’s financial

capacity utilizing numerous attributes such as interest

rates, vacancy, and discount rates. Key information is

captured from the various portfolios and then stressed at

the aggregate level. Results are utilized to assist with the

assessment of the adequacy of the ALLL and to steer

portfolio management strategies.

The largest geographical concentrations of CRE balances

as of December 31, 2022 were in Florida (25%), Texas

(12%), North Carolina (11%), Georgia (10%), Louisiana

(9%), and Tennessee (9%), with no other state

representing more than 5% of the portfolio. Subcategories

of income-producing CRE loans consist of multi-family

(27%), office (21%), retail (18%), industrial (16%),

hospitality (11%), land/land development (2%), and other

(5%).

Consumer Loan Portfolios

Consumer Real Estate

The consumer real estate portfolio is primarily composed

of home equity lines and installment loans. This portfolio

totaled $12.3 billion as of December 31, 2022 and $10.8

billion as of December 31, 2021. The largest geographical

concentrations of balances in the consumer real estate

portfolio as of December 31, 2022 were in Florida (30%),

Tennessee (22%), Louisiana (9%), Texas (9%), North

Carolina (7%), and New York (5%), with no other state

representing more than 5% of the portfolio.

As of December 31, 2022, approximately 88% of the

consumer real estate portfolio was in a first lien position.

As of December 31, 2022, the weighted average FICO

score at origination of this portfolio was 757 and the

refreshed FICO scores averaged 754, no significant change

from FICO scores of 755 and 754, respectively, as of

December 31, 2021. Generally, performance of this

portfolio is affected by life events that affect borrowers’

finances, the level of unemployment, and home prices.

As of December 31, 2022 and 2021, FHN had held-to-

maturity consumer mortgage loans secured by real estate

totaling $42 million and $20 million, respectively, that

were in the process of foreclosure.

HELOCs comprised $2.0 billion of the consumer real estate

portfolio for both December 31, 2022 and December 31,

2021. FHN’s HELOCs typically have a 5 or 10 year draw

period followed by a 10 or 20 year repayment period,

respectively. During the draw period, a borrower is able to

draw on the line and is only required to make interest

payments. The line is frozen if a borrower becomes past

due on payments. Once the draw period has concluded,

the line is closed and the borrower is required to make

both principal and interest payments monthly until the

loan matures. The principal payment generally is fully

amortizing, but payment amounts will adjust when

variable rates reset to reflect changes in the prime rate.

As of December 31, 2022, approximately 92% of FHN's

HELOCs were in the draw period compared to 88% at the

end of 2021. Based on when draw periods are scheduled

to end per the line agreement, it is expected that $519

million, or 28%, of HELOCs currently in the draw period

will enter the repayment period during the next 60

months, based on current terms. Generally, delinquencies

for HELOCs that have entered the repayment period are

initially higher than HELOCs still in the draw period

because of the increased minimum payment requirement.

However, over time, performance of these loans usually

begins to stabilize. HELOC's nearing the end of the draw

period are closely monitored.

The following table shows the HELOCs currently in the

draw period and expected timing of conversion to the

repayment period.

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Table 7.11

HELOC DRAW TO REPAYMENT SCHEDULE

		December 31, 2022				December 31, 2021
(Dollars in millions)		Repayment Amount		Percent		Repayment Amount		Percent
Months remaining in draw period:
0-12		$31		2%		$43		2%
13-24		40		2		42		2
25-36		109		6		50		3
37-48		135		7		136		8
49-60		204		11		160		9
>60		1,356		72		1,324		76
Total		$1,875		100%		$1,755		100%

Underwriting

For the majority of loans in this portfolio, underwriting

decisions are made through a centralized loan

underwriting center. To obtain a consumer real estate

loan, the loan applicant(s) in most cases must first meet a

minimum qualifying FICO score. Minimum FICO score

requirements are established by management for both

loans secured by real estate as well as non-real estate

loans. Management also establishes maximum loan

amounts, loan-to-value ratios, and debt-to-income ratios

for each consumer real estate product. Applicants must

have the financial capacity (or available income) to service

the debt by not exceeding a calculated debt-to-income

ratio. The amount of the loan is limited to a percentage of

the lesser of the current appraised value or sales price of

the collateral. Identified guideline and policy exceptions

require established mitigating factors that have been

approved for use by Credit Risk Management.

HELOC interest rates are variable and adjust with

movements in the index rate stated in the loan

agreement. Such loans can have elevated risks of default,

particularly in a rising interest rate environment,

potentially stressing borrower capacity to repay the loan

at the higher interest rate. FHN’s current underwriting

practice requires HELOC borrowers to qualify based on a

sensitized interest rate (above the current note rate), fully

amortized payment methodology. FHN’s underwriting

guidelines require borrowers to qualify at an interest rate

that is 200 basis points above the note rate. This mitigates

risk to FHN in the event of a sharp rise in interest rates

over a relatively short time horizon.

HELOC Portfolio Risk Management

FHN performs continuous HELOC account reviews in order

to identify higher-risk home equity lines and initiate

preventative and corrective actions. The reviews consider

a number of account activity patterns and characteristics

such as the number of times delinquent within recent

periods, changes in credit bureau score since origination,

score degradation, performance of the first lien, and

account utilization. In accordance with FHN’s

interpretation of regulatory guidance, FHN may block

future draws on accounts in order to mitigate risk of loss

to FHN.

Credit Card and Other

The credit card and other consumer loan portfolio totaled

$840 million as of December 31, 2022 and $910 million as

of December 31, 2021. This portfolio primarily consists of

consumer-related credits, including home equity and

other personal consumer loans, credit card receivables,

and automobile loans. The $70 million decrease was

driven by net repayments.

Allowance for Credit Losses

The ACL is maintained at a level sufficient to provide

appropriate reserves to absorb estimated future credit

losses in accordance with GAAP. For additional

information regarding the ACL, see Notes 1 and 4 of this

Report.

The ALLL was $685 million as of December 31, 2022, or

1.18% of total loans and leases, compared to $670 million,

or 1.22% of total loans and leases, at the end of 2021. The

ACL to total loans and leases ratio decreased to 1.33% as

of December 31, 2022 from 1.34% as of December 31,

2021.

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Consolidated Net Charge-offs

Net charge-offs were $59 million in 2022 compared to $2

million in 2021. As a percentage of average total loans and

leases, net charge-offs increased 11 basis points from

2021.

Net charge-offs in the C&I portfolio were $53 million, an

increase of $40 million from 2021, driven by higher land

and development related charge-offs. Net charge-offs in

the commercial real estate portfolio were minimal in both

2022 and 2021.

In the consumer portfolio, net recoveries of $14 million in

consumer real estate loans were offset by net charge-offs

of $20 million in credit card and other loans. Net

recoveries in the consumer portfolio in 2021 were $11

million.

Table 7.12

ANALYSIS OF ALLOWANCE FOR CREDIT LOSSES AND CHARGE-OFFS

			December 31
(Dollars in millions)			2022		2021		2020
Allowance for loan and lease losses
	C&I		$308		$334		$453
	CRE		146		154		242
	Consumer real estate		200		163		242
	Credit card and other		31		19		26
	Total allowance for loan and lease losses		$685		$670		$963
Reserve for remaining unfunded commitments
	C&I		$55		$46		$65
	CRE		22		12		10
	Consumer real estate		10		8		10
	Credit card and other		—		—		—
	Total reserve for remaining unfunded commitments		$87		$66		$85
Allowance for credit losses
	C&I		$363		$380		$518
	CRE		168		166		252
	Consumer real estate		210		171		252
	Credit card and other		31		19		26
	Total allowance for credit losses		$772		$736		$1,048
Period-end loans and leases
	C&I		$31,781		$31,068		$33,104
	CRE		13,228		12,109		12,275
	Consumer real estate		12,253		10,772		11,725
	Credit card and other		840		910		1,128
	Total period-end loans and leases		$58,102		$54,859		$58,232
ALLL / loans and leases %
	C&I		0.97%		1.07%		1.37%
	CRE		1.10		1.27		1.97
	Consumer real estate		1.63		1.51		2.07
	Credit card and other		3.72		2.14		2.34
	Total ALLL / loans and leases %		1.18%		1.22%		1.65%
ACL / loans and leases %
	C&I		1.14%		1.22%		1.56%
	CRE		1.27		1.37		2.05

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	Consumer real estate		1.71		1.59		2.15
	Credit card and other		3.72		2.09		2.30
	Total ACL / loans and leases %		1.33%		1.34%		1.80%
Net charge-offs (recoveries)
	C&I		$53		$13		$120
	CRE		—		—		1
	Consumer real estate		(14)		(22)		(10)
	Credit card and other		20		11		9
	Total net charge-offs		$59		$2		$120
Average loans and leases
	C&I		$30,969		$32,010		$27,638
	CRE		12,722		12,314		8,508
	Consumer real estate		11,397		10,969		9,191
	Credit card and other		864		1,005		846
	Total average loans and leases		$55,952		$56,298		$46,183
Charge-off %
	C&I		0.17%		0.04%		0.43%
	CRE		—		0.01		0.01
	Consumer real estate		NM		NM		NM
	Credit card and other		2.39		1.05		1.04
	Total charge-off %		0.11%		—%		0.26%
ALLL / net charge-offs
	C&I		578%		2,645%		376%
	CRE		NM		13,189		43,670
	Consumer real estate		NM		NM		NM
	Credit card and other		151		185		299
	Total ALLL / net charge-offs		1,155%		30,641%		808%

NM - not meaningful

Nonperforming Assets

Nonperforming loans are loans placed on nonaccrual if it

becomes evident that full collection of principal and

interest is at risk, if impairment has been recognized as a

partial charge-off of principal balance due to insufficient

collateral value and past due status, or (on a case-by-case

basis), if FHN continues to receive payments but there are

other borrower-specific issues. Included in nonaccrual are

loans for which FHN continues to receive payments,

including residential real estate loans where the borrower

has been discharged of personal obligation through

bankruptcy. NPAs consist of nonperforming loans and

OREO (excluding OREO from government insured

mortgages).

Total NPAs (including NPLs HFS) increased $42 million to

$327 million as of December 31, 2022, and the ratio of

nonperforming loans to total loans increased 4 basis

points to 0.54%.  The increase in nonperforming loans was

largely driven by the C&I portfolio.

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Table 7.13

NONPERFORMING ASSETS

			December 31
(Dollars in millions)			2022		2021		2020
Nonperforming loans and leases
	C&I		$153		$125		$144
	CRE		9		9		58
	Consumer real estate		152		138		182
	Credit card and other		2		3		2
	Total nonperforming loans and leases (a) (c)		$316		$275		$386
Nonperforming loans held-for-sale (a)			$8		$7		$5
Foreclosed real estate and other assets (b)			3		3		15
	Total nonperforming assets (a) (b)		$327		$285		$406
Nonperforming loans and leases to total loans and leases
	C&I		0.48%		0.40%		0.43%
	CRE		0.07		0.08		0.48
	Consumer real estate		1.24		1.29		1.56
	Credit card and other		0.27		0.31		0.18
	Total NPL %		0.54%		0.50%		0.66%
ALLL / NPLs
	C&I		202%		268%		315%
	CRE		1,554		1,671		415
	Consumer real estate		131		118		133
	Credit card and other		1,364		699		1,313
	Total ALLL / NPLs		217%		244%		249%

(a) Excludes loans and leases that are 90 or more days past due and still accruing interest.

(b) Balances do not include government-insured foreclosed real estate. Foreclosed real estate from GNMA loans totaled less than $1 million, $1

million, and $2 million at December 31, 2022, 2021, and 2020, respectively.

(c) Under the original terms of the loans, estimated interest income would have been approximately $21 million, $19 million, and $18 million

during 2022, 2021 and 2020, respectively

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The following table provides nonperforming assets by business segment:

Table 7.14

NONPERFORMING ASSETS BY SEGMENT

		December 31
(Dollars in millions)			2022		2021		2020
Nonperforming loans and leases (a) (b)
	Regional Banking		$227		$163		$216
	Specialty Banking		60		78		117
	Corporate		29		34		53
	Consolidated		$316		$275		$386
Foreclosed real estate (c)
	Regional Banking		$—		$2		$12
	Specialty Banking		2		—		1
	Corporate		1		1		2
	Consolidated		$3		$3		$15
Nonperforming Assets (a) (b) (c)
	Regional Banking		$227		$165		$228
	Specialty Banking		62		78		118
	Corporate		30		35		55
	Consolidated		$319		$278		$401
Nonperforming loans and leases to total loans and leases
	Regional Banking		0.54%		0.43%		0.54%
	Specialty Banking		0.37		0.48		0.68
	Corporate		6.28		5.39		5.70
	Consolidated		0.54%		0.50%		0.66%
NPA % (d)
	Regional Banking		0.55%		0.44%		0.57%
	Specialty Banking		0.39		0.48		0.68
	Corporate		6.54		5.51		5.87
	Consolidated		0.55%		0.51%		0.69%

(a)Excludes loans and leases that are 90 or more days past due and still accruing interest.

(b)Excludes loans classified as held for sale.

(c)Excludes foreclosed real estate and receivables related to government-insured mortgages of less than $1 million, $1 million, and $5 million as of

December 31, 2022, 2021, and 2020, respectively.

(d)Ratio is non-performing assets related to the loan and lease portfolio to total loans plus foreclosed real estate and other assets.

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Past Due Loans and Potential Problem Assets

Past due loans are loans contractually past due as to

interest or principal payments, but which have not yet

been put on nonaccrual status. Loans 90 days or more

past due and still accruing were $33 million as of

December 31, 2022 compared to $40 million as of

December 31, 2021. Loans 30 to 89 days past due were

$105 million as of December 31, 2022 compared to $108

million as of December 31, 2021, largely reflecting lower

commercial loan balances past due 30 to 89 days.

Table 7.15

ACCRUING DELINQUENCIES

		December 31
(Dollars in millions)			2022		2021		2020
Accruing loans and leases 30+ days past due
	C&I		$61		$58		$15
	CRE		11		13		23
	Consumer real estate		55		70		69
	Credit card and other		11		7		10
	Total accruing loans and leases 30+ days past due		$138		$148		$117
Accruing loans and leases 30+ days past due %
	C&I		0.19%		0.19%		0.05%
	CRE		0.08		0.11		0.19
	Consumer real estate		0.44		0.65		0.58
	Credit card and other		1.28		0.76		0.87
	Total accruing loans and leases 30+ days past due %		0.24%		0.27%		0.20%
Accruing loans and leases 90+ days past due (a) (b) (c)
	C&I		$11		$5		$—
	CRE		—		—		—
	Consumer real estate		18		33		16
	Credit card and other		4		2		1
	Total accruing loans and leases 90+ days past due		$33		$40		$17
Loans held for sale
	30 to 89 days past due (b)		$10		$7		$6
	30 to 89 days past due - guaranteed portion (b) (d)		7		2		5
	90+ days past due (b)		16		24		12
	90+ days past due - guaranteed portion (b) (d)		6		12		10

(a)Excludes loans classified as held for sale.

(b)Amounts are not included in nonperforming/nonaccrual loans.

(c)Amounts are also included in accruing loans and leases 30+ days past due.

(d)Guaranteed loans include FHA, VA, and GNMA loans repurchased through the GNMA buyout program.

Potential problem assets represent those assets where

information about possible credit problems of borrowers

has caused management to have serious doubts about the

borrower’s ability to comply with present repayment

terms and includes loans past due 90 days or more and

still accruing. This definition is believed to be substantially

consistent with the standards established by the Federal

banking regulators for loans classified as substandard.

Potential problem assets in the loan portfolio decreased

$105 million to $492 million as of December 31, 2022.The

current expectation of losses from potential problem

assets has been included in management’s analysis for

assessing the adequacy of the allowance for loan and

lease losses.

In addition to PPP loans, other customer support

initiatives in response to the COVID-19 pandemic included

incremental lending assistance for borrowers through

delayed payment programs and fee waivers. To the extent

that these loans were past due and had been granted a

deferral, they were excluded from loans past due in the

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table above. Customer deferrals were immaterial as of

December 31, 2022 and were $84 million and $518 million

as of December 31, 2021 and 2020, respectively.

Troubled Debt Restructuring and Loan Modifications

As part of FHN’s ongoing risk management practices, FHN

attempts to work with borrowers when appropriate to

extend or modify loan terms to better align with their

current ability to repay. Extensions and modifications to

loans are made in accordance with internal policies and

guidelines which conform to regulatory guidance. Each

occurrence is unique to the borrower and is evaluated

separately. In a situation where an economic concession

has been granted to a borrower that is experiencing

financial difficulty, FHN identifies and reports that loan as

a TDR.

Loan modifications made during 2021 that met the TDR

relief provisions outlined in either the CARES Act, as

extended by the CAA, or revised Interagency Guidance,

are excluded from consideration as a TDR, and are

therefore excluded from designation as a TDR in the

information and discussion that follows. See Note 1 -

Significant Accounting Policies and Note 3 – Loans and

Leases for further discussion regarding TDRs and loan

modifications.

Commercial Loan Modifications

As part of FHN’s credit risk management governance

processes, the Loan Rehab and Recovery Department

(LRRD) is responsible for managing most commercial

relationships with borrowers whose financial condition

has deteriorated to such an extent that the credits are

being considered for impairment, classified as

substandard or worse, placed on nonaccrual status,

foreclosed or in process of foreclosure, or in active or

contemplated litigation. LRRD has the authority and

responsibility to enter into workout and/or rehabilitation

agreements with troubled commercial borrowers in order

to mitigate and/or minimize the amount of credit losses

recognized from these problem assets. While every

circumstance is different, LRRD will generally use

forbearance agreements (generally 6-12 months) as an

element of commercial loan workouts, which might

include reduced interest rates, reduced payments, release

of guarantor, or entering into short sale agreements.

The individual impairment assessments completed on

commercial loans in accordance with the Accounting

Standards Codification Topic related to Troubled Debt

Restructurings (“ASC 310-40”) include loans classified as

TDRs as well as loans that may have been modified yet not

classified as TDRs by management. For example, a

modification of loan terms that management would

generally not consider to be a TDR could be a temporary

extension of maturity to allow a borrower to complete an

asset sale whereby the proceeds of such transaction are to

be paid to satisfy the outstanding debt. Additionally, a

modification that extends the term of a loan but does not

involve reduction of principal or accrued interest, in which

the interest rate is adjusted to reflect current market rates

for similarly situated borrowers, is not considered a TDR.

Nevertheless, each assessment will take into account any

modified terms and will be comprehensive to ensure

appropriate impairment assessment. If individual

impairment is identified, management will either hold

specific reserves on the amount of impairment, or, if the

loan is collateral dependent, write down the carrying

amount of the asset to the net realizable value of the

collateral.

Consumer Loan Modifications

FHN does not currently participate in any of the loan

modification programs sponsored by the U.S. government

but does generally structure modified consumer loans

using the parameters of the former Home Affordable

Modification Program. Generally, a majority of loans

modified under any such proprietary programs are

classified as TDRs.

Within the HELOC and real estate installment loans classes

of the consumer portfolio segment, TDRs are typically

modified by reducing the interest rate (in increments of 25

basis points to a minimum of 1% for up to 5 years) and a

possible maturity date extension to reach an affordable

housing debt-to-income ratio. After 5 years, the interest

rate generally returns to the original interest rate prior to

modification; for certain modifications, the modified

interest rate increases 2% per year until the original

interest rate prior to modification is achieved. Permanent

mortgage TDRs are typically modified by reducing the

interest rate (in increments of 25 basis points to a

minimum of 2% for up to 5 years) and a possible maturity

date extension to reach an affordable housing debt-to-

income ratio. After 5 years, the interest rate steps up 1

percent every year until it reaches the Federal Home Loan

Mortgage Corporation Weekly Survey Rate cap.

Contractual maturities may be extended to 40 years on

permanent mortgages and to 30 years for consumer real

estate loans. Within the credit card class of the consumer

portfolio segment, TDRs are typically modified through

either a short-term credit card hardship program or a

longer-term credit card workout program. In the credit

card hardship program, borrowers may be granted rate

and payment reductions for 6 months to 1 year. In the

credit card workout program, clients are granted a rate

reduction to 0% and term extensions for up to 5 years to

pay off the remaining balance.

Following classification as a TDR, modified loans within the

consumer portfolio, which were previously evaluated for

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impairment on a collective basis determined by their

smaller balances and homogenous nature, become

subject to the impairment guidance in ASC 310-10-35,

which requires individual evaluation of the debt for

impairment. However, as applicable accounting guidance

allows, FHN may aggregate certain smaller-balance

homogeneous TDRs and use historical statistics, such as

aggregated charge-off amounts and average amounts

recovered, along with a composite effective interest rate

to measure impairment when such impaired loans have

risk characteristics in common.

FHN had $180 million and $206 million in held-for-

investment TDRs as of December 31, 2022 and 2021,

respectively. For these TDRs, FHN had an allowance for

loan and lease losses of $12 million for both periods, 

including specific reserves, or 7% and 6% of TDR balances,

as of December 31, 2022 and 2021, respectively.

Additionally, FHN had $30 million and $35 million of HFS

loans classified as TDRs as of December 31, 2022 and

2021, respectively.

The following table provides a summary of TDRs for the

periods ended December 31, 2022 and 2021.

Table 7.16

TROUBLED DEBT RESTRUCTURINGS

(Dollars in millions)		December 31, 2022		December 31, 2021
Held for investment:
Commercial loans:
Current		$5		$53
Delinquent		—		—
Non-accrual		47		35
Total commercial loans		52		88
Consumer real estate:
Current		$66		$60
Delinquent		4		4
Non-accrual (a)		58		53
Total consumer real estate		128		117
Credit card and other:
Current		—		1
Delinquent		—		—
Non-accrual		—		—
Total credit card and other		—		1
Total held for investment		$180		$206
Held for sale:
Current		$23		$27
Delinquent		6		7
Non-accrual		1		1
Total held for sale		30		35
Total troubled debt restructurings		$210		$241

(a)Balances as of both December 31, 2022 and 2021, include $12 million of discharged bankruptcies.

Deposits

Total deposits of $63.5 billion as of December 31, 2022

decreased $11.4 billion from $74.9 billion as of

December 31, 2021 reflecting a continued downward

trend from mid-2021 highs driven by excess liquidity

associated with the COVID-19 pandemic. Interest-bearing

deposits decreased $7.0 billion and noninterest-bearing

deposits decreased $4.4 billion. The following tables

summarize FHN's total deposits and estimated uninsured

total deposits for 2022, 2021, and 2020, as well as the

maturities of FHN's uninsured time deposits as of

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December 31, 2022. See Table 7.2 - Average Balances, Net

Interest Income and Yields/Rates in this Report for

information on average deposits including average rates

paid.

Table 7.17

DEPOSITS

(Dollars in millions)		2022		Percent  of Total		2022 Growth Rate		2021		Percent  of Total		2021 Growth  Rate		2020		Percent  of Total		2020 Growth  Rate
Savings		$21,971		35%		(17)%		$26,457		35%		(3)%		$27,324		39%		134%
Time deposits		2,887		4		(18)		3,500		5		(31)		5,070		7		40
Other interest-bearing deposits		15,165		24		(11)		17,055		23		11		15,415		22		77
Total interest-bearing deposits		40,023		63		(15)		47,012		63		(2)		47,809		68		99
Noninterest-bearing deposits		23,466		37		(16)		27,883		37		26		22,173		32		163
Total deposits		$63,489		100%		(15)%		$74,895		100%		7%		$69,982		100%		116%

Table 7.18

ESTIMATED UNINSURED DEPOSITS

		For the Year Ended December 31,
(Dollars in millions)		2022		2021		2020
Uninsured deposits		$30,304		$39,756		$33,057

Table 7.19

UNINSURED TIME DEPOSITS BY MATURITY

(Dollars in millions)		December 31, 2022
Portion of U.S. time deposits in excess of insurance limit		$643
Time deposits otherwise uninsured with a maturity of:
3 months or less		198
Over 3 months through 6 months		147
Over 6 months through 12 months		225
Over 12 months		73

Short-Term Borrowings

Short-term borrowings include federal funds purchased,

securities sold under agreements to repurchase, trading

liabilities, and other short-term borrowings. Total short-

term borrowings were $2.8 billion and $2.6 billion as of

December 31, 2022 and December 31, 2021, respectively.

Short-term borrowings balances fluctuate largely based on

the level of FHLB borrowing as a result of loan demand,

deposit levels and balance sheet funding strategies.

Trading liabilities fluctuate based on various factors,

including levels of trading securities and hedging

strategies. Federal funds purchased fluctuates depending

on the amount of excess funding of FHN's correspondent

bank customers. Balances of securities sold under

agreements to repurchase fluctuate based on cost

attractiveness relative to FHLB borrowing levels and the

ability to pledge securities toward such transactions. See

Note 9 - Short-Term Borrowings for additional

information.

Term Borrowings

Term borrowings include senior and subordinated

borrowings with original maturities greater than one year.

Total term borrowings were $1.6 billion as of both

December 31, 2022 and December 31, 2021. See Note 10 -

Term Borrowings for additional information.

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Capital

Management’s objectives are to provide capital sufficient

to cover the risks inherent in FHN’s businesses, to

maintain excess capital to well-capitalized standards, and

to assure ready access to the capital markets.

Total equity of $8.5 billion increased $53 million compared

to December 31, 2021. Significant changes included net

income of $912 million and the issuance of $494 million in

Series G preferred stock, which were offset by

$361 million in common and preferred dividends and a

$1.1 billion decrease in AOCI.

The following tables provide a reconciliation of

shareholders’ equity from the Consolidated Balance

Sheets to Common Equity Tier 1, Tier 1 and Total

Regulatory Capital as well as certain selected capital

ratios:

Table 7.20a

REGULATORY CAPITAL DATA

(Dollars in millions)		December 31, 2022		December 31, 2021
FHN shareholders’ equity		$8,252		$8,199
Modified CECL transitional amount (a)		85		114
FHN non-cumulative perpetual preferred		(1,014)		(520)
Common equity tier 1 before regulatory adjustments		$7,323		$7,793
Regulatory adjustments:
Disallowed goodwill and other intangibles		(1,658)		(1,711)
Net unrealized (gains) losses on securities available for sale		972		36
Net unrealized (gains) losses on pension and other postretirement plans		269		255
Net unrealized (gains) losses on cash flow hedges		126		(3)
Disallowed deferred tax assets		—		(2)
Other deductions from common equity tier 1		—		(1)
Common equity tier 1		$7,032		$6,367
FHN non-cumulative perpetual preferred (b)		920		426
Qualifying noncontrolling interest—First Horizon Bank preferred stock		295		295
Tier 1 capital		$8,247		$7,088
Tier 2 capital		975		830
Total regulatory capital		$9,222		$7,918
Risk-Weighted Assets
First Horizon Corporation		$69,163		$64,183
First Horizon Bank		68,728		63,601
Average Assets for Leverage
First Horizon Corporation		79,583		87,683
First Horizon Bank		78,923		86,953

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Table 7.20b

REGULATORY RATIOS & AMOUNTS

		December 31, 2022				December 31, 2021
(Dollars in millions)		Ratio		Amount		Ratio		Amount
Common Equity Tier 1
First Horizon Corporation		10.17%		$7,032		9.92%		$6,367
First Horizon Bank		10.77		7,405		10.75%		6,838
Tier 1
First Horizon Corporation		11.92		8,247		11.04		7,088
First Horizon Bank		11.20		7,700		11.22		7,133
Total
First Horizon Corporation		13.33		9,222		12.34		7,918
First Horizon Bank		12.41		8,532		12.41		7,893
Tier 1 Leverage
First Horizon Corporation		10.36		8,247		8.08		7,088
First Horizon Bank		9.76		7,700		8.20		7,133
Other Capital Ratios
Total period-end equity to period-end assets		10.83				9.53
Tangible common equity to tangible assets (c)		7.12				6.73
Adjusted tangible common equity to risk weighted assets (c)		9.35				9.20

(a)The modified CECL transitional amount is calculated as defined in the final rule issued by the banking regulators on August 26, 2020 and includes the full

amount of the impact to retained earnings from the initial adoption of CECL plus 25% of the change in the adjusted allowance for credit losses since

FHN’s initial adoption of CECL through December 31, 2022.

(b)The $94 million carrying value of the Series D preferred stock does not qualify as Tier 1 capital because the earliest redemption date is less than five years

from the issuance date.

(c)Tangible common equity to tangible assets and adjusted tangible common equity to risk-weighted assets are non-GAAP measures and are reconciled to

total equity to total assets (GAAP) in the Non-GAAP to GAAP Reconciliation - Table 7.29.

Banking regulators define minimum capital ratios for bank

holding companies and their bank subsidiaries. Based on

the capital rules and definitions prescribed by the banking

regulators, should any depository institution’s capital

ratios decline below predetermined levels, it would

become subject to a series of increasingly restrictive

regulatory actions.

The system categorizes a depository institution’s capital

position into one of five categories ranging from well-

capitalized to critically under-capitalized. For an institution

the size of FHN to qualify as well-capitalized, Common

Equity Tier 1, Tier 1 Capital, Total Capital, and Leverage

capital ratios must be at least 6.50%, 8.00%, 10.00%, and

5.00%, respectively. Furthermore, a capital conservation

buffer of 50 basis points above these levels must be

maintained on the Common Equity Tier 1, Tier 1 Capital

and Total Capital ratios to avoid restrictions on dividends,

share repurchases and certain discretionary bonuses.

As of December 31, 2022, both FHN and First Horizon

Bank had sufficient capital to qualify as well-capitalized

institutions and to meet the capital conservation buffer

requirement. Capital ratios for both FHN and First Horizon

Bank as of December 31, 2022 are calculated under the

final rule issued by the banking regulators in 2020 to delay

the effects of CECL on regulatory capital for two years,

followed by a three-year transition period.

For FHN, the Tier 1 and Total risk-based regulatory capital

ratios increased in 2022 relative to 2021 primarily from

the impact of net income less dividends. FHN's Tier 1

Capital and Tier 1 leverage ratios further benefited from

the issuance of its Series G preferred stock in February

2022. FHN and First Horizon Bank's risk-based regulatory

capital ratios were negatively impacted in 2022 from an

increase in risk-weighted assets from December 31, 2021.

During 2023, capital ratios are expected to remain above

well-capitalized standards plus the required capital

conservation buffer.

Stress Testing

The Economic Growth, Regulatory Relief, and Consumer

Protection Act, along with an interagency regulatory

statement effectively exempted both FHN and First

Horizon Bank from Dodd-Frank Act stress testing

requirements starting in 2018.

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For 2022, FHN and First Horizon Bank completed a

company run stress test using the Comprehensive Capital

Analysis and Review (CCAR) Resubmission scenarios

published in February 2022. Results of these tests indicate

that both FHN and First Horizon Bank would be able to

maintain capital well in excess of Basel III Adequately

Capitalized standards under the hypothetical severe global

recession of the 2022 CCAR Resubmission Severely

Adverse scenario. A summary of those results was posted

in the “Events & Presentations” section on FHN’s investor

relations website on August 26, 2022. Neither FHN’s stress

test posting, nor any other material found on FHN’s

website generally, is part of this report or incorporated

herein.

FHN anticipates that it will continue performing an annual

enterprise-wide stress test as part of its capital and risk

management process. Results of this test will be

presented to executive management and the Board.

The disclosures in this “Stress Testing” section include

forward-looking statements. Please refer to “Forward-

Looking Statements” for additional information

concerning the characteristics and limitations of

statements of that type.

Common Stock Purchase Programs

Pursuant to Board authority, FHN may repurchase shares

of its common stock from time to time and will evaluate

the level of capital and take action designed to generate

or use capital, as appropriate, for the interests of the

shareholders, subject to legal and regulatory restrictions. 

FHN’s Board has not authorized a preferred stock

purchase program.

General Purchase Program

On January 27, 2021, FHN announced that its Board

approved a new $500 million common share purchase

program that was to expire on January 31, 2023. On

October 26, 2021, FHN announced that the 2021 program

had been increased by $500 million and extended to

October 31, 2023. The 2021 program is not tied to any

compensation plan. Purchases may be made in the open

market or through privately negotiated transactions,

including under Rule 10b5-1 plans as well as accelerated

share repurchase and other structured transactions. The

timing and exact amount of common share repurchases

will be subject to various factors, including FHN's capital

position, financial performance, capital impacts of

strategic initiatives, market conditions and regulatory

considerations.

As of December 31, 2022, $401 million in purchases had

been made life-to-date under the 2021 program at an

average price per share of $16.60, or $16.58 excluding

commissions. At current price levels, which have been

impacted by the Pending TD Merger since it was

announced, management does not currently anticipate

purchasing additional shares under this authority.

Table 7.21a

COMMON STOCK PURCHASES—GENERAL PROGRAM

(Dollar values and volume in thousands, except per share data)		Total number of shares purchased		Average price paid per share (a)		Total number of shares purchased as part of publicly announced programs		Maximum approximate dollar value that may yet be purchased under the programs
2022
October 1 to October 31		—		N/A		—		$598,646
November 1 to November 30		—		N/A		—		$598,646
December 1 to December 31		—		N/A		—		$598,646
Total		—		N/A		—

(a)Represents total costs including commissions paid

Compensation Plans Purchase Program

A consolidated compensation plan share purchase

program was announced on August 6, 2004. This program

consolidated into a single share purchase program all of

the previously authorized compensation plan share

programs, as well as the renewal of the authorization to

purchase shares for use in connection with two

compensation plans for which the share purchase

authority had expired. The total amount authorized under

this consolidated compensation plan share purchase

program is 29.6 million shares calculated before adjusting

for stock dividends distributed through January 1, 2011.

The authorization has been reduced for that portion which

relates to compensation plans for which no options

remain outstanding. The shares may be purchased over

the option exercise period of the various compensation

plans on or before December 31, 2023. Purchases may be

made in the open market or through privately negotiated

transactions and are subject to various factors, including

FHN's capital position, financial performance, capital

impacts of strategic initiatives, market conditions, and

regulatory restrictions. As of December 31, 2022, the

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maximum number of shares that may be purchased under

the program was 23 million shares. Management currently

does not anticipate purchasing a material number of

shares under this authority during 2023.

Table 7.21b

COMMON STOCK PURCHASES—COMPENSATION PLANS PROGRAM

(Volume in thousands, except per share data)		Total number of shares purchased		Average price paid per share		Total number of shares purchased as part of publicly announced programs		Maximum number of shares that may yet be purchased under the programs
2022
October 1 to October 31		8		$22.91		8		22,518
November 1 to November 30		1		24.34		1		22,517
December 1 to December 31		11		24.83		11		22,506
Total		20		$24.06		20

Risk Management

FHN derives revenue from providing services and, in many

cases, assuming and managing risk for profit which

exposes FHN to business strategy and reputational,

liquidity, market, capital adequacy, operational,

compliance, legal, and credit risks that require ongoing

oversight and management. FHN has an enterprise-wide

approach to risk governance, measurement, management,

and reporting including an economic capital allocation

process that is tied to risk profiles used to measure risk-

adjusted returns. Through an enterprise-wide risk

governance structure and a Risk Appetite Statement

approved by the Board, management continually

evaluates the balance of risk/return and earnings volatility

with shareholder value.

FHN’s enterprise-wide risk governance structure begins

with the Board. The Board, working with the Risk

Committee of the Board, establishes FHN’s risk appetite

by approving policies and limits that provide standards for

the nature and the level of risk FHN is willing to assume.

The Board regularly receives reports on management’s

performance against FHN’s risk appetite primarily through

the Board’s Risk and Audit Committees.

To further support the risk governance provided by the

Board, FHN has established accountabilities, control

processes, procedures, and a management governance

structure designed to align risk management with risk-

taking throughout FHN. The control procedures are

aligned with FHN’s four components of risk governance:

(1) Specific Risk Committees; (2) the Risk Management

Organization; (3) Business Unit Risk Management; and

(4) Independent Assurance Functions.

1.Specific Risk Committees: The Board has delegated

authority to the Chief Executive Officer to manage

Business Strategy and Reputation Risk, and the general

business affairs of FHN under the Board’s oversight.

The CEO utilizes the executive management team and

the Management Risk Committee to carry out these

duties and to analyze existing and emerging strategic

and reputation risks and determines the appropriate

course of action. The Management Risk Committee is

comprised of the CEO and certain officers designated

by the CEO. The Management Risk Committee is

supported by a set of specific risk committees focused

on unique risk types (e.g. liquidity, credit, operational,

etc.). These risk committees provide a mechanism that

assembles the necessary expertise and perspectives of

the management team to discuss emerging risk issues,

monitor FHN’s risk-taking activities, and evaluate

specific transactions and exposures. These committees

also monitor the direction and trend of risks relative to

business strategies and market conditions and direct

management to respond to risk issues.

2.The Risk Management Organization: FHN’s risk

management organization, led by the Chief Risk Officer

and Chief Credit Officer, provides objective oversight

of risk-taking activities. The risk management

organization translates FHN’s overall risk appetite into

approved limits and formal policies and is supported by

corporate staff functions, including the Corporate

Secretary, Legal, Finance, Human Resources, and

Technology. Risk management also works with

business units and functional experts to establish

appropriate operating standards and monitor business

practices in relation to those standards. Additionally,

risk management proactively works with business units

and senior management to focus management on key

risks in FHN and emerging trends that may change

FHN’s risk profile. The Chief Risk Officer has overall

responsibility and accountability for enterprise risk

management and aggregate risk reporting.

3.Business Unit Risk Management: FHN’s business units

are responsible for identifying, acknowledging,

quantifying, mitigating, and managing all risks arising

within their respective units. They determine and

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execute their business strategies, which puts them

closest to the changing nature of risks and they are

best able to take the needed actions to manage and

mitigate those risks. The business units are supported

by the risk management organization that helps

identify and consider risks when making business

decisions. Management processes, structure, and

policies are designed to help ensure compliance with

laws and regulations as well as provide organizational

clarity for authority, decision-making, and

accountability. The risk governance structure supports

and promotes the escalation of material items to

executive management and the Board.

4.Independent Assurance Functions: Internal Audit,

Credit Assurance Services (CAS), Compliance Testing,

and Model Validation provide an independent and

objective assessment of the design and execution of

FHN’s internal control system, including management

processes, risk governance, and policies and

procedures. These groups’ activities are designed to

provide reasonable assurance that risks are

appropriately identified and communicated; resources

are safeguarded; significant financial, managerial, and

operating information is complete, accurate, and

reliable; and employee actions are in compliance with

FHN’s policies and applicable laws and regulations.

Internal Audit and CAS report to the Chief Audit

Executive, who is appointed by and reports to the

Audit Committee of the Board. Internal Audit reports

quarterly to the Audit Committee of the Board, while

CAS reports quarterly to the Risk Committee of the

Board. Compliance Testing and Model Validation

report to the Chief Risk Officer and report annually to

the Audit Committee of the Board.

Market Risk Management

Market risk is the risk that changes in market conditions

will adversely impact the value of assets or liabilities, or

otherwise negatively impact FHN’s earnings. Market risk is

inherent in the financial instruments associated with

FHN’s operations, primarily trading activities within FHN

Financial, but also through non-trading activities which are

primarily affected by interest rate risk that is managed by

the ALCO within FHN.

FHN is exposed to market risk related to the trading

securities inventory and loans held for sale maintained by

FHN Financial in connection with its fixed income

distribution activities. Various types of securities inventory

positions are procured for distribution to clients by the

sales staff. When these securities settle on a delayed

basis, they are considered forward contracts. Refer to the

"Determination of Fair Value - Trading securities and

trading liabilities" section of Note 23 - Fair Value of Assets

and Liabilities, which section is incorporated into this

MD&A by this reference.

FHN’s market risk appetite is approved by the Risk

Committee of the Board of Directors and executed

through management policies and procedures of ALCO

and the FHN Financial Risk Committee. These policies

contain various market risk limits including, for example,

VaR limits for the trading securities inventory, and

individual position limits and sector limits for products

with credit risk, among others. Risk measures are

computed and reviewed on a daily basis to ensure

compliance with market risk management policies.

Value-at-Risk and Stress Testing

VaR is a statistical risk measure used to estimate the

potential loss in value from adverse market movements

over an assumed fixed holding period within a stated

confidence level. FHN employs a model to compute daily

VaR measures for its trading securities inventory. FHN

computes VaR using historical simulation with a 1-year

lookback period at a 99% confidence level with 1-day and

10-day time horizons. Additionally, FHN computes a

Stressed VaR measure. The SVaR computation uses the

same model but with model inputs reflecting historical

data from a continuous 12-month period that reflects a

period of significant financial stress appropriate for our

trading securities portfolio.

A summary of FHN's VaR and SVaR measures for 1-day

and 10-day time horizons is presented in the following

table:

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Table 7.22

VaR & SVaR MEASURES

		Year Ended December 31, 2022						As of December 31, 2022
(Dollars in millions)		Mean		High		Low
1-day
VaR		$2		$4		$2		$3
SVaR		5		7		4		6
10-day
VaR		8		11		3		10
SVaR		24		34		18		29
		Year Ended December 31, 2021						As of December 31, 2021
(Dollars in millions)		Mean		High		Low
1-day
VaR		$1		$4		$1		$2
SVaR		4		7		2		5
10-day
VaR		5		21		1		5
SVaR		18		27		11		22

FHN’s overall VaR measure includes both interest rate risk and credit spread risk. Separate measures of these component risks

are as follows:

Table 7.23

SCHEDULE OF RISKS INCLUDED IN VaR

		As of December 31, 2022				As of December 31, 2021
(Dollars in millions)		1-day		10-day		1-day		10-day
Interest rate risk		$1		$3		$1		$1
Credit spread risk		1		2		1		1

The potential risk of loss reflected by FHN’s VaR measures

assumes the trading securities inventory is static. Because

FHN Financial procures fixed income securities for

purposes of distribution to clients, its trading securities

inventory turns over regularly. Additionally, FHNF traders

actively manage the trading securities inventory

continuously throughout each trading day. Accordingly,

FHNF’s trading securities inventory is highly dynamic,

rather than static. As a result, it would be rare for FHNF to

incur a negative revenue day in its fixed income activities

at the levels indicated by its VaR measures.

In addition to being used in FHN’s daily market risk

management process, the VaR and SVaR measures are

also used by FHN in computing its regulatory market risk

capital requirements in accordance with the Market Risk

Capital rules. For additional information regarding FHN's

capital adequacy refer to the Capital section of this

MD&A.

FHN also performs stress tests on its trading securities

portfolio to calculate the potential loss under various

assumed market scenarios. Key assumed stresses used in

those tests are:

Down 25 bps - assumes an instantaneous downward

move in interest rates of 25 basis points at all points on

the interest rate yield curve.

Up 25 bps - assumes an instantaneous upward move in

interest rates of 25 basis points at all points on the

interest rate yield curve.

Curve flattening - assumes an instantaneous flattening

of the interest rate yield curve through an increase in

short-term rates and a decrease in long-term rates. The

2-year point on the Treasury yield curve is assumed to

increase 15 basis points and the 10-year point on the

Treasury yield curve is assumed to decrease 15 basis

points. Shifts in other points on the yield curve are

predicted based on their correlation to the 2-year and

10-year points.

Curve steepening - assumes an instantaneous

steepening of the interest rate yield curve through a

decrease in short-term rates and an increase in long-

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term rates. The 2-year point on the Treasury yield curve

is assumed to decrease 15 basis points and the 10-year

point on the Treasury yield curve is assumed to increase

15 basis points. Shifts in other points on the yield curve

are predicted based on their correlation to the 2-year

and 10-year points.

Credit spread widening - assumes an instantaneous

increase in credit spreads (the difference between

yields on Treasury securities and non-Treasury

securities) of 25 basis points.

Model Validation

Trading risk management personnel within FHN Financial

have primary responsibility for model risk management

with respect to the model used by FHN to compute its VaR

measures and perform stress testing on the trading

inventory. Among other procedures, these personnel

monitor model results and perform periodic backtesting

as part of an ongoing process of validating the accuracy of

the model. These model risk management activities are

subject to annual review by FHN’s Model Validation

Group, an independent assurance group charged with

oversight responsibility for FHN’s model risk management.

Interest Rate Risk Management

Interest rate risk is the risk to earnings or capital arising

from movement in interest rates. ALCO is responsible for

overseeing the management of existing and emerging

interest rate risk for the company within risk tolerances

established by the Board. FHN primarily manages interest

rate risk by structuring the balance sheet to maintain a

desired level of associated earnings and to protect the

economic value of FHN’s capital.

Net interest income and the value of equity are affected

by changes in the level of market interest rates because of

the differing repricing characteristics of assets and

liabilities, the exercise of prepayment options held by loan

clients, the early withdrawal options held by deposit

clients, and changes in the basis between and changing

shapes of the various yield curves used to price assets and

liabilities. To isolate the repricing, basis, option, and yield

curve components of overall interest rate risk, FHN

employs Gap, Earnings at Risk, and Economic Value of

Equity analyses generated by a balance sheet simulation

model.

Net Interest Income Simulation Analysis

The information provided in this section, including the

discussion regarding the outcomes of simulation analysis

and rate shock analysis, is forward-looking. Actual results,

if the assumed scenarios were to occur, could differ

because of interest rate movements, the ability of

management to execute its business plans, and other

factors, including those presented in the Forward-Looking

Statements section of this Report.

Management uses a simulation model to measure interest

rate risk and to formulate strategies to improve balance

sheet positioning, earnings, or both, within FHN’s interest

rate risk, liquidity, and capital guidelines. Interest rate

exposure is measured by forecasting 12 months of NII

under various interest rate scenarios and comparing the

percentage change in NII for each scenario to a base case

scenario where interest rates remain unchanged.

Assumptions are made regarding future balance sheet

composition, interest rate movements, and loan and

deposit pricing. In addition, assumptions are made about

the magnitude of asset prepayments and earlier than

anticipated deposit withdrawals. The results of these

scenarios help FHN develop strategies for managing

exposure to interest rate risk. While management believes

the assumptions used and scenarios selected in its

simulations are reasonable, simulation modeling provides

only an estimate, not a precise calculation, of exposure to

any given change in interest rates.

Based on a static balance sheet as of December 31, 2022,

NII exposures over the next 12 months assuming rate

shocks of plus/minus 25 basis points, plus/minus 50 basis

points, plus/minus 100 basis points, and plus 200 basis

points are estimated to have variances as shown in the

table below.

Table 7.24

INTEREST RATE SENSITIVITY

Shifts in Interest Rates (in bps)		% Change in Projected Net Interest Income
-100		(7.4)%
-50		(3.6)%
-25		(1.8)%
+25		1.8%
+50		3.6%
+100		7.0%
+200		11.5%

A steepening yield curve scenario where long-term rates

increase by 50 basis points and short-term rates are static,

results in a favorable NII variance of 0.2%. A flattening

yield curve scenario where long-term rates decrease by 50

basis points and short-term rates are static, results in an

unfavorable NII variance of 0.3%. These hypothetical

scenarios are used to create a risk measurement

framework, and do not necessarily represent

management’s current view of future interest rates or

market developments.

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FHN’s net interest income had been impacted by the

disruption from the COVID-19 pandemic and its variants as

well as the low-rate environment. The impact of

government stimulus programs and other developments

continue to influence net interest income results,

although the impacts from these programs have abated.

The yield curve was inverted for much of the last half of

2022, which has continued into early 2023. The inverted

yield curve indicates market expectations that short term

rates are likely to peak and then decline in future periods. 

Market participants are divided in their opinions regarding

the timing and magnitude of further short term rate

increases or subsequent rate cuts. FHN continues to

monitor current economic trends and potential exposures

closely.

Fair Value Shock Analysis

Interest rate risk and the slope of the yield curve also

affect the fair value of FHN's trading inventory that is

reflected in noninterest income.

Generally, low or declining interest rates with a positively

sloped yield curve tend to increase income through higher

demand for fixed income products. Additionally, the fair

value of FHN's trading inventory can fluctuate as a result

of differences between current interest rates and the

interest rates of fixed income securities in the trading

inventory.

Derivatives

In the normal course of business, FHN utilizes various

financial instruments (including derivative contracts and

credit-related agreements) to manage the risk of loss

arising from adverse changes in the fair value of certain

financial instruments generally caused by changes in

interest rates, including FHN's securities inventory, certain

term borrowings, and certain loans. Additionally, FHN may

enter into derivative contracts in order to meet clients'

needs. However, such derivative contracts are typically

offset with a derivative contract entered into with an

upstream counterparty in order to mitigate risk associated

with changes in interest rates.

The simulation models and related hedging strategies

discussed above exclude the dynamics related to how fee

income and noninterest expense may be affected by

actual changes in interest rates or expectations of

changes. See Note 21 - Derivatives for additional

discussion of these instruments.

Capital Risk Management & Adequacy

The capital management objectives of FHN are to provide

capital sufficient to cover the risks inherent in FHN’s

businesses, to maintain excess capital to well-capitalized

standards and Board policy, and to assure ready access to

the capital markets. The Capital & Stress Testing

Committee, chaired by the Corporate Treasurer, reports

to ALCO and is responsible for capital management

oversight and provides a forum for addressing

management issues related to capital adequacy. This

committee reviews sources and uses of capital, key capital

ratios, segment economic capital allocation

methodologies, coordinates the annual enterprise-wide

stress testing process, and considers other factors in

monitoring and managing current capital levels, as well as

potential future sources and uses of capital. The Capital &

Stress Testing Committee also recommends capital

management policies, which are submitted for approval to

ALCO and the Risk Committee and the Board as necessary.

Operational Risk Management

Operational risk is the risk of loss from inadequate or

failed internal processes, people, or systems or from

external events including data or network security

breaches of FHN or of third parties affecting FHN or its

clients. This risk is inherent in all businesses. Operational

risk is divided into the following risk areas, which have

been established at the corporate level to address these

risks across the entire organization:

•Business Resilience

•Records Management

•Compliance/Legal (including Bank Secrecy Act)

•Program Governance

•Fiduciary

•Security/Fraud

•Financial (including disclosure controls and

procedures)

•Information Technology (including cybersecurity)

•Model

•Vendor

•Insurance

Management, measurement, and reporting of operational

risk are overseen by the Operational Risk, Fiduciary,

Financial Governance, FHN Financial Risk, and Strategic

Investment Board Committees. Key representatives from

the business segments, operating units, and supporting

units are represented on these committees as

appropriate. These governance committees manage the

individual operational risk types across FHN by setting

standards, monitoring activity, initiating actions, and

reporting exposures and results. Key Committee activities

and decisions are reported to the appropriate governance

committee or included in the Enterprise Risk Report, a

quarterly analysis of risk within the organization that is

provided to the Risk Committee. Emphasis is dedicated to

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	90	2022 FORM 10-K ANNUAL REPORT

refinement of processes and tools to aid in measuring and

managing material operational risks and providing for a

culture of awareness and accountability.

Compliance Risk Management

Compliance risk is the risk of legal or regulatory sanctions,

material financial loss, or loss to reputation as a result of

failure to comply with laws, regulations, rules, self-

regulatory organization standards, and codes of conduct

applicable to FHN’s activities. Management,

measurement, and reporting of compliance risk are

overseen by the Operational Risk Committee and other

key Corporate Governance Committees. Key executives

from the business segments, legal, compliance, risk

management, and service functions are represented on

the Committees. Summary reports of Committee activities

and decisions are provided to the appropriate governance

committees. Reports include the status of regulatory

activities, internal compliance program initiatives,

compliance testing and internal audit results and

evaluation of emerging compliance risk areas.

Credit Risk Management

Credit risk is the risk of loss due to adverse changes in a

borrower’s or counterparty’s ability to meet its financial

obligations under agreed upon terms. FHN is subject to

credit risk in lending, trading, investing, liquidity/funding,

and asset management activities although lending

activities have the most exposure to credit risk. The nature

and amount of credit risk depends on the types of

transactions, the structure of those transactions, collateral

received, the use of guarantors and the parties involved.

FHN assesses and manages credit risk through a series of

policies, processes, measurement systems, and controls.

The Credit Risk Management Committee is responsible for

overseeing the management of existing and emerging

credit risks in the company within the broad risk

tolerances established by the Board. The CRMC reports

through the Management Risk Committee. The Credit Risk

Management function, led by the Chief Credit Officer,

provides strategic and tactical credit leadership by

maintaining policies, overseeing credit approval, assessing

new credit products, strategies and processes, and

managing portfolio composition and performance.

While the Credit Risk function oversees FHN’s credit risk

management, there is significant coordination between

the business lines and the Credit Risk function in order to

manage FHN’s credit risk and maintain strong asset

quality. The Credit Risk function recommends portfolio,

industry/sector, and individual client limits to the Risk

Committee of the Board for approval. Adherence to these

approved limits is vigorously monitored by Credit Risk

which provides recommendations to slow or cease lending

to the business lines as commitments near established

lending limits. Credit Risk also ensures subject matter

experts are providing oversight, support and credit

approvals, particularly in the specialty lending areas where

industry-specific knowledge is required. Management

emphasizes general portfolio servicing such that emerging

risks are able to be spotted early enough to correct

potential deficiencies, prevent further credit

deterioration, and mitigate credit losses.

The Credit Risk Management function assesses the asset

quality trends and results, as well as lending processes,

adherence to underwriting guidelines (portfolio-specific

underwriting guidelines are discussed further in the Asset

Quality Trends section), and utilizes this information to

inform management regarding the current state of credit

quality and as a factor of the estimation process for

determining the allowance for credit losses. The CRMC

reviews on a periodic basis various reports issued by

assurance functions which provide an independent

assessment of the adequacy of loan servicing, grading

accuracy, and other key functions. Additionally, CRMC is

presented with and discusses various portfolios, lending

activity and lending-related projects.

All of the above activities are subject to independent

review by FHN’s Credit Assurance Services Group. CAS

reports to the Chief Audit Executive, who is appointed by

and reports to the Audit Committee of the Board, and

provides quarterly reports to the Risk Committee of the

Board. CAS is charged with providing the Risk Committee

of the Board and executive management with

independent, objective, and timely assessments of FHN’s

portfolio quality, credit policies, and credit risk

management processes.

Liquidity Risk Management

Among other things, ALCO is responsible for liquidity

management: the funding of assets with liabilities of

appropriate duration, while mitigating the risk of

unexpected cash needs. ALCO and the Board of Directors

have adopted a Liquidity Policy of which the objective is to

ensure that FHN meets its cash and collateral obligations

promptly, in a cost-effective manner and with the highest

degree of reliability. The maintenance of adequate levels

of asset and liability liquidity should provide FHN with the

ability to meet both expected and unexpected cash and

collateral needs. Key liquidity ratios, asset liquidity levels,

and the amount available from funding sources are

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reported to ALCO on a regular basis. FHN’s Liquidity Policy

establishes liquidity limits that are deemed appropriate

for FHN’s risk profile.

In accordance with the Liquidity Policy, ALCO manages

FHN’s exposure to liquidity risk through a dynamic, real

time forecasting methodology. Base liquidity forecasts are

reviewed by ALCO and are updated as financial conditions

dictate. In addition to the baseline liquidity reports, robust

stress testing of assumptions and funds availability are

periodically reviewed. FHN maintains a contingency

funding plan that may be executed should unexpected

difficulties arise in accessing funding that affects FHN, the

industry, or both. Subject to market conditions and

compliance with applicable regulatory requirements from

time to time, funds are available from a number of

sources, including the available-for-sale securities

portfolio, dealer and commercial customer repurchase

agreements, access to the overnight and term Federal

Funds markets, incremental borrowing capacity at the

FHLB ($13.9 billion was available at December 31, 2022),

brokered deposits, loan sales, syndications, and access to

the Federal Reserve Bank.

Core deposits are a significant source of funding and have

historically been a stable source of liquidity for banks.

Generally, core deposits represent funding from a

financial institution's client base which provides

inexpensive, predictable pricing. The ratio of average

loans, excluding loans HFS and restricted real estate loans,

to average core deposits was 82% on December 31, 2022

and 80% on December 31, 2021.

FHN may also use unsecured short-term borrowings as a

source of liquidity. Federal funds purchased from

correspondent bank clients are considered to be

substantially more stable than funds purchased in the

national broker markets for federal funds due to the long,

historical, and reciprocal nature of banking services

provided by FHN to these correspondent banks. The

remainder of FHN’s wholesale short-term borrowings

consists of securities sold under agreements to repurchase

transactions accounted for as secured borrowings with

business clients or broker dealer counterparties.

Both FHN and First Horizon Bank have the ability to

generate liquidity by issuing senior or subordinated

unsecured debt, preferred equity, and common equity,

subject to market conditions and compliance with

applicable regulatory requirements. In February 2022,

FHN issued and sold to TD 4,936 shares of Series G

Perpetual Convertible Preferred Stock in a private

placement transaction for $494 million. As of

December 31, 2022, FHN had outstanding $1.3 billion in

senior and subordinated unsecured debt and $1.0 billion

in non-cumulative perpetual preferred stock. As of

December 31, 2022, First Horizon Bank and subsidiaries

had outstanding preferred shares of $295 million, which

are reflected as noncontrolling interest on the

Consolidated Balance Sheet.

Parent company liquidity is primarily provided by cash

flows stemming from dividends and interest payments

collected from subsidiaries. These sources of cash

represent the primary sources of funds to pay cash

dividends to shareholders and principal and interest to

debt holders of FHN. The amount paid to the parent

company through First Horizon Bank common dividends is

managed as part of FHN’s overall cash management

process, subject to applicable regulatory restrictions.

Certain regulatory restrictions exist regarding the ability of

First Horizon Bank to transfer funds to FHN in the form of

cash, common dividends, loans, or advances. At any given

time, the pertinent portions of those regulatory

restrictions allow First Horizon Bank to declare preferred

or common dividends without prior regulatory approval in

an aggregate amount equal to First Horizon Bank’s

retained net income for the two most recently completed

years plus the current year-to-date period. For any period,

First Horizon Bank’s "retained net income" generally is

equal to First Horizon Bank’s regulatory net income

reduced by the preferred and common dividends declared

by First Horizon Bank. Applying the dividend restrictions

imposed under applicable federal and state rules as

outlined above, the Bank’s total amount available for

dividends was $893 million as of January 1, 2023.

Consequently, on that date the Bank could pay common

dividends up to that amount to its sole common

shareholder, FHN, or to its preferred shareholders without

prior regulatory approval. Additionally, a capital

conservation buffer must be maintained (as described in

the Capital section of this Report) to avoid restrictions on

dividends.

In March 2022, FHN agreed to suspend the Dividend

Reinvestment Plan in connection with the Pending TD

Merger. As a result of the suspension of the Plan,

participants in the Plan received their first quarter 2022

FHN dividend, paid on April 1, 2022, in cash. During the

suspension period, dividend payments of FHN will not be

automatically reinvested in additional shares of FHN

common stock and participants in the Plan will be unable

to purchase shares of FHN common stock through

optional cash investments under the Plan.

First Horizon Bank declared and paid common dividends

to the parent company in the amount of $435 million in

2022 and $770 million in 2021. In January 2023, First

Horizon Bank declared and paid a common dividend to the

parent company in the amount of $110 million. First

Horizon Bank paid preferred dividends in each quarter of

2022 and 2021 and declared preferred dividends in the

first quarter of 2023 which are payable in April 2023.

Payment of a dividend to shareholders of FHN is

dependent on several factors which are considered by the

Board. These factors include FHN’s current and

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	92	2022 FORM 10-K ANNUAL REPORT

prospective capital, liquidity, and other needs, applicable

regulatory restrictions (including capital conservation

buffer requirements) and availability of funds to FHN

through a dividend from First Horizon Bank.  Additionally,

banking regulators generally require insured banks and

bank holding companies to pay cash dividends only out of

current operating earnings. Consequently, the decision of

whether FHN will pay future dividends and the amount of

dividends will be affected by current operating results.

FHN paid a cash dividend of $0.15 per common share on

January 3, 2023. FHN paid cash dividends of $1,625 per

Series E preferred share and $1,175 per Series F preferred

share on January 10, 2023 and $331.25 per Series B

preferred share and $165 per Series C preferred share on

February 1, 2023. In addition, in January 2023, the Board

approved cash dividends per share in the following

amounts:

Table 7.25

CASH DIVIDENDS APPROVED BUT NOT PAID

		Dividend/ Share		Record Date		Payment Date
Common Stock		$0.15		3/17/2023		4/3/2023
Preferred Stock
Series C		$165.00		4/14/2023		5/1/2023
Series D		$305.00		4/14/2023		5/1/2023
Series E		$1,625.00		3/24/2023		4/10/2023
Series F		$1,175.00		3/24/2023		4/10/2023

Although we do not expect the Pending TD Merger to be

completed before March 17, 2023 (the common stock

record date), if it is, the common stock dividend described

above will not be paid.

The FHN preferred stock and the First Horizon Bank Class

A preferred stock will remain outstanding after the closing

of the Pending TD Merger. If, following the closing of the

Pending TD Merger, TD elects to effect the merger of FHN

into TD Bank US Holding Company, at the effective time of

such merger, each share of FHN preferred stock described

above will be automatically converted into a share of a

newly created, corresponding series of preferred stock of

TD Bank US Holding Company having terms that are not

materially less favorable than those of the existing series

of FHN preferred stock. In addition, following the closing

of the Pending TD Merger, at the effective time of the

merger of First Horizon Bank into TDBNA, each share of

First Horizon Bank Class A preferred stock will be

automatically converted into a share of a newly created,

corresponding series of preferred stock of TDBNA having

terms that are not materially less favorable than those of

the existing First Horizon Bank Class A preferred stock. The

payment and timing of the dividends will not be impacted

by any such conversion of the FHN preferred stock into TD

Bank US Holding Company preferred stock or the First

Horizon Bank Class A preferred stock into TDBNA

preferred stock.

Off-Balance Sheet Arrangements

In the normal course of business, FHN is a party to a

number of activities that contain credit, market and

operational risk that are not reflected in whole or in part

in the consolidated financial statements. Such activities

include traditional off-balance sheet credit-related

financial instruments. FHN enters into commitments to

extend credit to borrowers, including loan commitments,

lines of credit, standby letters of credit, and commercial

letters of credit. Many of the commitments are expected

to expire unused or be only partially used; therefore, the

total amount of commitments does not necessarily

represent future cash requirements and are not included

in the table below. Based on its available liquidity and

available borrowing capacity, FHN anticipates it will

continue to have sufficient funds to meet its current

commitments. See Note 16 - Contingencies and Other

Disclosures for more information.

Contractual Obligations

The following table sets forth contractual obligations

representing required and potential cash outflows as of

December 31, 2022. Purchase obligations represent

obligations under agreements to purchase goods or

services that are enforceable and legally binding on FHN

and that specify all significant terms, including fixed or

minimum quantities to be purchased; fixed, minimum, or

variable price provisions; and the approximate timing of

the transaction.

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Table 7.26

CONTRACTUAL OBLIGATIONS

as of December 31, 2022

		Payments due by period (a)
		Less than		1 year -		3 years -		After 5
(Dollars in millions)		1 year		< 3 years		< 5 years		years		Total
Contractual obligations:
Time deposit maturities (b) (c)		$2,415		$341		$116		$15		$2,887
Short-term borrowings (b) (d)		2,841		—		—		—		2,841
Term borrowings (b) (e)		450		356		—		812		1,618
Annual rental commitments under noncancelable leases (b) (f)		46		86		79		228		439
Purchase obligations		189		118		27		7		341
Total contractual obligations		$5,941		$901		$222		$1,062		$8,126

(a)Excludes a $89 million liability for unrecognized tax benefits as the timing of payment cannot be reasonably estimated.

(b)Amounts do not include interest.

(c)See Note 8 - Deposits for further details.

(d)See Note 9 - Short-term Borrowings for further details.

(e)See Note 10 - Term Borrowings for further details.

(f)See Note 5 - Premises, Equipment and Leases for further details.

Credit Ratings

FHN is currently able to fund a majority of the balance

sheet through core deposits, which are generally not as

sensitive to FHN’s credit ratings as other types of funding.

However, maintaining adequate credit ratings on debt

issues and preferred stock is critical to liquidity should

FHN need to access funding from other sources, including

from long-term debt issuances and certain brokered

deposits, at an attractive rate. The availability and cost of

funds other than core deposits is also dependent upon

marketplace perceptions of the financial soundness of

FHN, which include such factors as capital levels, asset

quality, and reputation. The availability of core deposit

funding is stabilized by federal deposit insurance, which

can be removed only in extraordinary circumstances, but

may also be influenced to some extent by the same

factors that affect other funding sources. FHN’s credit

ratings are also referenced in various respects in

agreements with certain derivative counterparties as

discussed in Note 21 - Derivatives.

The following table provides FHN’s most recent credit

ratings:

Table 7.27

CREDIT RATINGS

		Moody's  (a)		Fitch  (b)
First Horizon Corporation
	Overall credit rating: Long-term/Short-term/Outlook	Baa3/--/RUR		BBB/F2/RWP
	Long-term senior debt	Baa3		BBB
	Subordinated debt (c)	Baa3		BBB-
	Junior subordinated debt (c)	Ba1		BB-
	Preferred stock	Ba2		BB-
First Horizon Bank
	Overall credit rating: Long-term/Short-term/Outlook	Baa3/P-2/RUR		BBB/F2/RWP
	Long-term/short-term deposits	A3/P-2		BBB+/F2
	Long-term/short-term senior debt (c)	Baa3/P-2		BBB/F2
	Subordinated debt	Baa3		BBB-
	Preferred stock	Ba2		BB-
FT Real Estate Securities Company, Inc.
	Preferred stock	Ba1

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	94	2022 FORM 10-K ANNUAL REPORT

A rating is not a recommendation to buy, sell, or hold securities and is subject to revision or withdrawal at any time and should be

evaluated independently of any other rating.

(a)Last change in ratings was on May 14, 2015. Outlook changed to ratings under review (“RUR”) for possible upgrade on March 1, 2022; ratings

affirmed and outlook maintained on August 23, 2022.

(b)Last change in ratings was on May 6, 2020. Outlook changed to ratings watch positive (“RWP”) on March 1, 2022; ratings affirmed and

outlook maintained on October 18, 2022.

(c)Ratings are preliminary/implied.

Repurchase Obligations

Prior to September 2008, legacy First Horizon originated

loans through its pre-2009 mortgage business, primarily

first lien home loans, with the intention of selling them. As

discussed in Note 16 - Contingencies and Other

Disclosures, FHN's principal remaining exposures for those

activities relate to (i) indemnification claims by

underwriters, loan purchasers, and other parties which

assert that FHN-originated loans caused or contributed to

losses which FHN is legally obliged to indemnify, and (ii)

indemnification or other claims related to FHN's servicing

of pre-2009 mortgage loans.

FHN’s approach for determining the adequacy of the

repurchase and foreclosure reserve has evolved,

sometimes substantially, based on changes in information

available. Repurchase/make-whole rates vary based on

purchaser, vintage, and claim type. For those loans

repurchased or covered by a make-whole payment,

cumulative average loss severities range between 50 and

60 percent of the UPB.

Repurchase Accrual Approach

In determining potential loss content, claims are analyzed

by purchaser, vintage, and claim type. FHN considers

various inputs including claim rate estimates, historical

average repurchase and loss severity rates, mortgage

insurance cancellations, and mortgage insurance

curtailment requests. Inputs are applied to claims in the

active pipeline, as well as to historical average inflows to

estimate loss content related to potential future inflows.

Management also evaluates the nature of claims from

purchasers and/or servicers of loans sold to determine if

qualitative adjustments are appropriate.

Repurchase and Foreclosure Liability

FHN's repurchase and foreclosure liability, primarily

related to its pre-2009 mortgage business, is comprised of

accruals to cover estimated loss content in the active

pipeline (consisting of mortgage loan repurchase, make-

whole, foreclosure/servicing demands and certain related

exposures), estimated future inflows, and estimated loss

content related to certain known claims not currently

included in the active pipeline. The liability contemplates

repurchase/make-whole and damages obligations and

estimates for probable incurred losses associated with

loan populations excluded from the settlements with the

GSEs, as well as other whole loans sold, mortgage

insurance cancellations rescissions, and loans included in

bulk servicing sales effected prior to the settlements with

the GSEs. FHN compares the estimated probable incurred

losses determined under the applicable loss estimation

approaches for the respective periods with current

reserve levels. Changes in the estimated required liability

levels are recorded as necessary through the repurchase

and foreclosure provision. The repurchase and foreclosure

liability was $16 million and $17 million as of

December 31, 2022 and 2021, respectively.

Market Uncertainties and Prospective Trends

FHN’s future results could be affected both positively and

negatively by several known trends. Key among those are

changes in the U.S. and global economy and outlook,

government actions affecting interest rates, and

government actions and proposals which could have

positive or negative impacts on the economy at large or

on certain businesses, industries, or sectors.

Additional risks relate to how the COVID-19 pandemic

continues to affect FHN’s clients, political uncertainty,

changes in federal policies (including those publicly

discussed, formally proposed, or recently implemented)

and the potential impacts of those changes on our

businesses and clients, and whether FHN’s strategic

initiatives will succeed.

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Inflation, Recession, and Federal Reserve Policy

Economic Overview

The year 2022 and 2023 to date was marked by:  strong

inflation (which began in 2021); the Federal Reserve

implementing a "tightening" policy to contain inflation by

rapidly increasing short-term interest rates and ending

asset purchases; many indicators suggesting near-term

recession; continuing supply-chain difficulties impacting

many industries; and low unemployment rates. Several

aspects of these events were unusual:

•Although the U.S. economy flirted with recession in

2022, it did not officially enter one. Instead,

economic growth fluttered above and below zero,

ending the year with very modest positive growth.

•Although recessionary expectations in 2022 were

high much of the year, those did not translate into

large negative shifts in spending or employment. 

Recessionary expectations remain elevated early in

2023, but the range of expectations, and

uncertainty, is wide.

•Historically, while it is common for unemployment to

rise only after a recession has begun, it is unusual for

unemployment to remain low in the context of the

events in 2022. The unemployment rate remains

historically very low. With over 11 million job

openings reported in the U.S. at the end of 2022,

demand for labor remains strong. If recessionary

pressures continue to grow, demand for labor

eventually will abate. However, as 2022 showed, it is

not clear that recessionary expectations will be

borne out in 2023 or, if there is a recession, that it

will be typical.

Amplifying inflationary pressures and general

uncertainties, the Russian military invaded Ukraine in

February 2022. A year later, that conflict continues. Much

of Europe and the rest of the world, including the U.S.,

imposed economic sanctions on Russia for its attack, its

ongoing military campaign resulting in substantial civilian

casualties, and the manner in which it has prosecuted the

war which, reportedly, has significantly violated several

international conventions and treaties. The war and

sanctions resulted in global oil and gas prices rising

precipitously in early 2022, along with the prices of several

other commodities exported by Russia, Ukraine, or both,

including certain grains and vegetable oils. Oil prices have

been volatile since then, but have oscillated around much

higher price levels than before the war.

Federal Reserve and Rates

The Federal Reserve raised short-term rates several times

in 2022 and again in January 2023. Recent public

comments indicate that further raises will continue in

2023 until inflation is judged to be adequately controlled.

The raises in 2022 were 75 and 50 basis points each,

which was aggressive by historical standards, while the

January 2023 raise was a more-typical 25 basis points. The

Federal Reserve has expressed its intent to bring inflation

under control even at the risk of creating, or deepening,

an economic recession. By raising rates, the Federal

Reserve intends to curb demand in the U.S. for goods and

services by making credit more expensive and reducing

the amount of borrowed dollars generally. If supplies

remain constant, curbing demand should curb inflation

eventually.

FHN cannot predict exactly when or how much short-term

rates will be raised, nor how market-driven long-term

rates will behave, nor how those actions may affect

financial markets, during 2023. However, currently FHN

expects the Federal Reserve to adhere to its guidance and

continue raising short-term rates. More specifically, FHN

believes that the inverted yield curve indicates that the

market expects short term rates to be near a peak. In

contrast, FHN anticipates short term rates will increase in

small increments in 2023, and will not start to fall quickly.

Yield Curve

During 2022, the yield curve flattened and modestly

inverted at times in the first two quarters, and was

inverted much of the last two quarters. Unusual yield

curve effects, including inversion, may continue in 2023. A

traditional measure of inversion occurs when the two-year

U.S. Treasury rate is higher than the ten-year rate.

Traditional inversion was sustained for most of the second

half of 2022, which is very unusual. Sustained traditional

yield curve inversion is viewed, with statistical support, as

a harbinger of economic recession.

Recession

The U.S. economy contracted (experienced negative

growth) during the first two quarters of 2022, and

expanded during the second two, in all cases very

modestly. Moreover, the inflation rate was lower in the

second half of the year than in the first. Although second-

half U.S. growth was a positive development, and the

inflation rate is decelerating, inflation in the U.S. remains

persistently high and, therefore, the Federal Reserve is

expected to continue to hike interest rates.

Recession expectations in the U.S. were high in 2022 and

continue to be elevated in 2023. Traditionally, when

people and businesses expect a recession, they often

change their behaviors in ways that make recession more

likely: they borrow less, spend less, and invest less. Some

of those behaviors have started—some companies in

some industries have announced layoffs, for example,

citing diminished business activities or expectations—but

they have not become a broad trend yet.

Market Volatility

As a result of the prospects for recession, coupled with the

uncertainties associated with the war in eastern Europe,

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financial markets world-wide were volatile in 2022.

Financial asset values broadly fell last year, especially

during the second and third quarters. In the U.S., several

major stock indices fell more than 20% from their most

recent high levels, which conventionally means those

indices entered a "bear" market.

Impacts on FHN

In several respects FHN has benefited significantly from

rising rates. FHN is likely to continue to benefit as long as

the rise in lending rates outpaces the rise in deposit and

other funding rates.

However, some of FHN's businesses have been negatively

impacted. The general increase in interest rates this year

has pushed home mortgage rates in the U.S. higher. FHN's

direct mortgage lending and lending to mortgage

companies saw business decline significantly in 2022. If

mortgage rates continue to rise, FHN's revenues and

earnings from those areas likely will continue to fall

substantially compared with 2021. Moreover, FHN's

revenues from bond trading and related activities fell

significantly in 2022 due to rising rates coupled with

elevated market volatility.

More generally, a recession with still-rising rates likely

would have a significant negative impact on FHN's

businesses overall. Even if loan spreads continue to widen,

demand for loans is likely to fall, reserves for loan losses

are likely to rise, many commercial activities that generate

fee income are likely to decline, and competition for

clients is likely to sharpen. FHN already has experienced

some of these impacts. The deeper or longer a recession

lasts, the more significant these negative impacts are

likely to be for FHN.

Complicating the economic situation in the U.S. is the

impact that Federal Reserve policy has had on the value of

the U.S. dollar versus many other major currencies. The

dollar rose substantially during much of 2022, resulting in:

pressure on U.S. exports, which are relatively more

expensive; a windfall for imports into the U.S., which are

relatively cheaper; and pressure on non-U.S. borrowers of

U.S. dollars and international buyers of goods traded

mainly using U.S. dollars. The dollar's strength started to

abate late in 2022 and continuing into 2023, but

resurgence continues to be a risk. Although FHN is not

directly and significantly impacted by a strong U.S. dollar,

some clients have been and will continue to be. Moreover,

other central banks have followed the lead of the Federal

Reserve to support their respective currencies. As in the

U.S., those tightening actions dampen economic activity

and increase the risk of recession in those countries.

LIBOR & Reference Rate Reform

LIBOR

The London Inter-Bank Offered Rate ("LIBOR") for many

years was the most widely used reference rate in the

world. A large but declining portion of FHN's floating rate

loans use LIBOR, denominated in U.S. Dollars ("USD"), as

the reference rate to determine the interest rate paid by

the client/borrower. In addition, certain floating-rate

securities issued by FHN use USD LIBOR as the reference

rate.

LIBOR is based on a mix of transaction-based data and

expert judgment about market conditions. It is published

in different tenors, which are time periods such as 1-week,

1-month, 12-month, etc.

LIBOR Discontinuance

About a decade ago, evidence emerged that some

members of the panel that set LIBOR may have

manipulated the published LIBOR rates rather than using

strictly good-faith judgments. Several banks were fined.

In 2017, the Chief Executive of the United Kingdom

Financial Conduct Authority (the “FCA”)—the

governmental regulator of LIBOR—announced that it

intended to halt persuading or compelling banks to submit

rates for the calculation of LIBOR after 2021. In 2021, the

FCA announced that tenors of USD LIBOR would no longer

be published as follows:

•One week and 2-month USD LIBOR would not be

published after December 31, 2021; and

•All other USD LIBOR tenors (e.g., overnight, 1-month,

3-month, 6-month and 12-month tenors) would not

be published after June 30, 2023.

U.S. Regulatory Position

In 2020, the Federal Reserve, the OCC, and the FDIC jointly

encouraged U.S. banks to transition away from LIBOR for

new contracts as soon as practicable and, in any event, by

December 31, 2021. They noted that entering into new

contracts that use LIBOR as a reference rate after

December 31, 2021 would create safety and soundness

risks.

U.S. Federal Legislation

In March 2022, Congress passed the Adjustable Interest

Rate (LIBOR) Act. The legislation addresses loans that will

remain on LIBOR as of the June 30, 2023 cessation date,

and that either have no fallback provisions or that contain

fallback provisions that do not identify a specific

benchmark replacement. Per the legislation, at the final

cessation of USD LIBOR, banks may cause such loans to fall

back to a SOFR-based benchmark rate, with such rate to

be selected by the Federal Reserve Board. The LIBOR Act

also provides safe harbor from liability for banks that

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	97	2022 FORM 10-K ANNUAL REPORT

select the Board-selected replacement benchmark rate at

the cessation of LIBOR.

In December 2022, the Federal Reserve Board issued

Regulation ZZ, its final rule to implement the Adjustable

Interest Rate (LIBOR) Act.

Alternatives to LIBOR

LIBOR became the market-preferred reference rate

because it was perceived by lenders and borrowers as

being superior to alternatives in a wide range of

circumstances. Now that the origination of LIBOR-indexed

loans has ended, no single alternative reference rate has

replaced LIBOR for USD transactions. Instead, a number of

different reference rates are being used in different

circumstances. These include:

•Daily SOFR. The Alternative Reference Rates

Committee (“ARRC”) is a group of private-market

and financial regulator participants convened by the

Federal Reserve Board and the New York Federal

Reserve Bank to help ensure a successful transition

from USD LIBOR to a more robust reference rate.

The ARRC has recommended the Secured Overnight

Financing Rate (“SOFR”) as its preferred alternative.

SOFR resets daily and is based on actual transaction

data for the U.S. Treasury repurchase market.

Accordingly, SOFR represents a nearly risk-free

secured overnight rate.

•CME Term SOFR. Published by CME Group, Term

SOFR is a forward-looking rate, with 1-month, 3-

month, 6-month and 12-month tenors, and is based

on SOFR futures contracts. The ARRC recommended

conventions for Term SOFR rates, recommended

CME Group as the administrator for Term SOFR, and

recommended CME Group's Term SOFR rates.

Furthermore, the Federal Reserve Board's Regulation

ZZ, issued in December 2022, identifies CME Term

SOFR (plus a spread adjustment, as defined in the

LIBOR Act) as the Board-selected replacement rate

for the purposes of loans that are repriced in

accordance with the LIBOR Act upon the June 2023

final cessation of LIBOR.

•AMERIBOR. The American Interbank Offered Rate

(“AMERIBOR”) Index is produced by the American

Financial Exchange. AMERIBOR is based on actual

transaction data involving credit decisions by many

financial institutions, on an unsecured basis.

•BSBY. The Bloomberg short-term bank yield index

("BSBY") is a proprietary rate index calculated and

published by Bloomberg Index Services Limited.

BSBY is based on actual transaction data involving

unsecured credit.

•Prime. Although traditional prime rates (with each

bank setting its own) are not likely to regain the

prominence they had decades ago when U.S. banks

were much smaller and the industry was more

fragmented, for some clients and products banks

may increase their usage of prime rates.

The alternatives listed above were made available to the

majority of FHN’s commercial clients starting in November

2021. In accordance with the U.S. regulatory position, FHN

ceased entering into new LIBOR based contracts as of

December 31, 2021.

Each alternative reference rate has advantages and

disadvantages compared with other alternatives in various

circumstances. Despite being supported by the ARRC and

being the principal index used in interest rate derivatives

in the post-LIBOR environment, Daily SOFR has not gained

significant traction among middle market commercial

borrowers. When assessing Daily SOFR, some borrowers

have observed that the adoption of a rate with a daily

reset introduces operational complexities, including

changes to the loan's interest calculation and billing cycle.

By contrast, CME Term SOFR is a rate that: 1) like LIBOR,

has rate reset tenors of monthly or longer and 2) like Daily

SOFR, carries the endorsement of the ARRC. For these

reasons, CME Term SOFR has gained traction among many

middle market commercial borrowers.

All of the alternative reference rates selected by FHN to

date meet the International Organization of Securities

Commissions ("IOSCO") Principles for Financial

Benchmarks, as affirmed by the rate administrator and/or

an independent auditor. While banking regulators have

stated that banks are free to choose the index rates they

offer clients, some public sector officials have urged

caution in using the new credit sensitive alternative

reference rates (a category that includes BSBY and

AMERIBOR), primarily due to the robustness of underlying

data used to derive the rates. More specifically, there is

concern of an “inverted pyramid” effect where a large

number of financial contracts could be priced using an

index derived from a relatively low volume of

transactions. In an interagency statement on October 20,

2021, U.S. banking regulatory agencies noted that

“supervised institutions should understand how their

chosen reference rate is constructed and be aware of any

fragilities associated with that rate and the markets that

underlie it”. IOSCO has also warned of the potential for

the “inverted pyramid” problem and will monitor how the

IOSCO label is used by administrators.

FHN is monitoring the credit sensitive reference rates and

regulatory guidance around use of such rates.

Additionally, FHN expects that each financial contract will

contain fallback language to guide transition from a credit

sensitive rate to an alternative should that action be

deemed necessary in the future. Thus far, the use of credit

sensitive alternative reference rates by FHN and its clients

has been limited.

FHN's Actions to Date & Transition Plans

Starting in 2019, FHN modernized the fallback language

used in its loan documentation to better handle how

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	98	2022 FORM 10-K ANNUAL REPORT

floating rate loans would be re-set if LIBOR ceased to be

published during the loan term.

In the fourth quarter of 2021, FHN ceased using USD

LIBOR for new lending and renegotiated terms with clients

whose loans are based on 1-week or 2-month USD LIBOR,

which ceased publication at the end of 2021. Only a small

portion of FHN's clients had such loans.

On the consumer side, FHN began transitioning from

LIBOR-based adjustable rate mortgages ("ARMs") to SOFR-

based ARMs in November 2021, and no longer offers

LIBOR-based ARMs. SOFR has emerged as a market

standard for ARMs in the U.S. and is the conforming

convention for Fannie Mae and Freddie Mac.

For all products, FHN developed a go-to-market strategy

which included pricing considerations, associate training,

and client communications. All required systems,

processes, and reporting were updated to accommodate

the transition. FHN ceased origination of new contracts

tied to LIBOR on December 31, 2021.

In addition, FHN has established a LIBOR Transition Office

to assist associates in working with their clients to re-

negotiate terms of loan and derivative contracts that

extend past the June 30, 2023 cessation date for the

remaining USD LIBOR tenors noted above. Since

November 2021, FHN bankers have been amending the

pricing of existing LIBOR-based commercial loans via a rate

change at the time of loan renewal or via amendments to

the loan documents to change the benchmark rate.

Additionally, FHN bankers and FHNF derivatives marketers

are amending interest rate derivative contracts whose

tenors extend beyond the June 30, 2023 final cessation

date of LIBOR.

While FHN has exposure to LIBOR in various contracts (e.g.

securities, derivatives), FHN's primary exposure to LIBOR is

in floating rate loans to customers and derivative

contracts issued to customers through FHN Financial.

Below is a summary of these exposures as of December

31, 2022:

Table 7.28

LIBOR EXPOSURES

(Dollars in billions)	As of December 31, 2022	Mature after June 2023
Commercial loans (a)	$9	$9
Consumer loans (a)	3	3
Customer swaps (b)	5	5

(a) Amounts represent outstanding loan balances as of December 31,

2022.

(b) FHN has entered into offsetting upstream transactions with dealers to

offset its market risk exposure.

Financial Accounting Aspects

In 2020, the FASB issued ASU 2020-04, “Facilitation of the

Effects of Reference Rate Reform on Financial Reporting,”

which provides several optional expedients and

exceptions to ease the potential burden in accounting for

reference rate reform. The scope of ASU 2020-04 was

expanded in 2021 with ASU 2021-01, "Scope". Refer to the

Accounting Changes With Extended Transition Periods

section of Note 1 - Significant Accounting Policies for

additional information.

In December 2022, the FASB issued ASU 2022-06,

"Deferral of the Sunset Date of Topic 848" which extends

the transition window for ASU 2020-04 from December

31, 2022 to December 31, 2024, consistent with key USD

LIBOR tenors continuing to be published through June 30,

2023.

U.S. Tax Accommodation

On December 30, 2021, the IRS released final guidance

that is intended to facilitate the transition of existing

contracts from LIBOR to new reference rates without

triggering modification accounting or taxable exchange

treatment for those contracts. This guidance specifies

what must be met in order to qualify for the beneficial

transition approach and FHN is considering this guidance

in its transition plans.

Critical Accounting Policies & Estimates

Allowance for Loan and Lease Losses

Management’s policy is to maintain the ALLL at a level

sufficient to absorb expected credit losses in the loan and

lease portfolio. Management performs periodic and

systematic detailed reviews of its loan and lease portfolio

to identify trends and to assess the overall collectability of

the portfolio. Management believes the accounting

estimate related to the ALLL is a “critical accounting

estimate” as: (1) changes in it can materially affect the

provision for loan and lease losses and net income, (2) it

requires management to predict borrowers’ likelihood or

capacity to repay, including evaluation of inherently

uncertain future economic conditions, (3) prepayment

activity must be projected to estimate the life of loans

that often are shorter than contractual terms, (4) it

requires estimation of a reasonable and supportable

forecast period for credit losses for loan portfolio

segments before reversion to historical loss levels over the

remaining life of a loan and (5) expected future recoveries

of amounts previously charged off must be estimated.

Accordingly, this is a highly subjective process and

requires significant judgment since it is difficult to

evaluate current and future economic conditions in

relation to an overall credit cycle and estimate the timing

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	99	2022 FORM 10-K ANNUAL REPORT

and extent of loss events that are expected to occur prior

to the end of a loan’s and lease's estimated life.

FHN believes that the principal assumptions underlying

the accounting estimates made by management include:

(1) the commercial loan portfolio has been properly risk

graded based on information about borrowers in specific

industries and specific issues with respect to single

borrowers; (2) borrower specific information made

available to FHN is current and accurate; (3) the loan

portfolio has been segmented properly and individual

loans have similar credit risk characteristics and will

behave similarly; (4) the lives for loan portfolio pools have

been estimated properly, including consideration of

expected prepayments; (5) the economic forecasts utilized

and associated weighting selected by management in the

modeling of expected credit losses are reflective of future

economic conditions; (6) entity-specific historical loss

information has been properly assessed for all loan

portfolio segments as the initial basis for estimating

expected credit losses; (7) the reasonable and supportable

periods for loan portfolio segments have been properly

determined; (8) the reversion methodologies and

timeframes for migration from the reasonable and

supportable period to the use of historical loss rates are

reasonable; (9) expected recoveries of prior charge off

amounts have been properly estimated; and

(10) qualitative adjustments to modeled loss results

reasonably reflect expected future credit losses as of the

date of the financial statements.

While management uses the best information available to

establish the ALLL, future adjustments to the ALLL and

methodology may be necessary if economic or other

conditions differ substantially from the assumptions used

in making the estimates. Such adjustments to prior

estimates, as necessary, are made in the period in which

these factors and other relevant considerations indicate

that loss levels vary from previous estimates.

Selection and weighting of macroeconomic forecasts are

the most significant inputs in quantitative ALLL

calculations. Due to the sensitivity of the ALLL

determination to macroeconomic forecasts, changes in

those forecasts can result in materially different results

between reporting periods. In the determination of the

ALLL as of December 31, 2022, FHN utilized Moody's

Baseline, S1 (more favorable) and S2 (adverse) scenarios

for the calculation of the ALLL. FHN placed the most

weight on Moody's Baseline scenario but also included

weightings for S1 and S2 scenarios, primarily to reflect the

uncertainty of macroeconomic forecasts associated with

high inflation and the Federal Reserve's response with

higher interest rates, international and domestic supply-

chain issues, and labor challenges. All of these factors

contribute to an increased likelihood of recession in 2023.

Due to the dynamic relationship of macroeconomic inputs

in modeling calculations, quantifying the effects of

changing individual inputs is highly challenging. 

Additionally, management applies judgment in developing

qualitative adjustments that are considered necessary to

appropriately reflect elements of credit risk that are not

captured in the quantitative model results. To provide

some hypothetical sensitivity analysis, FHN prepared two

alternate quantitative calculations, applying 100%

weighting to Moody's Baseline and S2 (adverse) scenarios. 

These hypothetical calculations resulted in a 2% reduction

and 9% increase, respectively, in ALLL in comparison to

the ALLL recorded at December 31, 2022, inclusive of

qualitative adjustments that are affected by the weighting

of forecast scenarios.

See Note 1 - Significant Accounting Policies and Note 4 -

Allowance for Credit Losses for detail regarding FHN’s

processes, models, and methodology for determining the

ALLL.

Income Taxes

FHN is subject to the income tax laws of the U.S. and the

states and jurisdictions in which it operates. FHN accounts

for income taxes in accordance with ASC 740, "Income

Taxes". Significant judgments and estimates are required

in the determination of the consolidated income tax

expense. FHN income tax expense, deferred tax assets and

liabilities, and liabilities for unrecognized tax benefits

reflect management’s best estimate of current and future

taxes to be paid.

Income tax expense consists of both current and deferred

taxes. Current income tax expense is an estimate of taxes

to be paid or refunded for the current period and includes

income tax expense related to uncertain tax positions. A

DTA or a 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. Deferred taxes can be affected by changes in tax

rates applicable to future years, either as a result of

statutory changes or business changes that may change

the jurisdictions in which taxes are paid. Additionally,

DTAs are subject to a “more likely than not” test to

determine whether the full amount of the DTAs should be

realized in the financial statements. 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 or

generated with respect to the DTA. In projecting future

taxable income, FHN incorporates assumptions including

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	100	2022 FORM 10-K ANNUAL REPORT

the amount of future state and federal pretax 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. If the “more likely than

not” test is not met, a valuation allowance must be

established against the DTA.

The income tax laws of the jurisdictions in which FHN

operate are complex and subject to different

interpretations by the taxpayer and the relevant

government taxing authorities. In determining if a tax

position should be recognized and in establishing a

provision for income tax expense, FHN must make

judgments and interpretations about the application of

these inherently complex tax laws. Interpretations may be

subjected to review during examination by taxing

authorities and disputes may arise over the respective tax

positions. FHN attempts to resolve disputes that may arise

during the tax examination and audit process. However,

certain disputes may ultimately be resolved through the

federal and state court systems.

FHN monitors relevant tax authorities and revises

estimates of accrued income taxes on a quarterly basis.

Changes in estimates may occur due to changes in income

tax laws and their interpretation by the courts and

regulatory authorities. Revisions of estimates may also

result from income tax planning and from the resolution

of income tax controversies. Revisions in estimates may

be material to operating results for any given period.

See Note 14 - Income Taxes for additional information

including discussion of valuation allowances related to

deferred tax assets and the potential impact of

unrecognized tax benefits on future earnings.

Contingent Liabilities

A liability is contingent if the amount or outcome is not

presently known, but may become known in the future as

a result of the occurrence of some uncertain future event.

FHN estimates its contingent liabilities based on

management’s estimates about the probability of

outcomes and their ability to estimate the range of

exposure. Accounting standards require that a liability be

recorded if management determines that it is probable

that a loss has occurred and the loss can be reasonably

estimated. In addition, it must be probable that the loss

will be confirmed by some future event. As part of the

estimation process, management is required to make

assumptions about matters that are by their nature highly

uncertain and difficult to estimate.

The assessment of contingent liabilities, including legal

contingencies, involves the use of critical estimates,

assumptions, and judgments. Management’s estimates

are based on their belief that future events will validate

the current assumptions regarding the ultimate outcome

of these exposures. However, there can be no assurance

that future events, such as court decisions or decisions of

arbitrators, will not differ from management’s

assessments. Whenever practicable, management

consults with third-party experts (e.g., attorneys,

accountants, claims administrators, etc.) to assist with the

gathering and evaluation of information related to

contingent liabilities. Based on internally and/or externally

prepared evaluations, management makes a

determination whether the potential exposure requires

accrual in the financial statements.

See Note 16 - Contingencies and Other Disclosures for

additional information regarding FHN's existing material

contingent liabilities, including those with and without loss

accruals, and discussion of reasonably possible loss

amounts for pending litigation matters.

Accounting Changes

Refer to Note 1 – Significant Accounting Policies for a

detail of accounting changes with extended transition

periods and accounting changes issued but not currently

effective, which section is incorporated into this MD&A by

this reference.

Non-GAAP Information

Certain measures are included in this report are “non-

GAAP”, meaning they are not presented in accordance

with U.S. GAAP and also are not codified in U.S. banking

regulations currently applicable to FHN. Although other

entities may use calculation methods that differ from

those used by FHN for non-GAAP measures, FHN’s

management believes such measures are relevant to

understanding the capital position or financial results of

FHN and its business segments. Non-GAAP measures are

reported to FHN’s management and Board of Directors

through various internal reports.

The non-GAAP measures presented in this report are: pre-

provision net revenue, return on average tangible

common equity, tangible common equity to tangible

assets, adjusted tangible common equity to risk-weighted

assets, tangible book value per common share, and loans

and leases excluding PPP loans. Table 7.29 appearing in

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	101	2022 FORM 10-K ANNUAL REPORT

the MD&A (Item 7 of Part II) of this report provides a

reconciliation of non-GAAP items presented in this report

to the most comparable GAAP presentation.

Presentation of regulatory measures, even those which

are not GAAP, provide a meaningful base for

comparability to other financial institutions subject to the

same regulations as FHN, as demonstrated by their use by

banking regulators in reviewing capital adequacy of

financial institutions. Although not GAAP terms, these

regulatory measures are not considered “non-GAAP”

under U.S. financial reporting rules as long as their

presentation conforms to regulatory standards.

Regulatory measures used in this MD&A include: common

equity tier 1 capital, generally defined as common equity

less goodwill, other intangibles, and certain other required

regulatory deductions; tier 1 capital, generally defined as

the sum of core capital (including common equity and

instruments that cannot be redeemed at the option of the

holder) adjusted for certain items under risk based capital

regulations; and risk-weighted assets, which is a measure

of total on- and off-balance sheet assets adjusted for

credit and market risk, used to determine regulatory

capital ratios.

The following table provides a reconciliation of non-GAAP

items presented in this MD&A to the most comparable

GAAP presentation:

Table 7.29

NON-GAAP TO GAAP RECONCILIATION

(Dollars in millions; shares in thousands)		2022		2021		2020
Pre-provision Net Revenue (Non-GAAP)
Net interest income (GAAP)		$2,392		$1,994		$1,662
Plus: Noninterest income (GAAP)		815		1,076		1,492
Total Revenues (GAAP)		3,207		3,070		3,154
Less: Noninterest expense (GAAP)		1,953		2,096		1,718
Pre-provision Net Revenue (Non-GAAP)		$1,254		$974		$1,436
Tangible Common Equity (Non-GAAP)
(A) Total equity (GAAP)		$8,547		$8,494		$8,307
Less: Noncontrolling interest (a)		295		295		295
Less: Preferred stock (a)		1,014		520		470
(B) Total common equity		7,238		7,679		7,542
Less: Goodwill and other intangible assets (GAAP) (b)		1,745		1,809		1,865
(C) Tangible common equity (Non-GAAP)		5,493		5,870		5,677
Less: Unrealized gains (losses) on AFS securities, net of tax		(972)		(36)		108
(D) Adjusted tangible common equity (Non-GAAP)		$6,465		$5,906		$5,569
Tangible Assets (Non-GAAP)
(E) Total assets (GAAP)		$78,953		$89,092		$84,209
Less: Goodwill and other intangible assets (GAAP) (b)		1,745		1,809		1,865
(F) Tangible assets (Non-GAAP)		$77,208		$87,283		$82,344
Average Tangible Common Equity (Non-GAAP)
Average total equity (GAAP)		$8,579		$8,479		$6,609
Less: Average noncontrolling interest (a)		295		295		295
Less: Average preferred stock (a)		935		506		297
(G) Total average common equity		7,349		7,678		6,017
Less: Average goodwill and other intangible assets (GAAP) (b)		1,777		1,836		1,696
(H) Average tangible common equity (Non-GAAP)		$5,572		$5,842		$4,321
Net Income Available to Common Shareholders
(I) Net income available to common shareholders		$868		$962		$822
Risk Weighted Assets
(J) Risk weighted assets (c)		$69,163		$64,183		$63,140

ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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	102	2022 FORM 10-K ANNUAL REPORT

Period-end shares outstanding
(K) Period-end shares outstanding		537,101		533,577		555,031
Ratios
(A)/(E) Total period-end equity to period-end assets (GAAP)		10.83%		9.53%		9.86%
(C)/(F) Tangible common equity to tangible assets (Non-GAAP)		7.12		6.73		6.89
(D)/(J) Adjusted tangible common equity to risk weighted assets (Non-GAAP)		9.35		9.20		8.82
(I)/(G) Return on average common equity (GAAP)		11.81		12.53		13.66
(I)/(H) Return on average tangible common equity (Non-GAAP)		15.58		16.46		19.03
(B)/(K) Book value per common share (GAAP)		$13.48		$14.39		$13.59
(C)/(K) Tangible book value per common share (Non-GAAP)		$10.23		$11.00		$10.23
Loans and leases excluding PPP loans (Non-GAAP)
Commercial loans and leases excluding PPP loans		$44,933		$42,139		$41,327
PPP loans		76		1,038		4,052
Total commercial loans and leases		45,009		43,177		45,379
Total consumer loans		13,093		11,682		12,853
Total loans and leases		$58,102		$54,859		$58,232

(a)Included in total equity on the Consolidated Balance Sheets.

(b)Includes goodwill and other intangible assets, net of amortization.

(c)Defined by and calculated in conformity with bank regulations applicable to FHN.

ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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	103	2022 FORM 10-K ANNUAL REPORT

Item 7A.Quantitative and Qualitative Disclosures

About Market Risk

The information called for by this Item is incorporated

herein by reference to: 2022 MD&A (Item 7), which begins

on page 58 of this report; Note 21—Derivatives, which

begins on page 176 of this report; and Note 22—Master

Netting and Similar Agreements - Repurchase, Reverse

Repurchase, and Securities Borrowing Transactions, which

begins on page 183 of this report. Within 2022 MD&A,

these sections are especially pertinent to this Item 7A:

Market Risk Management and Interest Rate Risk

Management which begin, respectively, on pages 87 and

89 of this report. Notes 21 and 22 are part of our 2022

Financial Statements (Item 8).

ITEM 7A. QUANTITATIVE & QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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	104	2022 FORM 10-K ANNUAL REPORT

Item 8.Financial Statements and

Supplementary Data

TABLE OF ITEM 8 TOPICS

Report of Management on Internal Control Over Financial Reporting	107
Report of Independent Registered Public Accounting Firm	108
Balance Sheets	112
Statements of Income	113
Statements of Comprehensive Income	115
Statements of Changes in Equity	116
Statements of Cash Flows	117
Notes to the Consolidated Financial Statements	119
Note 1 Significant Accounting Policies	119
Note 2 Investment Securities	131
Note 3 Loans and Leases	134
Note 4 Allowance for Credit Losses	141
Note 5 Premises, Equipment, and Leases	143
Note 6 Goodwill and Other Intangible Assets	146
Note 7 Mortgage Banking Activity	147
Note 8 Deposits	148
Note 9 Short-Term Borrowings	149
Note 10 Term Borrowings	150
Note 11 Preferred Stock	152
Note 12 Regulatory Capital and Restrictions	153
Note 13 Components of Other Comprehensive Income (Loss)	155
Note 14 Income Taxes	156
Note 15 Earnings Per Share	159
Note 16 Contingencies and Other Disclosures	160
Note 17 Retirement Plans and Other Employee Benefits	162
Note 18 Stock Options, Restricted Stock, and Dividend Reinvestment Plans	167

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
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	105	2022 FORM 10-K ANNUAL REPORT

Note 19 Business Segment Information	170
Note 20 Variable Interest Entities	173
Note 21 Derivatives	176
Note 22 Master Netting and Similar Agreements - Repurchase, Reverse Repurchase, and Securities Borrowing Transactions	183
Note 23 Fair Value of Assets and Liabilities	185
Note 24 Parent Company Financial Information	200

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
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	106	2022 FORM 10-K ANNUAL REPORT

Report of Management on Internal Control over Financial Reporting

Management at First Horizon Corporation is responsible for establishing and maintaining adequate internal control over

financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. First Horizon

Corporation’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the

reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally

accepted accounting principles.

Even effective internal controls, no matter how well designed, have inherent limitations such as the possibility of human error

or of circumvention or overriding of controls, and consideration of cost in relation to benefit of a control. Moreover,

effectiveness must necessarily be considered according to the existing state of the art of internal control. Further, because of

changes in conditions, the effectiveness of internal controls may diminish over time.

Management assessed the effectiveness of First Horizon Corporation’s internal control over financial reporting as of

December 31, 2022. This assessment was based on criteria established in Internal Control – Integrated Framework (2013)

issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Based on our assessment and those criteria, management believes that First Horizon Corporation maintained effective

internal control over financial reporting as of December 31, 2022.

KPMG LLP, the independent registered public accounting firm that audited First Horizon Corporation's financial statements,

issued an audit report on First Horizon Corporation’s internal control over financial reporting. That report appears on the

following page.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
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	107	2022 FORM 10-K ANNUAL REPORT

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors

First Horizon Corporation:

Opinion on Internal Control Over Financial Reporting

We have audited First Horizon Corporation and subsidiaries' (the Company) internal control over financial reporting as of

December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee

of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects,

effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control –

Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)

(PCAOB), the consolidated balance sheets of the Company as of December 31, 2022 and 2021, the related consolidated

statements of income, comprehensive income, changes in equity, and cash flows for each of the years in the three-year

period ended December 31, 2022, and the related notes (collectively, the consolidated financial statements), and our report

dated March 1, 2023 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its

assessment of the effectiveness of internal control over financial reporting, included in the accompanying Report of

Management on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s

internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and

are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the

applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform

the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in

all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal

control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and

operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other

procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our

opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the

reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally

accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures

that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and

dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to

permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and

expenditures of the company are being made only in accordance with authorizations of management and directors of the

company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or

disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,

projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate

because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Memphis, Tennessee

March 1, 2023

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
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	108	2022 FORM 10-K ANNUAL REPORT

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors

First Horizon Corporation:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of First Horizon Corporation and subsidiaries (the Company)

as of December 31, 2022 and 2021, the related consolidated statements of income, comprehensive income, changes in

equity, and cash flows for each of the years in the three-year period ended December 31, 2022, and the related notes

(collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all

material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations

and its cash flows for each of the years in the three-year period ended December 31, 2022, in conformity with U.S. generally

accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)

(PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in

Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway

Commission, and our report dated March 1, 2023 expressed an unqualified opinion on the effectiveness of the Company’s

internal control over financial reporting.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express

an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with

the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities

laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform

the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material

misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material

misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that

respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures

in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant

estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We

believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial

statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts

or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging,

subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the

consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below,

providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Assessment of the allowance for loan losses for loans collectively evaluated for impairment

As discussed in Notes 1 and 4 to the consolidated financial statements, the Company’s total allowance for loan losses

as of December 31, 2022 was $685 million, of which a portion related to the allowance for loan losses for loans

collectively evaluated for impairment (the collective ALLL). The collective ALLL includes the measure of expected

credit losses on a collective (pooled) basis for those loans that share similar risk characteristics. The Company

estimated the collective ALLL using a current expected credit losses methodology which is based on relevant

information about historical experience, current conditions, and reasonable and supportable forecasts that affect the

collectability of the loan balances. The expected credit losses are the product of multiplying the Company’s estimates

of probability of default (PD), loss given default (LGD), and individual loan level exposure at default (EAD), including

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	109	2022 FORM 10-K ANNUAL REPORT

amortization and prepayment assumptions, on an undiscounted basis. The Company uses models or assumptions to

develop expected loss forecasts, which incorporate a weighting approach for multiple macroeconomic forecasts over

a four year reasonable and supportable forecast period. After the reasonable and supportable forecast period, the

Company immediately reverts to its historical loss averages, evaluated over the historical observation periods, for the

remaining estimated life of the loans. In order to capture the unique risks of the loan portfolio within the PD, LGD,

and prepayment models, the Company segments the portfolio into pools, generally incorporating loan grades for

commercial loans. The Company uses qualitative adjustments to adjust historical loss information in situations where

current loan characteristics differ from those in the historical loss information and for differences in economic

conditions and other factors.

We identified the assessment of the collective ALLL as a critical audit matter. A high degree of audit effort, including

specialized skills and knowledge, and subjective and complex auditor judgment was involved in the assessment of the

collective ALLL due to significant measurement uncertainty. Specifically, the assessment encompassed the evaluation

of the collective ALLL methodology, including the methods and models used to estimate the PD, LGD, and

prepayments and their significant assumptions, which included the selection of the economic forecast scenarios and

the weighting of each economic scenario. The assessment also included the evaluation of certain qualitative

adjustments and their significant assumptions. The significant assumptions are sensitive to variation, such that minor

changes in the assumption can cause significant changes in the estimates. The assessment also included an

evaluation of the conceptual soundness and performance of the PD, LGD, and prepayments models. In addition,

auditor judgment was required to evaluate the sufficiency of audit evidence obtained.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the

design and tested the operating effectiveness of certain internal controls related to the Company’s measurement of

the collective ALLL estimate, including controls over the:

•assessment of the collective ALLL methodology

•performance monitoring of the PD, LGD and prepayment models

•continued use and appropriateness of changes to the PD, LGD, and prepayment models, including the

significant assumptions used in the PD, LGD, and prepayment models

•selection of the economic scenarios and the weighting of each economic scenario

•development of the qualitative adjustments, including the significant assumptions used in the measurement

of the qualitative adjustments

•analysis of the collective ALLL results, trends, and ratios.

We evaluated the Company’s process to develop the collective ALLL estimate by testing certain sources of data,

factors, and assumptions that the Company used, and considered the relevance and reliability of such data, factors,

and assumptions. In addition, we involved credit risk professionals with specialized skills and knowledge, who

assisted in:

•evaluating the Company’s collective ALLL methodology for compliance with U.S. generally accepted

accounting principles

•evaluating judgments made by the Company relative to the performance testing of the PD, LGD, and

prepayment models by comparing them to relevant Company-specific metrics and trends and the applicable

industry and regulatory practices

•assessing the conceptual soundness and performance testing of the PD, LGD, and prepayment models by

inspecting the model documentation to determine whether the models are suitable for their intended use

•evaluating the selection of the economic forecast scenarios and the weighting applied to each scenario by

comparing to the Company’s business environment and relevant industry practices

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	OPINION ON CONSOLIDATED FINANCIAL STATEMENTS

   

	110	2022 FORM 10-K ANNUAL REPORT

•evaluating the methodology used to develop the qualitative adjustments and the effect of those

adjustments on the collective ALLL compared with relevant credit risk factors and consistency with credit

trends and identified limitations of the underlying quantitative models.

We also assessed the sufficiency of the audit evidence obtained related to the collective ALLL estimate by evaluating

the:

•cumulative results of the audit procedures

•qualitative aspects of the Company’s accounting practice

•potential bias in the accounting estimates.

We have served as the Company’s auditor since 2002.

Memphis, Tennessee

March 1, 2023

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	OPINION ON CONSOLIDATED FINANCIAL STATEMENTS

   

	111	2022 FORM 10-K ANNUAL REPORT

Consolidated Balance Sheets

		December 31,
(Dollars in millions, except per share amounts)		2022		2021
Assets
Cash and due from banks		$1,061		$1,147
Interest-bearing deposits with banks		1,384		14,907
Federal funds sold and securities purchased under agreements to resell		482		641
Trading securities		1,375		1,601
Securities available for sale at fair value		8,836		8,707
Securities held to maturity (fair value of $1,209 and $705, respectively)		1,371		712
Loans held for sale (including $51 and $258 at fair value, respectively)		590		1,172
Loans and leases		58,102		54,859
Allowance for loan and lease losses		(685)		(670)
Net loans and leases		57,417		54,189
Premises and equipment		612		665
Goodwill		1,511		1,511
Other intangible assets		234		298
Other assets		4,080		3,542
Total assets		$78,953		$89,092
Liabilities
Noninterest-bearing deposits		$23,466		$27,883
Interest-bearing deposits		40,023		47,012
Total deposits		63,489		74,895
Trading liabilities		335		426
Short-term borrowings		2,506		2,124
Term borrowings		1,597		1,590
Other liabilities		2,479		1,563
Total liabilities		70,406		80,598
Equity
Preferred stock, Non-cumulative perpetual, no par value; authorized 5,000,000 shares; issued 31,686 and 26,750 shares, respectively		1,014		520
Common stock, $0.625 par value; authorized 700,000,000 shares; issued 537,100,615 and 533,576,766 shares, respectively		336		333
Capital surplus		4,840		4,743
Retained earnings		3,430		2,891
Accumulated other comprehensive loss, net		(1,368)		(288)
FHN shareholders' equity		8,252		8,199
Noncontrolling interest		295		295
Total equity		8,547		8,494
Total liabilities and equity		$78,953		$89,092

See accompanying notes to consolidated financial statements.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	CONSOLIDATED BALANCE SHEETS

   

	112	2022 FORM 10-K ANNUAL REPORT

Consolidated Statements of Income

		Year Ended December 31
(Dollars in millions, except per share data; shares in thousands)		2022		2021		2020
Interest income
Interest and fees on loans and leases		$2,292		$1,957		$1,722
Interest and fees on loans held for sale		39		33		30
Interest on investment securities		198		121		105
Interest on trading securities		58		30		35
Interest on other earning assets		96		17		6
Total interest income		2,683		2,158		1,898
Interest expense
Interest on deposits		184		81		152
Interest on trading liabilities		12		6		6
Interest on short-term borrowings		23		5		14
Interest on term borrowings		72		72		64
Total interest expense		291		164		236
Net interest income		2,392		1,994		1,662
Provision for credit losses		95		(310)		503
Net interest income after provision for credit losses		2,297		2,304		1,159
Noninterest income
Fixed income		205		406		423
Deposit transactions and cash management		171		175		148
Brokerage, management fees and commissions		92		88		66
Card and digital banking fees		84		78		60
Mortgage banking and title income		68		154		129
Other service charges and fees		54		44		26
Trust services and investment management		48		51		39
Securities gains (losses), net		18		13		(6)
Purchase accounting gain		—		(1)		533
Other income		75		68		74
Total noninterest income		815		1,076		1,492
Noninterest expense
Personnel expense		1,101		1,210		1,033
Net occupancy expense		128		137		116
Computer software		113		116		85
Operations services		87		80		56
Legal and professional fees		62		68		84
Contract employment and outsourcing		54		67		24
Amortization of intangible assets		51		56		40
Advertising and public relations		50		37		18
Equipment expense		45		47		42
Communications and delivery		37		37		31
Contributions		7		14		41
Impairment of long-lived assets		—		34		7
Other expense		218		193		141
Total noninterest expense		1,953		2,096		1,718

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	CONSOLIDATED STATEMENTS OF INCOME

   

	113	2022 FORM 10-K ANNUAL REPORT

Income before income taxes		1,159		1,284		933
Income tax expense		247		274		76
Net income		$912		$1,010		$857
Net income attributable to noncontrolling interest		12		11		12
Net income attributable to controlling interest		$900		$999		$845
Preferred stock dividends		32		37		23
Net income available to common shareholders		$868		$962		$822
Basic earnings per share		$1.62		$1.76		$1.90
Diluted earnings per share		$1.53		$1.74		$1.89
Weighted average common shares		535,033		546,354		432,125
Diluted average common shares		566,004		551,241		433,717

See accompanying notes to consolidated financial statements.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	CONSOLIDATED STATEMENTS OF INCOME

   

	114	2022 FORM 10-K ANNUAL REPORT

Consolidated Statements of Comprehensive Income

 

		Year Ended December 31
(Dollars in millions)		2022		2021		2020
Net income		$912		$1,010		$857
Other comprehensive income (loss), net of tax:
Net unrealized gains (losses) on securities available for sale		(937)		(144)		77
Net unrealized gains (losses) on cash flow hedges		(129)		(10)		9
Net unrealized gains (losses) on pension and other postretirement plans		(14)		6		13
Other comprehensive income (loss)		(1,080)		(148)		99
Comprehensive income (loss)		(168)		862		956
Comprehensive income attributable to noncontrolling interest		12		11		12
Comprehensive income (loss) attributable to controlling interest		$(180)		$851		$944
Income tax expense (benefit) of items included in other comprehensive income:
Net unrealized gains (losses) on securities available for sale		$(302)		$(46)		$25
Net unrealized gains (losses) on cash flow hedges		(42)		(3)		3
Net unrealized gains (losses) on pension and other postretirement plans		(5)		2		3

See accompanying notes to consolidated financial statements.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

   

	115	2022 FORM 10-K ANNUAL REPORT

Consolidated Statements of Changes in Equity

		Preferred Stock				Common Sock
(Dollars in millions, except per share data; shares in thousands)		Shares		Amount		Shares		Amount		Capital Surplus		Retained Earnings		Accumulated Other Comprehensive Income (Loss) (a)		Noncontrolling Interest		Total
Balance, December 31, 2019		1,000		$96		311,469		$195		$2,931		$1,798		$(239)		$295		$5,076
Adjustment to reflect adoption of ASU 2016-13		—		—		—		—		—		(96)		—		—		(96)
Beginning balance, as adjusted		1,000		96		311,469		195		2,931		1,702		(239)		295		4,980
Net income		—		—		—		—		—		845		—		12		857
Other comprehensive income (loss)		—		—		—		—		—		—		99		—		99
Comprehensive income (loss)		—		—		—		—		—		845		99		12		956
Cash dividends declared:
Preferred stock		—		—		—		—		—		(23)		—		—		(23)
Common stock ($0.60 per share)		—		—		—		—		—		(263)		—		—		(263)
Preferred stock issuance (1,500 shares issued at $100,000 per share net of offering costs)		1,500		144		—		—		—		—		—		—		144
Common stock repurchased (b)		—		—		(426)		—		(4)		—		—		—		(4)
Common stock issued for:
Stock options exercised and restricted stock awards		—		—		1,726		—		7		—		—		—		7
Issued in business combination		23,750		230		243,015		152		2,115		—		—		—		2,497
Stock-based compensation expense		—		—		—		—		32		—		—		—		32
Dividends declared - noncontrolling interest of subsidiary preferred stock		—		—		—		—		—		—		—		(12)		(12)
Other (c)		—		—		(753)		—		(7)		—		—		—		(7)
Balance, December 31, 2020		26,250		470		555,031		347		5,074		2,261		(140)		295		8,307
Net income		—		—		—		—		—		999		—		11		1,010
Other comprehensive income (loss)		—		—		—		—		—		—		(148)		—		(148)
Comprehensive income (loss)		—		—		—		—		—		999		(148)		11		862
Cash dividends declared:
Preferred stock		—		—		—		—		—		(32)		—		—		(32)
Common stock ($0.60 per share)		—		—		—		—		—		(332)		—		—		(332)
Preferred stock issuance (1,500 shares issued at $100,000 per share net of offering costs)		1,500		145		—		—		—		—		—		—		145
Call of preferred stock		(1,000)		(95)		—		—		—		(5)		—		—		(100)
Common stock repurchased (b)		—		—		(25,063)		(16)		(400)		—		—		—		(416)
Common stock issued for:
Stock options exercised and restricted stock awards		—		—		3,609		2		26		—		—		—		28
Stock-based compensation expense		—		—		—		—		43		—		—		—		43
Dividends declared - noncontrolling interest of subsidiary preferred stock		—		—		—		—		—		—		—		(11)		(11)
Balance, December 31, 2021		26,750		520		533,577		333		4,743		2,891		(288)		295		8,494
Net income		—		—		—		—		—		900		—		12		912
Other comprehensive income (loss)		—		—		—		—		—		—		(1,080)		—		(1,080)
Comprehensive income (loss)		—		—		—		—		—		900		(1,080)		12		(168)
Cash dividends declared:
Preferred stock		—		—		—		—		—		(32)		—		—		(32)
Common stock ($0.60 per share)		—		—		—		—		—		(329)		—		—		(329)
Preferred stock issuance (4,936 shares issued at $100,000 per share)		4,936		494		—		—		—		—		—		—		494
Common stock repurchased (b)		—		—		(577)		—		(12)		—		—		—		(12)
Common stock issued for:
Stock options exercised and restricted stock awards		—		—		4,101		3		34		—		—		—		37
Stock-based compensation expense		—		—		—		—		75		—		—		—		75
Dividends declared - noncontrolling interest of subsidiary preferred stock		—		—		—		—		—		—		—		(12)		(12)
Balance, December 31, 2022		31,686		$1,014		537,101		$336		$4,840		$3,430		$(1,368)		$295		$8,547

(a)Due to the nature of the preferred stock issued by FHN and its subsidiaries, all components of other comprehensive income (loss) have been attributed

solely to FHN as the controlling interest holder.

(b)2021 and 2020 include $401 million and $4 million, respectively, repurchased under share repurchase programs.

(c)Represents shares canceled in connection with the resolution of remaining CBF dissenters' appraisal process and to cover taxes on the IBKC equity   

        compensation grants that automatically vested as part of the merger.

See accompanying notes to consolidated financial statements.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

   

	116	2022 FORM 10-K ANNUAL REPORT

Consolidated Statements of Cash Flows

		Year Ended December 31
(Dollars in millions)		2022		2021		2020
Operating Activities
Net income		$912		$1,010		$857
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Provision for credit losses		95		(310)		503
Deferred income tax expense (benefit)		91		—		(18)
Depreciation and amortization of premises and equipment		59		61		52
Amortization of intangible assets		51		56		40
Net other amortization and accretion		(11)		(67)		(30)
Net decrease in trading securities		2,120		1,824		1,912
Net (increase) decrease in derivatives		524		412		(223)
Purchase accounting gain		—		1		(533)
Stock-based compensation expense		75		43		32
Securities (gains) losses, net		(18)		(13)		6
Loss on debt extinguishment		—		26		—
Net (gains) losses on sale/disposal of fixed assets		(1)		29		8
(Gain) loss on BOLI		(9)		(8)		(5)
Gain on sale of mortgage servicing rights		(12)		—		—
Gain on sale of title services business		(22)		—		—
Loans held for sale:
Purchases and originations		(3,728)		(6,644)		(4,710)
Gross proceeds from settlements and sales		2,310		4,451		2,907
(Gain) loss due to fair value adjustments and other		107		(205)		(81)
Other operating activities, net		(232)		75		(545)
Total adjustments		1,399		(269)		(685)
Net cash provided by operating activities		2,311		741		172
Investing Activities
Proceeds from sales of securities available for sale		—		68		629
Proceeds from maturities of securities available for sale		1,351		2,771		4,099
Purchases of securities available for sale		(2,767)		(3,736)		(4,740)
Purchases of securities held to maturity		(712)		(720)		—
Proceeds from prepayments of securities held to maturity		55		17		—
Proceeds from sales of premises and equipment		18		42		12
Purchases of premises and equipment		(28)		(53)		(58)
Proceeds from BOLI		22		22		12
Net (increase) decrease in loans and leases		(3,224)		3,509		(819)
Net (increase) decrease in interest-bearing deposits with banks		13,523		(6,556)		(6,187)
Cash received for acquisitions, net		—		—		2,071
Other investing activities, net		75		19		14
Net cash provided by (used in) investing activities		8,313		(4,617)		(4,967)
Financing Activities
Common stock:
Stock options exercised		36		28		7
Cash dividends paid		(324)		(333)		(222)
Repurchase of shares		(12)		(416)		(4)
Cancellation of common shares		—		—		(7)
Preferred stock issuance		494		145		144
Call of preferred stock		—		(100)		—

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	CONSOLIDATED STATEMENTS OF CASH FLOWS

   

	117	2022 FORM 10-K ANNUAL REPORT

Cash dividends paid - preferred stock - noncontrolling interest		(11)		(11)		(12)
Cash dividends paid - preferred stock		(32)		(33)		(17)
Net increase (decrease) in deposits		(11,406)		4,919		7,143
Net increase (decrease) in short-term borrowings		382		(75)		(1,529)
Increases (decreases) in term borrowings		4		(108)		(327)
Net cash provided by (used in) financing activities		(10,869)		4,016		5,176
Net increase (decrease) in cash and cash equivalents		(245)		140		381
Cash and cash equivalents at beginning of period		1,788		1,648		1,267
Cash and cash equivalents at end of period		$1,543		$1,788		$1,648
Supplemental Disclosures
Total interest paid		$280		$170		$261
Total taxes paid		20		258		105
Total taxes refunded		7		30		36
Transfer from loans to OREO		3		4		2
Transfer from loans HFS to trading securities		1,893		2,232		1,742
Transfer from loans to loans HFS		—		31		9

See accompanying notes to consolidated financial statements.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	CONSOLIDATED STATEMENTS OF CASH FLOWS

   

	118	2022 FORM 10-K ANNUAL REPORT

Notes to the Consolidated Financial Statements

Note 1—Significant Accounting Policies

Basis of Accounting

The consolidated financial statements of FHN, including its

subsidiaries, have been prepared in conformity with

accounting principles generally accepted in the United

States of America and follow general practices within the

industries in which it operates. This preparation requires

management to make estimates and assumptions that

affect the amounts reported in the financial statements

and accompanying notes. These estimates and

assumptions are based on information available as of the

date of the financial statements and could differ from

actual results.

Pending Merger

As previously disclosed, on February 27, 2022, FHN

entered into an Agreement and Plan of Merger (the “TD

Merger Agreement”) with The Toronto-Dominion Bank, a

Canadian chartered bank (“TD”), TD Bank US Holding

Company, a Delaware corporation and indirect, wholly

owned subsidiary of TD (“TD-US”), and Falcon Holdings

Acquisition Co., a Delaware corporation and wholly owned

subsidiary of TD-US (“Merger Sub”).

Pursuant to the TD Merger Agreement, FHN and Merger

Sub will merge (the “First Holding Company Merger”),

with FHN continuing as the surviving entity in the merger. 

Following the First Holding Company Merger, at the

election of TD, FHN and TD-US will merge (the “Second

Holding Company Merger” and, together with the First

Holding Company Merger, the “Holding Company

Mergers”), with TD-US continuing as the surviving entity in

the merger.

Upon the terms and subject to the conditions set forth in

the TD Merger Agreement, each share of FHN common

stock, par value $0.625 per share, (“Company Common

Stock”), issued and outstanding immediately prior to the

effective time of the First Holding Company Merger (the

“First Effective Time”) will be converted into the right to

receive $25.00 (USD) per share in cash, without interest.

Because the transaction did not close on or before

November 27, 2022, shareholders will receive an

additional $0.65 per share of Company Common Stock on

an annualized basis (or approximately 5.4 cents per

month) for the period from November 28, 2022 through

the day immediately prior to the closing.

Each outstanding share of FHN’s preferred stock, series B,

C, D, E and F, will remain issued and outstanding in

connection with the First Holding Company Merger. If TD

elects to effect the Second Holding Company Merger, at

the effective time of the Second Holding Company

Merger, each outstanding share of FHN’s preferred stock

will be converted into a share of a newly created,

corresponding series of preferred stock of TD-US having

terms as described in the TD Merger Agreement.

Following the completion of the First Holding Company

Merger, at such time as determined by TD, First Horizon

Bank and TD Bank, N.A., a national banking association

(“TDBNA”) will merge, with TDBNA surviving as a

subsidiary of TD-US (the “Bank Merger” and together with

the Holding Company Mergers, the “Pending TD Merger”).

The Pending TD Merger is subject to customary closing

conditions, including approvals from U.S. and Canadian

regulatory authorities. On February 9, 2023, FHN and TD

agreed to extend the outside date to May 27, 2023. 

Subsequent to the extension, TD recently informed FHN

that TD does not expect that the necessary regulatory

approvals will be received in time to complete the Pending

TD Merger by May 27, 2023, and that TD cannot provide a

new projected closing date at this time. TD has initiated

discussions with FHN regarding a potential further

extension of the outside date. There can be no assurance

that an extension will ultimately be agreed or that TD will

satisfy all regulatory requirements so that the regulatory

approvals required to complete the Pending TD Merger

will be received.

FHN's shareholders approved the merger on May 31,

2022. Merger and integration expenses related to the

Pending TD Merger are recorded in FHN’s Corporate

segment. Expenses recognized during the year ended

December 31, 2022 were $87 million.

Merger with IBERIABANK Corporation

On July 1, 2020, FHN and IBERIABANK Corporation closed

their merger of equals transaction. Historical periods prior

to the closing of the merger only reflect results of legacy

FHN operations. Subsequent to closing, results reflect all

post-merger activity.

Principles of Consolidation

The consolidated financial statements include the

accounts of FHN and other entities in which it has a

controlling financial interest. Variable Interest Entities for

which FHN or a subsidiary has been determined to be the

primary beneficiary are also consolidated. Affiliates for

which FHN is not considered the primary beneficiary and

in which FHN does not have a controlling financial interest

are accounted for by the equity method. These

investments are included in other assets, and FHN’s

proportionate share of income or loss is included in

noninterest income. All significant intercompany

transactions and balances have been eliminated.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 1—SIGNIFICANT ACCOUNTING POLICIES

   

	119	2022 FORM 10-K ANNUAL REPORT

Revenues

Revenue is recognized when the performance obligations

under the terms of a contract with a client are satisfied in

an amount that reflects the consideration FHN expects to

be entitled. FHN derives a significant portion of its

revenues from fee-based services. Noninterest income

from transaction-based fees is generally recognized

immediately upon completion of the transaction.

Noninterest income from service-based fees is generally

recognized over the period in which FHN provides the

service. Any services performed over time generally

require that FHN render services each period and

therefore FHN measures progress in completing these

services based upon the passage of time and recognizes

revenue as invoiced.

Following is a discussion of FHN's key revenues within the

scope of ASC 606, "Revenue from Contracts with

Customers", except as noted.

Fixed Income

Fixed income includes fixed income securities sales,

trading, and strategies, loan sales and derivative sales

which are not within the scope of revenue from contracts

with customers. Fixed income also includes investment

banking fees earned for services related to underwriting

debt securities and performing portfolio advisory services.

FHN's performance obligation for underwriting services is

satisfied on the trade date while advisory services is

satisfied over time.

Mortgage Banking and Title Income

Mortgage banking and title income includes mortgage

servicing income, title income, mortgage loan originations

and sales, derivative settlements, as well as any changes in

fair value recorded on mortgage loans and derivatives.

Mortgage banking income from 1) sale of loans, 2)

settlement of derivatives, 3) changes in fair value of loans,

derivatives and servicing rights and 4) servicing of loans

are not within the scope of revenue from contracts with

customers. Prior to the sale of this business during 2022,

title income was earned when FHN fulfilled its

performance obligation at the point in time when the

services were completed.

Deposit Transactions and Cash Management

Deposit transactions and cash management activities

include fees for services related to consumer and

commercial deposit products (such as service charges on

checking accounts), cash management products and

services such as electronic transaction processing

(Automated Clearing House and Electronic Data

Interchange), account reconciliation services, cash vault

services, lockbox processing, and information reporting to

large corporate clients. FHN's obligation for transaction-

based services is satisfied at the time of the transaction

when the service is delivered while FHN's obligation for

service based fees is satisfied over the course of each

month.

Brokerage, Management Fees and Commissions

Brokerage, management fees and commissions include

fees for portfolio management, trade commissions, and

annuity and mutual fund sales. Asset-based management

fees are charged based on the market value of the client’s

assets. The services associated with these revenues, which

include investment advice and active management of

client assets are generally performed and recognized over

a month or quarter. Transactional revenues are based on

the size and number of transactions executed at the

client’s direction and are generally recognized on the

trade date.

Trust Services and Investment Management

Trust services and investment management fees include

investment management, personal trust, employee

benefits, and custodial trust services. Obligations for trust

services are generally satisfied over time but may be

satisfied at points in time for certain activities that are

transactional in nature.

Card and Digital Banking Fees

Card and digital banking fees include credit interchange

and network revenues and various card-related fees.

Interchange income is recognized concurrently with the

delivery of services on a daily basis. Card-related fees such

as late fees, currency conversion, and cash advance fees

are loan-related and excluded from the scope of ASC 606.

Contract Balances

As of December 31, 2022, accounts receivable related to

products and services on non-interest income were

$6 million. For the year ended December 31, 2022, FHN

had no material impairment losses on non-interest

accounts receivable and there were no material contract

assets, contract liabilities or deferred contract

costs recorded on the Consolidated Balance Sheets as of

December 31, 2022. Credit risk is assessed on these

accounts receivable each reporting period and the amount

of estimated uncollectible receivables is not material.

Transaction Price Allocated to Remaining Performance

Obligations

For the year ended December 31, 2022, revenue

recognized from performance obligations related to prior

periods was not material. Revenue expected to be

recognized in any future year related to remaining

performance obligations, excluding revenue pertaining to

contracts that have an original expected duration of one

year or less and contracts where revenue is recognized as

invoiced, is not material.

Refer to Note 19 - Business Segment Information for a

reconciliation of disaggregated revenue by major product

line and reportable segment.

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Statements of Cash Flows

For purposes of these statements, cash and due from

banks, federal funds sold, and securities purchased under

agreements to resell are considered cash and cash

equivalents. Federal funds are usually sold for one-day

periods, and securities purchased under agreements to

resell are short-term, highly liquid investments.

Interest-Bearing Deposits With Banks

Interest-bearing deposits with banks primarily consist of

funds on deposit with the Federal Reserve and collateral

posted with derivative counterparties. Interest is earned

at overnight rates.

Debt Investment Securities

Debt securities that may be sold prior to maturity are

classified as AFS and are carried at fair value. The

unrealized gains and losses on debt securities AFS,

including securities for which no credit impairment exists,

are excluded from earnings and are reported, net of tax,

as a component of other comprehensive income within

shareholders’ equity and the Consolidated Statements of

Comprehensive Income. Debt securities which

management has the intent and ability to hold to maturity

are reported at amortized cost. Interest only strips were

classified in securities AFS and valued at elected fair value

in periods prior to October 1, 2021 at which time they

were transferred to trading securities. See Note 23 - Fair

Value of Assets and Liabilities for additional information.

Realized gains and losses (i.e., from sales) for debt

investment securities are determined by the specific

identification method and reported in noninterest income.

The evaluation of credit risk for HTM debt securities

mirrors the process described below for loans held for

investment. AFS debt securities are reviewed for potential

credit impairment at the individual security level. The

evaluation of credit risk includes consideration of third-

party and government guarantees (both explicit and

implicit), senior or subordinated status, credit ratings of

the issuer, the effects of interest rate changes since

purchase and observable market information such as

issuer-specific credit spreads. Credit losses for AFS debt

securities are generally recognized through establishment

of an allowance for credit losses that cannot exceed the

amount by which amortized cost exceeds fair value.

Charge-offs are recorded as reductions of the security’s

amortized cost and the credit allowance. Subsequent

improvements in estimated credit losses result in

reduction of the credit allowance, but not beyond zero.

However, if FHN has the intent to sell or if it is more-likely-

than-not that it will be compelled to sell a security with an

unrecognized loss, the difference between the security's

carrying value and fair value is recognized through

earnings and a new amortized cost basis is established for

the security (i.e., no allowance for credit losses is

recognized).

FHN has elected to exclude accrued interest receivable

from the fair value and amortized cost basis on debt

securities when assessing whether these securities have

experienced credit impairment. Additionally, FHN has

elected to not measure an allowance for credit losses on

AIR for debt securities based on its policy to write off

uncollectible interest in a timely manner, which generally

occurs when delinquency reaches no more than 90 days

for all security types. Any such write offs are recognized as

a reduction of interest income. AIR for debt securities is

included within other assets in the Consolidated Balance

Sheets.

Equity Investment Securities

Equity securities are classified in other assets. Banks

organized under state law may apply to be members of

the Federal Reserve System. Each member bank is

required to own stock in its regional Federal Reserve Bank.

Given this requirement, FRB stock may not be sold,

traded, or pledged as collateral for loans. Membership in

the Federal Home Loan Bank network requires ownership

of capital stock. Member banks are entitled to borrow

funds from the FHLB and are required to pledge mortgage

loans as collateral. Investments in the FHLB are non-

transferable and, generally, membership is maintained

primarily to provide a source of liquidity as needed. FRB

and FHLB stock are recorded at cost and are subject to

impairment reviews. FHN's subsidiary, First Horizon Bank,

was a state member bank throughout 2022.

Other equity investments primarily consist of mutual

funds which are marked to fair value through earnings.

Smaller balances of equity investments without a readily

determinable fair value are recorded at cost minus

impairment with adjustments through earnings for

observable price changes in orderly transactions for the

identical or a similar investment of the same issuer.

Federal Funds Sold and Purchased

Federal funds sold and purchased represent unsecured

overnight funding arrangements between participants in

the Federal Reserve system primarily to assist banks in

meeting their regulatory cash reserve requirements.

Federal Funds Sold are evaluated for credit risk each

reporting period. Due to the short duration of each

transaction and the history of no credit losses, no credit

loss has been recognized.

Securities Purchased Under Agreements to Resell and

Securities Sold Under Agreements to Repurchase

FHN purchases short-term securities under agreements to

resell which are accounted for as collateralized financings

except where FHN does not have an agreement to sell the

same or substantially the same securities before maturity

at a fixed or determinable price. All of FHN’s securities

purchased under agreements to resell are recognized as

collateralized financings. Securities delivered under these

transactions are delivered to either the dealer custody

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account at the FRB or to the applicable counterparty.

Securities sold under agreements to repurchase are

offered to cash management clients as an automated,

collateralized investment account. Securities sold under

agreements to repurchase are also used by the consumer/

commercial bank to obtain favorable borrowing rates on

its purchased funds. All of FHN's securities sold under

agreements to repurchase are secured borrowings.

Collateral is valued daily and FHN may require

counterparties to deposit additional securities or cash as

collateral, or FHN may return cash or securities previously

pledged by counterparties, or FHN may be required to

post additional securities or cash as collateral, based on

the contractual requirements for these transactions.

FHN’s fixed income business utilizes securities borrowing

arrangements as part of its trading operations. Securities

borrowing transactions generally require FHN to deposit

cash with the securities lender. The amount of cash

advanced is recorded within securities purchased under

agreements to resell in the Consolidated Balance Sheets.

These transactions are not considered purchases and the

securities borrowed are not recognized by FHN. FHN does

not conduct securities lending transactions.

Securities purchased under agreements to resell and

securities borrowing arrangements are evaluated for

credit risk each reporting period. As presented in Note 22 -

Master Netting and Similar Agreements - Repurchase,

Reverse Repurchase, and Securities Borrowing

Transactions, these agreements are collateralized by the

related securities and collateral maintenance provisions

with counterparties, including replenishment and

adjustment on a transaction specific basis. This collateral

includes both the securities collateral for each transaction

as well as offsetting securities sold under agreements to

repurchase with the same counterparty. Given the history

of no credit losses and collateralized nature of these

transactions, no credit loss has been recognized.

Loans Held for Sale

Loans originated or purchased for which management

lacks the intent to hold are included in loans held for sale

in the Consolidated Balance Sheets. FHN generally

accounts for loans held for sale at the lower of amortized

cost or market value, with an exception for certain

mortgage loans held for sale and repurchased loans that

are not governmentally insured which are accounted for

under the fair value option of reporting.

•Fair Value Option Election. These loans consist of

originated fixed rate single-family residential

mortgage loans that are committed to be sold in the

secondary market. Gains and losses on these

mortgage loans are included in mortgage banking and

title income.

•Other loans held for sale. For these loans, gains on

sale are recognized through noninterest income. Net

unrealized losses, if any, are recognized through a

valuation allowance that is also recorded as a charge

to noninterest income.

Loans and Leases

Generally, loans are stated at principal amounts

outstanding, net of unearned income. Interest on loans is

recognized on an accrual basis at the applicable interest

rate on the principal amount outstanding. Loan origination

fees and direct costs as well as premiums and discounts

are amortized as level yield adjustments over the

respective loan terms. Unamortized net fees or costs,

premiums and discounts are recognized in interest income

upon early repayment of the loans. Loan commitment

fees are generally deferred and amortized on a straight-

line basis over the commitment period.

Equipment financing leases to commercial clients are

primarily classified as direct financing and sales-type

leases. Equipment financing leases are reported at the net

lease investment, which represents the sum of minimum

lease payments over the lease term and the estimated

residual value, less unearned interest income. 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 and recognized as an

adjustment of the yield on the lease.

FHN has elected to exclude accrued interest receivable

from the amortized cost basis on its held-for-investment

loan portfolio. FHN has also elected to not measure an

allowance for credit losses on AIR for loans held for

investment based on its policy to write off uncollectible

interest in a timely manner, which occurs when a loan is

placed on nonaccrual status. Such write-offs are

recognized as a reduction of interest income. AIR for held-

for-investment loans is included within other assets in the

Consolidated Balance Sheets.

Nonaccrual and Past Due Loans

Generally, loans are placed on nonaccrual status if it

becomes evident that full collection of principal and

interest is at risk, impairment has been recognized as a

partial charge-off of principal balance due to insufficient

collateral value and past due status, or on a case-by-case

basis if FHN continues to receive payments, but there are

other borrower-specific issues. Consumer loans are

generally placed into nonaccrual status no later than 90

days past due.

•The accrual status policy for commercial TDRs follows

the same internal policies and procedures as other

commercial portfolio loans.

•Residential real estate loans discharged through

Chapter 7 bankruptcy and not reaffirmed by the

borrower (“discharged bankruptcies”) are placed on

nonaccrual and are reported as TDRs. They are not

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returned to accrual status even if current and

performing in the future.

•Current second lien residential real estate loans that

are junior to first liens are placed on nonaccrual

status if in bankruptcy.

•Consumer real estate (HELOC and residential real

estate installment loans), if not already on nonaccrual

per above situations, are placed on nonaccrual if the

loan is 30 or more days delinquent at the time of

modification and is also determined to be a TDR.

When commercial and consumer loans within each

portfolio segment and class are placed on nonaccrual

status, accrued but uncollected interest is reversed and

charged against interest income. Management may elect

to continue the accrual of interest when the estimated net

realizable value of collateral is sufficient to recover the

principal balance and accrued interest. Interest payments

received on nonaccrual loans are normally applied to

outstanding principal first. Once all principal has been

received, additional interest payments are recognized on a

cash basis as interest income.

Generally, commercial and consumer loans within each

portfolio segment and class that have been placed on

nonaccrual status can be returned to accrual status if all

principal and interest is current and FHN expects full

repayment of the remaining contractual principal and

interest. This typically requires that a borrower make

payments in accordance with the contractual terms for a

sustained period of time (generally for a minimum of six

months) before being returned to accrual status. For TDRs,

FHN may also consider a borrower’s sustained historical

repayment performance for a reasonable time prior to the

restructuring in assessing whether the borrower can meet

the restructured terms, as it may indicate whether the

borrower is capable of servicing the level of debt under

the modified terms.

Residential real estate loans discharged through Chapter 7

bankruptcy and not reaffirmed by the borrower are not

returned to accrual status. For current second liens that

have been placed on nonaccrual because the first lien is

90 or more days past due or is a TDR or bankruptcy, the

second lien may be returned to accrual upon pay-off or

cure of the first lien.

Charge-offs

For all commercial and consumer loan portfolio segments,

all losses of principal are charged to the ALLL in the period

in which the loan is deemed to be uncollectible.

For consumer loans, the timing of a full or partial charge-

off generally depends on the loan type and delinquency

status. Generally, for the consumer real estate segment, a

loan will be either partially or fully charged-off when it

becomes 180 days past due. At this time, if the collateral

value does not support foreclosure, balances are fully

charged-off and other avenues of recovery are pursued. If

the collateral value supports foreclosure, the loan is

charged-down to net realizable value (collateral value less

estimated costs to sell) and is placed on nonaccrual status.

For residential real estate loans discharged in Chapter 7

bankruptcy and not reaffirmed by the borrower, the fair

value of the collateral position is assessed at the time FHN

is made aware of the discharge and the loan is charged

down to the net realizable value (collateral value less

estimated costs to sell). Within the credit card and other

portfolio segment, credit cards are normally charged-off

upon reaching 180 days past due while other non-real

estate consumer loans are charged-off or partially

charged-off upon reaching 120 days past due.

For acquired PCD loans where all or a portion of the loan

balance had been charged off prior to acquisition, and for

which active collection efforts are still underway, the ALLL

recorded at acquisition is immediately charged off if

required by FHN’s existing charge off policy. Additionally,

FHN is required to consider its existing policies in

determining whether to charge off any financial assets,

regardless of whether a charge-off was recorded by the

predecessor company. The initial ALLL recognized on PCD

assets includes the gross-up of the loan balance reduced

by immediate charge-offs for loans previously charged off

by the predecessor company or which meet FHN’s charge-

off policy on the date of acquisition. Charge-offs against

the allowance related to such acquired PCD loans do not

result in an income statement impact.

Purchased Credit-Deteriorated Loans

At the time of acquisition FHN evaluates all acquired loans

to determine if they have experienced a more-than-

insignificant deterioration in credit quality since

origination. PCD loans can be identified on either an 1)

individual or 2) pooled basis when the loans share similar

risk characteristics. FHN evaluates various absolute factors

to assist in the identification of PCD loans, including

criteria such as, existing PCD status, risk rating of special

mention or lower, nonaccrual or impaired status,

identification of prior TDRs, and delinquency status. FHN

also utilizes relative factors to identify PCD loans such as

commercial loan grade migration, expansion of borrower

credit spreads, declines in external risk ratings and

changes in consumer loan characteristics (e.g., FICO

decline or LTV increase). In addition, factors reflective of

broad economic considerations are also considered in

identifying PCD loans. These include industry, collateral

type, and geographic location for the borrower’s

operations. Internal factors for origination of new loans

that are similar to the acquired loans are also evaluated to

assess loans for PCD status, including increases in required

yields, necessity of borrowers’ providing additional

collateral and/or guarantees and changes in acceptable

loan duration. Other indicators may also be used to

evaluate loans for PCD status depending on borrower-

specific communications and actions, such public

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statements, initiation of loan modification discussions and

obtaining emergency funding from alternate sources.

Upon acquisition, the expected credit losses are allocated

to the purchase price of individual PCD loans to determine

each individual asset's amortized cost basis, typically

resulting in a reduction of the discount that is accreted

prospectively to interest income. At the acquisition date

and prospectively, only the unpaid principal balance is

incorporated within the estimation of expected credit

losses for PCD loans. Otherwise, the process for

estimation of expected credit losses is consistent with that

discussed below. As discussed below FHN applies

undiscounted cash flow methodologies for the estimation

of expected credit losses, which results in the calculated

amount of credit losses at acquisition that is added to the

amortized cost basis of the related PCD loans to exceed

the discounted value of estimated credit losses included in

the loan valuation.

For PCD loans where all or a portion of the loan balance

has been previously written-off, or would be subject to

write-off under FHN’s charge-off policy, the initial ALLL

included as part of the grossed-up loan balance at

acquisition was immediately written-off, resulting in a

zero period-end allowance balance and no impact on the

ALLL rollforward.

Allowance for Credit Losses

The nature of the process by which FHN determines the

appropriate ACL requires the exercise of considerable

judgment. The ACL is determined in accordance with ASC

326-20 "Financial Instruments - Credit Losses" which was

adopted on January 1, 2020. See Note 4 - Allowance for

Credit Losses for a discussion of FHN’s ACL methodology

and a description of the models utilized in the estimation

process for the commercial and consumer loan portfolios.

Future adjustments to the ACL may be necessary if

economic or other conditions differ substantially from the

assumptions used in making the estimates or, if required

by regulators, based upon information at the time of their

examinations or upon future regulatory guidance. Such

adjustments to original estimates, as necessary, are made

in the period in which these factors and other relevant

considerations indicate that loss levels vary from previous

estimates.

Management's estimate of expected credit losses in the

loan and lease portfolio is recorded in the ALLL and the

reserve for unfunded lending commitments, collectively

the ACL. The ACL is maintained at a level that

management determines is sufficient to absorb current

expected credit losses in the loan and lease portfolio and

unfunded lending commitments. Management uses

analytical models to estimate expected credit losses in the

loan and lease portfolio and unfunded lending

commitments as of the balance sheet date. The models

are carefully reviewed to identify trends that may not be

captured in the modeled loss estimates. Management

uses qualitative adjustments for those items not reflected

in the modeled loss information such as recent changes

from the macroeconomic forecasts utilized in model

calculations, results of additional stressed modeling

scenarios, observed and/or expected changes affecting

borrowers in specific industries or geographic areas,

exposure to large lending relationships and expected

recoveries of prior charge offs. Qualitative adjustments

are also used to accommodate for the imprecision of

certain assumptions and uncertainties inherent in the

model calculations as well as to align certain differences in

models used by acquired loan portfolios to the

methodologies described herein. Loans accounted for at

elected fair value are excluded from CECL measurements.

The ALLL is increased by the provision for loan and lease

losses and is decreased by loan charge-offs. Credit loss

estimation is based on the amortized cost of loans, which

includes the following:

1.Unpaid principal balance for originated assets or

acquisition price for purchased assets

2.Accrued interest (see elections discussed previously)

3.Accretion or amortization of premium, discount, and

net deferred fees or costs

4.Collection of cash

5.Charge-offs

Premiums, discounts and net deferred origination costs/

fees affect the calculated amount of expected credit

losses but they are not considered when determining the

amount of expected credit losses that are recorded.

Under CECL, a loan must be pooled when it shares similar

risk characteristics with other loans. Loans that do not

share similar risk characteristics are evaluated individually.

Expected credit loss is estimated for the remaining life of

loan(s), which is limited to the remaining contractual

term(s), adjusted for prepayment estimates, which are

included as separate inputs into modeled loss estimates.

Renewals and extensions are not anticipated unless they

are included in existing loan documentation and are not

unconditionally cancellable by the lender. However, losses

are estimated over the estimated remaining life of

reasonably expected TDRs which can extend beyond the

current remaining contractual term.

Management has developed multiple current expected

credit losses models which segment the loan and lease

portfolio by borrower type and loan or lease type to

estimate expected lifetime expected credit losses for loans

and leases that share similar risk characteristics. Estimates

of expected credit losses incorporate consideration of

available information that is relevant to assessing the

collectability of future cash flows. This includes internal

and external information relating to past events, current

conditions and reasonable and supportable forecasts of

future conditions. FHN utilizes internal and external

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historical loss information, as applicable, for all available

historical periods as the initial point for estimating

expected credit losses. Given the duration of historical

information available, FHN considers its internal loss

history to fully incorporate the effects of prior credit

cycles. The historical loss information may be adjusted in

situations where current loan characteristics (e.g.,

underwriting criteria) differ from those in existence at the

time the historical losses occurred. Historical loss

information is also adjusted for differences in economic

conditions, macroeconomic forecasts and other factors

management considers relevant over a period extending

beyond the measurement date which is considered

reasonable and supportable.

FHN generally measures expected credit losses using

undiscounted cash flow methodologies. Credit

enhancements (e.g., guarantors) that are not freestanding

are considered in the estimation of uncollectible cash

flows. Estimation of expected credit losses for loan

agreements involving collateral maintenance provisions

include consideration of the value of the collateral and

replenishment requirements, with the maximum loss

limited to the difference between the amortized cost of

the loan and the fair value of the collateral. Expected

credit losses for loans for which foreclosure is probable

are measured at the fair value of collateral, less estimated

costs to sell when disposition through sale is anticipated.

Additionally, for borrowers experiencing financial difficulty

certain loans are valued at the fair value of collateral

when repayment is expected to be provided substantially

through the operation of the collateral. The fair value of

the collateral is reduced for estimated costs to sell when

repayment is expected through sale of the collateral.

Expected credit losses for TDRs are measured in

accordance with ASC 310-40, which generally requires a

discounted cash flow methodology, whereby the loans are

measured based on the present value of expected future

payments discounted at the loan’s original effective

interest rate.

Expected recoveries of previously charged-off amounts

are also included as a qualitative adjustment in the

estimation of expected credit losses, which reduces the

amount of the allowance recognized. Estimates of

recoveries on previously charged-off assets included in the

allowance for loan losses do not exceed the aggregate of

amounts previously written off and expected to be written

off for an individual loan or pool.

Since CECL requires the estimation of credit losses for the

entire expected life of loans, loss estimates are highly

sensitive to changes in macroeconomic forecasts,

especially when those forecasts change dramatically in

short time periods. Additionally, under CECL credit loss

estimates are more likely to increase rapidly in periods of

loan growth.

Expected credit losses for unfunded commitments are

estimated for periods where the commitment is not

unconditionally cancellable by FHN. The measurement of

expected credit losses for unfunded commitments mirrors

that of loans with the additional estimate of future draw

rates (timing and amount).The liability for credit losses

inherent in lending-related commitments, such as letters

of credit and unfunded loan commitments, is included in

other liabilities on the Consolidated Balance Sheets and

established through a charge to the provision for credit

losses.

Premises and Equipment

Premises and equipment are carried at cost less

accumulated depreciation and amortization and include

additions that materially extend the useful lives of existing

premises and equipment. All other maintenance and

repair expenditures are expensed as incurred. Premises

and equipment held for sale are generally valued at

appraised values which reference recent disposition

values for similar property types but also consider

marketability discounts for vacant properties. The

valuations of premises and equipment held for sale are

reduced by estimated costs to sell. Impairments, and any

subsequent recoveries, are recorded in noninterest

expense. Gains and losses on dispositions are reflected in

noninterest income and expense, respectively.

Depreciation and amortization are computed on the

straight-line method over the estimated useful lives of the

assets and are recorded as noninterest expense.

Leasehold improvements are amortized over the lesser of

the lease periods or the estimated useful lives using the

straight-line method. Useful lives utilized in determining

depreciation for furniture, fixtures and equipment and for

buildings are three years to fifteen years and seven years

to forty-five years, respectively.

Other Real Estate Owned

Real estate acquired by foreclosure or other real estate-

owned consists of properties that have been acquired in

satisfaction of debt. These properties are carried at the

lower of the outstanding loan amount or estimated fair

value less estimated costs to sell the real estate. At the

time acquired, and in conjunction with the transfer from

loans to OREO, there is a charge-off against the ALLL if the

estimated fair value less costs to sell is less than the loan’s

cost basis. Subsequent declines in fair value and gains or

losses on dispositions, if any, are charged to other

expense on the Consolidated Statements of Income.

Required developmental costs associated with acquired

property under construction are capitalized and included

in determining the estimated net realizable value of the

property, which is reviewed periodically, and any write-

downs are charged against current earnings.

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Goodwill and Other Intangible Assets

Goodwill represents the excess of cost over net assets of

acquired businesses less identifiable intangible assets. On

an annual basis, or more frequently if necessary, FHN

assesses goodwill for impairment. Other intangible assets

primarily represent client lists and relationships, acquired

contracts, covenants not to compete and premium on

purchased deposits, which are amortized over their

estimated useful lives. Intangible assets related to

acquired deposit bases are primarily amortized over 10

years using an accelerated method. Management

evaluates whether events or circumstances have occurred

that indicate the remaining useful life or carrying value of

amortizing intangibles should be revised. Other

intangibles also include smaller amounts of non-

amortizing intangibles for title plant and state banking

licenses.

Servicing Rights

FHN recognizes the rights to service mortgage and other

loans as separate assets, which are recorded in other

assets in the Consolidated Balance Sheets, when

purchased or when servicing is contractually separated

from the underlying loans by sale with servicing rights

retained. For loan sales with servicing retained, a servicing

right, generally an asset, is recorded at fair value at the

time of sale for the right to service the loans sold. All

servicing rights are identified by class and amortized over

the remaining life of the loan with periodic reviews for

impairment.

Transfers of Financial Assets

Transfers of financial assets, or portions thereof which

meet the definition of a participating interest, are

accounted for as sales when control over the assets has

been surrendered. Control over transferred assets is

deemed to be surrendered when 1) the assets have been

legally isolated from FHN, 2) the transferee has the right

to pledge or exchange the assets with no conditions that

constrain the transferee and provide more than a trivial

benefit to FHN, and 3) FHN does not maintain effective

control over the transferred assets. If the transfer does

not satisfy all three criteria, the transaction is recorded as

a secured borrowing. If the transfer is accounted for as a

sale, the transferred assets are derecognized from FHN’s

balance sheet and a gain or loss on sale is recognized. If

the transfer is accounted for as a secured borrowing, the

transferred assets remain on FHN’s balance sheet and the

proceeds from the transaction are recognized as a liability.

Derivative Financial Instruments

FHN accounts for derivative financial instruments in

accordance with ASC 815 which requires recognition of all

derivative instruments on the balance sheet as either an

asset or liability measured at fair value through

adjustments to either accumulated other comprehensive

income within shareholders’ equity or current earnings.

Fair value is defined as the price that would be received to

sell a derivative asset or paid to transfer a derivative

liability in an orderly transaction between market

participants on the transaction date. Fair value is

determined using available market information and

appropriate valuation methodologies. FHN has elected to

present its derivative assets and liabilities gross on the

Consolidated Balance Sheets. Amounts of collateral

posted or received have not been netted with the related

derivatives unless the collateral amounts are considered

legal settlements of the related derivative positions. See

Note 21 - Derivatives for discussion on netting of

derivatives.

FHN prepares written hedge documentation, identifying

the risk management objective and designating the

derivative instrument as a fair value hedge or cash flow

hedge as applicable, or as a free-standing derivative

instrument entered into as an economic hedge or to meet

clients’ needs. All transactions designated as ASC 815

hedges must be assessed at inception and on an ongoing

basis as to the effectiveness of the derivative instrument

in offsetting changes in fair value or cash flows of the

hedged item. For a fair value hedge, changes in the fair

value of the derivative instrument and changes in the fair

value of the hedged asset or liability attributable to the

hedged risk are recognized currently in earnings. For a

cash flow hedge, changes in the fair value of the derivative

instrument are recorded in accumulated other

comprehensive income and subsequently reclassified to

earnings as the hedged transaction impacts net income.

For fair value hedges, the entire change in the fair value of

the hedging instrument included in the assessment of

effectiveness is recorded to the same financial statement

line item (e.g., interest expense) used to present the

earnings effect of the hedged item. For cash flow hedges,

the entire fair value change of the hedging instrument

that is included in the assessment of hedge effectiveness

is initially recorded in other comprehensive income and

later recycled into earnings as the hedged transaction(s)

affect net income with the income statement effects

recorded in the same financial statement line item used to

present the earnings effect of the hedged item (e.g.,

interest income). For free-standing derivative instruments,

changes in fair values are recognized currently in earnings.

See Note 21 - Derivatives for additional information.

Cash flows from derivative contracts are reported as

operating activities on the Consolidated Statements of

Cash Flows.

Leases

At inception, all arrangements are evaluated to determine

if they contain a lease, which is defined as a contract, or

part of a contract, that conveys the right to control the

use of identified property, plant, or equipment for a

period of time in exchange for consideration. Control is

deemed to exist when a lessor has granted and a lessee

has received both the right to obtain substantially all of

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	126	2022 FORM 10-K ANNUAL REPORT

the economic benefits from use of the identified asset and

the right to direct the use of the identified asset

throughout the period of use.

Lessee

As a lessee, FHN recognizes lease (right-of-use) assets and

lease liabilities for all leasing arrangements with lease

terms that are greater than one year. The lease asset and

lease liability are recognized at the present value of

estimated future lease payments, including estimated

renewal periods, with the discount rate reflecting a fully-

collateralized rate matching the estimated lease term.

Renewal options are included in the estimated lease term

if they are considered reasonably certain of exercise.

Periods covered by termination options are included in

the lease term if it is reasonably certain they will not be

exercised. Additionally, prepaid or accrued lease

payments, lease incentives and initial direct costs related

to lease arrangements are recognized within the right-of-

use asset. Each lease is classified as a financing or

operating lease which depends on the relationship of the

lessee’s rights to the economic value of the leased asset.

For finance leases, interest on the lease liability is

recognized separately from amortization of the right-of-

use asset in earnings, resulting in higher expense in the

earlier portion of the lease term. For operating leases, a

single lease cost is calculated so that the cost of the lease

is allocated over the lease term on a generally straight-line

basis. Substantially all of FHN’s lessee arrangements are

classified as operating leases. For leases with a term of 12

months or less, FHN does not to recognize lease assets

and lease liabilities and expense is generally recognized on

a straight-line basis over the lease term.

Lease assumptions and classification are reassessed upon

the occurrence of events that result in changes to the

estimated lease term or consideration. Modifications to

lease contracts are evaluated to determine 1) if a right to

use an additional asset has been obtained, 2) if only the

lease term and/or consideration have been revised or 3) if

a full or partial termination has occurred. If an additional

right-of use-asset has been obtained, the modification is

treated as a separate contract and its classification is

evaluated as a new lease arrangement. If only the lease

term or consideration are changed, the lease liability is

revalued with an offset to the lease asset and the lease

classification is re-assessed. If a modification results in a

full or partial termination of the lease, the lease liability is

revalued through earnings along with a proportionate

reduction in the value of the related lease asset and

subsequent expense recognition is similar to a new lease

arrangement.

Lease assets are evaluated for impairment when triggering

events occur, such as a change in management intent

regarding the continued occupation of the leased space. If

a lease asset is impaired, it is written down to the present

value of estimated future cash flows and the prospective

expense recognition for that lease follows the accelerated

expense recognition methodology applicable to finance

leases, even if it remains classified as an operating lease.

Sublease arrangements are accounted for consistent with

the lessor accounting described below. Sublease

arrangements are evaluated to determine if changes to

estimates for the primary lease are warranted or if the

sublease terms reflect impairment of the related lease

asset.

Lease assets are recognized in other assets and lease

liabilities are recognized in other liabilities in the

Consolidated Balance Sheets. Since substantially all of its

leasing arrangements relate to real estate, FHN records

lease expense, and any related sublease income, within

Occupancy expense in the Consolidated Statements of

Income.

Lessor

As a lessor, FHN also evaluates its lease arrangements to

determine whether a finance lease or an operating lease

exists and utilizes the rate implicit in the lease

arrangement as the discount rate to calculate the present

value of future cash flows. Depending upon the terms of

the individual agreements, finance leases represent either

sales-type or direct financing leases, both of which require

de-recognition of the asset being leased with offsetting

recognition of a lease receivable that is evaluated for

impairment similar to loans. Other than equipment lease

entered into as part of commercial lease financing

arrangements, all of FHN's lessor arrangements are

considered operating leases.

Lease income for operating leases is recognized over the

life of the lease, generally on a straight-line basis. Lease

incentives and initial direct costs are capitalized and

amortized over the estimated life of the lease. Lease

income is not significant for any reporting periods and is

classified as a reduction of net occupancy expense in the

Consolidated Statements of Income.

Investment Tax Credit

FHN has elected to utilize the deferral method for

acquired investments that generate investment tax

credits. This includes both solar and historic tax credit

investments. Under this approach the investment tax

credits are recorded as an offset to the related investment

on the balance sheet. Credit amounts are recognized in

earnings over the life of the investment within the same

income or expense accounts as used for the investment.

Advertising and Public Relations

Advertising and public relations costs are generally

expensed as incurred.

Income Taxes

FHN accounts for income taxes using the asset and liability

method pursuant to ASC 740, “Income Taxes,” which

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	127	2022 FORM 10-K ANNUAL REPORT

requires the recognition of deferred tax assets and

liabilities for the expected future tax consequences of

events that have been included in the financial

statements. Under this method, FHN’s deferred tax assets

and liabilities are determined based on differences

between financial statement carrying amounts and the

corresponding tax basis of certain assets and liabilities

using enacted tax rates in effect for the year in which the

differences are expected to reverse. The effect of a

change in tax rates on DTAs and DTLs is recognized in

income in the period that includes the enactment date.

Additionally, DTAs are subject to a “more likely than not”

test to determine whether the full amount of the DTAs

should be recognized in the financial statements. 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. If the “more likely than

not” test is not met, a valuation allowance must be

established against the DTA. In the event FHN determines

that DTAs are realizable in the future in excess of their net

recorded amount, FHN would make an adjustment to the

valuation allowance, which would reduce income tax

expense.

FHN records uncertain tax positions in accordance with

ASC 740 on the basis of a two-step process in which (1) it

is determined whether it is more likely than not that the

tax positions will be sustained on the basis of the technical

merits of the position and (2) for those tax positions that

meet the more-likely-than-not recognition threshold, the

largest amount of tax benefit that is more than 50 percent

likely to be realized upon ultimate settlement with the

related tax authority is recognized. FHN's ASC 740 policy is

to recognize interest and penalties related to

unrecognized tax benefits as a component of income tax

expense. Accrued interest and penalties are included

within the related tax asset/liability line in the

Consolidated Balance Sheet.

FHN and its eligible subsidiaries are included in a

consolidated federal income tax return. FHN files separate

returns for subsidiaries that are not eligible to be included

in a consolidated federal income tax return. Based on the

laws of the applicable state where it conducts business

operations, FHN either files consolidated, combined, or

separate returns.

Earnings per Share

Earnings per share is computed by dividing net income or

loss available to common shareholders by the weighted

average number of common shares outstanding for each

period. Diluted earnings per share in net income periods is

computed by dividing net income available to common

shareholders by the weighted average number of

common shares outstanding adjusted to include the

number of additional common shares that would have

been outstanding if the potential dilutive common shares

resulting from performance shares and units, restricted

shares and units, and options granted under FHN’s equity

compensation plans and deferred compensation

arrangements had been issued. FHN utilizes the treasury

stock method in this calculation. Diluted earnings per

share does not reflect an adjustment for potentially

dilutive shares in periods in which a net loss available to

common shareholders exists.

Equity Compensation

FHN accounts for its employee stock-based compensation

plans using the grant date fair value of an award to

determine the expense to be recognized over the life of

the award. Stock options are valued using an option-

pricing model, such as Black-Scholes. Restricted and

performance shares and share units are valued at the

stock price on the grant date. For awards with service

vesting criteria, expense is recognized using the straight-

line method over the requisite service period (generally

the vesting period). Forfeitures are recognized when they

occur. For awards vesting based on a performance

measure, anticipated performance is projected to

determine the number of awards expected to vest, and

the corresponding aggregate expense is adjusted to reflect

the elapsed portion of the performance period. If a

performance period extends beyond the required service

term, total expense is adjusted for changes in estimated

achievement through the end of the performance period.

Some performance awards include a total shareholder

return modifier (“TSR Modifier”) that operates after

determination of the performance criteria, affecting only

the quantity of awards issued if the minimum

performance threshold is attained. The effect of the TSR

Modifier is included in the grant date fair value of the

related performance awards using a Monte Carlo

valuation technique. The fair value of equity awards with

cash payout requirements, as well as awards for which fair

value cannot be estimated at grant date, is remeasured

each reporting period through vesting date. Performance

awards with pre-grant date achievement criteria are

expensed over the period from the start of the

performance period through the end of the service vesting

term. Awards are amortized using the nonsubstantive

vesting methodology which requires that expense

associated with awards having only service vesting criteria

that continue vesting after retirement be recognized over

a period ending no later than an employee’s retirement

eligibility date.

Phantom stock awards are accounted for as liability

awards and are remeasured at each reporting period

based on changes in their fair value, which is based on

changes in common share prices, until the date of cash

settlement. Compensation cost for each reporting period

until settlement is based on the change (or a portion of

the change, depending on the percentage of the requisite

service that has been rendered at the reporting date) in

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	128	2022 FORM 10-K ANNUAL REPORT

the fair value of the phantom stock award for each

reporting period.

Repurchase and Foreclosure Provision

The repurchase and foreclosure provision is the charge to

earnings necessary to maintain the liability at a level that

reflects management’s best estimate of losses associated

with the repurchase of loans previously transferred in

whole loans sales or securitizations, or make whole

requests as of the balance sheet date. See Note 16 -

Contingencies and Other Disclosures for discussion related

to FHN’s obligations to repurchase such loans.

Legal Costs

Generally, legal costs are expensed as incurred. Costs

related to equity issuances are netted against capital

surplus. Costs related to debt issuances are included in

debt issuance costs that are recorded within term

borrowings.

Contingency Accruals

Contingent liabilities arise in the ordinary course of

business, including those related to lawsuits, arbitration,

mediation, and other forms of litigation. FHN establishes

loss contingency liabilities for matters when loss is both

probable and reasonably estimable in accordance with

ASC 450-20-50 “Contingencies - Accruals for Loss

Contingencies”. If loss for a matter is probable and a range

of possible loss outcomes is the best estimate available,

accounting guidance generally requires a liability to be

established at the low end of the range. Expected

recoveries from insurance and indemnification

arrangements are recognized if they are considered

equally as probable and reasonably estimable as the

related loss contingency up to the recognized amount of

the estimated loss. Gain contingencies and expected

recoveries from insurance and indemnification

arrangements in excess of the associated recorded

estimated losses are generally recognized when received.

Recognized recoveries are recorded as offsets to the

related expense in the Consolidated Statements of

Income. The favorable resolution of a gain contingency

generally results in the recognition of other income in the

Consolidated Statements of Income. Contingencies

assumed in business combinations are evaluated through

the end of the one-year post-closing measurement

period.  If the acquisition-date fair value of the

contingency can be determined during the measurement

period, recognition occurs as part of the acquisition-date

fair value of the acquired business. If the acquisition-date

fair value of the contingency cannot be determined, but

loss is considered probable as of the acquisition date and

can be reasonably estimated within the measurement

period, then the estimated amount is recorded within

acquisition accounting. If the requirements for inclusion of

the contingency as part of the acquisition are not met,

subsequent recognition of the contingency is included in

earnings.

Business Combinations

Assets and liabilities acquired in business combinations

are generally recognized at their fair values as of the

acquisition date, with the related transaction costs

expensed in the period incurred. Specified items such as

net investment in leases as lessor, acquired operating

lease assets and liabilities as lessee, employee benefit

plans and income-tax related balances are recognized in

accordance with accounting guidance that results in

measurements that may differ from fair value.  FHN may

record provisional amounts at the time of acquisition

based on available information. The provisional valuation

estimates may be adjusted for a period of up to one year

(“measurement period”) from the date of acquisition if

new information is obtained about facts and

circumstances that existed as of the acquisition date that,

if known, would have affected the measurement of the

amounts recognized as of that date. Business

combinations are included in the financial statements

from the respective dates of acquisition. Adjustments

recorded during the measurement period are recognized

in the current reporting period.

The excess of purchase price over the valuation of

specifically identified assets and liabilities is recorded as

goodwill. In certain circumstances the net values of assets

and liabilities acquired may exceed the purchase price,

which is recognized within non-interest income as a

purchase accounting gain.

Accounting Changes With Extended Transition Periods

In March 2020, the FASB issued ASU 2020-04, “Facilitation

of the Effects of Reference Rate Reform on Financial

Reporting” which provides several optional expedients

and exceptions to ease the potential burden in accounting

for (or recognizing the effects of) reference rate reform on

financial reporting. The provisions of ASU 2020-04

primarily affect 1) contract modifications (e.g., loans,

leases, debt, and derivatives) made in anticipation that a

reference rate (e.g., LIBOR) will be discontinued and 2) the

application of hedge accounting for existing relationships

affected by those modifications. The provisions of ASU

2020-04 are effective upon release and apply only to

contracts, hedging relationships, and other transactions

that reference LIBOR or another reference rate expected

to be discontinued because of reference rate reform. 

Including the adoption of ASU 2022-06 (discussed below),

the expedients and exceptions provided by ASU 2020-04

do not apply to contract modifications made and hedging

relationships entered into or evaluated after December

31, 2024, except for hedging relationships existing as of

December 31, 2024, that an entity has elected certain

optional expedients for and that are retained through the

end of the hedging relationship.

FHN has identified contracts affected by reference rate

reform and developed modification plans for those

contracts. FHN has elected to utilize the optional

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	129	2022 FORM 10-K ANNUAL REPORT

expedients and exceptions provided by ASU 2020-04 for

certain contract modifications that have already been

implemented. For cash flow hedges that reference 1-

Month USD LIBOR, FHN has applied expedients related to

1) the assumption of probability of cash flows when

reference rates are changed on hedged items 2) avoiding

de-designation when critical terms (i.e., reference rates)

change and 3) the allowed assumption of shared risk

exposure for hedged items. For its 2022 cash flow hedges

that reference 1-Month Term SOFR, FHN has applied

expedients related to 1) the allowed assumption of shared

risk exposure for hedged items and 2) multiple allowed

assumptions of conformity between hedged items and the

hedging instrument when assessing effectiveness. FHN

anticipates that it will continue to utilize the expedients

and exceptions for future modifications in situations

where they mitigate potential accounting outcomes that

do not faithfully represent management’s intent or risk

management activities, consistent with the purpose of the

standard.

In December 2022, the FASB issued ASU 2022-06,

"Deferral of the Sunset Date of Topic 848" which extends

the transition window for ASU 2020-04 from December

31, 2022 to December 31, 2024, consistent with key USD

LIBOR tenors continuing to be published through June 30,

2023.

In January 2021, the FASB issued ASU 2021-01, "Scope" to

expand the scope of ASU 2020-04 to apply to certain

contract modifications that were implemented in October

2020 by derivative clearinghouses for the use of Secure

Overnight Funding Rate (SOFR) in discounting, margining

and price alignment for centrally cleared derivatives,

including derivatives utilized in hedging relationships. ASU

2021-01 also applies to derivative contracts affected by

the change in discounting convention regardless of

whether they are centrally cleared (i.e., bi-lateral

contracts can also be modified) and regardless of whether

they reference LIBOR. ASU 2021-01 was effective

immediately upon issuance with retroactive application

permitted. FHN elected to retroactively apply the

provisions of ASU 2021-01 because FHN's centrally cleared

derivatives were affected by the change in discounting

convention and because FHN has other bi-lateral

derivative contracts that may be modified to conform to

the use of SOFR for discounting. Adoption did not have a

significant effect on FHN's reported financial condition or

results of operations.

Accounting Changes Issued But Not Currently Effective

ASU 2022-01

In March 2022, the FASB issued ASU 2022-01, "Fair Value

Hedging - Portfolio Layer Method", which will expand

FHN's ability to hedge the benchmark interest rate risk of

portfolios of financial interests (or beneficial interests) in a

fair value hedge. The provisions of ASU 2022-01 also

permit FHN to apply the same portfolio hedging method

to both prepayable and non-prepayable financial assets,

namely by expanding the use of the "portfolio layer"

method to non-prepayable financial assets. ASU 2022-01

also permits multiple hedged layers to be designated as a

single closed portfolio to achieve hedge accounting.

Additionally, the ASU requires that basis adjustments

must be maintained on the closed portfolio of assets as a

whole, and not allocated to individual assets for active

portfolio layer method hedges.

ASU 2022-01 is effective for fiscal years beginning after

December 15, 2022, including interim periods within those

fiscal years. Early adoption is permitted. FHN is evaluating

the impact of ASU 2022-01 on its future hedging

strategies.

ASU 2022-02

In March 2022, the FASB issued ASU 2022-02, “Troubled

Debt Restructurings and Vintage Disclosures” that

eliminates current TDR recognition and measurement

guidance and instead requires the Company to evaluate

whether the modification represents a new loan or a

continuation of an existing loan (which is consistent with

the accounting for other loan modifications). The

provisions of ASU 2022-02 also enhance existing

disclosure requirements and introduces new disclosures

related to certain modifications made to borrowers

experiencing financial difficulty. The provisions of this ASU

also require FHN to disclose current period gross write-

offs of loans and leases by year of origination. 

ASU 2022-02 is effective for fiscal years beginning after

December 15, 2022, including interim periods within those

fiscal years. Early adoption is permitted. For the transition

method related to the recognition and measurement of

TDRs, FHN has the option to apply a modified

retrospective transition, resulting in a cumulative-effect

adjustment to retained earnings in the period of adoption.

Otherwise, provisions in this ASU will be applied

prospectively. Effective January 1, 2023, FHN elected the

modified retrospective transition method which resulted

in a reduction in ALLL of $6 million and an increase to

retained earnings of $4 million, net of tax.

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	130	2022 FORM 10-K ANNUAL REPORT

Note 2—Investment Securities

The following table summarizes FHN’s investment securities as of December 31, 2022 and 2021:

Table 8.2.1

INVESTMENT SECURITIES

		December 31, 2022
(Dollars in millions)		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities available for sale:
Government agency issued MBS		$5,457		$1		$(695)		$4,763
Government agency issued CMO		2,682		—		(369)		2,313
Other U.S. government agencies		1,325		—		(162)		1,163
States and municipalities		658		1		(62)		597
Total securities available for sale (a)		$10,122		$2		$(1,288)		$8,836
Securities held to maturity:
Government agency issued MBS		$897		$—		$(109)		$788
Government agency issued CMO		474		—		(53)		421
Total securities held to maturity		$1,371		$—		$(162)		$1,209

(a)Includes $6.5 billion of securities pledged to secure public deposits, securities sold under agreements to repurchase, and for other purposes.

		December 31, 2021
(Dollars in millions)		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities available for sale:
Government agency issued MBS		$5,062		$42		$(49)		$5,055
Government agency issued CMO		2,296		8		(47)		2,257
Other U.S. government agencies		861		4		(15)		850
States and municipalities		535		11		(1)		545
Total securities available for sale (a)		$8,754		$65		$(112)		$8,707
Securities held to maturity:
Government agency issued MBS		$509		$—		$(5)		$504
Government agency issued CMO		203		—		(2)		201
Total securities held to maturity		$712		$—		$(7)		$705

(a)Includes $6.5 billion of securities pledged to secure public deposits, securities sold under agreements to repurchase, and for other purposes.

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	131	2022 FORM 10-K ANNUAL REPORT

The amortized cost and fair value by contractual maturity for the debt securities portfolio as of December 31, 2022 is provided

below:

Table 8.2.2

DEBT SECURITIES PORTFOLIO MATURITIES 

		Held to Maturity				Available for Sale
(Dollars in millions)		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Within 1 year		$—		$—		$43		$43
After 1 year through 5 years		—		—		120		115
After 5 years through 10 years		—		—		394		354
After 10 years		—		—		1,426		1,248
Subtotal		—		—		1,983		1,760
Government agency issued MBS and CMO (a)		1,371		1,209		8,139		7,076
Total		$1,371		$1,209		$10,122		$8,836

(a)Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or

prepayment penalties.

Gross gains on sales of AFS securities for the years ended

December 31, 2022, 2021 and 2020 were insignificant.

Gross losses on sales of AFS securities were insignificant

for the years ended December 31, 2022, and 2021, and

$4 million for the year ended 2020. Cash proceeds from

sales of AFS securities were insignificant for 2022 and

were $68 million and $629 million for 2021 and 2020,

respectively. 

The following table provides information on investments

within the available-for-sale portfolio that had unrealized

losses as of December 31, 2022 and 2021:

Table 8.2.3

AFS INVESTMENT SECURITIES WITH UNREALIZED LOSSES  

		As of December 31, 2022
		Less than 12 months				12 months or longer				Total
(Dollars in millions)		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Government agency issued MBS		$2,314		$(249)		$2,350		$(446)		$4,664		$(695)
Government agency issued CMO		1,104		(123)		1,209		(246)		2,313		(369)
Other U.S. government agencies		643		(67)		424		(95)		1,067		(162)
States and municipalities		493		(48)		54		(14)		547		(62)
Total		$4,554		$(487)		$4,037		$(801)		$8,591		$(1,288)

		As of December 31, 2021
		Less than 12 months				12 months or longer				Total
(Dollars in millions)		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Government agency issued MBS		$2,973		$(41)		$184		$(8)		$3,157		$(49)
Government agency issued CMO		1,436		(37)		248		(10)		1,684		(47)
Other U.S. government agencies		459		(11)		90		(4)		549		(15)
States and municipalities		68		(1)		—		—		68		(1)
Total		$4,936		$(90)		$522		$(22)		$5,458		$(112)

FHN has evaluated all AFS debt securities that were in

unrealized loss positions in accordance with its accounting

policy for recognition of credit losses. No AFS debt

securities were determined to have credit losses. Total AIR

not included in the fair value or amortized cost basis of

AFS debt securities was $32 million and $23 million as of

December 31, 2022 and 2021, respectively. Consistent

with FHN's review of the related securities, there were no

credit-related write downs of AIR for AFS debt securities

during the reporting periods. Additionally, for AFS debt

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	132	2022 FORM 10-K ANNUAL REPORT

securities with unrealized losses, FHN does not intend to

sell them and it is more-likely-than-not that FHN will not

be required to sell them prior to recovery. Therefore, no

write downs of these investments to fair value occurred

during the reporting periods.

For HTM securities, an allowance for credit losses is

required to absorb estimated lifetime credit losses. Total

AIR not included in the fair value or amortized cost basis

of HTM debt securities was $3 million and $1 million as of

December 31, 2022 and 2021, respectively. FHN has

assessed the risk of credit loss and has determined that no

allowance for credit losses for HTM securities was

necessary as of December 31, 2022 and 2021. The

evaluation of credit risk includes consideration of third-

party and government guarantees (both explicit and

implicit), senior or subordinated status, credit ratings of

the issuer, the effects of interest rate changes since

purchase and observable market information such as

issuer-specific credit spreads.

The carrying amount of equity investments without a

readily determinable fair value was $79 million and $70

million at December 31, 2022 and 2021, respectively. The

year-to-date 2022 and 2021 gross amounts of upward and

downward valuation adjustments were not significant.

Unrealized losses of $11 million and unrealized gains of

$3 million and $7 million were recognized during 2022,

2021 and 2020, respectively, for equity investments with

readily determinable fair values.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
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	133	2022 FORM 10-K ANNUAL REPORT

Note 3—Loans and Leases

The loan and lease portfolio is disaggregated into portfolio

segments and then further disaggregated into classes for

certain disclosures. GAAP defines a portfolio segment as

the level at which an entity develops and documents a

systematic method for determining its allowance for

credit losses. A class is generally a disaggregation of a

portfolio segment and is generally determined based on

risk characteristics of the loan and FHN’s method for

monitoring and assessing credit risk and performance.

FHN's loan and lease portfolio segments are commercial

and consumer. The classes of loans and leases are: (1)

commercial, financial, and industrial, which includes

commercial and industrial loans and leases and loans to

mortgage companies, (2) commercial real estate, (3)

consumer real estate, which includes both real estate

installment and home equity lines of credit, and (4) credit

card and other.

The following table provides the amortized cost basis of

loans and leases by portfolio segment and class as of

December 31, 2022 and 2021, excluding accrued interest

of $226 million and $134 million, respectively, which is

included in other assets in the Consolidated Balance

Sheets. 

Table 8.3.1

LOANS AND LEASES BY PORTFOLIO SEGMENT

		December 31,
(Dollars in millions)		2022		2021
Commercial:
Commercial and industrial (a) (b)		$29,523		$26,550
Loans to mortgage companies		2,258		4,518
Total commercial, financial, and industrial		31,781		31,068
Commercial real estate		13,228		12,109
Consumer:
HELOC		2,028		1,964
Real estate installment loans		10,225		8,808
Total consumer real estate		12,253		10,772
Credit card and other		840		910
Loans and leases		$58,102		$54,859
Allowance for loan and lease losses		(685)		(670)
Net loans and leases		$57,417		$54,189

(a)Includes equipment financing leases of $1.1 billion and $792 million, respectively, as of December 31, 2022 and 2021.

(b)  Includes PPP loans fully guaranteed by the SBA of $76 million and $1.0 billion as of December 31, 2022 and 2021.

Restrictions

Loans and leases with carrying values of $38.3 billion and

$36.6 billion were pledged as collateral for borrowings at

December 31, 2022 and 2021, respectively.

Concentrations of Credit Risk

Most of the FHN’s business activity is with clients located

in the southern United States. FHN’s lending activity is

concentrated in its market areas within those states. As of

December 31, 2022, FHN had loans to mortgage

companies of $2.3 billion and loans to finance and

insurance companies of $4.1 billion. As a result, 20% of

the C&I portfolio is sensitive to impacts on the financial

services industry.

Credit Quality Indicators

FHN employs a dual grade commercial risk grading

methodology to assign an estimate for the probability of

default and the loss given default for each commercial

loan using factors specific to various industry, portfolio, or

product segments that result in a rank ordering of risk and

the assignment of grades PD 1 to PD 16. This credit

grading system is intended to identify and measure the

credit quality of the loan and lease portfolio by analyzing

the migration between grading categories. It is also

integral to the estimation methodology utilized in

determining the ALLL since an allowance is established for

pools of commercial loans based on the credit grade

assigned. Each PD grade corresponds to an estimated one-

year default probability percentage. PD grades are

continually evaluated, but require a formal scorecard

annually.

PD 1 through PD 12 are “pass” grades. PD grades 13-16

correspond to the regulatory-defined categories of special

mention (13), substandard (14), doubtful (15), and loss

(16). Special mention commercial loans and leases have

potential weaknesses that, if left uncorrected, may result

in deterioration of FHN's credit position at some future

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
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	134	2022 FORM 10-K ANNUAL REPORT

date. Substandard commercial loans and leases have well-

defined weaknesses and are characterized by the distinct

possibility that FHN will sustain some loss if the

deficiencies are not corrected. Doubtful commercial loans

and leases have the same weaknesses as substandard

loans and leases with the added characteristics that the

probability of loss is high and collection of the full amount

is improbable.

The following table provides the amortized cost basis of

the commercial loan portfolio by year of origination and

credit quality indicator as of December 31, 2022 and 2021:

Table 8.3.2

C&I PORTFOLIO

		December 31, 2022
(Dollars in millions)		2022		2021		2020		2019		2018		Prior to 2018		LMC (a)		Revolving Loans		Revolving Loans Converted to Term Loans		Total
Credit Quality Indicator:
Pass (PD grades 1 through 12) (b)		$5,856		$4,040		$1,980		$2,099		$1,229		$3,710		$2,258		$9,165		$371		$30,708
Special Mention (PD grade 13)		19		63		19		141		9		90		—		126		—		467
Substandard, Doubtful, or Loss (PD grades 14,15, and 16)		41		54		51		38		67		124		—		134		97		606
Total C&I loans		$5,916		$4,157		$2,050		$2,278		$1,305		$3,924		$2,258		$9,425		$468		$31,781

		December 31, 2021
(Dollars in millions)		2021		2020		2019		2018		2017		Prior to 2017		LMC (a)		Revolving Loans		Revolving Loans Converted to Term Loans		Total
Credit Quality Indicator:
Pass (PD grades 1 through 12) (b)		$7,372		$3,576		$3,439		$1,455		$1,193		$2,267		$4,518		$6,386		$13		$30,219
Special Mention (PD grade 13)		25		39		50		48		36		43		—		100		4		345
Substandard, Doubtful, or Loss (PD grades 14,15, and 16)		24		61		67		103		24		48		—		129		48		504
Total C&I loans		$7,421		$3,676		$3,556		$1,606		$1,253		$2,358		$4,518		$6,615		$65		$31,068

(a)LMC includes non-revolving commercial lines of credit to qualified mortgage companies primarily for the temporary warehousing of eligible mortgage

loans prior to the borrower's sale of those mortgage loans to third party investors. The loans are of short duration with maturities less than one year.

(b)Includes PPP loans.

Table 8.3.3

CRE PORTFOLIO

		December 31, 2022
(Dollars in millions)		2022		2021		2020		2019		2018		Prior to 2018		Revolving Loans		Revolving Loans Converted to Term Loans		Total
Credit Quality Indicator:
Pass (PD grades 1 through 12)		$2,637		$3,324		$1,488		$1,855		$808		$2,565		$274		$20		$12,971
Special Mention (PD grade 13)		—		3		3		37		68		5		1		—		117
Substandard, Doubtful, or Loss (PD grades 14,15, and 16)		1		4		12		50		31		31		11		—		140
Total CRE loans		$2,638		$3,331		$1,503		$1,942		$907		$2,601		$286		$20		$13,228

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 3—LOANS & LEASES

   

	135	2022 FORM 10-K ANNUAL REPORT

		December 31, 2021
(Dollars in millions)		2021		2020		2019		2018		2017		Prior to 2017		Revolving Loans		Revolving Loans Converted to Term Loans		Total
Credit Quality Indicator:
Pass (PD grades 1 through 12)		$3,441		$2,065		$2,514		$929		$691		$1,822		$204		$—		$11,666
Special Mention (PD grade 13)		4		26		52		125		20		65		—		—		292
Substandard, Doubtful, or Loss (PD grades 14,15, and 16)		47		—		24		3		33		32		12		—		151
Total CRE loans		$3,492		$2,091		$2,590		$1,057		$744		$1,919		$216		$—		$12,109

The consumer portfolio is comprised primarily of smaller-

balance loans which are very similar in nature in that most

are standard products and are backed by residential real

estate. Because of the similarities of consumer loan types,

FHN is able to utilize the FICO score, among other

attributes, to assess the credit quality of consumer

borrowers. FICO scores are refreshed on a quarterly basis

in an attempt to reflect the recent risk profile of the

borrowers. Accruing delinquency amounts are indicators

of asset quality within the credit card and other consumer

portfolio.

The following table reflects the amortized cost basis by

year of origination and refreshed FICO scores for

consumer real estate loans as of December 31, 2022 and

2021. Within consumer real estate, classes include HELOC

and real estate installment loans. HELOCs are loans which

during their draw period are classified as revolving loans.

Once the draw period ends and the loan enters its

repayment period, the loan converts to a term loan and is

classified as a revolving loan converted to a term loan. All

loans classified in the following table as revolving loans or

revolving loans converted to term loans are HELOCs. Real

estate installment loans are originated as fixed term loans

and are classified below in their vintage year. All loans in

the following tables classified in a vintage year are real

estate installment loans.

Table 8.3.4

CONSUMER REAL ESTATE PORTFOLIO

		December 31, 2022
(Dollars in millions)		2022		2021		2020		2019		2018		Prior to 2018		Revolving  Loans		Revolving Loans Converted to Term Loans		Total
FICO score 740 or greater		$2,154		$1,847		$819		$523		$278		$1,294		$1,297		$63		$8,275
FICO score 720-739		292		246		116		98		34		238		183		18		1,225
FICO score 700-719		242		206		93		55		35		226		142		22		1,021
FICO score 660-699		214		137		90		55		62		278		192		23		1,051
FICO score 620-659		21		24		25		41		20		105		47		9		292
FICO score less than 620		15		19		32		12		23		256		16		16		389
Total		$2,938		$2,479		$1,175		$784		$452		$2,397		$1,877		$151		$12,253

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 3—LOANS & LEASES

   

	136	2022 FORM 10-K ANNUAL REPORT

		December 31, 2021
(Dollars in millions)		2021		2020		2019		2018		2017		Prior to 2017		Revolving  Loans		Revolving Loans Converted to term loans		Total
FICO score 740 or greater		$1,594		$1,156		$825		$473		$394		$1,335		$1,086		$115		$6,978
FICO score 720-739		236		171		109		61		44		209		162		21		1,013
FICO score 700-719		143		112		81		68		45		153		141		23		766
FICO score 660-699		164		131		120		106		44		246		204		44		1,059
FICO score 620-659		42		36		55		23		13		118		66		27		380
FICO score less than 620		26		84		42		32		45		272		42		33		576
Total		$2,205		$1,690		$1,232		$763		$585		$2,333		$1,701		$263		$10,772

The following table reflects the amortized cost basis by year of origination and refreshed FICO scores for credit card and other

loans as of December 31, 2022 and 2021.

Table 8.3.5

CREDIT CARD & OTHER PORTFOLIO

		December 31, 2022
(Dollars in millions)		2022		2021		2020		2019		2018		Prior to 2018		Revolving  Loans		Revolving Loans Converted to Term Loans		Total
FICO score 740 or greater		$36		$14		$10		$10		$4		$25		$291		$6		$396
FICO score 720-739		3		2		2		1		—		4		30		1		43
FICO score 700-719		3		3		1		1		—		4		33		1		46
FICO score 660-699		3		2		1		1		2		7		30		1		47
FICO score 620-659		1		3		1		—		—		3		18		—		26
FICO score less than 620		7		6		6		10		7		71		174		1		282
Total		$53		$30		$21		$23		$13		$114		$576		$10		$840

		December 31, 2021
(Dollars in millions)		2021		2020		2019		2018		2017		Prior to 2017		Revolving  Loans		Revolving Loans Converted to Term Loans		Total
FICO score 740 or greater		$56		$35		$29		$23		$13		$56		$200		$11		$423
FICO score 720-739		14		5		4		3		4		17		46		3		96
FICO score 700-719		8		5		4		4		3		17		42		1		84
FICO score 660-699		25		6		5		6		4		31		98		2		177
FICO score 620-659		4		3		2		4		3		18		22		1		57
FICO score less than 620		24		3		3		4		4		16		18		1		73
Total		$131		$57		$47		$44		$31		$155		$426		$19		$910

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 3—LOANS & LEASES

   

	137	2022 FORM 10-K ANNUAL REPORT

Nonaccrual and Past Due Loans and Leases

Loans and leases are placed on nonaccrual if it becomes

evident that full collection of principal and interest is at

risk, impairment has been recognized as a partial charge-

off of principal balance due to insufficient collateral value

and past due status, or on a case-by-case basis if FHN

continues to receive payments but there are other

borrower-specific issues. Included in nonaccrual are loans

for which FHN continues to receive payments including

residential real estate loans where the borrower has been

discharged of personal obligation through bankruptcy.

Past due loans are loans contractually past due as to

interest or principal payments, but which have not yet

been put on nonaccrual status. In accordance with revised

Interagency Guidance issued in 2020, FHN was not

required to designate loans with deferrals granted in

response to COVID-19 as past due because of such

deferrals. If a borrower defers payment, this may result in

no contractual payments being past due, and as such,

loans would not be considered past due during the period

of deferral, and as a result, are excluded from loans past

due 30-89 days and loans 90+ days past due in the tables

below.

The following table reflects accruing and non-accruing

loans and leases by class on December 31, 2022 and 2021:

Table 8.3.6

ACCRUING & NON-ACCRUING LOANS & LEASES

		December 31, 2022
		Accruing								Non-Accruing
(Dollars in millions)		Current		30-89 Days Past Due		90+ Days Past Due		Total Accruing		Current		30-89 Days Past Due		90+ Days Past Due		Total Non- Accruing		Total Loans and Leases
Commercial, financial, and industrial:
C&I (a)		$29,309		$50		$11		$29,370		$64		$10		$79		$153		$29,523
Loans to mortgage companies		2,258		—		—		2,258		—		—		—		—		2,258
Total commercial, financial, and industrial		31,567		50		11		31,628		64		10		79		153		31,781
Commercial real estate:
CRE (b)		13,208		11		—		13,219		7		—		2		9		13,228
Consumer real estate:
HELOC (c)		1,967		12		5		1,984		32		4		8		44		2,028
Real estate installment loans (d)		10,079		25		13		10,117		56		5		47		108		10,225
Total consumer real estate		12,046		37		18		12,101		88		9		55		152		12,253
Credit card and other:
Credit card		287		5		4		296		—		—		—		—		296
Other		540		2		—		542		1		—		1		2		544
Total credit card and other		827		7		4		838		1		—		1		2		840
Total loans and leases		$57,648		$105		$33		$57,786		$160		$19		$137		$316		$58,102

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 3—LOANS & LEASES

   

	138	2022 FORM 10-K ANNUAL REPORT

		December 31, 2021
		Accruing								Non-Accruing
(Dollars in millions)		Current		30-89 Days Past Due		90+ Days Past Due		Total Accruing		Current		30-89 Days Past Due		90+ Days Past Due		Total Non- Accruing		Total Loans and Leases
Commercial, financial, and industrial:
C&I (a)		$26,367		$53		$5		$26,425		$97		$1		$27		$125		$26,550
Loans to mortgage companies		4,518		—		—		4,518		—		—		—		—		4,518
Total commercial, financial, and industrial		30,885		53		5		30,943		97		1		27		125		31,068
Commercial real estate:
CRE (b)		12,087		13		—		12,100		6		1		2		9		12,109
Consumer real estate:
HELOC (c)		1,906		7		6		1,919		34		2		9		45		1,964
Real estate installment loans (d)		8,658		30		27		8,715		44		3		46		93		8,808
Total consumer real estate		10,564		37		33		10,634		78		5		55		138		10,772
Credit card and other:
Credit card		292		2		2		296		—		—		—		—		296
Other		608		3		—		611		1		—		2		3		614
Total credit card and other		900		5		2		907		1		—		2		3		910
Total loans and leases		$54,436		$108		$40		$54,584		$182		$7		$86		$275		$54,859

(a)$147 million and $99 million of C&I loans are nonaccrual loans that have been specifically reviewed for impairment with no related allowance in 2022 and

2021, respectively.

(b)$5 million of CRE loans are nonaccrual loans that have been specifically reviewed for impairment with no related allowance for both 2022 and 2021.

(c)$5 million and $7 million of HELOC loans are nonaccrual loans that have been specifically reviewed for impairment with no related allowance for 2022

and 2021, respectively.

(d)$7 million and $50 million of real estate installment loans are nonaccrual loans that have been specifically reviewed for impairment with no related

allowance for 2022 and 2021, respectively.

Collateral-Dependent Loans

Collateral-dependent loans are defined as loans for which

repayment is expected to be derived substantially through

the operation or sale of the collateral and where the

borrower is experiencing financial difficulty. At a

minimum, the estimated value of the collateral for each

loan equals the current book value.

As of December 31, 2022 and 2021, FHN had commercial

loans with amortized cost of approximately $124 million

and $120 million, respectively, that were based on the

value of underlying collateral. Collateral-dependent C&I

and CRE loans totaled $116 million and $8 million,

respectively, at December 31, 2022. The collateral for

these loans generally consists of business assets including

land, buildings, equipment and financial assets. During the

years ended December 31, 2022 and 2021, FHN

recognized total charge-offs of approximately $10 million

and $26 million, respectively, on these loans related to

reductions in estimated collateral values.

Consumer HELOC and real estate installment loans with

amortized cost based on the value of underlying real

estate collateral were approximately $7 million and

$26 million, respectively, as of December 31, 2022, and

$7 million and $20 million, respectively, as of

December 31, 2021. Charge-offs were $2 million for

collateral-dependent consumer loans during the year

ended December 31, 2022, and were $1 million during the

year ended December 31, 2021.

Troubled Debt Restructurings

As part of FHN’s ongoing risk management practices, FHN

attempts to work with borrowers when necessary to

extend or modify loan terms to better align with their

current ability to repay. Extensions and modifications to

loans are made in accordance with internal policies and

guidelines which conform to regulatory guidance. Each

occurrence is unique to the borrower and is evaluated

separately.

A modification is classified as a TDR if the borrower is

experiencing financial difficulty and it is determined that

FHN has granted a concession to the borrower. FHN may

determine that a borrower is experiencing financial

difficulty if the borrower is currently in default on any of

its debt, or if it is probable that a borrower may default in

the foreseeable future. Many aspects of a borrower’s

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 3—LOANS & LEASES

   

	139	2022 FORM 10-K ANNUAL REPORT

financial situation are assessed when determining

whether they are experiencing financial difficulty.

Concessions could include extension of the maturity date,

reductions of the interest rate (which may make the rate

lower than current market for a new loan with similar

risk), reduction or forgiveness of accrued interest, or

principal forgiveness. The assessments of whether a

borrower is experiencing (or is likely to experience)

financial difficulty, and whether a concession has been

granted, are subjective in nature and management’s

judgment is required when determining whether a

modification is classified as a TDR.

Commercial loan TDRs are typically modified through

forbearance agreements which could include reduced

interest rates, reduced payments, release of guarantor, or

entering into short sale agreements.

Modifications for consumer loans are generally structured

using parameters of U.S. government-sponsored

programs. For HELOC and real estate installment loans,

TDRs are typically modified by an interest rate reduction

and a possible maturity date extension to reach an

affordable housing debt-to-income ratio. Despite the

absence of a loan modification, the discharge of personal

liability through bankruptcy proceedings is considered a

concession. As a result, FHN classifies all non-reaffirmed

residential real estate loans discharged in Chapter 7

bankruptcy as nonaccruing TDRs.

For the credit card portfolio, TDRs are typically modified

through either a short-term credit card hardship program

or a longer-term credit card workout program. In the

credit card hardship program, borrowers may be granted

rate and payment reductions for six months to one year.

In the credit card workout program, borrowers are

granted a rate reduction to 0% and a term extension for

up to five years.

On December 31, 2022 and 2021, FHN had $180 million

and $206 million of portfolio loans classified as TDRs,

respectively. Additionally, $30 million and $35 million of

loans held for sale as of December 31, 2022 and 2021,

respectively, were classified as TDRs. Loan modifications

that were made during the year ended December 31,

2021 that met the TDR relief provisions outlined in either

the CARES Act, as extended by the CAA, or revised

Interagency Guidance, have been excluded from

consideration as TDRs and therefore are excluded from

these disclosures.

The following table presents the end of period balance for

loans modified in a TDR during the years ended

December 31, 2022 and 2021:

Table 8.3.7

LOANS MODIFIED IN A TDR

		2022						2021
(Dollars in millions)		Number		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
C&I		6		$30		$24		32		$37		$34
CRE		1		1		1		1		12		10
HELOC		98		7		7		25		3		3
Real estate installment loans		181		41		41		87		14		14
Credit card and other		81		12		12		51		—		—
Total TDRs		367		$91		$85		196		$66		$61

The following table presents TDRs which re-defaulted during 2022 and 2021, and as to which the modification occurred 12

months or less prior to the re-default. For purposes of this disclosure, FHN generally defines payment default as 30 or more

days past due.

Table 8.3.8

LOANS MODIFIED IN A TDR THAT RE-DEFAULTED

		2022				2021
(Dollars in millions)		Number		Recorded Investment		Number		Recorded Investment
C&I		5		$—		18		$5
CRE		—		—		6		19
HELOC		22		1		1		—
Real estate installment loans		54		15		9		5
Credit card and other		17		—		4		—
Total TDRs		98		$16		38		$29

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 3—LOANS & LEASES

   

	140	2022 FORM 10-K ANNUAL REPORT

Note 4—Allowance for Credit Losses

Management's estimate of expected credit losses in the

loan and lease portfolios is recorded in the ALLL and the

reserve for unfunded lending commitments, collectively

referred to as the Allowance for Credit Losses, or the ACL.

See Note 1 - Significant Accounting Policies for further

discussion of FHN's ACL methodology.

The ACL is maintained at a level management believes to

be appropriate to absorb expected lifetime credit losses

over the contractual life of the loan and lease portfolio

and unfunded lending commitments. The determination

of the ACL is based on periodic evaluation of the loan and

lease portfolios and unfunded lending commitments

considering a number of relevant underling factors,

including key assumptions and evaluation of quantitative

and qualitative information.

The expected loan losses are the product of multiplying

FHN’s estimates of probability of default (PD), loss given

default (LGD), and individual loan level exposure as

default (EAD), including amortization and prepayment

assumptions, on an undiscounted basis. FHN uses models

or assumptions to develop the expected loss forecasts,

which incorporate multiple macroeconomic forecasts over

a four-year reasonable and supportable forecast period.

After the reasonable and supportable forecast period, the

Company immediately reverts to its historical loss

averages, evaluated over the historical observation

period, for the remaining estimated life of the loans. In

order to capture the unique risks of the loan portfolio

within the PD, LGD, and prepayment models, FHN

segments the portfolio into pools, generally incorporating

loan grades for commercial loans. As there can be no

certainty that actual economic performance will precisely

follow any specific macroeconomic forecast, FHN uses

qualitative adjustments where current loan characteristics

or current or forecasted economic conditions differ from

historical periods.

The evaluation of quantitative and qualitative information

is performed through assessments of groups of assets that

share similar risk characteristics and certain individual

loans and leases that do not share similar risk

characteristics with the collective group. As described in

Note 3 - Loans and Leases, loans are grouped generally by

product type and significant loan portfolios are assessed

for credit losses using analytical or statistical models. The

quantitative component utilizes economic forecast

information as its foundation, and is primarily based on

analytical models that use known or estimated data as of

the balance sheet date and forecasted data over the

reasonable and supportable period. The ACL is also

affected by qualitative factors that FHN considers to

reflect current judgment of various events and risks that

are not measured in the quantitative calculations,

including alternative economic forecasts.

In accordance with its accounting policy elections, FHN

does not recognize a separate allowance for expected

credit losses for AIR and records reversals of AIR as

reductions of interest income. FHN reverses previously

accrued but uncollected interest when an asset is placed

on nonaccrual status. AIR and the related allowance for

expected credit losses is included as a component of other

assets. The total amount of interest reversals from loans

placed on nonaccrual status and the amount of income

recognized on nonaccrual loans during the year ended

December 31, 2022 were not material.

Expected credit losses for unfunded commitments are

estimated for periods where the commitment is not

unconditionally cancellable. The measurement of

expected credit losses for unfunded commitments mirrors

that of loans and leases with the additional estimate of

future draw rates (timing and amount).

The ACL balance as of December 31, 2022 as compared to

December 31, 2021 reflects the impact of loan growth and

deterioration in the macroeconomic forecast. In

developing credit loss estimates for its loan and lease

portfolios, FHN utilized three Moody’s forecast scenarios

for its macroeconomic inputs. As of December 31, 2022,

FHN's scenario selection process focused on key economic

drivers such as unemployment and economic activity

including recession risk. Risks considered include: the

effects of inflation, rising interest rates, supply chain

disruptions, labor/wage constraints, and international

conflict. FHN selected one scenario as its base case, which

was the Moody's baseline growth scenario. The heaviest

weight was placed on the base case forecast, which

assumed positive real GDP growth over the forecast

horizon. Lower weightings were applied to more positive

and more negative macroeconomic scenarios.

During the year ended December 31, 2021, FHN

considered stressed loan portfolios or industries that are

most exposed to the effects of the COVID-19 pandemic,

and added qualitative adjustments, where needed, to

account for the risks not captured in modeled results.

Management also made qualitative adjustments to reflect

estimated recoveries based on a review of prior charge off

and recovery levels, for default risk associated with large

balances with individual borrowers, for estimated loss

amounts not reflected in historical factors due to specific

portfolio risk, and for instances where limited data for

acquired loans is considered to affect modeled results.

The following table provides a rollforward of the ALLL and

the reserve for unfunded lending commitments by

portfolio type for December 31, 2022, 2021 and 2020:

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 4—ALLOWANCE FOR CREDIT LOSSES

   

	141	2022 FORM 10-K ANNUAL REPORT

Table 8.4.1

ROLLFORWARD OF ALLL & RESERVE FOR UNFUNDED LENDING COMMITMENTS

(Dollars in millions)		Commercial, Financial, and Industrial (a)		Commercial Real Estate		Consumer Real Estate		Credit Card and Other		Total
Allowance for loan and lease losses:
Balance as of January 1, 2022		$334		$154		$163		$19		$670
Charge-offs		(62)		(1)		(5)		(25)		(93)
Recoveries		9		1		19		5		34
Provision for loan and lease losses		27		(8)		23		32		74
Balance as of December 31, 2022		308		146		200		31		685
Reserve for remaining unfunded commitments:
Balance as of January 1, 2022		46		12		8		—		66
Provision for unfunded lending commitments		9		10		2		—		21
Balance as of December 31, 2022		55		22		10		—		87
Allowance for credit losses as of December 31, 2022		$363		$168		$210		$31		$772
Allowance for loan and lease losses:
Balance as of January 1, 2021		$453		$242		$242		$26		$963
Charge-offs		(34)		(5)		(5)		(15)		(59)
Recoveries		21		5		27		4		57
Provision for loan and lease losses		(106)		(88)		(101)		4		(291)
Balance as of December 31, 2021		334		154		163		19		670
Reserve for remaining unfunded commitments:
Balance as of January 1, 2021		65		10		10		—		85
Provision for unfunded lending commitments		(19)		2		(2)		—		(19)
Balance as of December 31, 2021		46		12		8		—		66
Allowance for credit losses as of December 31, 2021		$380		$166		$171		$19		$736
Allowance for loan and lease losses
Balance as of January 1, 2020		$123		$36		$28		$13		$200
Adoption of ASU 2016-13		19		(7)		93		2		107
Balance as of January 1, 2020, as adjusted		142		29		121		15		307
Charge-offs (b)		(129)		(5)		(8)		(14)		(156)
Recoveries		9		4		18		5		36
Initial allowance on loans purchased with credit deterioration (b)		138		100		44		5		287
Provision for loan and lease losses (c)		293		114		67		15		489
Balance as of December 31, 2020		453		242		242		26		963
Reserve for remaining unfunded commitments:
Balance as of January 1, 2020		4		2		—		—		6
Adoption of ASU 2016-13		17		1		6		—		24
Balance as of January 1, 2020, as adjusted		21		3		6		—		30
Initial reserve on loans acquired		12		26		3		—		41
Provision for unfunded lending commitments		32		(19)		1		—		14
Balance as of December 31, 2020		65		10		10		—		85
Allowance for credit losses as of December 31, 2020		$518		$252		$252		$26		$1,048

(a)C&I loans as of December 31, 2022, 2021 and 2020 include $76 million, $1.0 billion, and $4.1 billion in PPP loans, respectively, which due to the government guarantee and

forgiveness provisions are considered to have no credit risk and therefore have no allowance for loan and lease losses.

(b)    The year ended December 31, 2020 excludes day 1 charge-offs and the related initial allowance on PCD loans is net of these amounts. Under ASC 326, the initial ALLL

recognized on PCD assets included an additional $237 million for charged-off loans that had been written off prior to acquisition (whether full or partial) or which met FHN's

charge-off policy at the time of acquisition. After charging these amounts off immediately upon acquisition, the net impact was $287 million of additional ALLL for PCD loans.

(c)    Provision for loan and lease losses for the year ended December 31, 2020 includes $147 million recognized on non-PCD loans from the IBKC merger and Truist branch

acquisition.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 4—ALLOWANCE FOR CREDIT LOSSES

   

	142	2022 FORM 10-K ANNUAL REPORT

Note 5—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%

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 5—PREMISES, EQUIPMENT, & LEASES

   

	143	2022 FORM 10-K ANNUAL REPORT

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.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 5—PREMISES, EQUIPMENT, & LEASES

   

	144	2022 FORM 10-K ANNUAL REPORT

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

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 5—PREMISES, EQUIPMENT, & LEASES

   

	145	2022 FORM 10-K ANNUAL REPORT

Note 6—Goodwill and Other Intangible Assets

Goodwill

On July 1, 2020, FHN completed its merger-of-equals

transaction with IBKC. In connection with the merger, FHN

recorded a $531 million purchase accounting gain, based

on fair value estimates.

On July 17, 2020, FHN completed its purchase of 30

branches from Truist Bank. In relation to the acquisition,

FHN recorded $78 million in goodwill, based on fair value

estimates.

FHN performed the required annual goodwill impairment

test as of October 1, 2022. The annual impairment test did

not indicate impairment in any of FHN’s reporting units as

of the testing date. Following the testing date,

management evaluated the events and circumstances that

could indicate that goodwill might be impaired and

concluded that a subsequent interim test was not

necessary. 

As further discussed in Note 19 - Business Segment

Information, FHN reorganized its management reporting

structure during 2020 and, accordingly, its segment

reporting structure and goodwill reporting units. In

connection with the reorganization, management

reallocated goodwill to the new reporting units using a

relative fair value approach.

Accounting estimates and assumptions were made about

FHN’s future performance and cash flows, as well as other

prevailing market factors (e.g., interest rates, economic

trends, etc.) when determining fair value as part of the

goodwill impairment test. While management used the

best information available to estimate future performance

for each reporting unit, future adjustments to

management’s projections may be necessary if conditions

differ substantially from the assumptions used in making

the estimates.

The following is a summary of goodwill by reportable

segment included in the Consolidated Balance Sheets as of 

December 31, 2022:

Table 8.6.1

GOODWILL

(Dollars in millions)		Regional Banking		Specialty Banking		Total
December 31, 2019		$802		$631		$1,433
Additions		78		—		78
December 31, 2020		$880		$631		$1,511
Additions		—		—		—
December 31, 2021		$880		$631		$1,511
Additions		—		—		—
December 31, 2022		$880		$631		$1,511

Other intangible assets

The following table, which excludes fully amortized

intangibles, presents other intangible assets included in

the Consolidated Balance Sheets:

Table 8.6.2

OTHER INTANGIBLE ASSETS

		December 31, 2022						December 31, 2021
(Dollars in millions)		Gross Carrying Amount		Accumulated Amortization		Net Carrying Value		Gross Carrying Amount		Accumulated Amortization		Net Carrying Value
Core deposit intangibles		$371		$(171)		$200		$371		$(128)		$243
Client relationships		32		(13)		19		37		(11)		26
Other (a)		27		(12)		15		41		(12)		29
Total		$430		$(196)		$234		$449		$(151)		$298

(a)Includes noncompete covenants and purchased credit card intangible assets. Also includes title plant intangible assets and state banking licenses which

are not subject to amortization.

Amortization expense was $51 million, $56 million, and

$40 million for the years ended December 31, 2022, 2021

and 2020, respectively. The following table shows the

aggregated amortization expense estimated, as of

December 31, 2022, for the next five years:  

Table 8.6.3

ESTIMATED AMORTIZATION EXPENSE

(Dollars in millions)
2023		$47
2024		44
2025		38
2026		33
2027		29

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 6—GOODWILL & OTHER INTANGIBLE ASSETS

   

	146	2022 FORM 10-K ANNUAL REPORT

Note 7—Mortgage Banking Activity

FHN originates mortgage loans for sale into the secondary

market. These loans primarily consist of residential first

lien mortgages that conform to standards established by

GSEs that are major investors in U.S. home mortgages, but

can also consist of junior lien and jumbo loans secured by

residential property. These loans are primarily sold to

private companies that are unaffiliated with the GSEs on a

servicing-released basis. Gains and losses on these

mortgage loans are included in mortgage banking and title

income on the Consolidated Statements of Income.

Prior to the IBKC merger, FHN’s mortgage banking

operations were not significant. At December 31, 2022,

FHN had approximately $39 million of loans that remained

from pre-2009 Mortgage Business operations of legacy

First Horizon. Activity related to the pre-2009 mortgage

loans was primarily limited to payments and write-offs in

2022, 2021, and 2020, with no new originations or loan

sales, and only an insignificant amount of repurchases.

These loans are excluded from the disclosure below.

The following table summarizes activity relating to

residential mortgage loans held for sale for the years

ended December 31, 2022, 2021, and 2020:

Table 8.7.1

MORTGAGE LOAN ACTIVITY

(Dollars in millions)		2022		2021		2020
Balance at beginning of period		$250		$409		$4
Acquired		—		—		320
Originations and purchases		1,275		2,836		2,499
Sales, net of gains		(1,481)		(3,025)		(2,405)
Mortgage loans transferred from (to) held for investment		—		30		(9)
Balance at end of period		$44		$250		$409

Mortgage Servicing Rights

FHN records mortgage servicing rights at the lower of cost

or market value and amortizes them over the remaining

servicing life of the loans, with consideration given to

prepayment assumptions.

Mortgage servicing rights are included in other assets on

the Consolidated Balance Sheets. Mortgage servicing

rights had the following carrying values as of the period

indicated.

Table 8.7.2

MORTGAGE SERVICING RIGHTS

	December 31, 2022
(Dollars in millions)	Gross  Carrying Amount		Accumulated Amortization		Net Carrying Amount
Mortgage servicing rights	$21		$(5)		$16
	December 31, 2021
(Dollars in millions)	Gross  Carrying Amount		Accumulated Amortization		Net Carrying Amount
Mortgage servicing rights	$39		$(9)		$30

In addition, there was an insignificant amount of non-

mortgage and commercial servicing rights as of December

31, 2022 and 2021. Total mortgage servicing fees included

in mortgage banking and title income were $4 million for

the years ended December 31, 2022 and 2021 and

$2 million for the year ended December 31, 2020.

Mortgage servicing rights with a net carrying amount of

$21 million were sold during 2022 resulting in a gain of

$12 million for the year ended December 31, 2022 which

is included in mortgage banking and title income on the

Consolidated Statements of Income.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 7—MORTGAGE BANKING ACTIVITY

   

	147	2022 FORM 10-K ANNUAL REPORT

Note 8—Deposits

The composition of deposits is presented in the following

table:

Table 8.8.1

DEPOSITS

(Dollars in millions)		2022		2021
Savings		$21,971		$26,457
Time deposits		2,887		3,500
Other interest-bearing deposits		15,165		17,055
Total interest-bearing deposits		40,023		47,012
Noninterest-bearing deposits		23,466		27,883
Total deposits		$63,489		$74,895

Time deposits in denominations that exceed the FDIC

insurance limit of $250,000 at December 31, 2022 and

2021 were $936 million and $859 million, respectively. Of

those deposits, $643 million and $515 million were

uninsured as of December 31, 2022 and 2021,

respectively.

Scheduled maturities of time deposits as of December 31,

2022 were as follows:

Table 8.8.2

TIME DEPOSIT MATURITIES

(Dollars in millions)
2023		$2,415
2024		260
2025		81
2026		63
2027		53
2028 and after		15
Total		$2,887

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 8—DEPOSITS

   

	148	2022 FORM 10-K ANNUAL REPORT

Note 9—Short-Term Borrowings

A summary of short-term borrowings for the years 2022, 2021 and 2020 is presented in the following table:

Table 8.9.1

SHORT-TERM BORROWINGS

(Dollars in millions)		Trading Liabilities		Federal Funds Purchased		Securities Sold Under Agreements to Repurchase		Other Short-term Borrowings
2022
Average balance		$480		$699		$881		$229
Year-end balance		335		400		1,013		1,093
Maximum month-end outstanding		700		1,023		1,211		1,093
Average rate for the year		2.56%		1.56%		0.77%		2.26%
Average rate at year-end		3.67%		4.40%		2.19%		4.30%
2021
Average balance		$540		$949		$1,235		$124
Year-end balance		426		775		1,247		102
Maximum month-end outstanding		685		1,037		1,615		146
Average rate for the year		1.11%		0.12%		0.30%		0.09%
Average rate at year-end		1.62%		0.10%		0.11%		0.08%
2020
Average balance		$457		$862		$1,109		$626
Year-end balance		353		845		1,187		166
Maximum month-end outstanding		983		1,487		1,661		4,061
Average rate for the year		1.24%		0.34%		0.50%		0.84%
Average rate at year-end		0.77%		0.10%		0.26%		0.09%

Federal funds purchased and securities sold under

agreements to repurchase generally have maturities of

less than 90 days. Trading liabilities, which represent short

positions in securities, are generally held for less than 90

days. Other short-term borrowings have original

maturities of one year or less. On December 31, 2022,

fixed income trading securities with a fair value of

$10 million were pledged to secure other short-term

borrowings.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 9—SHORT-TERM BORROWINGS

   

	149	2022 FORM 10-K ANNUAL REPORT

Note 10—Term Borrowings

Term borrowings include senior and subordinated borrowings with original maturities greater than one year. The following

table presents information pertaining to term borrowings as of December 31, 2022 and 2021:

Table 8.10.1

TERM BORROWINGS

(Dollars in millions)		2022		2021
First Horizon Bank:
Subordinated notes (a)
Maturity date – May 1, 2030 - 5.75%		$448		$447
Other collateralized borrowings - Maturity date – December 22, 2037
5.07% on December 31, 2022 and 0.50% on December 31, 2021 (b)		87		87
Other collateralized borrowings - SBA loans (c)		3		6
First Horizon Corporation:
Senior notes
Maturity date – May 26, 2023 - 3.55%		450		448
Maturity date – May 26, 2025 - 4.00%		349		349
Junior subordinated debentures (d)
Maturity date - June 28, 2035 - 6.45% on December 31, 2022 and 1.88% on December 31, 2021		3		3
Maturity date - December 15, 2035 - 6.14% on December 31, 2022 and 1.57% on December 31, 2021		18		18
Maturity date - March 15, 2036 - 6.17% on December 31, 2022 and 1.60% on December 31, 2021		9		9
Maturity date - March 15, 2036 - 6.31% on December 31, 2022 and 1.74% on December 31, 2021		12		12
Maturity date - June 30, 2036 - 6.05% on December 31, 2022 and 1.54% on December 31, 2021		27		27
Maturity date - July 7, 2036 - 5.63% on December 31, 2022 and 1.67% on December 31, 2021		18		18
Maturity date - June 15, 2037 - 6.42% on December 31, 2022 and 1.85% on December 31, 2021		52		52
Maturity date - September 6, 2037 - 6.16% on December 31, 2022 and 1.61% on December 31, 2021		9		9
Notes payable - New market tax credit investments; 7 to 35 year term, 0.93% to 4.95%		66		59
FT Real Estate Securities Company, Inc.:
Cumulative preferred stock (e)
Maturity date – March 31, 2031 – 9.50%		46		46
Total		$1,597		$1,590

(a)Qualifies for Tier 2 capital under the risk-based capital guidelines for First Horizon Bank as well as First Horizon Corporation up to certain limits for

minority interest capital instruments.

(b)Secured by trust preferred loans.

(c)Collateralized borrowings associated with SBA loan sales that did not meet sales criteria. The loans have remaining terms of 3 to 10 years. These

borrowings had a weighted average interest rate of 5.13% and 4.10% on December 31, 2022 and 2021, respectively.

(d)Acquired in conjunction with the acquisitions of CBF and merger with IBKC. The legacy IBKC junior subordinated debentures were early redeemed in

2021. A portion qualifies for Tier 2 capital under the risk-based capital guidelines.

(e)Qualifies for Tier 2 capital under the risk-based capital guidelines for both First Horizon Bank and First Horizon Corporation up to certain limits for

minority interest capital instruments.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 10—TERM BORROWINGS

   

	150	2022 FORM 10-K ANNUAL REPORT

Annual principal repayment requirements as of

December 31, 2022 are as follows:

Table 8.10.2

ANNUAL PRINCIPAL REPAYMENT SCHEDULE

(Dollars in millions)
2023		$450
2024		6
2025		350
2026		—
2027 and after		812

In conjunction with its acquisitions, FHN obtained junior

subordinated debentures, each of which is held by a

wholly-owned trust that has issued trust preferred

securities to external investors and loaned the funds to

FHN as junior subordinated debt. The book value for each

issuance represents the purchase accounting fair value as

of the closing date less accumulated amortization of the

associated discount, as applicable. Through various

contractual arrangements, FHN assumed a full and

unconditional guarantee for each trust’s obligations with

respect to the securities. While the maturity dates are

typically 30 years from the original issuance date, FHN has

the option to redeem each of the junior subordinated

debentures at par on any future interest payment date,

which would trigger redemption of the related trust

preferred securities. During 2021, FHN redeemed

$94 million of legacy IBKC junior subordinated debt

underlying multiple issuances of trust preferred securities.

The redemption resulted in a loss on debt extinguishment

of $26 million. A portion of FHN's remaining junior

subordinated notes qualifies as Tier 2 capital under the

risk-based capital guidelines.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 10—TERM BORROWINGS

   

	151	2022 FORM 10-K ANNUAL REPORT

Note 11—Preferred Stock

FHN Preferred Stock

The following table presents a summary of FHN's non-cumulative perpetual preferred stock:

Table 8.11.1

PREFERRED STOCK

													December 31,
(Dollars in millions)													2022		2021
	Issuance Date		Earliest Redemption Date (a)		Annual Dividend Rate		Dividend Payments		Shares Outstanding		Liquidation Amount		Carrying Amount		Carrying Amount
Series B	7/2/2020		8/1/2025		6.625%	(b)	Semi-annually		8,000		$80		$77		$77
Series C	7/2/2020		5/1/2026		6.600%	(c)	Quarterly		5,750		58		59		59
Series D	7/2/2020		5/1/2024		6.100%	(d)	Semi-annually		10,000		100		94		94
Series E	5/28/2020		10/10/2025		6.500%		Quarterly		1,500		150		145		145
Series F	5/3/2021		7/10/2026		4.700%		Quarterly		1,500		150		145		145
Series G	2/28/2022		2/28/2027		N/A		N/A		4,936		494		494		—
									31,686		$1,032		$1,014		$520

N/A - not applicable

(a)  Denotes earliest optional redemption date. Earlier redemption is possible, at FHN's election, if certain regulatory capital events occur.

(b)Fixed dividend rate will reset on August 1, 2025 to three-month LIBOR plus 4.262%.

(c)Fixed dividend rate will reset on May 1, 2026 to three-month LIBOR plus 4.920%.

(d)Fixed dividend rate will reset on May 1, 2024 to three-month LIBOR plus 3.859%.

On February 28, 2022, in connection with the execution of

the TD Merger Agreement, FHN issued $494 million of

Series G Perpetual Convertible Preferred Stock (the Series

G Convertible Preferred Stock). The Series G Convertible

Preferred Stock is convertible into up to 4.9% of the

outstanding shares of FHN common stock in certain

circumstances, including closing of the Pending TD Merger

or termination of the TD Merger Agreement. Conversion

occurs at a fixed rate of 5,574.136 shares of common

stock for each share of Series G Convertible Preferred

Stock, or 4,000 shares of common stock if regulatory

approval of the Pending TD Merger is not obtained. For

more information on the impact of the convertible

features on diluted earnings per share, see Note 15 -

Earnings Per Share.

The Series G Convertible Preferred Stock is redeemable at

FHN's option, in whole or in part, on or after February 28,

2027. Earlier redemption is possible, at FHN's election, if

certain regulatory capital events occur. The $494 million

carrying value of the Series G Convertible Preferred Stock

currently qualifies as Tier 1 Capital. Dividends are payable

only in certain circumstances if the TD Merger Agreement

is terminated before the shares are converted into

common stock. See Pending Merger within Note 1 -

Significant Accounting Policies beginning on page 119 for

further information.

Subsidiary Preferred Stock

First Horizon Bank has issued 300,000 shares of Class A

Non-Cumulative Perpetual Preferred Stock (Class A

Preferred Stock) with a liquidation preference of $1,000

per share. Dividends on the Class A Preferred Stock, if

declared, accrue and are payable each quarter, in arrears,

at a floating rate equal to the greater of the three month

LIBOR plus 0.85% or 3.75% per annum. These securities

qualify fully as Tier 1 capital for both First Horizon Bank

and FHN. On December 31, 2022 and 2021, $295 million

of Class A Preferred Stock was recognized as

noncontrolling interest on the Consolidated Balance

Sheets.

FT Real Estate Securities Company, Inc. (FTRESC), an

indirect subsidiary of FHN, has issued 50 shares of 9.50%

Cumulative Preferred Stock, Class B (Class B Preferred

Shares), with a liquidation preference of $1 million per

share; of those shares, 47 were issued to nonaffiliates.

FTRESC is a real estate investment trust established for

the purpose of acquiring, holding, and managing real

estate mortgage assets. Dividends on the Class B Preferred

Shares are cumulative and are payable semi-annually. At

December 31, 2022, the Class B Preferred Shares partially

qualified as Tier 2 regulatory capital. For all periods

presented, these securities are presented in the

Consolidated Balance Sheets as term borrowings.

The Class B Preferred Shares are mandatorily redeemable

on March 31, 2031, and redeemable at the discretion of

FTRESC in the event that the Class B Preferred Shares

cannot be accounted for as Tier 2 regulatory capital or

there is more than an insubstantial risk that dividends paid

with respect to the Class B Preferred Shares will not be

fully deductible for tax purposes.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 11—PREFERRED STOCK

   

	152	2022 FORM 10-K ANNUAL REPORT

Note 12—Regulatory Capital and Restrictions

Regulatory Capital

FHN is subject to various regulatory capital requirements

administered by the federal banking agencies. Failure to

meet minimum capital requirements can initiate certain

mandatory, and possibly additional discretionary actions

by regulators that, if undertaken, could have a direct

material effect on FHN’s financial statements. Under

capital adequacy guidelines and the regulatory framework

for prompt corrective action, FHN must meet specific

capital guidelines that involve quantitative measures of

assets, liabilities, and certain off-balance sheet items

calculated pursuant to regulatory directives. Capital

amounts and classification are also subject to qualitative

judgment by the regulators such as capital components,

asset risk weightings, and other factors.

Management believes that, as of December 31, 2022, FHN

and First Horizon Bank met all capital adequacy

requirements to which they were subject. As of

December 31, 2022, First Horizon Bank was classified as

well-capitalized under the regulatory framework for

prompt corrective action. To be categorized as well-

capitalized, an institution must maintain minimum Total

Risk-Based, Tier 1 Risk-Based, Common Equity Tier 1 and

Tier 1 Leverage ratios as set forth in the following table.

Management believes that no events or changes have

occurred subsequent to year-end that would change this

designation.

Quantitative measures established by regulation to ensure

capital adequacy require FHN to maintain minimum ratios

as set forth in the following table. FHN and First Horizon

Bank are also subject to a 2.5% capital conservation buffer

which is an amount above the minimum levels designed to

ensure that banks remain well-capitalized, even in adverse

economic scenarios.

The actual capital amounts and ratios of FHN and First

Horizon Bank are presented in the following table.

Table 8.12.1

CAPITAL AMOUNTS & RATIOS

(Dollars in millions)		First Horizon Corporation				First Horizon Bank
		Amount		Ratio		Amount		Ratio
On December 31, 2022
Actual:
Total Capital		$9,222		13.33%		$8,532		12.41%
Tier 1 Capital		8,247		11.92		7,700		11.20
Common Equity Tier 1		7,032		10.17		7,405		10.77
Leverage		8,247		10.36		7,700		9.76
Minimum Requirement for Capital Adequacy Purposes:
Total Capital		5,533		8.00		5,498		8.00
Tier 1 Capital		4,150		6.00		4,124		6.00
Common Equity Tier 1		3,112		4.50		3,093		4.50
Leverage		3,183		4.00		3,157		4.00
Minimum Requirement to be Well Capitalized Under Prompt Corrective Action Provisions:
Total Capital						6,873		10.00
Tier 1 Capital						5,498		8.00
Common Equity Tier 1						4,467		6.50
Leverage						3,946		5.00
On December 31, 2021
Actual:
Total Capital		$7,918		12.34%		$7,893		12.41%
Tier 1 Capital		7,088		11.04		7,133		11.22
Common Equity Tier 1		6,367		9.92		6,838		10.75
Leverage		7,088		8.08		7,133		8.20

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 12—REGULATORY CAPITAL & RESTRICTIONS

   

	153	2022 FORM 10-K ANNUAL REPORT

Minimum Requirement for Capital Adequacy Purposes:
Total Capital		5,135		8.00		5,088		8.00
Tier 1 Capital		3,851		6.00		3,816		6.00
Common Equity Tier 1		2,888		4.50		2,862		4.50
Leverage		3,507		4.00		3,478		4.00
Minimum Requirement to be Well Capitalized Under Prompt Corrective Action Provisions:
Total Capital						6,360		10.00
Tier 1 Capital						5,088		8.00
Common Equity Tier 1						4,134		6.50
Leverage						4,348		5.00

Restrictions on cash and due from banks

Effective March 26, 2020, the Fed reduced its reserve

requirement to zero, and as a result, on December 31,

2022 and 2021, First Horizon Bank was not required to

maintain cash reserves.

Restrictions on dividends

Cash dividends are paid by FHN from its assets, which are

mainly provided by dividends from its subsidiaries. Certain

regulatory restrictions exist regarding the ability of First

Horizon Bank to transfer funds to FHN in the form of cash,

dividends, loans, or advances. As of December 31, 2022,

First Horizon Bank had undivided profits of $2.7 billion, of

which a limited amount was available for distribution to

FHN as dividends without prior regulatory approval.  At

any given time, the pertinent portions of those regulatory

restrictions allow First Horizon Bank to declare preferred

or common dividends without prior regulatory approval in

an amount equal to First Horizon Bank's retained net

income for the two most recent completed years plus the

current year-to-date period. For any period, First Horizon

Bank’s "retained net income" generally is equal to First

Horizon Bank’s regulatory net income reduced by the

preferred and common dividends declared by First

Horizon Bank. Applying the dividend restrictions imposed

under applicable federal and state rules, First Horizon

Bank’s total amount available for dividends was $893

million at January 1, 2023. First Horizon Bank declared and

paid common dividends to the parent company in the

amount of $435 million in 2022 and $770 million in 2021.

During 2022 and 2021, First Horizon Bank declared and

paid dividends on its preferred stock according to the

payment terms of its issuances as noted in Note 11 -

Preferred Stock.

The payment of cash dividends by FHN and First Horizon

Bank may also be affected or limited by other factors, such

as the requirement to maintain adequate capital above

regulatory guidelines. Furthermore, the Federal Reserve

generally requires insured banks and bank holding

companies to pay dividends only out of current operating

earnings.

Restrictions on intercompany transactions

Under current Federal banking laws, First Horizon Bank

may not enter into covered transactions with any affiliate

including the parent company and certain financial

subsidiaries in excess of 10% of the bank’s capital stock

and surplus, as defined, or $876 million, on December 31,

2022. Covered transactions include a loan or extension of

credit to an affiliate, a purchase of or an investment in

securities issued by an affiliate, and the acceptance of

securities issued by the affiliate as collateral for any loan

or extension of credit. The equity investment, including

retained earnings, in certain of a bank’s financial

subsidiaries is also treated as a covered transaction. On

December 31, 2022: the parent company had no covered

transactions from First Horizon Bank; and 840 Denning

LLC, a parent company subsidiary, had a covered

transaction of $2 million. Two of the bank’s financial

subsidiaries, FHN Financial Securities Corp. and First

Horizon Advisors, Inc., had covered transactions from First

Horizon Bank totaling $402 million and $55 million,

respectively. In addition, the aggregate amount of covered

transactions with all affiliates, as defined, is limited to 20%

of the bank’s capital stock and surplus, as defined, or $1.8

billion, on December 31, 2022. First Horizon Bank’s total

covered transactions with all affiliates including the parent

company on December 31, 2022 were $459 million.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 12—REGULATORY CAPITAL & RESTRICTIONS

   

	154	2022 FORM 10-K ANNUAL REPORT

Note 13—Components of Other Comprehensive Income (Loss)

The following table provides the changes in accumulated other comprehensive income (loss) by component, net of tax, for the

years ended December 31, 2022, 2021, and 2020:

Table 8.13.1

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

(Dollars in millions)		Securities AFS		Cash Flow Hedges		Pension and Post-retirement Plans		Total
Balance as of December 31, 2019		$31		$3		$(273)		$(239)
Net unrealized gains (losses)		74		15		3		92
Amounts reclassified from AOCI		3		(6)		10		7
Other comprehensive income (loss)		77		9		13		99
Balance as of December 31, 2020		$108		$12		$(260)		$(140)
Net unrealized gains (losses)		(144)		(3)		(2)		(149)
Amounts reclassified from AOCI		—		(7)		8		1
Other comprehensive income (loss)		(144)		(10)		6		(148)
Balance as of December 31, 2021		$(36)		$2		$(254)		$(288)
Net unrealized gains (losses)		$(937)		$(144)		$(22)		$(1,103)
Amounts reclassified from AOCI		—		15		8		23
Other comprehensive income (loss)		(937)		(129)		(14)		(1,080)
Balance as of December 31, 2022		$(973)		$(127)		$(268)		$(1,368)

Reclassifications from AOCI, and related tax effects, were as follows:

Table 8.13.2

RECLASSIFICATIONS FROM AOCI

(Dollars in millions)
Details about AOCI		2022		2021		2020		Affected line item in the statement where net income is presented
Securities AFS:
Realized (gains) losses on securities AFS		$—		$—		$4		Securities gains (losses), net
Tax expense (benefit)		—		—		(1)		Income tax expense
		—		—		3
Cash flow hedges:
Realized (gains) losses on cash flow hedges		20		(9)		(8)		Interest and fees on loans and leases
Tax expense (benefit)		(5)		2		2		Income tax expense
		15		(7)		(6)
Pension and Postretirement Plans:
Amortization of prior service cost and net actuarial (gain) loss		10		10		13		Other expense
Tax expense (benefit)		(2)		(2)		(3)		Income tax expense
		8		8		10
Total reclassification from AOCI		$23		$1		$7

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 13—COMPONENTS OF OTHER COMPREHENSIVE INCOME (LOSS)

   

	155	2022 FORM 10-K ANNUAL REPORT

Note 14—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)		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

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

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 14—INCOME TAXES

   

	156	2022 FORM 10-K ANNUAL REPORT

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

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

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 pretax 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, 2022, FHN's net DTA was $313 million

compared to $52 million at December 31, 2021. At

December 31, 2022, FHN's gross DTA (net of a valuation

allowance) and gross DTL were $761 million and $448

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, 2022

and 2021 were as follows:

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 14—INCOME TAXES

   

	157	2022 FORM 10-K ANNUAL REPORT

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.

Total unrecognized tax benefits at December 31, 2022 and

2021 were $89 million and $92 million, respectively. To

the extent such unrecognized tax benefits as of

December 31, 2022 are subsequently recognized, $48

million of tax benefits could impact tax expense and FHN’s

effective tax rate in future periods.

FHN is currently under audit in several jurisdictions. It is

reasonably possible that the unrecognized tax benefits

related to federal and state exposures could decrease by

$76 million during 2023 if audits are completed and

settled and 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 $17 million

and $14 million accrued for the payment of interest as of

December 31, 2022 and 2021, respectively. The total

amount of interest and penalties recognized in the

Consolidated Statements of Income during 2022 and 2021

was an expense of $3 million for both periods.

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

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 14—INCOME TAXES

   

	158	2022 FORM 10-K ANNUAL REPORT

Note 15—Earnings Per Share

The computations of basic and diluted earnings per common share were as follows:

Table 8.15.1

EARNINGS PER SHARE COMPUTATIONS

(Dollars in millions, except per share data; shares in thousands)		2022		2021		2020
Net income		$912		$1,010		$857
Net income attributable to noncontrolling interest		12		11		12
Net income attributable to controlling interest		900		999		845
Preferred stock dividends		32		37		23
Net income available to common shareholders		868		962		822
Weighted average common shares outstanding—basic		535,033		546,354		432,125
Effect of dilutive restricted stock, performance equity awards and options		7,830		4,887		1,592
Effect of dilutive convertible preferred stock (a)		23,141		—		—
Weighted average common shares outstanding—diluted		566,004		551,241		433,717
Basic earnings per common share		$1.62		$1.76		$1.90
Diluted earnings per common share		$1.53		$1.74		$1.89
(a) On February 28, 2022, FHN issued $494 million of Series G Convertible Preferred Stock, which is convertible into common stock upon completion of the Pending TD Merger or the termination of the TD Merger Agreement. For more information on the convertible features, including the conversion rate, see Note 11 - Preferred Stock.

The following table presents outstanding options and

other equity awards that were excluded from the

calculation of diluted earnings per share because they

were either anti-dilutive (the exercise price was higher

than the weighted-average market price for the period) or

the performance conditions have not been met:

Table 8.15.2

ANTI-DILUTIVE EQUITY AWARDS

(Shares in thousands)		2022		2021		2020
Stock options excluded from the calculation of diluted EPS		29		1,366		4,595
Weighted average exercise price of stock options excluded from the calculation of diluted EPS		$25.64		$20.44		$17.47
Other equity awards excluded from the calculation of diluted EPS		144		1,531		3,639

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 15—EARNINGS PER SHARE

   

	159	2022 FORM 10-K ANNUAL REPORT

Note 16—Contingencies and Other Disclosures

Contingencies

Contingent Liabilities Overview

Contingent liabilities arise in the ordinary course of

business. Often they are related to lawsuits, arbitration,

mediation, and other forms of litigation. Various litigation

matters currently are threatened or pending against FHN

and its subsidiaries. Also, FHN at times receives requests

for information, subpoenas, or other inquiries from

federal, state, and local regulators, from other

government authorities, and from other parties

concerning various matters relating to FHN’s current or

former businesses. Certain matters of that sort are

pending at most times, and FHN generally cooperates

when those matters arise. Pending and threatened

litigation matters sometimes are settled by the parties,

and sometimes pending matters are resolved in court or

before an arbitrator, or are withdrawn. Regardless of the

manner of resolution, frequently the most significant

changes in status of a matter occur over a short time

period, often following a lengthy period of little

substantive activity. In view of the inherent difficulty of

predicting the outcome of these matters, particularly

where the claimants seek very large or indeterminate

damages, or where the cases present novel legal theories

or involve a large number of parties, or where claims or

other actions may be possible but have not been brought,

FHN cannot reasonably determine what the eventual

outcome of the matters will be, what the timing of the

ultimate resolution of these matters may be, or what the

eventual loss or impact related to each matter may be.

FHN establishes a loss contingency liability for a litigation

matter when loss is both probable and reasonably

estimable as prescribed by applicable financial accounting

guidance. If loss for a matter is probable and a range of

possible loss outcomes is the best estimate available,

accounting guidance requires a liability to be established

at the low end of the range.

Based on current knowledge, and after consultation with

counsel, management is of the opinion that loss

contingencies related to threatened or pending litigation

matters should not have a material adverse effect on the

consolidated financial condition of FHN, but may be

material to FHN’s operating results for any particular

reporting period depending, in part, on the results from

that period.

Material Loss Contingency Matters

As used in this Note, except for matters that are reported

as having been substantially settled or otherwise

substantially resolved, FHN's “material loss contingency

matters” generally fall into at least one of the following

categories: (i) FHN has determined material loss to be

probable and has established a material loss liability in

accordance with applicable financial accounting guidance;

(ii) FHN has determined material loss to be probable but is

not reasonably able to estimate an amount or range of

material loss liability; or (iii) FHN has determined that

material loss is not probable but is reasonably possible,

and the amount or range of that reasonably possible

material loss is estimable. As defined in applicable

accounting guidance, loss is reasonably possible if there is

more than a remote chance of a material loss outcome for

FHN. FHN provides contingencies note disclosures for

certain pending or threatened litigation matters each

quarter, including all matters mentioned in categories (i)

or (ii) and, occasionally, certain matters mentioned in

category (iii). In addition, in this Note, certain other

matters, or groups of matters, are discussed relating to

FHN’s pre-2009 mortgage origination and servicing

businesses. In all litigation matters discussed in this Note,

unless settled or otherwise resolved, FHN believes it has

meritorious defenses and intends to pursue those

defenses vigorously.

FHN reassesses the liability for litigation matters each

quarter as the matters progress. At December 31, 2022,

the aggregate amount of liabilities established for all such

loss contingency matters was $2 million. These liabilities

are separate from those discussed under the heading

Mortgage Loan Repurchase and Foreclosure Liability

below.

In each material loss contingency matter, except as

otherwise noted, there is more than a remote chance that

any of the following outcomes will occur: the plaintiff will

substantially prevail; the defense will substantially prevail;

the plaintiff will prevail in part; or the matter will be

settled by the parties. At December 31, 2022, FHN

estimates that for all material loss contingency matters,

estimable reasonably possible losses in future periods in

excess of currently established liabilities could aggregate

in a range from zero to less than $1 million.

As a result of the general uncertainties discussed above

and the specific uncertainties discussed for each matter

mentioned below, it is possible that the ultimate future

loss experienced by FHN for any particular matter may

materially exceed the amount, if any, of currently

established liability for that matter.

Exposures from pre-2009 Mortgage Business

FHN is contending with indemnification claims related to

"other whole loans sold," which were mortgage loans

originated by FHN before 2009 and sold outside of a

securitization organized by FHN. These claims generally

assert that FHN-originated loans contributed to losses in

connection with mortgage loans securitized by the buyer

of the loans. The claims generally do not include specific

deficiencies for specific loans sold by FHN. Instead, the

claims generally assert that FHN is liable for a share of the

claimant's loss estimated by assessing the totality of the

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
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	160	2022 FORM 10-K ANNUAL REPORT

other whole loans sold by FHN to claimant in relation to

the totality of the larger number of loans securitized by

claimant. FHN is unable to estimate an RPL range for these

matters due to significant uncertainties regarding: the

number of, and the facts underlying, the loan originations

which claimants assert are indemnifiable; the applicability

of FHN’s contractual indemnity covenants to those facts

and originations; and, in those cases where an indemnity

claim may be supported, whether any legal defenses,

counterclaims, other counter-positions, or third-party

claims might eliminate or reduce claims against FHN or

their impact on FHN.

FHN also has indemnification claims related to servicing

obligations. The most significant is from Nationstar

Mortgage LLC, currently doing business as “Mr. Cooper.”

Nationstar was the purchaser of FHN’s mortgage servicing

obligations and assets in 2013 and 2014 and, was FHN’s

subservicer. Nationstar asserts several categories of

indemnity obligations in connection with mortgage loans

under the subservicing arrangement and under the

purchase transaction. This matter currently is not in

litigation, but litigation in the future is possible. FHN is

unable to estimate an RPL range for this matter due to

significant uncertainties regarding: the exact nature of

each of Nationstar’s claims and its position in respect of

each; the number of, and the facts underlying, the claimed

instances of indemnifiable events; the applicability of

FHN’s contractual indemnity covenants to those facts and

events; and, in those cases where the facts and events

might support an indemnity claim, whether any legal

defenses, counterclaims, other counter-positions, or third-

party claims might eliminate or reduce claims against FHN

or their impact on FHN.

FHN has additional potential exposures related to its

pre-2009 mortgage businesses. A few of those matters

have become litigation which FHN currently estimates are

immaterial, some are non-litigation claims or threats,

some are mere subpoenas or other requests for

information, and in some areas FHN has no indication of

any active or threatened dispute. Some of those matters

might eventually result in settlements, and some might

eventually result in adverse litigation outcomes, but none

are included in the material loss contingency liabilities

mentioned above or in the RPL range mentioned above.

Mortgage Loan Repurchase and Foreclosure Liability

FHN’s repurchase and foreclosure liability, primarily

related to its pre-2009 mortgage businesses, is comprised

of accruals to cover estimated loss content in the active

pipeline (consisting of mortgage loan repurchase, make-

whole, foreclosure/servicing demands and certain related

exposures), estimated future inflows, and estimated loss

content related to certain known claims not currently

included in the active pipeline. FHN compares the

estimated probable incurred losses determined under the

applicable loss estimation approaches for the respective

periods with current reserve levels. Changes in the

estimated required liability levels are recorded as

necessary through the repurchase and foreclosure

provision.

Based on currently available information and experience

to date, FHN has evaluated its loan repurchase, make-

whole, foreclosure, and certain related exposures and has

accrued for losses of $16 million and $17 million as of

December 31, 2022 and December 31, 2021, respectively.

Accrued liabilities for FHN’s estimate of these obligations

are reflected in other liabilities on the Consolidated

Balance Sheets. Charges/expense reversals to increase/

decrease the liability are included within other income on

the Consolidated Statements of Income. The estimates are

based upon currently available information and fact

patterns that exist as of each balance sheet date and

could be subject to future changes. Changes to any one of

these factors could significantly impact the estimate of

FHN’s liability.

Other Disclosures

Indemnification Agreements and Guarantees

In the ordinary course of business, FHN enters into

indemnification agreements for legal proceedings against

its directors and officers and standard representations and

warranties for underwriting agreements, merger and

acquisition agreements, loan sales, contractual

commitments, and various other business transactions or

arrangements.

The extent of FHN’s obligations under these agreements

depends upon the occurrence of future events; therefore,

it is not possible to estimate a maximum potential amount

of payouts that could be required by such agreements.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
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	161	2022 FORM 10-K ANNUAL REPORT

Note 17—Retirement Plans and Other Employee Benefits

Pension Plan

FHN sponsors a noncontributory, qualified defined benefit

pension plan to employees hired or re-hired on or before

September 1, 2007. Pension benefits are based on years

of service, average compensation near retirement or

other termination, and estimated social security benefits

at age 65. Benefits under the plan are “frozen” so that

years of service and compensation changes after 2012 do

not affect the benefit owed. Minimum contributions are

based upon actuarially determined amounts necessary to

fund the total benefit obligation. Decisions to contribute

to the plan are based upon pension funding requirements

under the Pension Protection Act, the maximum amount

deductible under the Internal Revenue Code, the actual

performance of plan assets, and trends in the regulatory

environment. FHN made a contribution of $6 million to

the qualified pension plan in 2021, and no contributions

were made in 2022 and 2020. Management does not

currently anticipate that FHN will make a contribution to

the qualified pension plan in 2023.

FHN also maintains non-qualified plans including a

supplemental retirement plan that covers certain

employees whose benefits under the qualified pension

plan have been limited by tax rules. These other non-

qualified plans are unfunded, and contributions to these

plans cover all benefits paid under the non-qualified plans.

Payments made under the non-qualified plans were

$5 million for 2022. Management does not currently

anticipate that FHN will make a contribution to the non-

qualified pension plan in 2023.

Savings Plan

FHN provides all qualifying full-time employees with the

opportunity to participate in FHN's tax qualified 401(k)

savings plan. The qualified plan allows employees to defer

receipt of earned salary, up to tax law limits, on a tax-

advantaged basis. Accounts, which are held in trust, may

be invested in a wide range of mutual funds and in FHN

common stock. Up to tax law limits, FHN provides a 100%

match for the first 6% of salary deferred, with company

matching contributions invested according to a

participant’s current investment election. Through a non-

qualified savings restoration plan, FHN provides a

restorative benefit to certain highly-compensated

employees who participate in the savings plan and whose

contribution elections are capped by tax limitations.

FHN also provides “flexible dollars” to assist employees

with the cost of annual benefits and/or allow the

employee to contribute to his or her qualified savings plan

account. These “flexible dollars” are pre-tax contributions

and are based upon the employees’ years of service and

qualified compensation. Contributions made by FHN

through the flexible benefits plan and the company

matches were $47 million, $51 million, and $37 million for

2022, 2021, and 2020, respectively.

Other Employee Benefits

FHN provides postretirement life insurance benefits to

certain employees and also provides postretirement

medical insurance benefits to retirement-eligible

employees, including certain prescription drug benefits.

The postretirement medical plan is contributory with FHN

contributing a fixed amount for certain participants.

Actuarial Assumptions

FHN’s process for developing the long-term expected rate

of return of pension plan assets is based on capital market

exposure as the source of investment portfolio returns.

Capital market exposure refers to the plan’s allocation of

its assets to asset classes, which primarily represent fixed

income investments. FHN also considers expectations for

inflation, real interest rates, and various risk premiums

based primarily on the historical risk premium for each

asset class. The expected return is based upon a time

horizon of 30 years. Given its funded status, the asset

allocation strategy for the qualified pension plan utilizes

fixed income instruments that closely match the

estimated duration of payment obligations.

The discount rates for the three years ended 2022 for

pension and other benefits were determined by using a

hypothetical AA yield curve represented by a series of

annualized individual discount rates from one-half to 30

years. The discount rates are selected based upon data

specific to FHN’s plans and employee population. The

bonds used to create the hypothetical yield curve were

subjected to several requirements to ensure that the

resulting rates were representative of the bonds that

would be selected by management to fulfill the company’s

funding obligations. In addition to the AA rating, only non-

callable bonds were included. Each bond issue was

required to have at least $300 million par outstanding so

that each issue was sufficiently marketable. Finally, bonds

more than two standard deviations from the average yield

were removed. When selecting the discount rate, FHN

matches the duration of high quality bonds with the

duration of the obligations of the plan as of the

measurement date. For all years presented, the

measurement date of the benefit obligations and net

periodic benefit costs was December 31.

The actuarial assumptions used in the defined benefit

pension plans and other employee benefit plans were as

follows:

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	162	2022 FORM 10-K ANNUAL REPORT

Table 8.17.1

ACTUARIAL ASSUMPTIONS FOR DEFINED BENEFIT PLANS

		Benefit Obligations						Net Periodic Benefit Cost
		2022		2021		2020		2022		2021		2020
Discount rate
Qualified pension		5.20%		2.95%		2.63%		2.96%		2.64%		3.31%
Nonqualified pension		5.10%		2.65%		2.24%		2.65%		2.24%		3.08%
Other nonqualified pension		4.94%		1.99%		1.41%		1.99%		1.41%		2.57%
Postretirement benefits		5.04% - 5.25%		2.43% - 3.07%		1.92% - 2.81%		2.42% - 5.08%		1.93% - 2.81%		2.87% - 3.44%
Expected long- term rate of return
Qualified pension/ postretirement benefits		N/A		N/A		N/A		2.85%		2.30%		3.45%
Postretirement benefit (retirees post January 1, 1993)		N/A		N/A		N/A		5.95%		5.80%		6.40%
Postretirement benefit (retirees prior to January 1, 1993)		N/A		N/A		N/A		1.05%		1.00%		0.90%

Since the benefits in the defined benefit pension plan are

frozen, the rate of compensation increase has no effect on

qualified pension benefits.

FHN has one pension plan where participants' benefits are

affected by interest crediting rates. The plan's projected

benefit obligation as of December 31, 2022, 2021 and

2020 and interest crediting rates for the respective years

were as follows:

Table 8.17.2

PROJECTED BENEFIT OBLIGATION

& CREDITING RATE

(Dollars in millions)		2022		2021		2020
Projected benefit obligation		$10		$12		$15
Interest crediting rate		10.77%		9.07%		8.20%

The components of net periodic benefit cost for the plan

years 2022, 2021 and 2020 were as follows:

Table 8.17.3

COMPONENTS OF NET PERIODIC BENEFIT COST

(Dollars in millions)		Pension Benefits						Other Benefits
		2022		2021		2020		2022		2021		2020
Components of net periodic benefit cost
Interest cost		$20		$17		$24		$1		$1		$1
Expected return on plan assets		(24)		(20)		(26)		(2)		(1)		(1)
Amortization of unrecognized:
Actuarial (gain) loss		12		10		13		—		—		—
Net periodic benefit cost		$8		$7		$11		$(1)		$—		$—

The long-term expected rate of return is applied to the

market-related value of plan assets in determining the

expected return on plan assets. FHN determines the

market-related value of plan assets using a hybrid

methodology which recognizes liability-hedging assets at

current fair value while return-seeking assets use a

calculated value that recognizes changes in fair value over

five years, as permitted by GAAP.

FHN utilizes a spot rate approach which applies duration-

specific rates from the full yield curve to estimated future

benefit payments for the determination of interest cost.

The following table presents the plans’ benefit obligations

and plan assets for 2022 and 2021:

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Table 8.17.4

BENEFIT OBLIGATIONS & PLAN ASSETS

(Dollars in millions)		Pension Benefits				Other Benefits
		2022		2021		2022		2021
Change in benefit obligation
Benefit obligation, beginning of year		$845		$893		$41		$46
Interest cost		20		17		1		1
Actuarial (gain) loss (a)		(163)		(26)		(9)		(5)
Actual benefits paid		(39)		(39)		(1)		(1)
Benefit obligation, end of year		$663		$845		$32		$41
Change in plan assets
Fair value of plan assets, beginning of year		$849		$896		$26		$23
Actual return on plan assets		(172)		(18)		(4)		3
Employer contributions		3		10		1		1
Actual benefits paid – settlement payments		(2)		(3)		(2)		(1)
Actual benefits paid – other payments		(1)		(2)		—		—
Premium paid for annuity purchase (b)		(36)		(34)		—		—
Fair value of plan assets, end of year		$641		$849		$21		$26
Funded (unfunded) status of the plans		$(22)		$4		$(11)		$(15)
Amounts recognized in the Balance Sheets
Other assets		$4		$37		$19		$23
Other liabilities		(26)		(33)		(30)		(38)
Net asset (liability) at end of year		$(22)		$4		$(11)		$(15)

(a)Variances in the actuarial (gain) loss are due to normal activity such as changes in discount rates, updates to participant demographic information and

revisions to life expectancy assumptions.

(b)Amounts represent settlements of certain retired participants in the qualified pension plan that occurred during the year.

The projected benefit obligation for unfunded plans was as follows:

Table 8.17.5

BENEFIT OBLIGATION - UNFUNDED PLANS

		Pension Benefits				Other Benefits
(Dollars in millions)		2022		2021		2022		2021
Projected benefit obligation		$26		$33		$30		$38

The qualified pension plan was overfunded by $4 million

and $37 million as of December 31, 2022 and 2021,

respectively. Because of the pension freeze at the end of

2012, as of both December 31, 2022 and 2021, the

pension benefit obligation is equivalent to the

accumulated benefit obligation. FHN's funded post

retirement plan was also in an overfunded status as of

December 31, 2022 and 2021.

Unrecognized actuarial gains and losses and unrecognized

prior service costs and credits are recognized as a

component of accumulated other comprehensive income.

Balances reflected in accumulated other comprehensive

income on a pre-tax basis for the years ended

December 31, 2022 and 2021 consist of:

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
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	164	2022 FORM 10-K ANNUAL REPORT

Table 8.17.6

PRE-TAX ACTUARIAL GAINS (LOSSES) REFLECTED IN AOCI

(Dollars in millions)		Pension Benefits				Other Benefits
		2022		2021		2022		2021
Amounts recognized in accumulated other comprehensive income
Net actuarial (gain) loss		$363		$342		$(8)		$(6)

The pre-tax amounts recognized in other comprehensive income during 2022, 2021, and 2020 were as follows:

Table 8.17.7

PRE-TAX AMOUNTS RECOGNIZED IN OCI

(Dollars in millions)		Pension Benefits						Other Benefits
		2022		2021		2020		2022		2021		2020
Changes in plan assets and benefit obligation recognized in other comprehensive income
Net actuarial (gain) loss arising during measurement period		$32		$13		$(8)		$(3)		$(7)		$3
Items amortized during the measurement period:
Net actuarial gain (loss)		(11)		(10)		(13)		—		—		—
Total recognized in other comprehensive income		$21		$3		$(21)		$(3)		$(7)		$3

FHN utilizes the minimum amortization method in

determining the amount of actuarial gains or losses to

include in plan expense. Under this approach, the net

deferred actuarial gain or loss that exceeds a threshold is

amortized over the average remaining service period of

active plan participants. The threshold is measured as the

greater of: 10% of a plan’s projected benefit obligation as

of the beginning of the year or 10% of the market related

value of plan assets as of the beginning of the year. FHN

amortizes actuarial gains and losses using the estimated

average remaining life expectancy of the remaining

participants since all participants are considered inactive

due to the freeze.

The following table provides detail on expected benefit

payments, which reflect expected future service, as

appropriate:

Table 8.17.8

EXPECTED BENEFIT PAYMENTS

(Dollars in millions)		Pension Benefits		Other Benefits
2023		$42		$2
2024		44		2
2025		45		2
2026		47		2
2027		47		2
2028-2032		238		12

Plan Assets

FHN’s overall investment goal is to create, over the life of

the pension plan and retiree medical plan, an adequate

pool of sufficiently liquid assets to support the qualified

pension benefit obligations to participants, retirees, and

beneficiaries, as well as to partially support the medical

obligations to retirees and beneficiaries. Thus, the

qualified pension plan and retiree medical plan seek to

achieve a level of investment return consistent with

changes in projected benefit obligations.

Qualified pension plan assets primarily consist of fixed

income securities which include U.S. treasuries, corporate

bonds of companies from diversified industries, municipal

bonds, and foreign bonds. Fixed income investments

generally have long durations consistent with the

estimated pension liabilities of FHN. This duration-

matching strategy is intended to hedge substantially all of

the plan’s risk associated with future benefit payments.

Retiree medical funds are kept in short-term investments,

primarily money market funds and mutual funds. On

December 31, 2022 and 2021, FHN did not have any

significant concentrations of risk within the plan assets

related to the pension plan or the retiree medical plan.

The fair value of FHN’s pension plan assets at

December 31, 2022 and 2021, by asset category classified

using the Fair Value measurement hierarchy, is shown in

the table below. See Note 23 – Fair Value of Assets and

Liabilities for more details about fair value measurements.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
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	165	2022 FORM 10-K ANNUAL REPORT

Table 8.17.9

FAIR VALUE OF PENSION ASSETS

(Dollars in millions)		December 31, 2022
		Level 1		Level 2		Level 3		Total
Cash equivalents and money market funds		$20		$—		$—		$20
Fixed income securities:
U.S. treasuries		—		15		—		15
Corporate, municipal and foreign bonds		—		300		—		300
Common and collective funds:
Fixed income		—		306		—		306
Total		$20		$621		$—		$641

(Dollars in millions)		December 31, 2021
		Level 1		Level 2		Level 3		Total
Cash equivalents and money market funds		$45		$—		$—		$45
Fixed income securities:
U.S. treasuries		—		15		—		15
Corporate, municipal and foreign bonds		—		445		—		445
Common and collective funds:
Fixed income		—		344		—		344
Total		$45		$804		$—		$849

The Pension and Savings Investment Committees,

comprised of senior managers within the organization,

meet regularly to review asset performance and potential

portfolio revisions.

Adjustments to the qualified pension plan asset allocation

primarily reflect changes in anticipated liquidity needs for

plan benefits.

The fair value of FHN’s retiree medical plan assets at

December 31, 2022 and 2021 by asset category are as

follows:

Table 8.17.10

FAIR VALUE OF RETIREE MEDICAL PLAN ASSETS

(Dollars in millions)		December 31, 2022
		Level 1		Level 2		Level 3		Total
Mutual funds:
Equity mutual funds		$6		$—		$—		$6
Fixed income mutual funds		15		—		—		15
Total		$21		$—		$—		$21

(Dollars in millions)		December 31, 2021
		Level 1		Level 2		Level 3		Total
Mutual funds:
Equity mutual funds		$17		$—		$—		$17
Fixed income mutual funds		9		—		—		9
Total		$26		$—		$—		$26

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	166	2022 FORM 10-K ANNUAL REPORT

Note 18—Stock Options, Restricted Stock, and Dividend Reinvestment Plans

Equity Compensation Plans

FHN currently has one plan which authorizes the grant of

new stock-based awards, the 2021 Incentive Plan (the IP).

New awards under the IP may be granted to any of FHN's

directors, officers, or associates. The IP was approved by

shareholders in April 2021. Most awards outstanding at

year end were granted under predecessor plans which are

no longer active.

The IP authorizes a broad range of award types, including

restricted shares, stock units, cash units, and stock

options. Stock units may be paid in shares or cash,

depending upon the terms of the award. The IP also

authorizes the grant of stock appreciation rights, though

no such grants have been made under the IP or recent

predecessor plans. Unvested awards have service and/or

performance conditions which must be met in order for

the shares to vest. Awards generally have service-vesting

conditions, meaning that the associate must remain

employed by FHN for certain periods in order for the

award to vest. Some outstanding awards also have

performance conditions, and one outstanding award has

performance conditions associated with FHN’s stock price.

FHN operates the IP by establishing award programs, each

of which is intended to cover a specific need. Programs

are created, changed, or terminated as needs change.

On December 31, 2022, there were 6,266,253 shares

available for new awards under the IP. This includes the

new/additional shares originally authorized under the IP

along with shares underlying ECP awards that have been

forfeited or canceled since the IP was approved by

shareholders, net of shares underlying IP awards that are

outstanding or have been paid.

Service condition full-value awards

Awards may be granted with service conditions only. In

recent years, programs using these awards have included

annual programs for executives and selected management

associates, a mandatory deferral program for executives

tied to annual bonuses earned, other mandatory or

elective deferral programs, various retention programs,

and special hiring-incentive situations. Details of the

awards vary by program, but most are settled in shares at

vesting rather than cash, and vesting generally begins no

earlier than the third anniversary of grant and rarely

extends beyond the fifth anniversary of grant.

Performance condition awards

Under FHN’s long-term incentive and corporate

performance programs, performance stock units (PSUs)

(executives) and cash units (selected management

employees) are granted annually and vest only if

predetermined performance measures are met. The

measures are changed each year based on goals and

circumstances prevailing at the time of grant. In recent

years the performance periods have been three years,

with service-vesting near the third anniversary of the

grant. PSUs granted from 2014 to 2020 have a post-vest

holding period of two years. PSUs granted after 2020 no

longer have the 2-year holding period. Recent annual

performance awards require pro-rated forfeiture (in

relation to the maximum possible) for performance falling

between a threshold level and a maximum. Performance

awards sometimes are used to provide a narrow, targeted

incentive to a single person or small group; one such

award which includes a market performance condition to

FHN’s CEO is discussed in the next paragraph. Of the

annual program awards paid during 2022 or outstanding

on December 31, 2022: the 2017 units vested in 2020 and

their two year post-vesting holding period ended during

2020, 2018 and 2019 units vested in 2021 and 2022 at the

133.3%  and 187.5% payout level, respectively, and remain

in a two year post-vesting holding period; the three-year

performance period of the 2020 units has ended but

performance is measured relative to peers and has not yet

been determined; and, the three-year performance

periods for the 2021 and 2022 units have not ended.

Market condition award

In 2016, FHN made a special grant of performance stock

units to FHN’s CEO which will vest at the end of a

performance period of seven years. The award has no

provision for pro-rated payment based on partial

performance. The award’s performance goal is based on

achievement of a specific level of total shareholder return

during the performance period.

Director awards

Non-employee directors receive cash and annual grants of

service-conditioned stock units under a program approved

by the board of directors. Director stock units granted

prior to the IBKC merger vest in the year following the

year of grant, require a payment deferral of two years,

and settle in shares after the deferral period. Director

stock units granted after the IBKC merger no longer have

the 2-year holding period. In 2022 and 2021, each director

received a base of $122,000 or prorated equivalent of

stock units, representing a portion of their annual

retainer. Prior to 2005, directors could elect to defer cash

compensation in the form of discount-priced stock

options, some of which remain outstanding.

Stock and stock unit awards. A summary of restricted and

performance stock and unit activity during the year ended

December 31, 2022, is presented below:

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 18—STOCK OPTIONS, RESTRICTED STOCK, & DIVIDEND REINVESTMENT PLANS

   

	167	2022 FORM 10-K ANNUAL REPORT

Table 8.18.1

RESTRICTED AND PERFORMANCE EQUITY AWARD ACTIVITY

		Shares/ Units (a)		Weighted average grant date fair value (per share) (b)
January 1, 2022		9,296,888		$13.14
Shares/units granted		6,363,454		20.64
Shares/units vested/distributed		(2,085,465)		11.09
Shares/units canceled		(541,231)		18.01
December 31, 2022		13,033,646		$17.09

(a)Includes only units that settle in shares; nonvested performance units are included at 100% payout level.

(b)The weighted average grant date fair value for shares/units granted in 2021 and 2020 was $13.14 and $12.47, respectively.

On December 31, 2022, there was $137 million of

unrecognized compensation cost related to nonvested

restricted stock awards. That cost is expected to be

recognized over a weighted-average period of two years.

The total grant date fair value of shares vested during

2022, 2021 and 2020, was $29 million, $36 million, and

$24 million, respectively.

Stock option awards

In 2021 FHN ended its only remaining stock option

program, making only one grant related to a 2020

commitment. Options under that program, for executives,

have service-vesting requirements and seven-year terms.

In the past, option programs varied widely in their uses

and terms, and many old-program options, granted under

the ECP or its predecessor plans, remain outstanding

today. All options granted since 2005 provide for the

issuance of FHN common stock at a price fixed at its fair

market value on the grant date. Except for converted

options and a special retention stock option award to the

CEO in 2016, all options granted since 2008 vest fully no

later than the fourth anniversary of grant, and all such

options expire seven years from the grant date. CBF

converted options and IBKC converted options granted

prior to November 3, 2019 (the merger agreement date)

are fully vested and expire ten years from grant date. IBKC

converted options granted subsequent to the merger

agreement vest fully no later than the fifth anniversary of

the grant date and expire ten years from grant date. The

2016 retention award vests beginning on the fourth

anniversary of grant and extends through the sixth

anniversary of grant. A deferral program, which was

discontinued in 2005, allowed for foregone compensation

plus the exercise price to equal the fair market value of

the stock on the date of grant if the grantee agreed to

receive the options in lieu of compensation. Deferral

options still outstanding expire 20 years from the grant

date.

The summary of stock option activity for the year ended

December 31, 2022, is shown below:

Table 8.18.2

STOCK OPTION ACTIVITY

		Options Outstanding		Weighted Average Exercise Price (per share)		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value (millions)
January 1, 2022		4,980,929		$15.81
Options granted		—		—
Options exercised		(2,349,432)		15.36
Options expired/canceled		(194,051)		22.35
December 31, 2022		2,437,446		$15.72		3.42		$21
Options exercisable		1,836,692		15.76		2.88		16
Options expected to vest		600,754		15.59		5.05		5

The total intrinsic value of options exercised during 2022,

2021 and 2020 was $17 million, $12 million, and $3

million, respectively. On December 31, 2022, there was

less than $1 million of unrecognized compensation cost

related to nonvested stock options. That cost is expected

to be recognized over a weighted-average period of

1.3 years.

FHN did not grant or convert stock options in 2022. FHN

granted or converted 155,124 and 4,182,737 stock options

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 18—STOCK OPTIONS, RESTRICTED STOCK, & DIVIDEND REINVESTMENT PLANS

   

	168	2022 FORM 10-K ANNUAL REPORT

with a weighted average fair value of $3.39 and $2.13 per

option at grant date in 2021 and 2020, respectively.

FHN used the Black-Scholes Option Pricing Model to

estimate the fair value of stock options granted or

converted in 2021 and 2020 with the following

assumptions:

Table 8.18.3

STOCK OPTION FAIR VALUE ASSUMPTIONS

		2021		2020
Expected dividend yield		4.16%		3.77%
Expected weighted-average lives of options granted		6.29 years		6.25 years
Expected weighted-average volatility		38.44%		23.94%
Expected volatility range		37.86% - 39.02%		23.32% - 24.56%
Risk-free interest rate		0.62%		1.47%

Expected lives of options granted are determined based

on the vesting period, historical exercise patterns and

contractual term of the options. FHN uses a blend of

historical and implied volatility in determining expected

volatility. A portion of the weighted average volatility rate

is derived by compiling daily closing stock prices over a

historical period approximating the expected lives of the

options. Additionally, because of market volatility due to

economic conditions and the impact on stock prices of

financial institutions, FHN also incorporates a measure of

implied volatility so as to incorporate more recent market

conditions in the estimation of future volatility.

Phantom stock awards

As a result of the IBKC merger, FHN assumed phantom

stock awards under various plans to officers and other key

associates. The awards are subject to a vesting period of

five years and are paid out in cash upon vesting. The

amount paid per vesting period is calculated as the

number of vested share equivalents multiplied by closing

market price of a share of the Company's common stock

on the vesting date. Share equivalents are calculated on

the date of grant as the total award's dollar value divided

by the closing market price of a share of the Company's

common stock on the grant date. As of December 31,

2022, there were 310,764 share equivalents of phantom

stock awards outstanding. See Note 1 - Significant

Accounting Policies for more discussion on FHN's phantom

stock awards.

Compensation Cost

The compensation cost that has been included in the

Consolidated Statements of Income pertaining to stock-

based awards was $75 million, $43 million, and $32

million for 2022, 2021, and 2020, respectively. The

corresponding total income tax benefits recognized were

$18 million, $10 million and $8 million in 2022, 2021, and

2020, respectively.

Authorization

Consistent with Tennessee state law, only authorized, but

unissued, stock may be utilized in connection with any

issuance of FHN common stock which may be required as

a result of stock-based compensation awards. FHN has

obtained authorization from the Board of Directors to

repurchase up to certain numbers of shares related to

issuance under the IP and several older stock award plans.

These authorizations are automatically adjusted for stock

splits and stock dividends. Repurchases are authorized to

be made in the open market or through privately

negotiated transactions and will be subject to market

conditions, accumulation of excess equity, legal and

regulatory restrictions, and prudent capital management.

FHN does not currently expect to repurchase a material

number of shares under the compensation plan-related

repurchase program during 2023.

Dividend reinvestment plan

Prior to March 2022, the Dividend Reinvestment and Stock

Purchase Plan authorized the sale of FHN’s common stock

from stock acquired on the open market to shareholders

who choose to invest all or a portion of their cash

dividends or make optional cash payments of $25 to

$10,000 per quarter without paying commissions. The

price of stock purchased on the open market was the

average price paid. In March 2022, FHN agreed to suspend

the Dividend Reinvestment Plan in connection with the

pending TD Merger. As a result of the suspension of the

Plan, participants in the Plan received all dividends in cash

starting with the first quarter 2022 FHN dividend, paid on

April 1, 2022. During the suspension period, dividend

payments of FHN will not be automatically reinvested in

additional shares of FHN common stock and participants

in the Plan will be unable to purchase shares of FHN

common stock through optional cash investments under

the Plan.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 18—STOCK OPTIONS, RESTRICTED STOCK, & DIVIDEND REINVESTMENT PLANS

   

	169	2022 FORM 10-K ANNUAL REPORT

Note 19—Business Segment Information

FHN's operating segments are composed of the following:

•Regional Banking segment offers financial products

and services, including traditional lending and deposit

taking, to consumer and commercial clients primarily

in the southern U.S. and other selected markets.

Regional Banking also provides investment, wealth

management, financial planning, trust and asset

management services for consumer clients.

•Specialty Banking segment consists of lines of

business that deliver product offerings and services

with specialized industry knowledge. Specialty

Banking’s lines of business include asset-based

lending, mortgage warehouse lending, commercial

real estate, franchise finance, correspondent banking,

equipment finance, mortgage, and title insurance. In

addition to traditional lending and deposit taking,

Specialty Banking also delivers treasury management

solutions, loan syndications, and international

banking. Additionally, Specialty Banking has a line of

business focused on fixed income securities sales,

trading, underwriting, and strategies for institutional

clients in the U.S. and abroad, as well as loan sales,

portfolio advisory services, and derivative sales.

•Corporate segment consists primarily of corporate

support functions including risk management, audit,

accounting, finance, executive office, and corporate

communications. Shared support services such as

human resources, properties, technology, credit risk

and bank operations are allocated to the activities of

Regional Banking, Specialty Banking and Corporate. 

Additionally, the Corporate segment includes

centralized management of capital and funding to

support the business activities of the company

including management of wholesale funding, liquidity,

and capital management and allocation. The

Corporate segment also includes the revenue and

expense associated with run-off businesses such as

pre-2009 mortgage banking elements, run-off

consumer and trust preferred loan portfolios, and

other exited businesses.

Periodically, FHN adapts its segments to reflect

managerial or strategic changes. During 2020, FHN

reorganized its internal management structure and,

accordingly, its segment reporting structure. Historically,

FHN's reportable business segments were Regional

Banking, Fixed Income, Corporate, and Non-strategic. The

closing of the FHN and IBKC merger-of-equals transaction

prompted organizational changes to better integrate and

execute the combined Company's strategic priorities

across all lines of businesses. As a result, segment

information for 2020 has been reclassified to conform to

the current period presentation.

FHN may also modify its methodology of allocating

expenses and equity among segments which could change

historical segment results. Business segment revenue,

expense, asset, and equity levels reflect those which are

specifically identifiable or which are allocated based on an

internal allocation method. Because the allocations are

based on internally developed assignments and

allocations, to an extent they are subjective. Generally, all

assignments and allocations have been consistently

applied for all periods presented.

The following table presents financial information for each

reportable business segment for the years ended

December 31:

Table 8.19.1

SEGMENT FINANCIAL INFORMATION

		2022
(Dollars in millions)		Regional Banking		Specialty Banking		Corporate		Consolidated
Net interest income (expense)		$1,954		$557		$(119)		$2,392
Provision for credit losses		94		14		(13)		95
Noninterest income (a)		444		311		60		815
Noninterest expense (b)(f)		1,234		440		279		1,953
Income (loss) before income taxes		1,070		414		(325)		1,159
Income tax expense (benefit)		251		101		(105)		247
Net income (loss)		$819		$313		$(220)		$912
Average assets		$42,295		$19,967		$21,955		$84,217
Depreciation and amortization		11		(7)		60		64
Expenditures for long-lived assets		18		12		(6)		24

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 19—BUSINESS SEGMENT INFORMATION

   

	170	2022 FORM 10-K ANNUAL REPORT

		2021
(Dollars in millions)		Regional Banking		Specialty Banking		Corporate		Consolidated
Net interest income (expense)		$1,764		$620		$(390)		$1,994
Provision for credit losses		(229)		(64)		(17)		(310)
Noninterest income		438		597		41		1,076
Noninterest expense (b)(c)(f)		1,139		571		386		2,096
Income (loss) before income taxes		1,292		710		(718)		1,284
Income tax expense (benefit)		303		171		(200)		274
Net income (loss)		$989		$539		$(518)		$1,010
Average assets		$41,527		$20,789		$25,293		$87,609
Depreciation and amortization		(67)		(3)		98		28
Expenditures for long-lived assets		27		3		7		37

		2020
(Dollars in millions)		Regional Banking		Specialty Banking		Corporate		Consolidated
Net interest income (expense)		$1,287		$576		$(201)		$1,662
Provision for credit losses (e)		392		116		(5)		503
Noninterest income (a)		345		576		571		1,492
Noninterest expense (b)(c)(d)		903		498		317		1,718
Income (loss) before income taxes		337		538		58		933
Income tax expense (benefit)		73		131		(128)		76
Net income (loss)		$264		$407		$186		$857
Average assets		$31,890		$19,809		$12,647		$64,346
Depreciation and amortization		(39)		3		82		46
Expenditures for long-lived assets		283		6		90		379

(a)2022 includes a $22 million gain related to the sale of the title insurance business in the Corporate segment. 2020 includes a $533 million purchase

accounting gain associated with the IBKC merger in the Corporate segment.

(b)2022, 2021, and 2020 include $136 million, $187 million and $155 million, respectively, in merger and integration expenses related to the IBKC merger

and Pending TD Merger in the Corporate segment.

(c)2021 and 2020 includes $37 million and $13 million, respectively, in asset impairments related to IBKC merger integration efforts in the Corporate

segment.

(d)2020 includes $41 million of contributions to FHN's foundations.

(e)The provision for credit losses in 2020 was impacted by the provision related to non-PCD loans acquired in the IBKC merger and Truist branch acquisition

and the economic forecast attributable to the COVID-19 pandemic.

(f)2022 and 2021 include $22 million and $19 million, respectively, in derivative valuation adjustments related to prior sales of Visa Class B shares in the

Corporate segment.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 19—BUSINESS SEGMENT INFORMATION

   

	171	2022 FORM 10-K ANNUAL REPORT

The following table presents a disaggregation of FHN’s noninterest income by major product line and reportable segment for

the years ended December 31, 2022, 2021, and 2020:

Table 8.19.2

NONINTEREST INCOME DETAIL BY SEGMENT

		December 31, 2022
(Dollars in millions)		Regional Banking		Specialty Banking		Corporate		Consolidated
Noninterest income:
Fixed income (a)		$—		$205		$—		$205
Deposit transactions and cash management		153		10		8		171
Brokerage, management fees and commissions		92		—		—		92
Card and digital banking fees		75		2		7		84
Mortgage banking and title income		—		68		—		68
Other service charges and fees		32		22		—		54
Trust services and investment management		48		—		—		48
Securities gains (losses), net (b)		—		—		18		18
Other income (c)		44		4		27		75
Total noninterest income		$444		$311		$60		$815
		December 31, 2021
(Dollars in millions)		Regional Banking		Specialty Banking		Corporate		Consolidated
Noninterest income:
Fixed income (a)		$—		$406		$—		$406
Deposit transactions and cash management		157		12		6		175
Brokerage, management fees and commissions		88		—		—		88
Card and digital banking fees		67		3		8		78
Mortgage banking and title income		—		152		2		154
Other service charges and fees		23		17		4		44
Trust services and investment management		51		—		—		51
Securities gains (losses), net (b)		—		—		13		13
Purchase accounting gain		—		—		(1)		(1)
Other income (c)		52		7		9		68
Total noninterest income		$438		$597		$41		$1,076
		December 31, 2020
(Dollars in millions)		Regional Banking		Specialty Banking		Corporate		Consolidated
Noninterest income:
Fixed income (a)		$1		$422		$—		$423
Deposit transactions and cash management		131		11		6		148
Brokerage, management fees and commissions		66		—		—		66
Card and digital banking fees		50		2		8		60
Mortgage banking and title income		—		128		1		129
Other service charges and fees		18		7		1		26
Trust services and investment management		39		—		—		39
Securities gains (losses), net (b)		—		—		(6)		(6)
Purchase accounting gain		—		—		533		533
Other income (c)		40		6		28		74
Total noninterest income		$345		$576		$571		$1,492

(a)2022, 2021 and 2020, include $43 million, $44 million, and $39 million, respectively, of underwriting, portfolio advisory, and other noninterest income in scope of ASC 606,

"Revenue From Contracts With Customers.

(b)Represents noninterest income excluded from the scope of ASC 606. Amount is presented for informational purposes to reconcile total noninterest income.

(c)Includes letter of credit fees and insurance commissions in scope of ASC 606.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 19—BUSINESS SEGMENT INFORMATION

   

	172	2022 FORM 10-K ANNUAL REPORT

Note 20—Variable Interest Entities

FHN makes equity investments in various entities that are

considered VIEs, as defined by GAAP. A VIE typically does

not have sufficient equity at risk to finance its activities

without additional subordinated financial support from

other parties. The Company’s variable interest arises from

contractual, ownership or other monetary interests in the

entity, which change with fluctuations in the fair value of

the entity's net assets. FHN consolidates a VIE if FHN is the

primary beneficiary of the entity. FHN is the primary

beneficiary of a VIE if FHN's variable interest provides it

with the power to direct the activities that most

significantly impact the VIE and the right to receive

benefits (or the obligation to absorb losses) that could

potentially be significant to the VIE. To determine whether

or not a variable interest held could potentially be

significant to the VIE, FHN considers both qualitative and

quantitative factors regarding the nature, size and form of

its involvement with the VIE. FHN assesses whether or not

it is the primary beneficiary of a VIE on an ongoing basis.

Consolidated Variable Interest Entities

FHN has established certain rabbi trusts related to

deferred compensation plans offered to its employees.

FHN contributes employee cash compensation deferrals to

the trusts and directs the underlying investments made by

the trusts. The assets of these trusts are available to FHN’s

creditors only in the event that FHN becomes insolvent.

These trusts are considered VIEs as there is no equity at

risk in the trusts since FHN provided the equity interest to

its employees in exchange for services rendered. FHN is

considered the primary beneficiary of the rabbi trusts as it

has the power to direct the activities that most

significantly impact the economic performance of the

rabbi trusts through its ability to direct the underlying

investments made by the trusts. Additionally, FHN could

potentially receive benefits or absorb losses that are

significant to the trusts due to its right to receive any asset

values in excess of liability payoffs and its obligation to

fund any liabilities to employees that are in excess of a

rabbi trust’s assets.

The following table summarizes the carrying value of

assets and liabilities associated with rabbi trusts used for

deferred compensation plans which are consolidated by

FHN as of December 31, 2022 and 2021:

Table 8.20.1

CONSOLIDATED VIEs

(Dollars in millions)		December 31, 2022		December 31, 2021
Assets:
Other assets		$181		$205
Liabilities:
Other liabilities		$150		$179

Nonconsolidated Variable Interest Entities

Low Income Housing Tax Credit Partnerships

Through designated wholly-owned subsidiaries, First

Horizon Bank makes equity investments as a limited

partner in various partnerships that sponsor affordable

housing projects utilizing the LIHTC. The purpose of these

investments is to achieve a satisfactory return on capital

and to support FHN’s community reinvestment initiatives.

LIHTC partnerships are managed by unrelated general

partners that have the power to direct the activities which

most significantly affect the performance of the

partnerships. FHN is therefore not the primary beneficiary

of any LIHTC partnerships. Accordingly, FHN does not

consolidate these VIEs and accounts for these investments

in other assets on the Consolidated Balance Sheets.

FHN accounts for all qualifying LIHTC investments under

the proportional amortization method. Under this method

an entity amortizes the initial cost of the investment in

proportion to the tax credits and other tax benefits

received and recognizes the net investment performance

as a component of income tax expense. LIHTC investments

that do not qualify for the proportional amortization

method are accounted for using the equity method.

Expenses associated with non-qualifying LIHTC

investments were not material during 2022, 2021, and

2020.

The following table summarizes the impact to income tax

expense on the Consolidated Statements of Income for

the years ended December 31, 2022, 2021 and 2020 for

LIHTC investments accounted for under the proportional

amortization method.

Table 8.20.2

LIHTC IMPACTS ON TAX EXPENSE

(Dollars in millions)		2022		2021		2020
Income tax expense (benefit):
Amortization of qualifying LIHTC investments		$44		$26		$23
Low income housing tax credits		(48)		(32)		(22)
Other tax benefits related to qualifying LIHTC investments		(12)		(7)		(10)

Other Tax Credit Investments

Through designated subsidiaries, First Horizon Bank

periodically makes equity investments as a non-managing

member in various LLCs that sponsor community

development projects utilizing the NMTC. First Horizon

Bank also makes equity investments as a limited partner

or non-managing member in entities that receive solar

and historic tax credits. The purposes of these

investments are to achieve a satisfactory return on capital

and to support FHN’s community reinvestment initiatives.

These entities are considered VIEs as First Horizon Bank's

subsidiaries represent the holders of the equity

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 20—VARIABLE INTEREST ENTITIES

   

	173	2022 FORM 10-K ANNUAL REPORT

investment at risk, but do not have the ability to direct the

activities that most significantly affect the performance of

the entities.

Small Issuer Trust Preferred Holdings

First Horizon Bank holds variable interests in trusts which

have issued mandatorily redeemable preferred capital

securities (“trust preferreds”) for smaller banking and

insurance enterprises. First Horizon Bank has no voting

rights for the trusts’ activities. The trusts’ only assets are

junior subordinated debentures of the issuing enterprises.

The creditors of the trusts hold no recourse to the assets

of First Horizon Bank. Since First Horizon Bank is solely a

holder of the trusts’ securities, it has no rights which

would give it the power to direct the activities that most

significantly impact the trusts’ economic performance and

thus it is not considered the primary beneficiary of the

trusts. First Horizon Bank has no contractual requirements

to provide financial support to the trusts.

On-Balance Sheet Trust Preferred Securitization

In 2007, First Horizon Bank executed a securitization of

certain small issuer trust preferreds for which the

underlying trust meets the definition of a VIE, as the

holders of the equity investment at risk do not have the

power through voting rights, or similar rights, to direct the

activities that most significantly impact the entity’s

economic performance. Since First Horizon Bank did not

retain servicing or other decision-making rights, First

Horizon Bank is not the primary beneficiary as it does not

have the power to direct the activities that most

significantly impact the trust’s economic performance.

Accordingly, First Horizon Bank has accounted for the

funds received through the securitization as a term

borrowing in its Consolidated Balance Sheets. First

Horizon Bank has no contractual requirements to provide

financial support to the trust.

Holdings in Agency Mortgage-Backed Securities

FHN holds securities issued by various Agency

securitization trusts. Based on their restrictive nature, the

trusts meet the definition of a VIE since the holders of the

equity investments at risk do not have the power through

voting rights, or similar rights, to direct the activities that

most significantly impact the entities’ economic

performance. FHN could potentially receive benefits or

absorb losses that are significant to the trusts based on

the nature of the trusts’ activities and the size of FHN’s

holdings. However, FHN is solely a holder of the trusts’

securities and does not have the power to direct the

activities that most significantly impact the trusts’

economic performance and is not considered the primary

beneficiary of the trusts. FHN has no contractual

requirements to provide financial support to the trusts.

Commercial Loan Troubled Debt Restructurings

For certain troubled commercial loans, First Horizon Bank

restructures the terms of the borrower’s debt in an effort

to increase the probability of receipt of amounts

contractually due. Following a troubled debt restructuring,

the borrower entity typically meets the definition of a VIE

as the initial determination of whether an entity is a VIE

must be reconsidered as events have proven that the

entity’s equity is not sufficient to permit it to finance its

activities without additional subordinated financial

support or a restructuring of the terms of its financing. As

First Horizon Bank does not have the power to direct the

activities that most significantly impact such troubled

commercial borrowers’ operations, it is not considered the

primary beneficiary even in situations where, based on the

size of the financing provided, First Horizon Bank is

exposed to potentially significant benefits and losses of

the borrowing entity. First Horizon Bank has no

contractual requirements to provide financial support to

the borrowing entities beyond certain funding

commitments established upon restructuring of the terms

of the debt that allows for preparation of the underlying

collateral for sale.

Proprietary Trust Preferred Issuances

In conjunction with its acquisitions, FHN acquired junior

subordinated debt underlying multiple issuances of trust

preferred debt. All of the trusts are considered VIEs

because the ownership interests from the capital

contributions to these trusts are not considered “at risk”

in evaluating whether the holders of the equity

investments at risk in the trusts have the ability to direct

the activities that most significantly impact the entities’

economic performance. Thus, FHN cannot be the trusts’

primary beneficiary because its ownership interests in the

trusts are not considered variable interests as they are not

considered “at risk”. Consequently, none of the trusts are

consolidated by FHN.

The following tables summarize FHN’s nonconsolidated

VIEs as of December 31, 2022 and 2021:

 

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 20—VARIABLE INTEREST ENTITIES

   

	174	2022 FORM 10-K ANNUAL REPORT

Table 8.20.3

NONCONSOLIDATED VIEs AT DECEMBER 31, 2022

(Dollars in millions)		Maximum Loss Exposure		Liability Recognized		Classification
Type:
Low income housing partnerships		$463		$154		(a)
Other tax credit investments (b)		85		67		Other assets
Small issuer trust preferred holdings (c)		171		—		Loans and leases
On-balance sheet trust preferred securitization		27		87		(d)
Holdings of agency mortgage-backed securities (c)		8,652		—		(e)
Commercial loan troubled debt restructurings (f)		53		—		Loans and leases
Proprietary trust preferred issuances (g)		—		167		Term borrowings

(a)Maximum loss exposure represents $309 million of current investments and $154 million of accrued contractual funding commitments. Accrued funding

commitments represent unconditional contractual obligations for future funding events and are recognized in other liabilities. FHN currently expects to

be required to fund these accrued commitments by the end of 2024.

(b)Maximum loss exposure represents the value of current investments.

(c)Maximum loss exposure represents the value of current investments. A liability is not recognized as FHN is solely a holder of the trusts’ securities.

(d)Includes $112 million classified as loans and leases and $2 million classified as trading securities, which are offset by $87 million classified as term

borrowings.

(e)Includes $205 million classified as trading securities, $1.4 billion classified as securities held to maturity, and $7.1 billion classified as securities available

for sale.

(f)Maximum loss exposure represents $53 million of current receivables with no additional contractual funding commitments on loans related to

commercial borrowers involved in a troubled debt restructuring.

(g)No exposure to loss due to nature of FHN's involvement.

Table 8.20.4

NONCONSOLIDATED VIEs AT DECEMBER 31, 2021

(Dollars in millions)		Maximum Loss Exposure		Liability Recognized		Classification
Type:
Low income housing partnerships		$382		$129		(a)
Other tax credit investments (b)		77		56		Other assets
Small issuer trust preferred holdings (c)		195		—		Loans and leases
On-balance sheet trust preferred securitization		27		87		(d)
Holdings of agency mortgage-backed securities (c)		8,550		—		(e)
Commercial loan troubled debt restructurings (f)		98		—		Loans and leases
Proprietary trust preferred issuances (g)		—		167		Term borrowings

(a)Maximum loss exposure represents $253 million of current investments and $129 million of accrued contractual funding commitments. Accrued funding

commitments represent unconditional contractual obligations for future funding events and are recognized in other liabilities. FHN currently expects to

be required to fund these accrued commitments by the end of 2024.

(b)Maximum loss exposure represents the value of current investments.

(c)Maximum loss exposure represents the value of current investments. A liability is not recognized as FHN is solely a holder of the trusts’ securities.

(d)Includes $112 million classified as loans and leases and $2 million classified as trading securities, which are offset by $87 million classified as term

borrowings.

(e)Includes $526 million classified as trading securities, $712 million classified as securities held to maturity, and $7.3 billion classified as securities available

for sale.

(f)Maximum loss exposure represents $94 million of current receivables and $4 million of contractual funding commitments on loans related to commercial

borrowers involved in a troubled debt restructuring.

(g)No exposure to loss due to nature of FHN's involvement.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 20—VARIABLE INTEREST ENTITIES

   

	175	2022 FORM 10-K ANNUAL REPORT

Note 21—Derivatives

In the normal course of business, FHN utilizes various

financial instruments (including derivative contracts and

credit-related agreements) through its fixed income and

risk management operations, as part of its risk

management strategy and as a means to meet clients’

needs. Derivative instruments are subject to credit and

market risks in excess of the amount recorded on the

balance sheet as required by GAAP. The contractual or

notional amounts of these financial instruments do not

necessarily represent the amount of credit or market risk.

However, they can be used to measure the extent of

involvement in various types of financial instruments.

Controls and monitoring procedures for these instruments

have been established and are routinely reevaluated. The

ALCO controls, coordinates, and monitors the usage and

effectiveness of these financial instruments.

Credit risk represents the potential loss that may occur if a

party to a transaction fails to perform according to the

terms of the contract. The measure of credit exposure is

the replacement cost of contracts with a positive fair

value. FHN manages credit risk by entering into financial

instrument transactions through national exchanges,

primary dealers or approved counterparties, and by using

mutual margining and master netting agreements

whenever possible to limit potential exposure. FHN also

maintains collateral posting requirements with certain

counterparties to limit credit risk. Daily margin posted or

received with central clearinghouses is considered a legal

settlement of the related derivative contracts which

results in a net presentation for each contract in the

Consolidated Balance Sheets. Treatment of daily margin as

a settlement has no effect on hedge accounting or gains/

losses for the applicable derivative contracts. On

December 31, 2022 and 2021, respectively, FHN had $159

million and $181 million of cash receivables and $42

million and $102 million of cash payables related to

collateral posting under master netting arrangements,

inclusive of collateral posted related to contracts with

adjustable collateral posting thresholds and over-

collateralized positions, with derivative counterparties.

With exchange-traded contracts, the credit risk is limited

to the clearinghouse used. For non-exchange traded

instruments, credit risk may occur when there is a gain in

the fair value of the financial instrument and the

counterparty fails to perform according to the terms of

the contract and/or when the collateral proves to be of

insufficient value. See additional discussion regarding

master netting agreements and collateral posting

requirements later in this note under the heading “Master

Netting and Similar Agreements.” Market risk represents

the potential loss due to the decrease in the value of a

financial instrument caused primarily by changes in

interest rates or the prices of debt instruments. FHN

manages market risk by establishing and monitoring limits

on the types and degree of risk that may be undertaken.

FHN continually measures this risk through the use of

models that measure value-at-risk and earnings-at-risk.

Derivative Instruments

FHN enters into various derivative contracts both to

facilitate client transactions and as a risk management

tool. Where contracts have been created for clients, FHN

enters into upstream transactions with dealers to offset its

risk exposure. Contracts with dealers that require central

clearing are novated to a clearing agent who becomes

FHN’s counterparty. Derivatives are also used as a risk

management tool to hedge FHN’s exposure to changes in

interest rates or other defined market risks.

Forward contracts are over-the-counter contracts where

two parties agree to purchase and sell a specific quantity

of a financial instrument at a specified price, with delivery

or settlement at a specified date. Futures contracts are

exchange-traded contracts where two parties agree to

purchase and sell a specific quantity of a financial

instrument at a specified price, with delivery or settlement

at a specified date. Interest rate option contracts give the

purchaser the right, but not the obligation, to buy or sell a

specified quantity of a financial instrument, at a specified

price, during a specified period of time. Caps and floors

are options that are linked to a notional principal amount

and an underlying indexed interest rate. Interest rate

swaps involve the exchange of interest payments at

specified intervals between two parties without the

exchange of any underlying principal. Swaptions are

options on interest rate swaps that give the purchaser the

right, but not the obligation, to enter into an interest rate

swap agreement during a specified period of time.

Trading Activities

FHNF trades U.S. Treasury, U.S. Agency, government-

guaranteed loan, mortgage-backed, corporate and

municipal fixed income securities, and other securities for

distribution to clients. When these securities settle on a

delayed basis, they are considered forward contracts.

FHNF also enters into interest rate contracts, including

caps, swaps, and floors, for its clients. In addition, FHNF

enters into futures and option contracts to economically

hedge interest rate risk associated with a portion of its

securities inventory. These transactions are measured at

fair value, with changes in fair value recognized in

noninterest income. Related assets and liabilities are

recorded on the Consolidated Balance Sheets as derivative

assets and derivative liabilities within other assets and

other liabilities. The FHNF Risk Committee and the Credit

Risk Management Committee collaborate to mitigate

credit risk related to these transactions. Credit risk is

controlled through credit approvals, risk control limits,

and ongoing monitoring procedures. Total trading

revenues were $157 million, $360 million and $371 million

for the years ended December 31, 2022, 2021 and 2020,

respectively. Trading revenues are inclusive of both

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 21—DERIVATIVES

   

	176	2022 FORM 10-K ANNUAL REPORT

derivative and non-derivative financial instruments, and

are included in fixed income on the Consolidated

Statements of Income.

The following table summarizes derivatives associated

with FHNF's trading activities as of December 31, 2022

and 2021:

Table 8.21.1

DERIVATIVES ASSOCIATED WITH TRADING

		December 31, 2022
(Dollars in millions)		Notional		Assets		Liabilities
Customer interest rate contracts		$3,076		$3		$270
Offsetting upstream interest rate contracts		3,076		91		6
Option contracts purchased		40		—		—
Forwards and futures purchased		1,127		5		2
Forwards and futures sold		1,256		4		5

		December 31, 2021
(Dollars in millions)		Notional		Assets		Liabilities
Customer interest rate contracts		$3,587		$84		$41
Offsetting upstream interest rate contracts		3,587		4		8
Option contracts purchased		13		—		—
Forwards and futures purchased		4,430		2		9
Forwards and futures sold		5,044		10		2

Interest Rate Risk Management

FHN’s ALCO focuses on managing market risk by

controlling and limiting earnings volatility attributable to

changes in interest rates. Interest rate risk exists to the

extent that interest-earning assets and interest-bearing

liabilities have different maturity or repricing

characteristics. FHN uses derivatives, primarily swaps, that

are designed to moderate the impact on earnings as

interest rates change. Interest paid or received for swaps

utilized by FHN to hedge the fair value of long-term debt is

recognized as an adjustment of the interest expense of

the liabilities whose risk is being managed. FHN’s interest

rate risk management policy is to use derivatives to hedge

interest rate risk or market value of assets or liabilities,

not to speculate. In addition, FHN has entered into certain

interest rate swaps and caps as a part of a product

offering to commercial clients that includes customer

derivatives paired with upstream offsetting market

instruments that, when completed, are designed to

mitigate interest rate risk. These contracts do not qualify

for hedge accounting and are measured at fair value with

gains or losses included in current earnings in noninterest

expense on the Consolidated Statements of Income.

The following table summarizes FHN’s derivatives

associated with interest rate risk management activities as

of December 31, 2022 and 2021:

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 21—DERIVATIVES

   

	177	2022 FORM 10-K ANNUAL REPORT

Table 8.21.2

DERIVATIVES ASSOCIATED WITH INTEREST RATE RISK MANAGEMENT

		December 31, 2022
(Dollars in millions)		Notional		Assets		Liabilities
Customer Interest Rate Contracts Hedging
Hedging Instruments and Hedged Items:
Customer interest rate contracts		$8,377		$3		$570
Offsetting upstream interest rate contracts		8,377		351		5

		December 31, 2021
(Dollars in millions)		Notional		Assets		Liabilities
Customer Interest Rate Contracts Hedging
Hedging Instruments and Hedged Items:
Customer interest rate contracts		$8,037		$202		$29
Offsetting upstream interest rate contracts		8,037		4		15

The following table summarizes gains (losses) on FHN’s derivatives associated with interest rate risk management activities for

the years ended December 31, 2022, 2021, and 2020:

Table 8.21.3

DERIVATIVE GAINS (LOSSES) ASSOCIATED WITH INTEREST RATE RISK MANAGEMENT

		Year Ended December 31,
		2022		2021		2020
(Dollars in millions)		Gains (Losses)		Gains (Losses)		Gains (Losses)
Customer Interest Rate Contracts Hedging
Hedging Instruments and Hedged Items:
Customer interest rate contracts (a)		$(744)		$(268)		$357
Offsetting upstream interest rate contracts (a)		744		268		(357)
Debt Hedging
Hedging Instruments:
Interest rate swaps (b)		$—		$—		$2
Hedged Items:
Term borrowings (a) (c)		—		—		(2)

(a)Gains (losses) included in other expense within the Consolidated Statements of Income.

(b)Gains (losses) included in interest expense.

(c)Represents gains and losses attributable to changes in fair value due to interest rate risk as designated in ASC 815-20 hedging relationships.

Cash Flow Hedges

Prior to 2021, FHN entered into pay floating, receive fixed

interest rate swaps designed to manage its exposure to

the variability in cash flows related to interest payments

on debt instruments. In conjunction with the IBKC merger,

FHN acquired interest rate contracts (floors and collars)

which have been re-designated as cash flow hedges. The

debt instruments primarily consist of held-to-maturity

commercial loans that have variable interest payments

based on 1-month LIBOR.

In 2022, FHN entered into interest rate contracts (floors

and swaps) which have been designated as cash flow

hedges. These hedges reference 1-month Term SOFR and

FHN has made certain elections under ASU 2020-04 to

facilitate qualification for hedge accounting during the

time that hedged items transition away from 1-Month

LIBOR.

In a cash flow hedge, the entire change in the fair value of

the interest rate derivatives included in the assessment of

hedge effectiveness is initially recorded in OCI and is

subsequently reclassified from OCI to current period

earnings (interest income or interest expense) in the same

period that the hedged item affects earnings.

The following table summarizes FHN’s derivative activities

associated with cash flow hedges as of December 31, 2022

and 2021:

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 21—DERIVATIVES

   

	178	2022 FORM 10-K ANNUAL REPORT

Table 8.21.4

DERIVATIVES ASSOCIATED WITH CASH FLOW HEDGES

		December 31, 2022
(Dollars in millions)		Notional		Assets		Liabilities
Cash Flow Hedges
Hedging Instruments:
Interest rate contracts		$5,350		$—		$71
Hedged Items:
Variability in cash flows related to debt instruments (primarily loans)		N/A		$5,350		N/A

		December 31, 2021
(Dollars in millions)		Notional		Assets		Liabilities
Cash Flow Hedges
Hedging Instruments:
Interest rate contracts		$1,100		$13		$—
Hedged Items:
Variability in cash flows related to debt instruments (primarily loans)		N/A		$1,100		N/A

The following table summarizes gains (losses) on FHN’s derivatives associated with cash flow hedges for the years ended

December 31, 2022, 2021, and 2020:

Table 8.21.5

DERIVATIVE GAINS (LOSSES) ASSOCIATED WITH CASH FLOW HEDGES

		Year Ended December 31,
		2022		2021		2020
(Dollars in millions)		Gains (Losses)		Gains (Losses)		Gains (Losses)
Cash Flow Hedges
Hedging Instruments:
Interest rate contracts (a)		$195		$29		$3
Gain (loss) recognized in other comprehensive income (loss)		15		(3)		15
Gain (loss) reclassified from AOCI into interest income		(129)		(7)		(6)

(a)Approximately $20 million of pre-tax losses are expected to be reclassified into earnings in the next twelve months.

Other Derivatives

FHN has mortgage banking operations that include the

origination and sale of loans into the secondary market. As

part of the origination of loans, FHN enters into interest

rate lock commitments with borrowers. Additionally, FHN

enters into forward sales contracts with buyers for

delivery of loans at a future date. Both of these contracts

qualify as freestanding derivatives and are recognized at

fair value through earnings. The notional and fair values of

these contracts are presented in the table below.

Table 8.21.6

DERIVATIVES ASSOCIATED WITH MORTGAGE BANKING HEDGES

		December 31, 2022
(Dollars in millions)		Notional		Assets		Liabilities
Mortgage Banking Hedges
Option contracts written		$35		$—		$—
Forward contracts written		61		—		—

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 21—DERIVATIVES

   

	179	2022 FORM 10-K ANNUAL REPORT

		December 31, 2021
(Dollars in millions)		Notional		Assets		Liabilities
Mortgage Banking Hedges
Option contracts written		$241		$4		$—
Forward contracts written		404		—		—

The following table summarizes gains (losses) on FHN's derivatives associated with mortgage banking activities for the years

ended December 31, 2022 and 2021:

Table 8.21.7

DERIVATIVE GAINS (LOSSES) ASSOCIATED WITH MORTGAGE BANKING HEDGES

			Year Ended December 31,
			2022		2021		2020
(Dollars in millions)			Gains (Losses)		Gains (Losses)		Gains (Losses)
Mortgage Banking Hedges
Option contracts written			$3		$15		$15
Forward contracts written			32		11		(37)

In conjunction with pre-2020 sales of Visa Class B shares,

FHN entered into derivative transactions whereby FHN

will make or receive cash payments whenever the

conversion ratio of the Visa Class B shares into Visa Class A

shares is adjusted. As of December 31, 2022 and 2021, the

derivative liabilities associated with the sales of Visa Class

B shares were $27 million and $23 million, respectively.

For the year ended December 31, 2022 and 2021, FHN

recognized $22 million and $19 million, respectively, in

derivative valuation adjustments related to prior sales of

Visa Class B shares. See Note 23 - Fair Value of Assets and

Liabilities for discussion of the valuation inputs and

processes for these Visa-related derivatives.

FHN utilizes cross currency swaps and cross currency

interest rate swaps to economically hedge its exposure to

foreign currency risk and interest rate risk associated with

non-U.S. dollar denominated loans. As of December 31,

2022 and 2021, these loans were valued at $9 million and

$7 million, respectively. The balance sheet amount and

the gains/losses associated with these derivatives were

not significant.

Related to its loan participation/syndication activities, FHN

enters into risk participation agreements, under which it

assumes exposure for, or receives indemnification for,

borrowers’ performance on underlying interest rate

derivative contracts. FHN’s counterparties in these

contracts are other lending institutions involved in the

loan participation/syndication arrangements for which the

underlying interest rate derivative contract is intended to

hedge interest rate risk for the borrower. FHN will make

(other institution is the lead bank) or receive (FHN is the

lead bank) payments for risk participations if the borrower

defaults on its obligation to perform under the terms of its

interest rate derivative agreement with the lead bank in

the participation.

As of December 31, 2022 and 2021, the notional values of

FHN’s risk participations were $242 million and $257

million of derivative assets and $742 million and $500

million of derivative liabilities, respectively. The notional

value for risk participation/syndication agreements is

consistent with the percentage of participation in the

lending arrangement. FHN’s maximum exposure or

benefit in the risk participation agreements is contingent

on the fair value of the underlying interest rate derivative

contracts for which the borrower is in a liability position at

the time of default. FHN monitors the credit risk

associated with the borrowers to which the risk

participations relate through the same credit risk

assessment process utilized for establishing credit loss

estimates for its loan portfolio. These credit risk estimates

are included in the determination of fair value for the risk

participations. Assuming all underlying third party

customers referenced in the swap contracts defaulted at

December 31, 2022 and 2021, the exposure from these

agreements would not be material based on the fair value

of the underlying swaps.

FHN holds certain certificates of deposit with the rate of

return based on an equity index which is considered an

embedded derivative as a written option that must be

separately recognized. The risks of the written option are

offset by purchasing an option with terms that mirror the

written option, which is also carried at fair value on the

Company’s Consolidated Balance Sheets. As of

December 31, 2022 and 2021, FHN had recognized an

insignificant amount of assets and liabilities associated

with these contracts.

Master Netting and Similar Agreements

FHN uses master netting agreements, mutual margining

agreements and collateral posting requirements to

minimize credit risk on derivative contracts. Master

netting and similar agreements are used when

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 21—DERIVATIVES

   

	180	2022 FORM 10-K ANNUAL REPORT

counterparties have multiple derivatives contracts that

allow for a “right of setoff,” meaning that a counterparty

may net offsetting positions and collateral with the same

counterparty under the contract to determine a net

receivable or payable. The following discussion provides

an overview of these arrangements which may vary due to

the derivative type and market in which a derivative

transaction is executed.

Interest rate derivatives are subject to agreements

consistent with standard agreement forms of the ISDA.

Currently, all interest rate derivative contracts are entered

into as over-the-counter transactions and collateral

posting requirements are based on the net asset or

liability position with each respective counterparty. For

contracts that require central clearing, novation to a

counterparty with access to a clearinghouse occurs and

initial margin is posted.

Cash margin received (posted) that is considered

settlements for the derivative contracts is included in the

respective derivative asset (liability) value. Cash margin

that is considered collateral received (posted) for interest

rate derivatives is recognized as a liability (asset) on FHN’s

Consolidated Balance Sheets.

Interest rate derivatives with clients that are smaller

financial institutions typically require posting of collateral

by the counterparty to FHN. This collateral is subject to a

threshold with daily adjustments based upon changes in

the level or fair value of the derivative position. Positions

and related collateral can be netted in the event of

default. Collateral pledged by a counterparty is typically

cash or securities. The securities pledged as collateral are

not recognized within FHN’s Consolidated Balance Sheets.

Interest rate derivatives associated with lending

arrangements share the collateral with the related loan(s).

The derivative and loan positions may be netted in the

event of default. For disclosure purposes, the entire

collateral amount is allocated to the loan.

Interest rate derivatives with larger financial institutions

entered into prior to required central clearing typically

contain provisions whereby the collateral posting

thresholds under the agreements adjust based on the

credit ratings of both counterparties. If the credit rating of

FHN and/or First Horizon Bank is lowered, FHN could be

required to post additional collateral with the

counterparties. Conversely, if the credit rating of FHN and/

or First Horizon Bank is increased, FHN could have

collateral released and be required to post less collateral

in the future. Also, if a counterparty’s credit ratings were

to decrease, FHN and/or First Horizon Bank could require

the posting of additional collateral; whereas if a

counterparty’s credit ratings were to increase, the

counterparty could require the release of excess

collateral. Collateral for these arrangements is adjusted

daily based on changes in the net fair value position with

each counterparty.

The net fair value, determined by individual counterparty,

of all derivative instruments with adjustable collateral

posting thresholds was $5 million of assets and $268

million of liabilities on December 31, 2022, and $67 million

of assets and $26 million of liabilities on December 31,

2021. As of December 31, 2022 and 2021, FHN had

received collateral of $106 million and $205 million and

posted collateral of $61 million and $14 million,

respectively, in the normal course of business related to

these agreements.

Certain agreements entered into prior to required central

clearing also contain accelerated termination provisions,

inclusive of the right of offset, if a counterparty’s credit

rating falls below a specified level. If a counterparty’s debt

rating (including FHN’s and First Horizon Bank's) were to

fall below these minimums, these provisions would be

triggered, and the counterparties could terminate the

agreements and require immediate settlement of all

derivative contracts under the agreements. The net fair

value, determined by individual counterparty, of all

interest rate derivative instruments with credit-risk-

related contingent accelerated termination provisions was

$378 million of assets and $268 million of liabilities on

December 31, 2022, and $74 million of assets and $30

million of liabilities on December 31, 2021. As of

December 31, 2022 and 2021, FHN had received collateral

of $479 million and $213 million and posted collateral of

$61 million and $18 million, respectively, in the normal

course of business related to these contracts.

FHNF buys and sells various types of securities for its

clients. When these securities settle on a delayed basis,

they are considered forward contracts, and are generally

not subject to master netting agreements. For futures and

options, FHN transacts through a third party, and the

transactions are subject to margin and collateral

maintenance requirements. In the event of default, open

positions can be offset along with the associated

collateral.

For this disclosure, FHN considers the impact of master

netting and other similar agreements which allow FHN to

settle all contracts with a single counterparty on a net

basis and to offset the net derivative asset or liability

position with the related securities and cash collateral.

The application of the collateral cannot reduce the net

derivative asset or liability position below zero, and

therefore any excess collateral is not reflected in the

following tables.

The following table provides details of derivative assets

and collateral received as presented on the Consolidated

Balance Sheets as of December 31, 2022 and 2021:

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 21—DERIVATIVES

   

	181	2022 FORM 10-K ANNUAL REPORT

Table 8.21.8

DERIVATIVE ASSETS & COLLATERAL RECEIVED

								Gross amounts not offset in  the Balance Sheets
(Dollars in millions)		Gross amounts of recognized assets		Gross amounts offset in the Balance Sheets		Net amounts of assets presented in the Balance Sheets (a)		Derivative liabilities available for offset		Collateral received		Net amount
Derivative assets:
December 31, 2022
Interest rate derivative contracts		$449		$—		$449		$(58)		$(378)		$13
Forward contracts		9		—		9		(6)		(2)		1
		$458		$—		$458		$(64)		$(380)		$14
December 31, 2021
Interest rate derivative contracts		$311		$—		$311		$(32)		$(181)		$98
Forward contracts		12		—		12		(4)		(3)		5
		$323		$—		$323		$(36)		$(184)		$103

(a)Included in other assets on the Consolidated Balance Sheets. As of December 31, 2022 and 2021, $2 million and $2 million, respectively, of derivative

assets have been excluded from these tables because they are generally not subject to master netting or similar agreements.

The following table provides details of derivative liabilities and collateral pledged as presented on the Consolidated Balance

Sheets as of December 31, 2022 and 2021:

Table 8.21.9

DERIVATIVE LIABILITIES & COLLATERAL PLEDGED

								Gross amounts not offset  in the Balance Sheets
(Dollars in millions)		Gross amounts of recognized liabilities		Gross  amounts offset in the Balance Sheets		Net amounts of liabilities presented in the Balance Sheets (a)		Derivative assets available for offset		Collateral pledged		Net amount
Derivative liabilities:
December 31, 2022
Interest rate derivative contracts		$921		$—		$921		$(58)		$(175)		$688
Forward contracts		8		—		8		(6)		(1)		1
		$929		$—		$929		$(64)		$(176)		$689
December 31, 2021
Interest rate derivative contracts		$93		$—		$93		$(32)		$(38)		$23
Forward contracts		10		—		10		(4)		(1)		5
		$103		$—		$103		$(36)		$(39)		$28

(a)Included in other liabilities on the Consolidated Balance Sheets. As of December 31, 2022 and 2021, $29 million and $24 million, respectively, of

derivative liabilities (primarily Visa-related derivatives) have been excluded from these tables because they are generally not subject to master netting or

similar agreements.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 21—DERIVATIVES

   

	182	2022 FORM 10-K ANNUAL REPORT

Note 22—Master Netting and Similar Agreements – Repurchase, Reverse

Repurchase, and Securities Borrowing Transactions

For repurchase, reverse repurchase and securities

borrowing transactions, FHN and each counterparty have

the ability to offset all open positions and related

collateral in the event of default. Due to the nature of

these transactions, the value of the collateral for each

transaction approximates the value of the corresponding

receivable or payable. For repurchase agreements through

FHN’s fixed income business (securities purchased under

agreements to resell and securities sold under agreements

to repurchase), transactions are collateralized by

securities and/or government guaranteed loans which are

delivered on the settlement date and are maintained

throughout the term of the transaction. For FHN’s

repurchase agreements through banking activities

(securities sold under agreements to repurchase),

securities are typically pledged at settlement and not

released until maturity. For asset positions, the collateral

is not included on FHN’s Consolidated Balance Sheets. For

liability positions, securities collateral pledged by FHN is

generally represented within FHN’s trading or available-

for-sale securities portfolios.

For this disclosure, FHN considers the impact of master

netting and other similar agreements that allow FHN to

settle all contracts with a single counterparty on a net

basis and to offset the net asset or liability position with

the related securities collateral. The application of the

collateral cannot reduce the net asset or liability position

below zero, and therefore any excess collateral is not

reflected in the tables below.

Securities purchased under agreements to resell is

included in federal funds sold and securities purchased

under agreements to resell in the Consolidated Balance

Sheets. Securities sold under agreements to repurchase is

included in short-term borrowings.

The following table provides details of securities

purchased under agreements to resell and collateral

pledged by counterparties as of December 31, 2022 and

2021:

Table 8.22.1

SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL

								Gross amounts not offset in the Balance Sheets
(Dollars in millions)		Gross amounts of recognized assets		Gross amounts offset in the Balance Sheets		Net amounts of assets presented in the Balance Sheets		Offsetting securities sold under agreements to repurchase		Securities collateral (not recognized on FHN’s Balance Sheets)		Net amount
Securities purchased under agreements to resell:
2022		$353		$—		$353		$(10)		$(340)		$3
2021		488		—		488		(10)		(476)		2

The following table provides details of securities sold under agreements to repurchase and collateral pledged by FHN as of

December 31, 2022 and 2021:

Table 8.22.2

SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

								Gross amounts not offset in the Balance Sheets
(Dollars in millions)		Gross amounts of recognized liabilities		Gross amounts offset in the Balance Sheets		Net amounts of liabilities presented in the Balance Sheets		Offsetting securities purchased under agreements to resell		Securities/ government guaranteed loans collateral		Net amount
Securities sold under agreements to repurchase:
2022		$1,013		$—		$1,013		$(10)		$(1,003)		$—
2021		1,247		—		1,247		(10)		(1,237)		—

Due to the short duration of securities sold under agreements to repurchase and the nature of collateral involved, the risks

associated with these transactions are considered minimal.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 22—MASTER NETTING & SIMILAR AGREEMENTS

   

	183	2022 FORM 10-K ANNUAL REPORT

The following table provides details, by collateral type, of the remaining contractual maturity of securities sold under

agreements to repurchase as of December 31, 2022 and 2021:

Table 8.22.3

MATURITIES OF SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

	December 31, 2022
(Dollars in millions)	Overnight and Continuous		Up to 30 Days		Total
Securities sold under agreements to repurchase:
U.S. treasuries	$10		$—		$10
Government agency issued MBS	851		—		851
Government agency issued CMO	122		—		122
Other U.S. government agencies	30		—		30
Total securities sold under agreements to repurchase	$1,013		$—		$1,013
	December 31, 2021
(Dollars in millions)	Overnight and Continuous		Up to 30 Days		Total
Securities sold under agreements to repurchase:
U.S. treasuries	$33		$—		$33
Government agency issued MBS	1,068		—		1,068
Other U.S. government agencies	31		—		31
Government guaranteed loans (SBA and USDA)	115		—		115
Total securities sold under agreements to repurchase	$1,247		$—		$1,247

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 22—MASTER NETTING & SIMILAR AGREEMENTS

   

	184	2022 FORM 10-K ANNUAL REPORT

Note 23—Fair Value of Assets and Liabilities

FHN groups its assets and liabilities measured at fair value

in three levels, based on the markets in which the assets

and liabilities are traded and the reliability of the

assumptions used to determine fair value. This hierarchy

requires FHN to maximize the use of observable market

data, when available, and to minimize the use of

unobservable inputs when determining fair value. Each

fair value measurement is placed into the proper level

based on the lowest level of significant input. These levels

are:

•Level 1—Valuation is based upon quoted prices for

identical instruments traded in active markets.

•Level 2—Valuation is based upon quoted prices for

similar instruments in active markets, quoted prices

for identical or similar instruments in markets that are

not active, and model-based valuation techniques for

which all significant assumptions are observable in

the market.

•Level 3—Valuation is generated from model-based

techniques that use significant assumptions not

observable in the market. These unobservable

assumptions reflect management’s estimates of

assumptions that market participants would use in

pricing the asset or liability. Valuation techniques

include use of option pricing models, discounted cash

flow models, and similar techniques.

Recurring Fair Value Measurements

The following table presents the balances of assets and

liabilities measured at fair value on a recurring basis as of

December 31, 2022 and 2021:

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 23—FAIR VALUE OF ASSETS AND LIABILITIES

   

	185	2022 FORM 10-K ANNUAL REPORT

Table 8.23.1

BALANCES OF ASSETS & LIABILITIES

MEASURED AT FAIR VALUE ON A RECURRING BASIS

		December 31, 2022
(Dollars in millions)		Level 1		Level 2		Level 3		Total
Trading securities:
U.S. treasuries		$—		$101		$—		$101
Government agency issued MBS		—		144		—		144
Government agency issued CMO		—		61		—		61
Other U.S. government agencies		—		115		—		115
States and municipalities		—		54		—		54
Corporate and other debt		—		875		—		875
Interest-only strips (elected fair value)		—		—		25		25
Total trading securities		—		1,350		25		1,375
Loans held for sale (elected fair value)		—		29		22		51
Securities available for sale:
Government agency issued MBS		—		4,763		—		4,763
Government agency issued CMO		—		2,313		—		2,313
Other U.S. government agencies		—		1,163		—		1,163
States and municipalities		—		597		—		597
Total securities available for sale		—		8,836		—		8,836
Other assets:
Deferred compensation mutual funds		112		—		—		112
Equity, mutual funds, and other		22		—		—		22
Derivatives, forwards and futures		9		—		—		9
Derivatives, interest rate contracts		—		449		—		449
Derivatives, other		—		2		—		2
Total other assets		143		451		—		594
Total assets		$143		$10,666		$47		$10,856
Trading liabilities:
U.S. treasuries		$—		$275		$—		$275
Government issued agency MBS		—		2		—		2
Corporate and other debt		—		58		—		58
Total trading liabilities		—		335		—		335
Other liabilities:
Derivatives, forwards and futures		8		—		—		8
Derivatives, interest rate contracts		—		922		—		922
Derivatives, other		—		1		27		28
Total other liabilities		8		923		27		958
Total liabilities		$8		$1,258		$27		$1,293

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 23—FAIR VALUE OF ASSETS AND LIABILITIES

   

	186	2022 FORM 10-K ANNUAL REPORT

		December 31, 2021
(Dollars in millions)		Level 1		Level 2		Level 3		Total
Trading securities:
U.S. treasuries		$—		$85		$—		$85
Government agency issued MBS		—		464		—		464
Government agency issued CMO		—		62		—		62
Other U.S. government agencies		—		276		—		276
States and municipalities		—		34		—		34
Corporate and other debt		—		642		—		642
Interest-only strips (elected fair value)		—		—		38		38
Total trading securities		—		1,563		38		1,601
Loans held for sale (elected fair value)		—		230		28		258
Securities available for sale:
Government agency issued MBS		—		5,055		—		5,055
Government agency issued CMO		—		2,257		—		2,257
Other U.S. government agencies		—		850		—		850
States and municipalities		—		545		—		545
Total securities available for sale		—		8,707		—		8,707
Other assets:
Deferred compensation mutual funds		125		—		—		125
Equity, mutual funds, and other		25		—		—		25
Derivatives, forwards and futures		12		—		—		12
Derivatives, interest rate contracts		—		311		—		311
Derivatives, other		—		1		—		1
Total other assets		162		312		—		474
Total assets		$162		$10,812		$66		$11,040
Trading liabilities:
U.S. treasuries		$—		$334		$—		$334
Government agency issued MBS		—		1		—		1
Corporate and other debt		—		91		—		91
Total trading liabilities		—		426		—		426
Other liabilities:
Derivatives, forwards and futures		11		—		—		11
Derivatives, interest rate contracts		—		93		—		93
Derivatives, other		—		1		23		24
Total other liabilities		11		94		23		128
Total liabilities		$11		$520		$23		$554

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 23—FAIR VALUE OF ASSETS AND LIABILITIES

   

	187	2022 FORM 10-K ANNUAL REPORT

Changes in Recurring Level 3 Fair Value Measurements

The changes in Level 3 assets and liabilities measured at fair value for the years ended December 31, 2022, 2021 and 2020 on

a recurring basis are summarized as follows:

Table 8.23.2

CHANGES IN LEVEL 3 ASSETS & LIABILITIES MEASURED AT FAIR VALUE

	Year Ended December 31, 2022
(Dollars in millions)		Interest-only strips		Loans held for sale		Net  derivative liabilities
Balance on January 1, 2022		$38		$28		$(23)
Total net gains (losses) included in net income		(7)		—		(23)
Purchases		—		2		—
Sales		(76)		(12)		—
Settlements		—		(2)		19
Repayments		—		(1)		—
Net transfers into (out of) Level 3		70	(b)	7		—
Balance on December 31, 2022		$25		$22		$(27)
Net unrealized gains (losses) included in net income		$(2)	(c)	$—	(a)	$(23)	(d)

	Year Ended December 31, 2021
(Dollars in millions)		Interest- only strips		Loans held for sale		Loans held for investment		Net  derivative liabilities
Balance on January 1, 2021		$32		$12		$16		$(14)
Total net gains (losses) included in net income		3		1		—		(19)
Purchases		—		10		—		—
Sales		(68)		(18)		—		—
Settlements		—		(3)		(2)		10
Net transfers into (out of) Level 3		71	(b)	26	(e)	(14)	(e)	—
Balance on December 31, 2021		$38		$28		$—		$(23)
Net unrealized gains (losses) included in net income		$(2)	(c)	$1	(a)	$—		$(19)	(d)

		Year Ended December 31, 2020
(Dollars in millions)		Trading securities		Interest-only strips- AFS		Loans held for sale		Loans held for investment		Net  derivative liabilities
Balance on January 1, 2020		$1		$19		$14		$—		$(23)
Acquired		—		—		—		14		—
Total net gains (losses) included in net income		(1)		(6)		1		—		(1)
Purchases		—		6		—		—		—
Sales		—		(11)		—		(4)		—
Settlements		—		—		(3)		(3)		10
Net transfers into (out of) Level 3		—		24	(b)	—		9		—
Balance on December 31, 2020		$—		$32		$12		$16		$(14)
Net unrealized gains (losses) included in net income		$—	(a)	$(4)	(c)	$1	(a)	$—		$(1)	(d)

(a)Primarily included in mortgage banking and title income on the Consolidated Statements of Income.

(b)Transfers into interest-only strips level 3 measured on a recurring basis reflect movements from loans held for sale (Level 2 nonrecurring).

(c)Primarily included in fixed income on the Consolidated Statements of Income.

(d)Included in other expense.

(e)The loans held for investment at fair value option portfolio was transferred to the loans held for sale portfolio on April 1, 2021.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 23—FAIR VALUE OF ASSETS AND LIABILITIES

   

	188	2022 FORM 10-K ANNUAL REPORT

There were no net unrealized gains (losses) for Level 3

assets and liabilities included in other comprehensive

income as of December 31, 2022, 2021 and 2020.

Nonrecurring Fair Value Measurements

From time to time, FHN may be required to measure

certain other financial assets at fair value on a

nonrecurring basis in accordance with GAAP. These

adjustments to fair value usually result from the

application of lower of cost or market (LOCOM)

accounting or write-downs of individual assets. For assets

measured at fair value on a nonrecurring basis which were

still held on the Consolidated Balance Sheets at

December 31, 2022, 2021 and 2020, respectively, the

following table provides the level of valuation

assumptions used to determine each adjustment and the

related carrying value.

Table 8.23.3

LEVEL OF VALUATION ASSUMPTIONS FOR ASSETS

MEASURED AT FAIR VALUE ON A NON-RECURRING BASIS

		Carrying value at December 31, 2022								Year Ended December 31, 2022
(Dollars in millions)		Level 1		Level 2		Level 3		Total		Net gains (losses)
Loans held for sale—SBAs and USDA		$—		$506		$—		$506		$(3)
Loans and leases (a)		—		—		135		135		(19)
OREO (b)		—		—		3		3		—
Other assets (c)		—		—		43		43		(6)
										$(28)

		Carrying value at December 31, 2021								Year Ended December 31, 2021
(Dollars in millions)		Level 1		Level 2		Level 3		Total		Net gains (losses)
Loans held for sale—SBAs and USDA		$—		$852		$1		$853		$(2)
Loans held for sale—first mortgages		—		—		1		1		—
Loans and leases (a)		—		—		84		84		(13)
OREO (b)		—		—		3		3		(1)
Other assets (c)		—		—		30		30		(2)
										$(18)

		Carrying value at December 31, 2020								Year Ended December 31, 2020
(Dollars in millions)		Level 1		Level 2		Level 3		Total		Net gains (losses)
Loans held for sale—SBAs and USDA		$—		$508		$1		$509		$(3)
Loans held for sale—first mortgages		—		—		1		1		—
Loans and leases (a)		—		—		77		77		(12)
OREO (b)		—		—		15		15		(1)
Other assets (c)		—		—		9		9		(2)
										$(18)

(a)Represents carrying value of loans for which adjustments are required to be based on the appraised value of the collateral less estimated costs to sell.

Write-downs on these loans are recognized as part of provision for credit losses.

(b)Represents the fair value and related losses of foreclosed properties that were measured subsequent to their initial classification as OREO. Balance

excludes OREO related to government insured mortgages.

(c)Represents tax credit investments accounted for under the equity method.

In 2022, FHN recognized less than $1 million of fixed asset

recoveries and $1 million of leased asset impairments. In

2021, FHN recognized $34 million of fixed asset

impairments and $3 million of leased asset impairments.

In 2020, FHN recognized $7 million of fixed asset

impairments and $6 million of leased asset impairments.

These impairments were primarily related to continuing

acquisition integration efforts associated with reduction of

leased office space and banking center optimization.

These amounts were primarily recognized in the

Corporate segment.

Lease asset impairments recognized represent the

reduction in value of the right-of-use assets associated

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 23—FAIR VALUE OF ASSETS AND LIABILITIES

   

	189	2022 FORM 10-K ANNUAL REPORT

with leases that are being exited in advance of the

contractual lease expiration.

Impairments are measured using a discounted cash flow

methodology, which is considered a Level 3 valuation.

Impairments of long-lived tangible assets reflect locations

where the associated land and building are either owned

or leased. The fair values of owned sites were determined

using estimated sales prices from appraisals and broker

opinions less estimated costs to sell with adjustments

upon final disposition. The fair values of owned assets in

leased sites (e.g., leasehold improvements) were

determined using a discounted cash flow approach, based

on the revised estimated useful lives of the related assets.

Both measurement methodologies are considered Level 3

valuations. Impairment adjustments recognized upon

disposition of a location are considered Level 2 valuations.

Level 3 Measurements

The following table provides information regarding the

unobservable inputs utilized in determining the fair value

of Level 3 recurring and non-recurring measurements as

of December 31, 2022 and 2021:

Table 8.23.4

UNOBSERVABLE INPUTS USED

IN LEVEL 3 FAIR VALUE MEASUREMENTS

(Dollars in millions)								Values Utilized
Level 3 Class		Fair Value at December 31, 2022		Valuation Techniques		Unobservable Input		Range		Weighted Average (d)
Trading securities - SBA interest-only strips		$25		Discounted cash flow		Constant prepayment rate		12%-13%		12%
						Bond equivalent yield		17%		17%
Loans held for sale - residential real estate		$22		Discounted cash flow		Prepayment speeds - First mortgage		2% - 8%		3%
						Foreclosure losses		63% - 75%		65%
						Loss severity trends - First mortgage		0% - 11% of UPB		5%
Derivative liabilities, other		$27		Discounted cash flow		Visa covered litigation resolution amount		$5.6 billion -  $6.0 billion		$5.9 billion
						Probability of resolution scenarios		5% - 25%		20%
						Time until resolution		12 - 42 months		28 months
Loans and leases (a)		$135		Appraisals from comparable properties		Marketability adjustments for specific properties		0% - 10% of appraisal		NM
				Other collateral valuations		Borrowing base certificates adjustment		20% - 50% of gross value		NM
						Financial Statements/ Auction values adjustment		0% - 25% of reported value		NM
OREO (b)		$3		Appraisals from comparable properties		Adjustment for value changes since appraisal		0% - 10% of appraisal		NM
Other assets (c)		$43		Discounted cash flow		Adjustments to current sales yields for specific properties		0% - 15% adjustment to yield		NM
				Appraisals from comparable properties		Marketability adjustments for specific properties		0% - 25% of appraisal		NM

NM - Not meaningful

(a)Represents carrying value of loans for which adjustments are required to be based on the appraised value of the collateral less estimated costs to sell.

Write-downs on these loans are recognized as part of provision for credit losses.

(b)Represents the fair value of foreclosed properties that were measured subsequent to their initial classification as OREO. Balance excludes OREO related

to government insured mortgages.

(c)Represents tax credit investments accounted for under the equity method.

(d)Weighted averages are determined by the relative fair value of the instruments or the relative contribution to an instrument's fair value.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 23—FAIR VALUE OF ASSETS AND LIABILITIES

   

	190	2022 FORM 10-K ANNUAL REPORT

(Dollars in millions)								Values Utilized
Level 3 Class		Fair Value at December 31, 2021		Valuation Techniques		Unobservable Input		Range		Weighted Average (d)
Trading securities - SBA interest-only strips		$38		Discounted cash flow		Constant prepayment rate		11% - 12%		11%
						Bond equivalent yield		11% - 14%		11%
Loans held for sale - residential real estate		$29		Discounted cash flow		Prepayment speeds - First mortgage		4% - 12%		5%
						Foreclosure losses		54% - 66%		65%
						Loss severity trends - First mortgage		1% - 14% of UPB		8%
Loans held for sale - unguaranteed interest in SBA loans		$1		Discounted cash flow		Constant prepayment rate		8% - 12%		10%
						Bond equivalent yield		11%		11%
Derivative liabilities, other		$23		Discounted cash flow		Visa covered litigation resolution amount		$5.8 billion -  $6.2 billion		$6.0 billion
						Probability of resolution scenarios		15% - 35%		24%
						Time until resolution		12 - 36 months		25 months
Loans and leases (a)		$84		Appraisals from comparable properties		Marketability adjustments for specific properties		0% - 10% of appraisal		NM
				Other collateral valuations		Borrowing base certificates adjustment		20% - 50% of gross value		NM
						Financial Statements/ Auction values adjustment		0% - 25% of reported value		NM
OREO (b)		$3		Appraisals from comparable properties		Adjustment for value changes since appraisal		0% - 10% of appraisal		NM
Other assets (c)		$30		Discounted cash flow		Adjustments to current sales yields for specific properties		0% - 15% adjustment to yield		NM
				Appraisals from comparable properties		Marketability adjustments for specific properties		0% - 25% of appraisal		NM

NM - Not meaningful

(a)Represents carrying value of loans for which adjustments are required to be based on the appraised value of the collateral less estimated costs to sell.

Write-downs on these loans are recognized as part of provision for credit losses.

(b)Represents the fair value of foreclosed properties that were measured subsequent to their initial classification as OREO. Balance excludes OREO related

to government insured mortgages.

(c)Represents tax credit investments accounted for under the equity method.

(d)Weighted averages are determined by the relative fair value of the instruments or the relative contribution to an instrument's fair value.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 23—FAIR VALUE OF ASSETS AND LIABILITIES

   

	191	2022 FORM 10-K ANNUAL REPORT

Trading Securities - SBA interest-only strips

Increases (decreases) in estimated prepayment rates and

bond equivalent yields negatively (positively) affect the

value of SBA interest-only strips. Management additionally

considers whether the loans underlying related SBA

interest-only strips are delinquent, in default or prepaying,

and adjusts the fair value down 20 - 100% depending on

the length of time in default. SBA interest-only strips were

transferred from AFS to trading securities on October 1,

2021.

Loans held for sale

Foreclosure losses and prepayment rates are significant

unobservable inputs used in the fair value measurement

of FHN’s residential real estate loans held for sale. Loss

severity trends are also assessed to evaluate the

reasonableness of fair value estimates resulting from

discounted cash flows methodologies as well as to

estimate fair value for newly repurchased loans and loans

that are near foreclosure. Significant increases (decreases)

in any of these inputs in isolation would result in

significantly lower (higher) fair value measurements. All

observable and unobservable inputs are re-assessed

quarterly.

Increases (decreases) in estimated prepayment rates and

bond equivalent yields negatively (positively) affect the

value of unguaranteed interests in SBA loans.

Unguaranteed interest in SBA loans held for sale are

carried at less than the outstanding balance due to credit

risk estimates. Credit risk adjustments may be reduced if

prepayment is likely or as consistent payment history is

realized. Management also considers other factors such as

delinquency or default and adjusts the fair value

accordingly.

Loans held for investment

Constant prepayment rate, constant default rate and loss

severity trends are significant unobservable inputs used in

the fair value measurement of loans held for investment.

Increases (decreases) in each of these inputs in isolation

result in negative (positive) effects on the valuation of the

associated loans.

Derivative liabilities

In conjunction with pre-2020 sales of Visa Class B shares,

FHN and the purchasers entered into derivative

transactions whereby FHN will make, or receive, cash

payments whenever the conversion ratio of the Visa Class

B shares into Visa Class A shares is adjusted. FHN uses a

discounted cash flow methodology in order to estimate

the fair value of FHN’s derivative liabilities associated with

its prior sales of Visa Class B shares. The methodology

includes estimation of both the resolution amount for

Visa’s Covered Litigation matters as well as the length of

time until the resolution occurs. Significant increases

(decreases) in either of these inputs in isolation would

result in significantly higher (lower) fair value

measurements for the derivative liabilities. Additionally,

FHN performs a probability weighted multiple resolution

scenario to calculate the estimated fair value of these

derivative liabilities. Assignment of higher (lower)

probabilities to the larger potential resolution scenarios

would result in an increase (decrease) in the estimated fair

value of the derivative liabilities. Since this estimation

process requires application of judgment in developing

significant unobservable inputs used to determine the

possible outcomes and the probability weighting assigned

to each scenario, these derivatives have been classified

within Level 3 in fair value measurements disclosures.

Loans and leases and Other Real Estate Owned

Collateral-dependent loans and OREO are primarily valued

using appraisals based on sales of comparable properties

in the same or similar markets. Other collateral

(receivables, inventory, equipment, etc.) is valued through

borrowing base certificates, financial statements and/or

auction valuations. These valuations are discounted based

on the quality of reporting, knowledge of the

marketability/collectability of the collateral and historical

disposition rates.

Other assets – tax credit investments

The estimated fair value of tax credit investments

accounted for under the equity method is generally

determined in relation to the yield (i.e., future tax credits

to be received) an acquirer of these investments would

expect in relation to the yields experienced on current

new issue and/or secondary market transactions. Thus, as

tax credits are recognized, the future yield to a market

participant is reduced, resulting in consistent impairment

of the individual investments. Individual investments are

reviewed for impairment quarterly, which may include the

consideration of additional marketability discounts related

to specific investments which typically includes

consideration of the underlying property’s appraised

value.

Fair Value Option

FHN has elected the fair value option on a prospective

basis for substantially all types of mortgage loans

originated for sale purposes except for mortgage

origination operations which utilize the platform acquired

from CBF. FHN determined that the election reduces

certain timing differences and better matches changes in

the value of such loans with changes in the value of

derivatives and forward delivery commitments used as

economic hedges for these assets at the time of election.

Repurchased loans relating to mortgage banking

operations conducted prior to the IBKC merger are

recognized within loans held for sale at fair value at the

time of repurchase, which includes consideration of the

credit status of the loans and the estimated liquidation

value. FHN has elected to continue recognition of these

loans at fair value in periods subsequent to reacquisition.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
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	192	2022 FORM 10-K ANNUAL REPORT

Due to the credit-distressed nature of the vast majority of

repurchased loans and the related loss severities

experienced upon repurchase, FHN believes that the fair

value election provides a more timely recognition of

changes in value for these loans that occur subsequent to

repurchase. Absent the fair value election, these loans

would be subject to valuation at the LOCOM value, which

would prevent subsequent values from exceeding the

initial fair value, determined at the time of repurchase,

but would require recognition of subsequent declines in

value. Thus, the fair value election provides for a more

timely recognition of any potential future recoveries in

asset values while not affecting the requirement to

recognize subsequent declines in value.

FHN also had a portion of mortgage loans held for

investment for which the fair value option was elected

upon origination and which were accounted for at fair

value. This portion of mortgage loans held for investment

at fair value option was transferred to the loans held for

sale portfolio on April 1, 2021.

The following table reflects the differences between the

fair value carrying amount of residential real estate loans

held for sale and held for investment measured at fair

value in accordance with management’s election and the

aggregate unpaid principal amount FHN is contractually

entitled to receive at maturity.

Table 8.23.5

DIFFERENCES BETWEEN FAIR VALUE CARRYING AMOUNTS

AND CONTRACTUAL AMOUNTS OF RESIDENTIAL REAL ESTATE LOANS REPORTED AT FAIR VALUE

		December 31, 2022
(Dollars in millions)		Fair value carrying amount		Aggregate unpaid principal		Fair value carrying amount less aggregate unpaid principal
Residential real estate loans held for sale reported at fair value:
Total loans		$51		$58		$(7)
Nonaccrual loans		5		8		(3)
Loans 90 days or more past due and still accruing		1		1		—
		December 31, 2021
(Dollars in millions)		Fair value carrying amount		Aggregate unpaid principal		Fair value carrying amount less aggregate unpaid principal
Residential real estate loans held for sale reported at fair value:
Total loans		$258		$264		$(6)
Nonaccrual loans		4		7		(3)

Assets and liabilities accounted for under the fair value

election are initially measured at fair value with

subsequent changes in fair value recognized in earnings.

Such changes in the fair value of assets and liabilities for

which FHN elected the fair value option are included in

current period earnings with classification in the income

statement line item reflected in the following table:

Table 8.23.6

CHANGES IN FAIR VALUE RECOGNIZED IN NET INCOME

	Year Ended December 31,
(Dollars in millions)	2022		2021		2020
Changes in fair value included in net income:
Mortgage banking and title noninterest income
Loans held for sale	$(9)		$(10)		$4

For the years ended December 31, 2022, 2021 and 2020,

the amount for residential real estate loans held for sale

included an insignificant amount of gains in pretax

earnings that are attributable to changes in instrument-

specific credit risk. The portion of the fair value

adjustments related to credit risk was determined based

on estimated default rates and estimated loss severities.

Interest income on residential real estate loans held for

sale measured at fair value is calculated based on the note

rate of the loan and is recorded in the interest income

section of the Consolidated Statements of Income as

interest on loans held for sale.

Determination of Fair Value

Fair values are based on the price that would be received

to sell an asset or paid to transfer a liability in an orderly

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
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	193	2022 FORM 10-K ANNUAL REPORT

transaction between market participants at the

measurement date. The following describes the

assumptions and methodologies used to estimate the fair

value of financial instruments recorded at fair value in the

Consolidated Balance Sheets and for estimating the fair

value of financial instruments for which fair value is

disclosed.

Short-term financial assets

Federal funds sold, securities purchased under

agreements to resell, and interest-bearing deposits with

other financial institutions and the Federal Reserve are

carried at historical cost. The carrying amount is a

reasonable estimate of fair value because of the relatively

short time between the origination of the instrument and

its expected realization.

Trading securities and trading liabilities

Trading securities and trading liabilities are recognized at

fair value through current earnings. Trading inventory held

for broker-dealer operations is included in trading

securities and trading liabilities. Broker-dealer long

positions are valued at bid price in the bid-ask spread.

Short positions are valued at the ask price. Inventory

positions are valued using observable inputs including

current market transactions, benchmark yields, credit

spreads and consensus prepayment speeds. Trading loans

are valued using observable inputs including current

market transactions, swap rates, mortgage rates, and

consensus prepayment speeds.

Trading securities - SBA interest-only strips

Interest-only strips are valued at elected fair value based

on an income approach using an internal valuation model.

The internal valuation model includes assumptions

regarding projections of future cash flows, prepayment

rates, default rates and interest-only strip terms. These

securities bear the risk of loan prepayment or default that

may result in FHN not recovering all or a portion of its

recorded investment. When appropriate, valuations are

adjusted for various factors including default or

prepayment status of the underlying SBA loans. Because

of the inherent uncertainty of valuation, those estimated

values may be higher or lower than the values that would

have been used had a ready market for the securities

existed, and may change in the near term. SBA interest-

only strips were transferred from AFS to trading on

October 1, 2021.

Securities available for sale and held to maturity

Valuations of debt securities are performed using

observable inputs obtained from market transactions in

similar securities. Typical inputs include benchmark yields,

consensus prepayment speeds, and credit spreads. Trades

from similar securities and broker quotes are used to

support these valuations.

Loans held for sale

FHN determines the fair value of loans held for sale using

either current transaction prices or discounted cash flow

models. Fair values are determined using current

transaction prices and/or values on similar assets when

available, including committed bids for specific loans or

loan portfolios. Uncommitted bids may be adjusted based

on other available market information.

Fair value of residential real estate loans held for sale

determined using a discounted cash flow model

incorporates both observable and unobservable inputs.

Inputs in the discounted cash flow model include current

mortgage rates for similar products, estimated

prepayment rates, foreclosure losses, and various loan

performance measures (delinquency, LTV, credit score).

Adjustments for delinquency and other differences in loan

characteristics are typically reflected in the model’s

discount rates. Loss severity trends and the value of

underlying collateral are also considered in assessing the

appropriate fair value for severely delinquent loans and

loans in foreclosure. The valuation of HELOCs also

incorporates estimated cancellation rates for loans

expected to become delinquent.

Non-mortgage consumer loans held for sale are valued

using committed bids for specific loans or loan portfolios

or current market pricing for similar assets with

adjustments for differences in credit standing

(delinquency, historical default rates for similar loans),

yield, collateral values and prepayment rates. If pricing for

similar assets is not available, a discounted cash flow

methodology is utilized, which incorporates all of these

factors into an estimate of investor required yield for the

discount rate.

FHN utilizes quoted market prices of similar instruments

or broker and dealer quotations to value the SBA and

USDA guaranteed loans. FHN values SBA-unguaranteed

interests in loans held for sale based on individual loan

characteristics, such as industry type and pay history

which generally follows an income approach.

Furthermore, these valuations are adjusted for changes in

prepayment estimates and are reduced due to restrictions

on trading. The fair value of other non-residential real

estate loans held for sale is approximated by their carrying

values based on current transaction values.

Mortgage loans held for investment at fair value option

The fair value of mortgage loans held for investment at

fair value option is determined by a third party using a

discounted cash flow model using various assumptions

about future loan performance (constant prepayment

rate, constant default rate and loss severity trends) and

market discount rates.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
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	194	2022 FORM 10-K ANNUAL REPORT

Loans held for investment

The fair values of mortgage loans are estimated using an

exit price methodology that is based on present values

using the interest rate that would be charged for a similar

loan to a borrower with similar risk, weighted for varying

maturity dates and adjusted for a liquidity discount based

on the estimated time period to complete a sale

transaction with a market participant.

Other loans and leases are valued based on present values

using the interest rate that would be charged for a similar

instrument to a borrower with similar risk, applicable to

each category of instruments, and adjusted for a liquidity

discount based on the estimated time period to complete

a sale transaction with a market participant.

For loans measured using the estimated fair value of

collateral less costs to sell, fair value is estimated using

appraisals of the collateral. Collateral values are

monitored and additional write-downs are recognized if it

is determined that the estimated collateral values have

declined further. Estimated costs to sell are based on

current amounts of disposal costs for similar assets.

Carrying value is considered to reflect fair value for these

loans.

Derivative assets and liabilities

The fair value for forwards and futures contracts is based

on current transactions involving identical securities.

Futures contracts are exchange-traded and thus have no

credit risk factor assigned as the risk of non-performance

is limited to the clearinghouse used.

Valuations of other derivatives (primarily interest rate

contracts) are based on inputs observed in active markets

for similar instruments. Typically inputs include

benchmark yields, option volatility and option skew. 

Starting in October 2020, centrally cleared derivatives are

discounted using SOFR as required by clearinghouses. In

measuring the fair value of these derivative assets and

liabilities, FHN has elected to consider credit risk based on

the net exposure to individual counterparties. Credit risk is

mitigated for these instruments through the use of mutual

margining and master netting agreements as well as

collateral posting requirements. For derivative contracts

with daily cash margin requirements that are considered

settlements, the daily margin amount is netted within

derivative assets or liabilities. Any remaining credit risk

related to interest rate derivatives is considered in

determining fair value through evaluation of additional

factors such as client loan grades and debt ratings. Foreign

currency related derivatives also utilize observable

exchange rates in the determination of fair value. The

determination of fair value for FHN’s derivative liabilities

associated with its prior sales of Visa Class B shares are

classified within Level 3 in the fair value measurements

disclosure as previously discussed in the unobservable

inputs discussion.

The fair value of risk participations is determined in

reference to the fair value of the related derivative

contract between the borrower and the lead bank in the

participation structure, which is determined consistent

with the valuation process discussed above. This value is

adjusted for the pro rata portion of the reference

derivative’s notional value and an assessment of credit

risk for the referenced borrower.

OREO

OREO primarily consists of properties that have been

acquired in satisfaction of debt. These properties are

carried at the lower of the outstanding loan amount or

estimated fair value less estimated costs to sell the real

estate. Estimated fair value is determined using appraised

values with subsequent adjustments for deterioration in

values that are not reflected in the most recent appraisal.

Other assets

For disclosure purposes, other assets consist of tax credit

investments, FRB and FHLB Stock, deferred compensation

mutual funds and equity investments (including other

mutual funds) with readily determinable fair values. Tax

credit investments accounted for under the equity

method are written down to estimated fair value quarterly

based on the estimated value of the associated tax credits

which incorporates estimates of required yield for

hypothetical investors. The fair value of all other tax credit

investments is estimated using recent transaction

information with adjustments for differences in individual

investments. Deferred compensation mutual funds are

recognized at fair value, which is based on quoted prices

in active markets.

Investments in the stock of the Federal Reserve Bank and

Federal Home Loan Banks are recognized at historical cost

in the Consolidated Balance Sheets which is considered to

approximate fair value. Investments in mutual funds are

measured at the funds’ reported closing net asset values.

Investments in equity securities are valued using quoted

market prices when available.

Defined maturity deposits

The fair value of these deposits is estimated by

discounting future cash flows to their present value.

Future cash flows are discounted by using the current

market rates of similar instruments applicable to the

remaining maturity. For disclosure purposes, defined

maturity deposits include all time deposits.

Short-term financial liabilities

The fair value of federal funds purchased, securities sold

under agreements to repurchase and other short-term

borrowings are approximated by the book value. The

carrying amount is a reasonable estimate of fair value

because of the relatively short time between the

origination of the instrument and its expected realization.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 23—FAIR VALUE OF ASSETS AND LIABILITIES

   

	195	2022 FORM 10-K ANNUAL REPORT

Loan commitments

Fair values of these commitments are based on fees

charged to enter into similar agreements taking into

account the remaining terms of the agreements and the

counterparties’ credit standing.

Other commitments

Fair values of these commitments are based on fees

charged to enter into similar agreements.

The following fair value estimates are determined as of a

specific point in time utilizing various assumptions and

estimates. The use of assumptions and various valuation

techniques, as well as the absence of secondary markets

for certain financial instruments, reduces the

comparability of fair value disclosures between financial

institutions. Due to market illiquidity, the fair values for

loans and leases, loans held for sale, and term borrowings

as of December 31, 2022 and December 31, 2021, involve

the use of significant internally-developed pricing

assumptions for certain components of these line items.

The assumptions and valuations utilized for this disclosure

are considered to reflect inputs that market participants

would use in transactions involving these instruments as

of the measurement date. The valuations of legacy assets,

particularly consumer loans and TRUPS loans within the

Corporate segment, are influenced by changes in

economic conditions since origination and risk perceptions

of the financial sector. These considerations affect the

estimate of a potential acquirer’s cost of capital and cash

flow volatility assumptions from these assets and the

resulting fair value measurements may depart significantly

from FHN’s internal estimates of the intrinsic value of

these assets.

Assets and liabilities that are not financial instruments

have not been included in the following table such as the

value of long-term relationships with deposit and trust

clients, premises and equipment, goodwill and other

intangibles, deferred taxes, and certain other assets and

other liabilities. Additionally, these measurements are

solely for financial instruments as of the measurement

date and do not consider the earnings potential of our

various business lines. Accordingly, the total of the fair

value amounts does not represent, and should not be

construed to represent, the underlying value of FHN.

The following table summarizes the book value and

estimated fair value of financial instruments recorded in

the Consolidated Balance Sheets as of December 31, 2022

and December 31, 2021:

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 23—FAIR VALUE OF ASSETS AND LIABILITIES

   

	196	2022 FORM 10-K ANNUAL REPORT

Table 8.23.7

BOOK VALUE AND ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS

		December 31, 2022
		Book Value		Fair Value
(Dollars in millions)				Level 1		Level 2		Level 3		Total
Assets:
Loans and leases, net of allowance for loan and lease losses
Commercial:
Commercial, financial and industrial		$31,473		$—		$—		$31,329		$31,329
Commercial real estate		13,082		—		—		12,909		12,909
Consumer:
Consumer real estate		12,053		—		—		11,934		11,934
Credit card and other		809		—		—		810		810
Total loans and leases, net of allowance for loan and lease losses		57,417		—		—		56,982		56,982
Short-term financial assets:
Interest-bearing deposits with banks		1,384		1,384		—		—		1,384
Federal funds sold		129		—		129		—		129
Securities purchased under agreements to resell		353		—		353		—		353
Total short-term financial assets		1,866		1,384		482		—		1,866
Trading securities (a)		1,375		—		1,350		25		1,375
Loans held for sale:
Mortgage loans (elected fair value) (a)		51		—		29		22		51
USDA & SBA loans - LOCOM		506		—		512		—		512
Mortgage loans - LOCOM		33		—		—		33		33
Total loans held for sale		590		—		541		55		596
Securities available for sale (a)		8,836		—		8,836		—		8,836
Securities held to maturity		1,371		—		1,209		—		1,209
Derivative assets (a)		460		9		451		—		460
Other assets:
Tax credit investments		547		—		—		542		542
Deferred compensation mutual funds		112		112		—		—		112
Equity, mutual funds, and other (b)		275		22		—		253		275
Total other assets		934		134		—		795		929
Total assets		$72,849		$—		$12,869		$57,857		$70,726
Liabilities:
Defined maturity deposits		$2,887		$—		$2,890		$—		$2,890
Trading liabilities (a)		335		—		335		—		335
Short-term financial liabilities:
Federal funds purchased		400		—		400		—		400
Securities sold under agreements to repurchase		1,013		—		1,013		—		1,013
Other short-term borrowings		1,093		—		1,093		—		1,093
Total short-term financial liabilities		2,506		—		2,506		—		2,506
Term borrowings:
Real estate investment trust-preferred		46		—		—		47		47
Term borrowings—new market tax credit investment		66		—		—		59		59
Secured borrowings		3		—		—		3		3
Junior subordinated debentures		148		—		—		150		150
Other long term borrowings		1,334		—		1,301		—		1,301
Total term borrowings		1,597		—		1,301		259		1,560
Derivative liabilities (a)		958		8		923		27		958
Total liabilities		$8,283		$8		$7,955		$286		$8,249

(a)Classes are detailed in the recurring and nonrecurring measurement tables.

(b)Level 1 primarily consists of mutual funds with readily determinable fair values. Level 3 includes restricted investments in FHLB-Cincinnati stock of $50

million and FRB stock of $203 million.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 23—FAIR VALUE OF ASSETS AND LIABILITIES

   

	197	2022 FORM 10-K ANNUAL REPORT

		December 31, 2021
		Book Value		Fair Value
(Dollars in millions)				Level 1		Level 2		Level 3		Total
Assets:
Loans and leases, net of allowance for loan and lease losses
Commercial:
Commercial, financial and industrial		$30,734		$—		$—		$31,020		$31,020
Commercial real estate		11,955		—		—		11,986		11,986
Consumer:
Consumer real estate		10,609		—		—		11,111		11,111
Credit card and other		891		—		—		906		906
Total loans and leases, net of allowance for loan and lease losses		54,189		—		—		55,023		55,023
Short-term financial assets:
Interest-bearing deposits with banks		14,907		14,907		—		—		14,907
Federal funds sold		153		—		153		—		153
Securities purchased under agreements to resell		488		—		488		—		488
Total short-term financial assets		15,548		14,907		641		—		15,548
Trading securities (a)		1,601		—		1,563		38		1,601
Loans held for sale:
Mortgage loans (elected fair value) (a)		258		—		230		28		258
USDA & SBA loans - LOCOM		853		—		855		1		856
Other loans - LOCOM		24		—		24		—		24
Mortgage loans - LOCOM		37		—		—		37		37
Total loans held for sale		1,172		—		1,109		66		1,175
Securities available for sale (a)		8,707		—		8,707		—		8,707
Securities held to maturity		712		—		705		—		705
Derivative assets (a)		324		12		312		—		324
Other assets:
Tax credit investments		456		—		—		450		450
Deferred compensation mutual funds		125		125		—		—		125
Equity, mutual funds, and other (b)		257		25		—		232		257
Total other assets		838		150		—		682		832
Total assets		$83,091		$15,069		$13,037		$55,809		$83,915
Liabilities:
Defined maturity deposits		$3,500		$—		$3,524		$—		$3,524
Trading liabilities (a)		426		—		426		—		426
Short-term financial liabilities:
Federal funds purchased		775		—		775		—		775
Securities sold under agreements to repurchase		1,247		—		1,247		—		1,247
Other short-term borrowings		102		—		102		—		102
Total short-term financial liabilities		2,124		—		2,124		—		2,124
Term borrowings:
Real estate investment trust-preferred		46		—		—		47		47
Term borrowings—new market tax credit investment		59		—		—		58		58
Secured borrowings		6		—		—		6		6
Junior subordinated debentures		148		—		—		150		150
Other long term borrowings		1,331		—		1,452		—		1,452
Total term borrowings		1,590		—		1,452		261		1,713
Derivative liabilities (a)		128		11		94		23		128
Total liabilities		$7,768		$11		$7,620		$284		$7,915

(a)Classes are detailed in the recurring and nonrecurring measurement tables.

(b)Level 1 primarily consists of mutual funds with readily determinable fair values. Level 3 includes restricted investments in FHLB-Cincinnati stock of $29

million and FRB stock of $203 million.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 23—FAIR VALUE OF ASSETS AND LIABILITIES

   

	198	2022 FORM 10-K ANNUAL REPORT

The following table presents the contractual amount and fair value of unfunded loan commitments and standby and other

commitments as of December 31, 2022 and December 31, 2021:

Table 8.23.8

UNFUNDED COMMITMENTS

		Contractual Amount				Fair Value
(Dollars in millions)		December 31, 2022		December 31, 2021		December 31, 2022		December 31, 2021
Unfunded Commitments:
Loan commitments		$25,953		$24,229		$1		$1
Standby and other commitments		754		810		7		6

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 23—FAIR VALUE OF ASSETS AND LIABILITIES

   

	199	2022 FORM 10-K ANNUAL REPORT

Note 24—Parent Company Financial Information

Following are statements of the parent company:

Parent Company Balance Sheets

Balance Sheets		December 31,
(Dollars in millions)		2022		2021
Assets:
Cash		$1,335		$724
Notes receivable		3		3
Investments in subsidiaries:
Bank		7,861		8,381
Non-bank		42		65
Other assets		251		291
Total assets		$9,492		$9,464
Liabilities and equity:
Accrued employee benefits and other liabilities		$293		$321
Term borrowings		948		944
Total liabilities		1,241		1,265
Total equity		8,251		8,199
Total liabilities and equity		$9,492		$9,464

Parent Company Statements of Income

		Year Ended December 31,
(Dollars in millions)		2022		2021		2020
Dividend income:
Bank		$435		$770		$180
Non-bank		16		—		—
Total dividend income		451		770		180
Other income (loss)		22		(26)		—
Total income		473		744		180
Interest expense - term borrowings		31		31		39
Personnel and other expense		128		89		54
Total expense		159		120		93
Income before income taxes		314		624		87
Income tax benefit		(31)		(35)		(18)
Income before equity in undistributed net income of subsidiaries		345		659		105
Equity in undistributed net income (loss) of subsidiaries:
Bank		561		332		736
Non-bank		(6)		8		4
Net income attributable to the controlling interest		$900		$999		$845

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 24—PARENT COMPANY FINANCIAL INFORMATION

   

	200	2022 FORM 10-K ANNUAL REPORT

Parent Company Statements of Cash Flows

(Dollars in millions)		2022		2021		2020
Operating activities:
Net income		$900		$999		$845
Less undistributed net income of subsidiaries		555		340		740
Income before undistributed net income of subsidiaries		345		659		105
Adjustments to reconcile income to net cash provided by operating activities:
Deferred income tax expense		7		8		5
Stock-based compensation expense		76		43		32
Loss on extinguishment of debt		—		26		—
Gain on sale of title services business		(22)		—		—
Other operating activities, net		2		(11)		25
Total adjustments		63		66		62
Net cash provided by operating activities		408		725		167
Investing activities:
Proceeds from sales and prepayments of securities		8		3		—
Purchases of securities		(1)		(10)		(5)
(Investment in) return on subsidiary		13		8		(2)
Cash received for business combination, net		—		—		103
Proceeds from business divestitures, net		22		—		—
Net cash provided by investing activities		42		1		96
Financing activities:
Proceeds from issuance of preferred stock		494		145		144
Call of preferred stock		—		(100)		—
Cash dividends paid - preferred stock		(32)		(33)		(17)
Common stock:
Stock options exercised		36		28		7
Cash dividends paid		(324)		(333)		(222)
Repurchase of shares		(13)		(416)		(4)
Proceeds from issuance of term borrowings		—		—		795
Repayment of term borrowings		—		(120)		(500)
Other financing activities, net		—		—		(8)
Net cash provided by (used in) financing activities		161		(829)		195
Net increase (decrease) in cash and cash equivalents		611		(103)		458
Cash and cash equivalents at beginning of year		724		827		369
Cash and cash equivalents at end of year		$1,335		$724		$827
Total interest paid		$35		$35		$33
Income taxes received from subsidiaries		42		28		33

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 24—PARENT COMPANY FINANCIAL INFORMATION

   

	201	2022 FORM 10-K ANNUAL REPORT

Item 9.Changes in and Disagreements with

Accountants on Accounting and

Financial Disclosure

Not applicable.

Item 9A.Controls and Procedures

Evaluation of Disclosure Controls & Procedures

Our management, with the participation of our Chief

Executive Officer and Chief Financial Officer, has evaluated

the effectiveness of our disclosure controls and

procedures (as defined in Exchange Act Rule 13a-15(e)) as

of the end of the period covered by this report. Based on

that evaluation, the Chief Executive Officer and the Chief

Financial Officer have concluded that our disclosure

controls and procedures were effective as of the end of

the period covered by this report.

Reports on Internal Control over Financial Reporting

The report of management required by Item 308(a) of

Regulation S-K appears at page 107, and the attestation

report required by Item 308(b) of Regulation S-K appears

starting at page 108, of our 2022 Financial Statements

(Item 8). Both are incorporated herein by this reference.

Changes in Internal Control over Financial Reporting

There have not been any changes in our internal control

over financial reporting during our fourth fiscal quarter

that have materially affected, or are reasonably likely to

materially affect, our internal control over financial

reporting.

Item 9B.Other Information

Not applicable.

Item 9C.Disclosure Regarding Foreign

Jurisdictions that Prevent Inspections

Not applicable.

ITEM 9. ACCOUNTANTS, ITEM 9A. CONTROLS & PROCEDURES, ITEM 9B. OTHER INFO, AND ITEM 9C. FOREIGN INSPECTIONS
Table of Contents

   

	202	2022 FORM 10-K ANNUAL REPORT

PART  III

Item 10.Directors and Executive Officers of the

Registrant

Required Item 10 Information

In 2022 there were no material amendments to the

procedures, described in our 2023 Proxy Statement under

the caption Shareholder Recommendations and

Nominations; Committee Consideration of Shareholder

Recommendations of Nominees, by which security holders

may recommend nominees to our Board of Directors.

Our bylaws contain a process, if certain conditions are

met, for a shareholder to nominate a person for election

to the Board in advance of an annual meeting, and to

require us to include that nomination in our annual

meeting proxy statement. Additional information

regarding this process is available in our 2023 Proxy

Statement under the captions Shareholder

Recommendations and Nominations and 2024 Annual

Meeting—Proposal & Nomination Deadlines, which

information is incorporated herein by reference.

Our Board of Directors has adopted a Code of Ethics for

Senior Financial Officers that applies to the Chief

Executive Officer, Chief Financial Officer, and Chief

Accounting Officer and also applies to all professionals

serving in the financial, accounting, or audit areas of FHN

and its subsidiaries. A copy of the Code has been filed or

incorporated by reference as Exhibit 14 to this report and

is posted on our current internet website at

www.firsthorizon.com: click on “Investor Relations,” at the

bottom of the web page, then hover over “Corporate

Governance” near the top of the page, then click on

“Governance Documents.” Scroll down the Governance

Documents page to find a link to the Code.  A paper copy

of the Code is available without charge upon written

request addressed to our Corporate Secretary at our main

office, 165 Madison Avenue, Memphis, Tennessee 38103.

We intend to satisfy our disclosure obligations under Item

5.05 of Form 8-K related to Code amendments or waivers

by posting such information on our internet website, the

address for which is listed in this paragraph above.

Other information required by this Item related to the

topics mentioned in Table 10.1 is incorporated herein by

reference to the disclosures indicated in the Table.

Table 10.1

ITEM 10 TOPICS TABLE

Item 10 Topics	Incorporated Disclosures
Directors and nominees for director of FHN, the Audit Committee of our Board of Directors, members of the Audit Committee, and Audit Committee financial experts	In our 2023 Proxy Statement: Independence & Categorical Standards, Committee Charters & Composition, Audit Committee, and Vote Item 1—Election of Directors (excluding the Audit Committee Report and the statements regarding the existence and location of the Audit Committee’s charter)
Executive officers	In the Supplemental Part I Information following Item 4 of this report: Executive Officers of the Registrant, beginning on page 54
Compliance with Section 16(a) of the Securities Exchange Act of 1934	In our 2023 Proxy Statement: Delinquent Section 16(a) Reports

ITEM 10. DIRECTORS & EXECUTIVE OFFICERS
Table of Contents

   

	203	2022 FORM 10-K ANNUAL REPORT

First Horizon Directors

Table 10.2

OUR BOARD OF DIRECTORS

(at February 20, 2023)

Harry V. Barton, Jr. Age 68 CPA and Owner, Barton Advisory Services, LLC, an investment advisory firm		John N. Casbon Age 74 Retired Executive Vice President, First American Title Insurance Company, a title insurance company		John C. Compton Age 61 Partner, Clayton, Dubilier & Rice a private equity firm
Wendy P. Davidson Age 53 President and Chief Executive Officer The Hain Celestial Group, Inc., an organic and natural products company		William H. Fenstermaker Age 74 Chairman and CEO, C.H. Fenstermaker and Associates, LLC, a surveying, mapping, engineering, and environmental consulting company		D. Bryan Jordan Age 61 Chairman of the Board, President and Chief Executive Officer, First Horizon Corporation, a financial services company
J. Michael Kemp, Sr. Age 52 Founder and Chief Executive Officer, Kemp Management Solutions, a program management and consulting firm		Rick E. Maples Age 64 Retired Co-Head of Investment Banking, Stifel, Nicolaus and Company, Incorporated, a financial services company		Vicki R. Palmer Age 69 President, The Palmer Group, LLC a general consulting firm
Colin V. Reed Age 75 Chairman of the Board and Chief Executive Officer, Ryman Hospitality Properties, Inc. a real estate investment trust		E. Stewart Shea, III Age 71 Private Investor		Cecelia D. Stewart Age 64 Retired President, U.S. Consumer & Commercial Banking, Citigroup, Inc. a financial services company
Rosa Sugrañes Age 65 Founder and former Chief Executive Officer, Iberia Tiles, a ceramic tile distributor				R. Eugene Taylor Age 75 Retired Chairman of the Board and Chief Executive Officer, Capital Bank Financial Corp., a financial services company

ITEM 10. DIRECTORS & EXECUTIVE OFFICERS
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	204	2022 FORM 10-K ANNUAL REPORT

Item 11.Executive Compensation

The information called for by this Item is incorporated

herein by reference to the following sections of our 2023

Proxy Statement: Compensation Committee,

Compensation Committee Interlocks & Insider

Participation, Director Compensation, Compensation

Discussion & Analysis, Recent Compensation, Post-

Employment Compensation, Pay Ratio of CEO to Median

Employee, and any Appendix to our Proxy Statement

referenced in those sections.

The sub-section of our 2023 Proxy Statement captioned

Compensation Risk, within the Compensation Committee

section, provides information concerning our

management of certain risks associated with our

compensation policies and practices. We do not believe

those risks are reasonably likely to have a material

adverse effect upon us; accordingly, we do not believe

that information is required to be provided in this Item.

The information required by Item 407(e)(5) of Regulation

S-K is provided in our 2023 Proxy Statement within the

Compensation Committee section under the sub-section

captioned Compensation Committee Report.  As permitted

by the instructions for that Item, the information under

that sub-section is not “filed” with this report.

ITEM 11. EXECUTIVE COMPENSATION
Table of Contents

   

	205	2022 FORM 10-K ANNUAL REPORT

Item 12.Security Ownership of Certain

Beneficial Owners and Management and

Related Stockholder Matters

Securities Authorized for Issuance under Equity Compensation

Plans

Equity Compensation Plan Information

Table 12.1 provides information as of December 31, 2022

regarding shares of our common stock that may be issued

under the following plans:

•2021 Incentive Plan ("2021 Plan")

•Equity Compensation Plan (“ECP”)

•IBERIABANK Corporation 2019 Stock Incentive Plan

("SIP")

•1997 Employee Stock Option Plan (“1997 Plan”)

•2002 Bank Director and Advisory Board Member

Deferral Plan (“Advisory Board Plan”)

•2000 Non-employee Directors’ Deferred

Compensation Stock Option Plan (“2000 Directors’

Plan”)

•The following IBERIABANK Corporation plans

(together with the SIP, the “IBKC Plans”): 2016 Stock

Incentive Plan; Amended and Restated 2010 Stock

Incentive Plan; and 2005 Stock Incentive Plan

•The following Capital Bank Financial Corp. plans (“CBF

Plans”): Capital Bank Financial Corp. 2013 Omnibus

Compensation Plan; North American Financial

Holdings 2010 Equity Incentive Plan; and FNB United

Corp. 2012 Incentive Plan

Table 12.1

EQUITY COMPENSATION PLAN INFORMATION

As of December 31, 2022

		A		B		C
Plan Category		Number of Securities to be Issued upon Exercise of Outstanding Options (1)		Weighted Average Exercise Price of Outstanding Options (1)		Number of Securities Remaining Available for Future Issuance under Equity  Compensation Plans (excluding securities reflected in Col. A)
Equity Compensation Plans Approved by Shareholders (2)		2,418,040	(3)	$15.70		6,266,253
Equity Compensation Plans Not Approved by Shareholders (4)		19,406	(4)	$17.59		—	(4)
Totals for A & C, wtd avg for B		2,437,446		$15.72		6,266,253

(1)The numbers of shares covered by stock options and the related option prices have been adjusted proportionately to reflect the estimated economic

effects of dividends distributed in common stock effective October 1, 2008 through January 1, 2011. The cumulative compound adjustment factor related

to those dividends is 20.038%.

(2)Consists of the 2021 Plan, the ECP, the 2000 Directors’ Plan, the IBKC Plans, and the CBF Plans. The 2021 Plan was approved by shareholders in 2021 and

remains active. The number of shares in Column C is entirely under the 2021 Plan; as provided in the 2021 Plan, the Col. C number includes the new/

additional shares originally authorized under the 2021 Plan along with shares underlying ECP awards that have been forfeited or cancelled since the 2021

Plan was approved by shareholders, net of shares underlying 2021 Plan awards that are outstanding or have been paid. The ECP initially was approved by

shareholders in 2003, most recently was re-approved in 2016, and has terminated. The 2000 Directors’ Plan was approved by shareholders in 2000, and

has terminated. The IBKC Plans were approved by IBKC's shareholders in 2005, 2020, 2011, 2014, 2016, and 2019, and all have terminated. FHN and IBKC

closed a merger-of-equals transaction in 2020, as a result of which FHN became the plan sponsor for the IBKC Plans and their awards. The CBF Plans were

approved by shareholders of CBF or certain other predecessor companies, and all have terminated.  FHN merged with CBF in 2017, as a result of which

FHN became the plan sponsor for the CBF Plans and their awards. "Terminated" means no new awards may be granted under the plan.

(3)Consists entirely of outstanding options issued under terminated plans approved by shareholders, 9,060 of which directly or indirectly were issued in

connection with non-employee director cash deferrals of approximately $0.1 million.

(4)Consists of the 1997 Plan and the Advisory Board Plan, both of which have terminated. These outstanding options were issued directly or indirectly in

connection with associate and advisory board cash deferrals of approximately $0.3 million.

ITEM 12. SECURITY OWNERSHIP & RELATED STOCKHOLDER MATTERS
Table of Contents

   

	206	2022 FORM 10-K ANNUAL REPORT

Only the 2021 Plan permits new awards to be granted; all

other plans have terminated. At December 31, 2022, there

were no shares issuable upon exercise of outstanding

options under the 2021 Plan, and the total number of

shares issuable upon exercise of outstanding options

under the terminated plans was 2,437,446 shares.

Shares covered by outstanding options are shown in

column A of Table 12.1. Outstanding equity awards other

than options ("full-value awards"), consisting of unpaid

stock units and restricted stock, are not included in any

column in that Table. In total, 13,033,646 shares are

covered by unpaid full-value awards, all granted under the

2021 Plan, the ECP, or the SIP. Of those, 12,237,301 are

covered by unvested awards, and 796,345 are covered by

awards that have vested but are subject to an unfulfilled

mandatory deferral period.

Column C of Table 12.1 presents the total number of

shares available for new awards under the 2021 Plan at

December 31, 2022, assuming eventual full exercise or

vesting of all shares covered by awards outstanding on

that date. The 2021 Plan permits the grant of options and

full-value awards, as well as stock appreciation rights

(none of which have been granted).

Of the options outstanding at December 31, 2022 (the

total under column A), approximately 1% were issued

directly or indirectly in connection with associate and

director cash deferral elections. We received over many

years a total of approximately $0.3 million in associate

cash deferrals and $0.1 million in non-employee director

and advisory board retainer and meeting fee deferrals

related to outstanding deferral options. The opportunity

to defer portions of compensation in exchange for options

has not been offered to associates, directors, or advisory

board members since 2004.

Description of Equity Compensation Plans Not Approved by Shareholders

The 1997 Plan

The 1997 Plan was adopted by the Board of Directors in

1996 and terminated in 2007. The 1997 Plan authorized

the grant of nonqualified stock options.

Options were granted under the 1997 Plan prior to its

termination pursuant to a management option program,

covering a wide range of management-level associates.

The last management options granted under the 1997

Plan, with seven-year terms, expired in 2014. However,

prior to 2005 certain associates could elect to defer a

portion of their annual compensation into stock options

under the 1997 Plan. Many deferral options had 20-year

terms, and they are the only options still outstanding

under the 1997 Plan.

All deferral options granted under the 1997 Plan had an

exercise price discounted from grant date fair market

value: the aggregate exercise price plus the aggregate

compensation foregone equaled the aggregate grant date

fair market value. Options could be exercised using shares

of FHN stock to pay the option price. When an option was

exercised with shares, the option holder sometimes

received a new (reload) option grant priced at then-

current market (without a discount), covering the

remainder of the deferral option's term.

As of December 31, 2022, options covering 17,915 shares

of our common stock were outstanding under the 1997

Plan, no shares remained available for future option

grants, and options covering 21,108,924 shares had been

exercised during the life of the plan. The 1997 Plan was

filed most recently as Exhibit 10.2(d) in our Form 10-Q for

the quarter ended June 30, 2009.

The Advisory Board Plan

The Advisory Board Plan was adopted by the Board of

Directors in 2001, and terminated in 2005.

Options granted under the Advisory Board Plan were

granted only to regional and advisory board members, or

to directors of certain bank affiliates, in any case who

were not associates. The options were granted in lieu of

the participants receiving retainers or attendance fees for

bank board and advisory board meetings. The number of

shares subject to grant equaled the amount of fees/

retainers earned divided by one half of the fair market

value of one share of common stock on the date of the

option grant. The exercise price plus the amount of fees

foregone equaled the fair market value of the stock on the

grant date. The options were vested at the grant date.

Those granted on or before January 2, 2004 had terms of

twenty years, and are the only options still outstanding.

As of December 31, 2022, options covering 1,491 shares of

our common stock were outstanding under the Advisory

Board Plan, no shares remained available for future option

grants, and options covering 19,408 shares had been

exercised during the life of the Plan. The Advisory Board

Plan was filed most recently as Exhibit 10.1(h) to our Form

10-Q for the quarter ended June 30, 2009.

ITEM 12. SECURITY OWNERSHIP & RELATED STOCKHOLDER MATTERS
Table of Contents

   

	207	2022 FORM 10-K ANNUAL REPORT

Beneficial Ownership of Corporation Stock

The information required for this Item pursuant to Item

403(a) and (b) of Regulation S-K is presented in our 2023

Proxy Statement under the heading Stock Ownership

Information. That information is incorporated into this

Item by reference.

Change in Control Arrangements

The information presented in Item 1 under the caption 2022 Merger Agreement with Toronto-Dominion Bank, which begins

on page 15, is incorporated into this Item by reference.

ITEM 12. SECURITY OWNERSHIP & RELATED STOCKHOLDER MATTERS
Table of Contents

   

	208	2022 FORM 10-K ANNUAL REPORT

Item 13.Certain Relationships and Related

Transactions

The information called for by this Item is presented in the

following sections of our 2023 Proxy Statement: Related

Party Transaction Procedures; Transactions with Related

Persons; and Independence & Categorical Standards. That

information is incorporated into this Item by reference.

Our independent directors and nominees are identified in

the Independence discussion within the Independence &

Categorical Standards section of our 2023 Proxy

Statement.

Item 14.Principal Accountant Fees and Services

The Audit Committee of the Board of Directors has a

policy providing for pre-approval of all audit and non-audit

services to be performed by our registered public

accounting firm that performs the audit of our

consolidated financial statements (our “Auditor”). Services

either may be approved in advance by the Audit

Committee specifically on a case-by-case basis (“specific

pre-approval”) or may be approved in advance (“advance

pre-approval”). Advance pre-approval requires the

Committee to identify in advance the specific types of

service that may be provided and the fee limits applicable

to such types of service, which limits may be expressed as

a limit by type of service or by category of services. All

requests to provide services that have been pre-approved

in advance must be submitted to the Chief Accounting

Officer prior to the provision of such services for a

determination that the service to be provided is of the

type and within the fee limit that has been pre-approved.

Unless the type of service to be provided by our Auditor

has received advance pre-approval under the policy and

the fee for such service is within the limit pre-approved,

the service will require specific pre-approval by the

Committee.

The terms of and fee for the annual audit engagement

must receive the specific pre-approval of the Committee.

“Audit,” “Audit-related,” “Tax,” and “All Other” services,

as those terms are defined in the policy, have the advance

pre-approval of the Committee, but only to the extent

those services have been specified by the Committee and

only in amounts that do not exceed the fee limits specified

by the Committee. Such advance pre-approval is to be for

a term of 12 months following the date of pre-approval

unless the Committee specifically provides for a different

term. Unless the Committee specifically determines

otherwise, the aggregate amount of the fees pre-

approved for All Other services for the fiscal year must not

exceed seventy-five percent (75%) of the aggregate

amount of the fees pre-approved for the fiscal year for

Audit services, Audit-related services, and those types of

Tax services that represent tax compliance or tax return

preparation. The policy delegates the authority to pre-

approve services to be provided by our Auditor, other

than the annual audit engagement and any changes

thereto, to the chair of the Committee. The chair may not,

however, make a determination that causes the 75% limit

described above to be exceeded. Any service pre-

approved by the chair will be reported to the Committee

at its next regularly scheduled meeting.

Information regarding fees billed to FHN by our Auditor,

KPMG LLP, for the two most recent fiscal years is

incorporated herein by reference to the section of our

2023 Proxy Statement captioned Vote Item 2—Auditor

Ratification. No services were approved by the Audit

Committee pursuant to Rule 2-01(c)(7)(i)(C) of Regulation

S-X.

ITEM 13. CERTAIN RELATIONSHIPS & RELATED TRANSACTIONS  AND  ITEM 14. PRINCIPAL ACCOUNTANT FEES & SERVICES
Table of Contents

   

	209	2022 FORM 10-K ANNUAL REPORT

PART  IV

Item 15.Exhibits and Financial Statement

Schedules

Financial Statements & Related Reports

Our consolidated financial statements, the notes thereto,

and the reports of management and independent public

accountants, as listed below, are incorporated herein by

reference to the pages of 2022 Financial Statements (Item

8) indicated in Table 15.1.

Table 15.1

Item 8 Page	Statement, Note, or Report Incorporated into Item 15
107	Report of Management on Internal Control over Financial Reporting
108	Reports of Independent Registered Public Accounting Firm
112	Consolidated Balance Sheets as of December 31, 2022 and 2021
113	Consolidated Statements of Income for the years ended December 31, 2022, 2021, and 2020
115	Consolidated Statements of Comprehensive Income for the years ended December 31, 2022, 2021, and 2020
116	Consolidated Statements of Changes in Equity for the years ended December 31, 2022, 2021, and 2020
117	Consolidated Statements of Cash Flows for the years ended December 31, 2022, 2021, and 2020
119	Notes to the Consolidated Financial Statements

Financial Statement Schedules

Not applicable.

Exhibits

In the exhibit table that follows: the “Filed Here” column

denotes each exhibit which is filed or furnished (as

applicable) with this report; the “Mngt Exh” column

denotes each exhibit that represents a management

contract or compensatory plan or arrangement required

to be identified as such; the “Furnished” column denotes

each exhibit that is “furnished” pursuant to 18 U.S.C.

Section 1350 or otherwise, and is not “filed” as part of this

report or as a separate disclosure document; and the

phrase “2022 named executive officers” refers to those

executive officers whose 2022 compensation is described

in our 2023 Proxy Statement. All references to “First

Horizon National Corporation” or to "First Tennessee

National Corporation" refer to us, under previous

corporate names.

In many agreements filed as exhibits, each party makes

representations and warranties to other parties. Those

representations and warranties are made only to and for

the benefit of those other parties in the context of a

business contract. Exceptions to such representations and

warranties may be partially or fully waived by such parties,

or not enforced by such parties, in their discretion. No

such representation or warranty may be relied upon by

any other person for any purpose.

ITEM 15. EXHIBITS & FINANCIAL STATEMENT SCHEDULES
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	210	2022 FORM 10-K ANNUAL REPORT

Table 15.2

10-K EXHIBIT TABLE

Exh No	Description of Exhibit to this 10-K Report	Filed Here	Mngt Exh	Furn- ished	Incorporated by Reference to
					Form	Exh No	Filing Date
	Corporate Exhibits
2.1	Agreement and Plan of Merger dated as of February 27, 2022, between FHN, The Toronto-Dominion Bank, TD Bank US Holding Company, and Falcon Holdings Acquisition Co. [conformed copy]				10-K	2.1	3/1/2022
3.1	Amended and Restated Charter of First Horizon Corporation				8-K	3.1	7/30/2021
3.2	Articles of Amendment of the Restated Charter of FHN, related to the Series G Preferred Stock				8-K	3.1	3/3/2022
3.3	Bylaws of First Horizon Corporation, as amended and restated effective January 24, 2023				8-K	3.1	1/25/2023
4.1	Deposit Agreement, dated as of July 1, 2020, by and among First Horizon National Corporation, Equiniti Trust Company, as depositary, and the holders from time to time of the depositary receipts described therein [Series B]				8-K	4.1	7/2/2020
4.2	Form of Depositary Receipt--Series B (included as part of Exhibit 4.1 to this report)				8-K	4.1	7/2/2020
4.3	Deposit Agreement, dated as of July 1, 2020, by and among First Horizon National Corporation, Equiniti Trust Company, as depositary, and the holders from time to time of the depositary receipts described therein [Series C]				8-K	4.2	7/2/2020
4.4	Form of Depositary Receipt--Series C (included as part of Exhibit 4.3 to this report)				8-K	4.2	7/2/2020
4.5	Deposit Agreement, dated as of July 1, 2020, by and among First Horizon National Corporation, Equiniti Trust Company, as depositary, and the holders from time to time of the depositary receipts described therein [Series D]				8-K	4.3	7/2/2020
4.6	Form of Depositary Receipt--Series D (included as part of Exhibit 4.5 to this report)				8-K	4.3	7/2/2020
4.7	Deposit Agreement, dated as of May 28, 2020, by and among First Horizon National Corporation, Equiniti Trust Company, as depositary, and the holders from time to time of the depositary receipts described therein [Series E]				8-K	4.1	5/28/2020
4.8	Form of certificate representing Series E Preferred Stock				8-K	4.2	5/28/2020
4.9	Form of Depositary Receipt--Series E (included as part of Exhibit 4.7 to this report)				8-K	4.1	5/28/2020
4.10	Deposit Agreement, dated as of May 3, 2021, by and among First Horizon Corporation, Equiniti Trust Company, as depositary, and the holders from time to time of the depositary receipts described therein [Series F]				8-K	4.1	5/03/2021
4.11	Form of certificate representing the Series F Preferred Stock				8-K	4.2	5/03/2021
4.12	Form of Depositary Receipt-Series F representing the Depositary Shares (included as part of Exhibit 4.10 to this report)				8-K	4.1	5/03/2021
4.13	Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934				10-Q 2Q21	4.4	8/5/2021
4.14	FHN agrees to furnish to the Securities and Exchange Commission upon request a copy of each instrument defining the rights of the holders of the senior and subordinated long- term debt of FHN and its consolidated subsidiaries
	Equity-Based Award Plans
10.1 (a)	2021 Incentive Plan		X		Proxy 2021	App. A	3/15/2021
10.1 (b)	Equity Compensation Plan (as amended and restated April 26, 2016)		X		Proxy 2016	App. A	3/14/2016
10.1 (c)	IBERIABANK Corporation 2019 Stock Incentive Plan		X		10-K 2020	10.1(b)	2/25/2021

ITEM 15. EXHIBITS & FINANCIAL STATEMENT SCHEDULES
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	211	2022 FORM 10-K ANNUAL REPORT

Exh No	Description of Exhibit to this 10-K Report	Filed Here	Mngt Exh	Furn- ished	Incorporated by Reference to
					Form	Exh No	Filing Date
10.1 (d)	IBERIABANK Corporation 2016 Stock Incentive Plan		X		10-K 2020	10.1(c)	2/25/2021
10.1 (e)	IBERIABANK Corporation 2010 Stock Incentive Plan		X		10-K 2020	10.1(d)	2/25/2021
10.1 (f)	1997 Employee Stock Option Plan, as restated for amendments through Dec. 15, 2008		X		10-Q 2Q09	10.2(d)	8/6/2009
10.1 (g)	2000 Non-Employee Directors’ Deferred Compensation Stock Option Plan, as restated for amendments through Dec. 15, 2008		X		10-Q 2Q09	10.1(e)	8/6/2009
	Performance-Based Equity Award Documents
10.2 (a)	Form of Grant Notice for Special Retention Stock Units [2016]		X		10-Q 1Q16	10.6	5/6/2016
10.2 (b)	Form of Grant Notice for Executive Performance Stock Units [2020]		X		10-Q 1Q20	10.1	5/8/2020
10.2 (c)	Form of Grant Notice for Executive Performance Stock Units [2021]		X		10-Q 1Q21	10.1	5/6/2021
10.2 (d)	Form of Grant Notice for Executive Performance Stock Units [2022]		X		10-Q 1Q22	10.1	5/6/2022
10.2 (e)	Form of Grant Notice for Executive Performance Stock Units [2023]	X	X
	Stock Option Award Documents
10.3 (a)	Form of Agreement to Defer Receipt of Shares Following Option Exercise		X		10-Q 2Q17	10.1	8/8/2017
10.3 (b)	Form of Stock Option Grant Notice		X		10-K 2004	10.5(e)	3/14/2005
10.3 (c)	First Tennessee Stock Option Enhancement Program		X		10-K 2006	10.5(o)	2/28/2007
10.3 (d)	Form of Grant Notice for Executive Stock Options [2016]		X		10-Q 1Q16	10.2	5/6/2016
10.3 (e)	Form of Grant Notice for Special Retention Stock Options [2016]		X		10-Q 1Q16	10.5	5/6/2016
10.3 (f)	Form of Grant Notice for Executive Stock Options [2017]		X		10-Q 1Q17	10.2	5/8/2017
10.3 (g)	Form of Grant Notice for Executive Stock Options [2018]		X		10-Q 1Q18	10.2	5/8/2018
10.3 (h)	Form of Grant Notice for Executive Stock Options [2019]		X		10-Q 1Q19	10.2	5/8/2019
10.3  (i)	Form of Grant Notice for Executive Stock Options [2020]		X		10-Q 1Q20	10.2	5/8/2020
10.3  (j)	Form of IBERIABANK Corporation Stock Option Agreement		X		10-K 2020	10.3(l)	2/25/2021
	Other Equity-Based Award Documents
10.4 (a)	Form of Grant Notice for Executive Restricted Stock Units [2020]		X		10-Q 1Q20	10.3	5/8/2020
10.4 (b)	Form of Grant Notice for Executive Restricted Stock Units [2021]		X		10-Q 1Q21	10.2	5/6/2021
10.4 (c)	Form of Grant Notice for Executive Restricted Stock Units - Special Bonus-Driven Award [2021]		X		10-Q 1Q21	10.3	5/6/2021
10.4 (d)	Form of Grant Notice for Executive Restricted Stock Units [2022]		X		10-Q 1Q22	10.2	5/6/2022
10.4 (e)	Form of Grant Notice for Executive Restricted Stock Units [2023]	X	X
10.4 (f)	Form of Grant Notice for Retention RSUs—TD Merger Integration Award Program (Special Leader Group) [2022-23]		X		10-Q 2Q22	10.1	8/4/2022

ITEM 15. EXHIBITS & FINANCIAL STATEMENT SCHEDULES
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	212	2022 FORM 10-K ANNUAL REPORT

Exh No	Description of Exhibit to this 10-K Report	Filed Here	Mngt Exh	Furn- ished	Incorporated by Reference to
					Form	Exh No	Filing Date
10.4 (g)	Form of Grant Notice for Restricted Cash Units—TD Merger Program [2023]	X	X
10.4 (h)	Form of IBERIABANK Corporation Restricted Stock Agreement		X		10-K 2020	10.4(f)	2/25/2021
10.4 (i)	Director Compensation Policy, as adopted April 27, 2021		X		10-Q 1Q21	10.4	5/6/2021
	Management Cash Incentive Plan Documents
10.5 (a)	Executive Bonus Plan		X		8-K	10.1	10/27/2021
	Other Exhibits relating to Employment, Retirement, Severance, or Separation
10.6 (a)	February 2007 form of change-in-control severance agreement between FHN and its executive officers		X		8-K	10.7(a2)	2/26/2007
10.6 (b)	Form of Amendment to February 2007 form of change-in- control severance agreement between FHN and its executive officers		X		10-Q 3Q07	10.7(a4)	11/7/2007
10.6 (c)	October 2007 form of change-in-control severance agreement between FHN and its executive officers		X		10-Q 3Q07	10.7(a5)	11/7/2007
10.6 (d)	Form of Change in Control Severance Agreement offered to executive officers from November 2008 through January 2021		X		8-K	10.2	11/24/2008
10.6 (e)	Executive Change in Control Severance Plan		X		8-K	10.1	1/29/2021
10.6 (f)	Form of Pension Restoration Plan (amended and restated as of January 1, 2008)		X		10-Q 3Q07	10.7(e)	11/7/2007
10.6 (g)	Form of Amendment to Pension Restoration Plan		X		10-K 2009	10.7(d2)	2/26/2010
10.6 (h)	Form of Amendment No. 3 to Pension Restoration Plan		X		10-Q 3Q11	10.2	11/8/2011
10.6  (i)	Form of First Horizon Corporation Savings Restoration Plan		X		8-K	10.1	7/17/2012
10.6  (j)	Letter agreement, dated as of November 3, 2019, by and between First Horizon and D. Bryan Jordan		X		8-K	10.1	11/7/2019
10.6 (k)	Form of Retention Agreement [entered into with certain executives of First Horizon, November 2019]		X		8-K	10.2	11/7/2019
10.6  (l)	Amended and Restated Agreement, dated August 20, 2001, between IBERIABANK Corporation and Daryl G. Byrd		X		10-K 2020	10.6(l)	2/25/2021
10.6 (m)	Letter agreement, dated as of November 3, 2019, between IBERIABANK Corporation and Daryl G. Byrd		X		10-K 2020	10.6(m)	2/25/2021
10.6 (n)	Letter agreement, dated as of November 3, 2019, between First Horizon National Corporation and Daryl G. Byrd		X		8-K	99.1	11/7/2019
10.6 (o)	Form of letter agreement [entered into with certain executives of IBERIABANK Corporation, November 2019]		X		10-K 2020	10.6(o)	2/25/2021
10.6 (p)	Retention Agreement of Anthony J. Restel, dated November 3,2019		X		8-K	10.1	7/2/2020
10.6 (q)	Conformed copy of offer letter [Hope Dmuchowski]		X		8-K	10.1	11/9/2021
	Documents Related to Other Deferral Plans and Programs
10.7 (a)	Directors and Executives Deferred Compensation Plan [originally adopted 1985], as amended and restated [2017], with forms of deferral agreement and 2007 addendum to deferral agreement		X		10-Q 2Q17	10.4	8/8/2017
10.7 (b)	Form of Amendment to Directors and Executives Deferred Compensation Plan		X		10-Q 3Q07	10.1(a3)	11/7/2007
10.7 (c)	Rate Applicable to Participating Directors and Officers under the Directors and Executives Deferred Compensation Plan		X		10-Q 3Q22	10.1	11/7/2022
10.7 (d)	Schedule of Deferral Agreements [Non-Employee Directors, 1995]		X		10-K 2018	10.7(d)	2/28/2019

ITEM 15. EXHIBITS & FINANCIAL STATEMENT SCHEDULES
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	213	2022 FORM 10-K ANNUAL REPORT

Exh No	Description of Exhibit to this 10-K Report	Filed Here	Mngt Exh	Furn- ished	Incorporated by Reference to
					Form	Exh No	Filing Date
10.7 (e)	Form of First Horizon National Corporation Deferred Compensation Plan as Amended and Restated [formerly known as First Tennessee National Corporation Nonqualified Deferred Compensation Plan]		X		10-Q 3Q07	10.1(c)	11/7/2007
10.7 (f)	Form of Deferred Compensation Agreement used under FHN’s Equity Compensation Plan and First Tennessee National Corporation Non-Qualified Deferred Compensation Plan, along with form of Salary, Commission, and Annual Bonus Deferral Programs Overview, form of Deferred Stock Option (“DSO”) Program Summary, and description of share receipt deferral feature		X		8-K	10(z)	1/3/2005
	Other Exhibits related to Management or Directors
10.8 (a)	Survivor Benefits Plan, as amended and restated July 18, 2006		X		10-Q 3Q06	10.8	11/8/2006
10.8 (b)	Other Compensation and Benefit Arrangements for Non- employee Directors		X		10-K 2020	10.8(b)	2/25/2021
10.8 (c)	Description of Long-Term Disability Program		X		10-Q 2Q17	10.2	8/8/2017
10.8 (d)	Form of Indemnity Agreement with directors and executive officers [2004 form]		X		10-Q 2Q17	10.3	8/8/2017
10.8 (e)	Form of amendment to 2004 form of Indemnity Agreement with directors and executive officers		X		8-K	10.4	4/28/2008
10.8 (f)	Form of Indemnity Agreement with directors and executive officers (April 2008 revision)		X		8-K	10.5	4/28/2008
10.8 (g)	List of Certain Benefits Available to Certain Executive Officers	X	X
10.8 (h)	Description of 2023 Salary Rates for 2022 Named Executive Officers	X	X
	Other Exhibits
14	Code of Ethics for Senior Financial Officers	X
21	Subsidiaries of First Horizon Corporation	X
23	Accountant’s Consents	X
24	Power of Attorney	X
31(a)	Rule 13a-14(a) Certifications of CEO (pursuant to Section 302 of Sarbanes-Oxley Act of 2002)	X
31(b)	Rule 13a-14(a) Certifications of CFO (pursuant to Section 302 of Sarbanes-Oxley Act of 2002)	X
32(a)	18 USC 1350 Certifications of CEO (pursuant to Section 906 of Sarbanes-Oxley Act of 2002)	X		X
32(b)	18 USC 1350 Certifications of CFO (pursuant to Section 906 of Sarbanes-Oxley Act of 2002)	X		X
	XBRL Exhibits
101	The following financial information from First Horizon Corporation’s Annual Report on Form 10-K for the year ended December 31, 2022, formatted in Inline XBRL: (i) Consolidated Balance Sheets at December 31, 2022 and 2021 (ii) Consolidated Statements of Income for the Years Ended December 31, 2022, 2021, and 2020 (iii) Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2022, 2021, and 2020.  (iv) Consolidated Statements of Changes in Equity for the Years Ended December 31, 2022, 2021, and 2020. (v) Consolidated Statements of Cash Flows for the Years Ended December 31, 2022, 2021, and 2020. (vi) Notes to the Consolidated Financial Statements	X

ITEM 15. EXHIBITS & FINANCIAL STATEMENT SCHEDULES
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	214	2022 FORM 10-K ANNUAL REPORT

Exh No	Description of Exhibit to this 10-K Report	Filed Here	Mngt Exh	Furn- ished	Incorporated by Reference to
					Form	Exh No	Filing Date
101. INS	XBRL Instance Document-the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document	X
101. SCH	Inline XBRL Taxonomy Extension Schema	X
101. CAL	Inline XBRL Taxonomy Extension Calculation Linkbase	X
101. DEF	Inline XBRL Taxonomy Extension Definition Linkbase	X
101. LAB	Inline XBRL Taxonomy Extension Label Linkbase	X
101. PRE	Inline XBRL Taxonomy Extension Presentation Linkbase	X
104	Cover Page Interactive Data File, formatted in Inline XBRL (included in Exhibit 101)	X

Item 16. Form 10-K Summary

Not applicable.

ITEM 15. EXHIBITS & FINANCIAL STATEMENT SCHEDULES
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	215	2022 FORM 10-K ANNUAL REPORT

Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this

report to be signed on its behalf by the undersigned, thereunto duly authorized.

		FIRST HORIZON CORPORATION
Date: March 1, 2023		By:		/s/ Hope Dmuchowski
		Name:		Hope Dmuchowski
		Title:		Senior Executive Vice President and Chief Financial Officer
				(Duly Authorized Officer and Principal Financial Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following

persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature*	Title	Date*		Signature*	Title	Date*
D. Bryan Jordan D. Bryan Jordan	President, Chief Executive Officer, Chairman of the Board, and a Director (principal executive officer)	*		Hope Dmuchowski Hope Dmuchowski	Senior Executive Vice President and Chief Financial Officer (principal financial officer)	*
Jeff L. Fleming Jeff L. Fleming	Executive Vice President and Chief Accounting Officer (principal accounting officer)	*		Harry V. Barton, Jr. Harry V. Barton, Jr.	Director	*
John N. Casbon John N. Casbon	Director	*		John C. Compton John C. Compton	Director	*
Wendy P. Davidson Wendy P. Davidson	Director	*		William H. Fenstermaker William H. Fenstermaker	Director	*
J. Michael Kemp, Sr. J. Michael Kemp, Sr.	Director	*		Rick E. Maples Rick E. Maples	Director	*
Vicki R. Palmer Vicki R. Palmer	Director	*		Colin V. Reed Colin V. Reed	Director	*
E. Stewart Shea III     E. Stewart Shea III	Director	*		Cecelia D. Stewart Cecelia D. Stewart	Director	*
Rosa Sugrañes Rosa Sugrañes	Director	*		R. Eugene Taylor R. Eugene Taylor	Director	*

	*By: /s/ Clyde A. Billings, Jr.	March 1, 2023
	Clyde A. Billings, Jr.
	As Attorney-in-Fact

SIGNATURES
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	216	2022 FORM 10-K ANNUAL REPORT