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

For the fiscal year ended December 31, 2023

- or -

☐	TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE 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. ☒

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, 2023, the aggregate market value of registrant common stock held by non-affiliates of the registrant was

approximately $6.2 billion based on the closing stock price reported for that date.

At January 31, 2024, the registrant had 558,807,806 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 23, 2024 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

		Page				Page
Glossary		1		Item 8.	Financial Statements and Supplementary Data	101
Executive Summary of Principal Investment Risks		3		Item 9.	Changes in and Disagreements with
Forward-Looking Statements		5			Accountants on Accounting and Financial
Part I					Disclosure	204
Item 1.	Business	6		Item 9A.	Controls and Procedures	204
Item 1A.	Risk Factors	29		Item 9B.	Other Information	204
Item 1B.	Unresolved Staff Comments	49		Item 9C.	Disclosure Regarding Foreign Jurisdictions that
Item 1C.	Cybersecurity	49			Prevent Inspections	204
Item 2.	Properties	49		Part III
Item 3.	Legal Proceedings	49		Item 10.	Directors, Executive Officers and Corporate
Item 4.	Mine Safety Disclosures	49			Governance	205
Supplemental Part I Information		50		Item 11.	Executive Compensation	207
Part II				Item 12.	Security Ownership of Certain Beneficial
Item 5.	Market for the Registrant’s Common Equity,				Owners and Management and Related
	Related Stockholder Matters, and Issuer				Stockholder Matters	208
	Purchases of Equity Securities	52		Item 13.	Certain Relationships and Related Transactions,
Item 6.	[Reserved]	53			and Director Independence	209
Item 7.	Management’s Discussion and Analysis of			Item 14.	Principal Accountant Fees and Services	209
	Financial Condition and Results of			Part IV
	Operations	54		Item 15.	Exhibits and Financial Statement Schedules	210
Item 7A.	Quantitative and Qualitative Disclosures			Item 16.	Form 10-K Summary	214
	about Market Risk	100		Signatures		215

MD&A and Financial Statement References:

In this report: "2023 MD&A" and "2023 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, "2023 Financial Statements" and

" 2023 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

BTFP	Bank Term Funding Program
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
CECL	Current expected credit loss
CEO	Chief Executive Officer
CFPB	Consumer Financial Protection Bureau
CMO	Collateralized mortgage obligations
CODM	Chief Operating Decision-Maker

TABLE OF CONTENTS and GLOSSARY

   

	1	2023 FORM 10-K ANNUAL REPORT

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 (U.S.)
GHG	Greenhouse Gas
GNMA	Government National Mortgage Association or Ginnie Mae
GSE	Government sponsored enterprises, in this filing references Fannie Mae and Freddie Mac
HELOC	Home equity line of credit
HFS	Held for sale
HR	Human Resources
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 Market 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
TD Merger Agreement	Merger agreement between FHN, TD, and certain TD subsidiaries, signed in February 2022 and terminated in May 2023
TD Transaction	The acquisition of FHN by TD contemplated by the TD Merger Agreement
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

   

	2	2023 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.

• 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 16, and

Risks from Economic Downturns and Changes which

begins on page 34.

• Credit Loss. Our lending business—accounting for about

half of our revenues—is 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. Even if the loan is

secured, our loss from a default 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. 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 10; and Credit

Risks beginning on page 36.

• 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 36.

• 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. Tightening ended in 2023. 2022

represented a significant and abrupt 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. In 2023, U.S. inflation abated

but at year-end remained higher than the desired policy

target. 2022's aggressive policy shift caused short-term

rates to rise substantially, and to exceed long-term rates

(a so-called yield curve inversion) many times in 2022

and during all of 2023. Over half of our loan portfolio

bears variable interest rates associated with short-term

reference rates, which reacted fairly quickly to the shifts

in environment. For additional information, see: the

Monetary Policy Shifts discussion within Significant

Business Developments Over Past Five Years, which

begins on page 10; the Cyclicality discussion within

Other Business Information, which begins on page 16;

Risks Associated with Monetary Events beginning on

page 34; Interest Rate and Yield Curve Risks beginning

on page 44; and discussion under the caption Federal

Reserve Policy in Transition within the Market

Uncertainties and Prospective Trends section of our

2023 MD&A (Item 7), which begins on page 92.

• Funding Balance. In our lending business, we aggregate

money, from deposits and borrowings, 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 are

larger than our lending needs, generally we can cut back

short-term borrowing or invest excess funds in

securities, 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 selling

investments or increasing deposit or borrowing volumes

and costs, or, most likely, we might have to take some

combination of those actions. For additional

information, see Liquidity and Funding Risks beginning

on page 42.

• Deposit Instability. A large portion of bank deposits can

be removed by depositors very quickly. Public

confidence in banks therefore is a key foundation for

the banking business. If deposits are removed quickly by

a large cohort of depositors at the same time due to a

sudden loss of confidence, the resulting "run on the

bank" can cause the bank to become insolvent. All

banks share the risk of a run. In first half of 2023 three

EXECUTIVE SUMMARY OF PRINCIPAL INVESTMENT RISKS
Table of Contents

   

	3	2023 FORM 10-K ANNUAL REPORT

large regional U.S. banks failed after very substantial

runs on their deposits. Most other regional banks,

including our Bank, experienced significant deposit

outflows during this period as public confidence in all

but the largest banks was shaken. Although we

launched a deposit campaign which proved to be

successful, future runs always are possible, and future

campaigns may not work. For additional information,

see Liquidity and Funding Risks beginning on page 42.

• 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 14, and Traditional

Competition Risks beginning on page 29.

• 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, increasingly sophisticated

technological systems 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. These rewards have

incented U.S. 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 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 10; the Strategic Transactions

discussion within the Other Business Information section

which begins on page 16; and Traditional Strategic Risks

beginning on page 30.

• Industry Disruption. Technological innovation, and the

associated changes in client preferences, are radically

transforming our industry and how financial services are

delivered to clients. Being a consistent innovation

leader is practically impossible for a bank our size, while

keeping pace is expensive and difficult. Moreover, rapid

innovation has the potential to be destructive of

traditional business models and companies in our

industry, as it has done and is doing in other industries.

For additional information, see Industry Disruption

beginning on page 31.

• 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 clients, and to protect the federal

government’s deposit insurance fund and program;

none exists to protect or enhance our profitability or

protect 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 38.

• 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 robustly secure, the less

that system can be flexible and adaptable. Moreover, a

high-security system can be associated with sub-optimal

user experience (client frustration). For additional

information, see Operational Risks beginning on page 32

and Cybersecurity Risks beginning on page 33.

• 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 32, and Risks of Expense Control beginning on

page 40.

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

29.

EXECUTIVE SUMMARY OF PRINCIPAL INVESTMENT RISKS
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	4	2023 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:

• global, general and local economic and business

conditions, including economic recession or

depression;

• 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;

• reputational risk and potential adverse reactions or

changes to business or employee relationships; 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 2023 MD&A (Item 7), among others.

FORWARD-LOOKING STATEMENTS
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	5	2023 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, 2023, we had total

consolidated assets of $82 billion. We provide diversified

financial services through our subsidiaries, principally First

Horizon Bank. The Bank is a Tennessee banking

corporation headquartered in Memphis, Tennessee.

During 2023 approximately 27% of our consolidated

revenues were provided by fee and other noninterest

income, and approximately 73% 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 2023, 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, 2023, the Bank had $82 billion in total

assets, $66 billion in total deposits, and $61 billion in total

loans (including certain leases, before considering the

allowance for loan and lease losses).

Principal Businesses, Brands, & Locations

Our principal brands at year-end 2023 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, 2023, 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, the Bank had 415 retail banking

centers in twelve states, as shown in Table 1.2.

Table 1.2

Retail Banking Centers at Year-End

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

Many banking centers contain special-service areas such

as wealth management and mortgage lending.

At year-end 2023, First Horizon also had over fifty 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: 27 fixed income offices in 17

states across the U.S.; and 9 stand-alone mortgage lending

offices in 6 states. First Horizon also has operational and

administrative offices.

ITEM 1. BUSINESS
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	6	2023 FORM 10-K ANNUAL REPORT

Loans

Loan Portfolios

Lending is a major source of revenue for us, and loans are

our largest asset type. Table 1.3 shows our total loans

(including certain leases) at year-end 2023, along with

some details regarding the composition of our loans. Most

of our loans are commercial.

As shown in Table 1.3, our loans are broken into two

major types, commercial and consumer. Each type is

broken into portfolios. Our three major portfolios are:

traditional, unsecured commercial, financial, and

industrial (“C&I”) loans; secured commercial real estate

(“CRE”) loans; and secured consumer real estate loans. A

fourth portfolio consists of consumer credit card and

other consumer debt.

Table 1.3

Loan Types & Portfolios1

Commercial	$47 B	76%
Consumer	$14 B	24%
Total Loans	$61 B	100%
Commercial Portfolios	% of Type	% of Total
C&I	70%	53%
CRE	30	23
Consumer Portfolios	% of Type	% of Total
Consumer real estate	95%	23%
Credit card/other	5	1

1Dollars and percentages at December 31, 2023.

Geographic Mix

Geographically, a significant majority of our loans

originate from five states: Florida, Tennessee, Texas,

North Carolina, and Louisiana. The geographic dispersion

of our loans varies considerably among our three major

loan portfolios, as shown in Table 1.4.

Table 1.4

Major Loan Portfolios1 by Geography

C&I ($33B)			CRE ($14B)			Cons. RE ($14B)
Tennessee	21%		Florida	27%		Florida	29%
Florida	13%		Texas	13%		Tennessee	22%
Texas	11%		N. Carolina	12%		Texas	11%
N. Carolina	7%		Georgia	9%		Louisiana	8%
Louisiana	6%		Tennessee	9%		N. Carolina	7%
Georgia	5%		Louisiana	8%		New York	5%
California	5%		All other	22%		Georgia	5%
All other	32%					All other	13%

1Dollars and percentages at December 31, 2023.

C&I Loans

The C&I portfolio, our largest portfolio by far, was $33

billion at December 31, 2023. Our C&I portfolio has an

industry concentration: about 18% of C&I loans are to

businesses in the financial services industry, which

includes finance and insurance companies and mortgage

lending companies. The rest of C&I covers a wide range of

industries, as shown in Table 1.5a.

Table 1.5a

C&I Loans1 by Industry/Line of Business

Finance and insurance	12%
Real estate and rental and leasing (a)	12
Health care and social assistance	8
Accommodation and food service	7
Manufacturing	7
Wholesale trade	7
Loans to mortgage companies	6
Retail trade	6
Transportation and warehousing	5
Energy	4
Other C&I	26

  1 Percentages of C&I portfolio at December 31, 2023.

(a)Leasing, rental of real estate, equipment, and goods.

CRE Loans

The CRE portfolio was $14 billion at December 31, 2023.

The largest property type within CRE is multi-family, as

shown in Table 1.5b. The next three largest property types

were office, retail, and industrial. At year-end, nearly half

of the office loans were for medical industry office space.

Table 1.5b

CRE Loans1 by Industry/Line of Business

Multi-family	31%
Office	20
Retail	16
Industrial	16
Hospitality	10
Land/land development	2
Other CRE	5

1 Percentages of CRE portfolio at December 31, 2023.

Consumer Loans

Consumer loans totaled $14 billion at December 31, 2023.

As shown in Table 1.3 above, a substantial majority of

consumer loans consists of home equity loans, mortgages,

and other secured consumer real estate loans.

Further information regarding our loans is provided in

Note 3 beginning on page 131 appearing in our 2023

Financial Statements (Item 8), and under the captions

Analysis of Financial Condition and Asset Quality,

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	7	2023 FORM 10-K ANNUAL REPORT

beginning on pages 62 and 65, respectively, of our 2023

MD&A (Item 7).

Deposits

Deposits comprise our largest resource to fund lending.

Deposits overall also tend to be our lowest-cost funding

source. At year-end 2023, we had total deposits of $66

billion. Most of our deposits are held in our regional

banking and specialty banking segments. Table 1.6

provides a deposit overview at December 31, 2023.

Further information regarding deposits is provided: in

Note 8 beginning on page 148 appearing in our 2023

Financial Statements (Item 8); under the caption Deposits

beginning on page 75 appearing in our 2023 MD&A (Item

7); and in other parts of this report referenced under

Deposits.

Table 1.6

Deposit1 Overview

Client Types	% of Total		Acct Types	% of Total		FDIC Insured Status	% of Total		Source	% of Total
Commercial	55%		Savings	38%		Estimated Insured	59%		Tennessee	38%
Consumer	45%		Time deposits	10%		Est. Uninsured - Total	41%		Florida	18%
			Other interest	26%		Est. Uninsured - Collateralized	8%		Louisiana	12%
			Noninterest	26%					N. Carolina	12%
									All other	20%

1Percentages of deposits at December 31, 2023.

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 2023

MD&A (Item 7) and in our 2023 Financial Statements

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

Information. Note 19 begins on page 172.

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 the revenues they generate

have a very different mix of net interest income vs.

noninterest income. In addition, regional banking is larger

than specialty banking by many financial measures. Table

1.7 provides high-level financial information for each of

those two segments, highlighting these points.

Table 1.7

Regional vs Specialty Banking Snapshot

(Dollars in millions)	Regional		Specialty
2023 Average assets	$45,858		$20,161
2023 Net interest income	$2,354		$518
2023 Noninterest income	$433		$209
2023 Pre-tax income	$1,262		$313

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

• energy finance

• healthcare finance

• tax credit finance

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• 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 1.4

primarily because of specialty banking business lines.

Revenues and earnings from three of the business lines in

the specialty banking segment are significantly more

volatile over time than those in regional banking. In

addition to being sensitive to economic conditions

generally, those specialty business lines can be very

strongly impacted or benefited by changes in interest

rates or in the shape of the yield curve. Those business

lines are fixed income/capital markets, mortgage

warehouse lending, and mortgage origination. Because

they can perform well when other business lines are

subdued, and vice-versa, we sometimes refer to these as

our counter-cyclical businesses. 2023 overall was a

subdued year for these businesses as interest rates

continued to rise before leveling, and the yield curve was

inverted the entire year.

Services We Provide

At December 31, 2023, 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

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—2023 Compared to 2022

beginning on page 56 of our 2023 MD&A (Item 7).

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Significant Business Developments Over Past Five Years

Selected Financial Data Past Five Years

Table 1.8 provides selected data concerning revenues, expenses, assets, liabilities, shareholders’ equity, and certain other

metrics for the past five years.

Table 1.8

SELECTED CONSOLIDATED FINANCIAL DATA

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

	2023	2022	2021	2020	2019
Net interest income	$2,540	$2,392	$1,994	$1,662	$1,210
Noninterest income	927	815	1,076	1,492	654
Net income available to common shareholders	865	868	962	822	435
Total loans and leases	61,292	58,102	54,859	58,232	31,061
Provision (benefit) for credit losses	260	95	(310)	503	45
Net Charge-offs	170	59	2	120	27
Net interest margin	3.42%	3.10%	2.48%	2.86%	3.28%
Total assets	81,661	78,953	89,092	84,209	43,311
Total deposits	65,780	63,489	74,895	69,982	32,430
Total term borrowings	1,150	1,597	1,590	1,670	791
Total liabilities	72,370	70,406	80,598	75,902	38,235
Preferred stock	520	1,014	520	470	96
Total shareholders’ equity (financial statement)	9,291	8,547	8,494	8,307	5,076
Common Equity Tier 1 Capital (regulatory)	8,104	7,032	6,367	6,110	3,409

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 in 2020 and 30-Branch Acquisition in 2020 in

this Item below for additional information. In

February 2022, we completed the principal systems

conversion work related to that merger.

• As shown in Table 1.8, 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

(fell) in 2022. The banking crisis in 2023 prompted us

to launch a deposit-gathering campaign in second

quarter, which was successful.

• 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 activities were significantly paused during the

period when the TD transaction was pending.

• 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. In 2023 the rates and amounts we paid

for deposits rose appreciably, but the impact was

moderated by continued increases in lending rates

along with a decrease in our borrowings.

• 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. Mortgage-related lending and

services fell significantly in 2022, which continued

throughout 2023.

• 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. That

adverse environment continued throughout 2023.

Events Impacting Year-to-Year Comparisons

TD Transaction 2022-2023

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

merger transaction. Our shareholders approved the TD

transaction in May 2022. In May 2023, after TD failed to

obtain timely regulatory approval, we and TD agreed to

terminate the transaction. See Toronto-Dominion

Transaction below for further information.

Preparation for the consummation of the TD transaction

resulted in significant noninterest expense in 2022 and

2023 unrelated to the ordinary course of business. TD paid

us a termination fee which substantially increased 2023

noninterest income, and we used part of that fee to

support community charities.

As part of the TD transaction, in 2022 TD paid us $494

million to purchase shares of our Series G convertible

preferred stock. After the transaction terminated, the

Series G stock was converted into our common stock in

2023 at a conversion price of $25 per common share.

Regional Bank Failures in 2023

Over the weekend of March 11, 2023, the FDIC closed two

large regional banks that had experienced a run on their

deposits. On May 1, 2023, the FDIC closed a third large

regional bank after a slower but extended run on its

deposits. During this period most regional bank stock

prices fell significantly and experienced substantial

volatility.

Although stock price drops and fluctuations do not directly

impact our financial results or position, we took action to

maintain client confidence in our financial stability when

the TD transaction terminated just a few days after the

third bank failure. Those actions included a significant

deposit-acquisition campaign and a rapid uptick in

marketing efforts. Also, a special FDIC assessment,

prompted by the bank failures and applied to all large and

regional banks in the U.S., was recognized by us as a

significant expense item in 2023.

Stock Purchase Moratorium in 2022-2023

After announcing the TD transaction in 2022, we halted

our stock purchase program except for tax withholding

related to stock awards. When the TD transaction

terminated in the midst of market turmoil surrounding

three U.S. regional bank failures, and facing the prospect

of possible new regulatory requirements (stemming from

those failures) which would directly affect our capital, we

continued the moratorium for all of 2023. The moratorium

ended in first quarter 2024.

Gain on Sale of Business

In third quarter of 2022, we sold our title services

business, recognizing a $22 million pre-tax 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. 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

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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 pre-tax 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, especially in

2020 and 2021.

Low Credit Loss Rates

During this period, our provision expense and net charge-

offs have, for the most part, been lower than historical

norms. Provision expense spiked in 2020 when the very

sudden COVID recession triggered significant upward

revisions in our expected credit losses, and provision

expense was negative in 2021 when a sizeable portion of

the 2020 loss reserves were released as loss expectations

moderated substantially. Net charge-offs during those

years similarly were higher in 2020 and lower in 2021,

though the deviations from the norm were much less

severe. If 2020 and 2021 are viewed together as a single

period, annual provision expense and net charge-offs

were similar to levels in 2022. When loan losses are low,

differences from year to year can be idiosyncratic, driven

by just one or a few clients. In 2023, loss levels increased

but continued to be low in general; however, a single

commercial loan default drove an uptick in provision

expense and net charge-offs for the year.

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

deteriorate in a rapid manner. Also in 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 2019 moderate market volatility and the downward

direction of interest rates resulted in much higher trading

volume and noninterest income in our fixed income

business, which largely continued in 2020 and 2021.

During most of 2022 the Federal Reserve aggressively

raised rates, resulting in a significant fall-off in fixed

income revenues, which continued in 2023. See the Fixed

Income discussion under Cyclicality within the Other

Business Information section of  this Item, which begins on

page 16, for additional information.

Monetary Policy Shifts

Interest rates were low by historical standards in the first

three of this five-year period, and generally fell during

those years. This environment lowered our net interest

margin from 2019 to 2021. 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. In 2023 short-term rate increases slowed

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substantially and then stopped entirely, while long-term

rates rose and then fluctuated.

During the last half of 2022 and all of 2023 the traditional

two-year/ten-year yield curve for U.S. Treasury debt was

inverted, meaning the two-year rate exceeded the ten-

year. Historically, inversion is not common, and extended

periods of inversion are quite rare. Although several

factors likely contributed to the current inversion, we

believe a key factor in this instance, especially in 2023,

was that markets tried to anticipate when, and how

aggressively, the Federal Reserve would start cutting

short-term rates in order to avoid or mitigate a recession.

Our net interest margin improved in 2022 and, despite the

inversion, improved again in 2023.

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

27; under the caption Risks Associated with Monetary

Events beginning on page 34 within Item 1A; and under

the caption Federal Reserve Policy in Transition within the

Market Uncertainties and Prospective Trends section of

2023 MD&A (Item 7), which begins on page 92.

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 1.8, 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 in 2022.

Significant Trends Past Five Years

Noteworthy trends during these five years included:

• Net interest margin declined from 2019 to 2021.

However, net interest income rose in 2020 as loan

balances increased with the IBERIABANK merger. Net

interest income expanded again in 2022 and 2023 as

margins improved with the rising-rate environment,

and loan growth continued following that merger.

• 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

rising rates in 2022 negatively impacted mortgage and

fixed income revenues in 2022 and in 2023. The

uptick in 2023's noninterest income was driven by the

fee paid to FHN when the TD transaction terminated.

• The large deposit uptick in 2020 was driven

substantially by the IBERIABANK and 30-branch

transactions. Also in 2020 and 2021, the 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. Deposits grew

again in 2023 as a result of a successful deposit

acquisition campaign.

• 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.

Toronto-Dominion Transaction

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”) and certain TD subsidiaries. Under that agreement,

TD was to acquire FHN for an all-cash purchase price of

$25 per FHN common share, with the price modestly

increasing if the transaction closed later than a certain

date.

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

outside date for the transaction to close until May 27,

2023. Subsequent to the extension, TD informed FHN that

TD did not expect that the necessary regulatory approvals

to be received in time to complete the transaction by May

27, 2023. On May 4, 2023, FHN and TD agreed to

terminate the transaction. 

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.

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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 Bank of America N.A., Fifth Third Bank National

Association, First-Citizens Bank & Trust Company (dba

First Citizens Bank), Hancock Whitney Bank, Huntington

National Bank, JPMorgan Chase Bank National Association,

Regions Bank, Pinnacle Bank, PNC Bank National

Association, Synovus Bank, Truist Bank, and Wells Fargo

Bank N.A., 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 and new ones, 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. The trend

of increasing 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, 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 and 2023, rate

pricing competition for deposits was more intense than

had been true in recent earlier years.

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	14	2023 FORM 10-K ANNUAL REPORT

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

For the past 160 years, our culture has been a catalyst to

our success. Our culture is centered around our people

and their performance, promoting teamwork and

collaboration to achieve results. We prioritize a healthy

work environment, which enhances morale and associate

satisfaction, ultimately leading to increased productivity

and engagement. In 2023, we retained 90% of our

associate base, including a 97% of our leadership team,

indicative of our ability to attract and retain top talent

even in challenging circumstances.

At the center of all that we do are our Purpose, Values and

Commitment, holding ourselves to the highest standards

of ethical conduct and operational excellence.

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 – Providing fair and equitable

opportunities for associates is at the center of our

diversity and inclusion efforts.

• 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.

Commitment: As teammates and as individuals, we must

own the moment.  We listen, understand and deliver.

Understanding the changing needs and expectations of

our workforce is central to our success. As evidenced

during the pandemic, our ability to remain nimble and

responsive allows us to serve our clients and communities

without disruption even when business conditions change.

We want our associates to be inspired and empowered to

perform at their best. We seek their input through formal

surveys and through the Firstpower Council, a group of

associates representing various areas of the company that

provide direct feedback on opportunities to enhance our

culture and organizational effectiveness.

The overall well-being of every associate is important to

us. In addition to competitive health care benefits,

wellness programs and parental and care-giver support,

we offer professional development opportunities through

mentoring and career development programs. Associates

can actively engage with their colleagues at work and be

involved in the community in a variety of ways, including

through volunteerism and by participating in one or more

of our associate resource groups (of which there are 10,

with two additional groups set to launch in 2024).

Creating a diverse workforce and inclusive work

environment is a fundamental aspect of our Firstpower

culture. This commitment starts at the top of the

organization with Board of Directors oversight and

executive leadership support and is embedded throughout

our organization and business priorities.

Our objective is not only to attract a diverse team, but

also to create an environment in which different

backgrounds, opinions and perspectives are valued. We

continuously focus on:

▪ Actively seeking representation of diverse talent

▪ Strengthening leadership capabilities and

accountability

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	15	2023 FORM 10-K ANNUAL REPORT

▪ 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 expanding

outreach and access for historically underserved

groups

We made measurable progress in 2023 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 providing

capital and counsel and committing to excellence in

everything we do. 

Year-End Statistical Information

At December 31, 2023*:

• First Horizon had 7,378 associates, or 7,249 full-time-

equivalent associates and 129 part-time equivalent

associates, not including contract labor for certain

services:

◦ 66% white, 20% African American, 9% Hispanic, 3%

Asian, and 2% other races or ethnicities

◦ 63% female and 37% male

◦ 4% have disabilities

• Of those, First Horizon had 1,200 corporate managers:

◦ 76% white, 13% African American, 7% Hispanic, 2%

Asian, and 2% other races or ethnicities

◦ 54% female and 46% male

◦ 2% have disabilities

• Of the managers, First Horizon had 36 members of the

CEO's Operating Committee (composed of the CEO and

leaders from across the organization):

◦ 86% white, 11% African American, 0% Hispanic, 3%

Asian, and 0% other races or ethnicities

◦ 44% female and 56% male

__________

*Data compiled from information provided by associates.

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 10 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, 2023 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 is

registered with the SEC as a municipal adviser.

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

Inc. 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. and FHIS, Inc. are

licensed as insurance agencies in all states where they

do business for which licensing is required.

• 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.

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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 funding costs down while higher

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

But if rates fall low enough (as they did in 2020-21), 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 29), 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 2023 MD&A (Item 7), in

Executive Overview (page 55), Interest Rate Risk

Management (page 84), and Market Uncertainties and

Prospective Trends (page 92).

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 1.9.

Table 1.9

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, push long-term rates up,

tighten credit, shrink the money supply, and decelerate

economic activity. “Easing” can include actions by the

Federal Reserve to lower short-term interest rates, push

long-term rates down, 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 pushing long-

term rates down, or steepen the curve by taking the

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opposite actions. Complicating any forecast, the Federal

Reserve can directly affect short-term rates but can only

influence long-term rates, which are market-driven and

which can defy the Federal Reserve's intentions. 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 1.10.

Table 1.10

Key Drivers of

Fixed Income Performance

Driver	If Driver Is:	FI Revenues Tend to Be:
Interest rates	Rising/up	Lower
	Falling/down	Higher
Market volatility	Extreme (low or high)	Lower
	Moderate	Higher
Yield curve	Flat or Inverted	Lower
	Steep	Higher
Credit spreads	Tighter	Lower
	Wider	Higher
Depository Liquidity	Lower	Lower
	Greater	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

2024 is likely to be an inflection year, making outlook

predictions more uncertain than usual. However, early in

2024, the two most important market factors in 2024

appear likely to be (i) whether, when, and by how much

the Federal Reserve will decide to implement short-term

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

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

Both factors, especially the first, assume that inflation in

the U.S. will not start to increase in 2024. Resumption of

rising prices could prompt the Federal Reserve to resume

short-term rate increases which, in turn, could increase

the risk of a recession.

Additional information concerning market uncertainties

and trends appears in Market Uncertainties and

Prospective Trends within 2023 MD&A (Item 7) beginning

on page 92, 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 2023 MD&A (Item 7) beginning on page 54.

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 205. 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, 2023,

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.

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 16.

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

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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 requirements, 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 primarily on 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.

As a practical matter, as we approach $100 billion, we will

have to prepare for Category IV compliance. Doing that

will require us to invest in systems and staffing. As a

result, a portion of the compliance costs associated with

Category IV status will be borne before we reach the

Category IV threshold.

Also, Category IV compliance requirements are proposed

to be expanded. If adopted, compliance costs and

restrictions would increase substantially. A few of the

proposed changes would apply to companies having $50

to $100 billion in total assets, like us.

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

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	20	2023 FORM 10-K ANNUAL REPORT

$1.2 billion at January 1, 2024. 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 2023 MD&A (Item 7) beginning on

page 88 of this report; and under the caption Restrictions

on dividends in Note 12—Regulatory Capital and

Restrictions of our 2023 Financial Statements (Item 8),

beginning on page 154.

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 our 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 us or our

other affiliates is restricted. The Bank and its subsidiaries

generally may not extend credit to us or to any other

affiliate of ours 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 the Bank's 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 other affiliates; the Bank’s

loans or extensions of credit to third parties collateralized

by the securities or obligations of us or other affiliates; the

issuance of guaranties, acceptances, and letters of credit

on behalf of us or other affiliates; and certain Bank

transactions with us or other affiliates, or with respect to

which we or other affiliates 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, 2023, our Common Equity Tier 1

Capital Ratio was 11.40% and the Bank’s was 11.40%.

• 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

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	21	2023 FORM 10-K ANNUAL REPORT

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

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, 2023, our Tier 1

Capital Ratio was 12.42% and the Bank’s was 11.82%.

• 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, 2023, our

Total Capital Ratio was 13.96% and the Bank’s was

13.17%.

• 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,

2023, our Leverage ratio was 10.69% and the Bank’s

was 10.20%.

• 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.

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. In addition, an 8% capital surcharge applies to certain

covered institutions, not including us or the Bank.

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

(such as the Bank) that do not meet minimum capital

requirements. For this purpose, insured depository

institutions are divided into five capital categories. The

specific requirements applicable to our Bank are

summarized in Table 1.11.

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Table 1.11

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, 2023, 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 outflow 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 currently. 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). Moreover, mergers and acquisitions that are large

enough are subject to anti-trust review and approval by

the U.S. Department of Justice.

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. The next CRA

assessment is expected to be completed in 2024.

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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, 2023, 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 16.

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.

Regulatory changes proposed in 2023, if adopted, would

lower that cap.

Volcker Rule

The so-called 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

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	25	2023 FORM 10-K ANNUAL REPORT

a “qualified mortgage” using traditional underwriting

practices involving down payments, credit history, income

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

prohibit, but do tend to discourage, lenders from

originating non-qualified mortgages.

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. Later, a

different appellate court in a separate case ruled the

opposite way. The question has been appealed to the U.S.

Supreme Court. If the U.S. Supreme Court affirms the first

ruling, 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 2023 fully adjusted rates

ranged from 2.5 to 42 basis points annually. (A basis point

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

temporary increase generally equal to 2 basis points. Also,

for eight quarters starting in 2024, the FDIC has imposed a

special assessment, of 3.36 basis points per quarter,

intended to replenish the DIF in the aftermath of three

large regional bank failures that occurred in March and

May of 2023.

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.

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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.

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.

One of our subsidiaries is a registered investment adviser

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 rules 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,

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 19 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

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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

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 10; under the caption Risks

Associated with Monetary Events beginning on page 34

within Item 1A; and under the caption Inflation, Recession,

and the Federal Reserve within the Market Uncertainties

and Prospective Trends section of our 2023 MD&A (Item

7), which begins on page 92.

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 2023 MD&A

(Item 7), including the subsection entitled Liquidity Risk

Management beginning on page 88, 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
Traditional Competition Risks	29			Risks of Expense Control	40
Traditional Strategic Risks	30			Geographic Risks	41
Industry Disruption	31			Insurance	42
Operational Risks	32			Liquidity & Funding Risks	42
Cybersecurity Risks	33			Credit Ratings	44
Risks from Economic Downturns & Changes	34			Interest Rate & Yield Curve Risks	44
Risks Associated with Monetary Events	34			Asset Inventories & Market Risks	45
Risks Related to Businesses We May Exit	35			Mortgage Business Risks	45
Reputation Risks	36			Pre-2009 Mortgage Business Risks	46
Credit Risks	36			Accounting Risks	46
Service Risks	38			Share Owning & Governance Risks	47
Regulatory, Legislative, and Legal Risks	38

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 31) 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. In 2023, after the

major market transitions in 2022 discussed in Risks

Associated with Monetary Events starting on page 34,

competition for deposits became much 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

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	29	2023 FORM 10-K ANNUAL REPORT

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 14 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 42 of this Item 1A for additional information

concerning this risk.

Traditional Strategic Risks

We may be unable to successfully implement our

strategies to operate and grow our regional and specialty

banking businesses. Although our current strategies are

expected to evolve as business conditions change,

currently 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 have enhanced

our market share in our regional banking markets with

targeted hires and marketing, and we have invested

resources in specialty commercial lending and private

client banking. 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.

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 we believe are significant to us at present.

Our challenge is to execute those strategies and adjust

them, or adopt new strategies, as conditions change.

Failure to achieve one or more key elements needed for

successful business acquisitions would adversely affect

our business and earnings. To the extent we engage in

future bank or non-bank business acquisitions, we face

various additional risks, including:

• our ability to realize planned strategic and tactical

objectives, including operating efficiencies and

revenue synergies, within a reasonable time period

after closing the transaction;

• our ability to identify, analyze, and correctly assess

the execution, credit, contingency, and other risks in

the acquisition and to price the transaction

appropriately;

• our ability to properly evaluate loss inherent in the

target business’ loan portfolios;

• our ability to integrate the acquired business’

operations, clients, and properties quickly and cost-

effectively;

• our ability to manage cultural assimilation risks

associated with growth through acquisitions, which

can be an often-overlooked and often-critical failure

point in mergers;

• our ability to combine the franchise values of the two

companies without significant loss from re-branding

and other similar changes; and

• our ability to retain core clients and key associates.

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.

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The IBKC merger in 2020 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 2021

hurricane event impacting key markets, the overall length

of the integration period likely would have been

significantly 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

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.

Other technologies, services, and systems based wholly or

in part on artificial intelligence are proliferating within our

industry and among many of our commercial clients,

resulting in an environment which is changing rapidly. Our

challenge is to maintain critical stability and security while

also being nimble enough to adapt quickly to changing

circumstances and client demands.

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,

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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 mainly

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.

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. Fraud directed against clients—generally using

deception to persuade clients to transfer funds—has

emerged as a third large source of fraud loss. The methods

used to perpetrate and combat fraud continue to evolve

as technology changes. In addition to cybersecurity risk

(discussed below), new technologies—including the use of

artificial intelligence—have made it easier for bad actors

to obtain and use client personal information, mimic

communications to or from clients, mimic 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

(see Cybersecurity Risks below), 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.

We expect to make significant investments over the next

several years in operational systems that are unlikely to

result in significant immediate returns. In 2021 we

started to invest significantly in new platforms and

processes to modernize operations, provide a better client

experience, reduce ongoing operating costs or otherwise

improve efficiencies, and support future growth. We

expect significant investments of that sort to grow over

the next several years as we prepare for business growth

and increased regulatory demands. Investments of that

sort are expensive. Although we believe they are

necessary for our future and are appropriate for our

company at this time, the financial returns on these

investments will be highly uncertain and, at best, likely to

occur only over a long time horizon. In addition,

investments of this sort lay the foundation for growth; if

growth does not materialize, many of these investments

may have little practical value.

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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 requirements. 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 85 of

our 2023 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 retention and growth in some

business lines depends substantially 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.

Cybersecurity Risks

An information technology security (cybersecurity)

breach or other similar incident is a major type of

operational risk. A cybersecurity 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

and 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

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expect our systems and regulatory requirements will

continue to evolve as technology and criminal techniques

also continue to evolve.

Additional information concerning cybersecurity risks and

our management of them, all of which is incorporated into

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

Cybersecurity Risk Management beginning on page 86 of

our 2023 MD&A (Item 7).

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

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 fraud impacting accounts at our Bank

and can cause us to take costly steps to avoid significant

theft loss to our Bank and to 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.

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.

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,

reversed, and reversed again 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

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yield curve in the U.S. Short-term rate rises in 2023 were

few and modest, and ended mid-year. Long-term rates

rose during 2023 but slowly and unevenly. The 2022 yield

curve inversion continued throughout 2023 and continues

in 2024.

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 16; within the Effect of Governmental Policies and

Proposals section of Item 1 beginning on page 27; in

Interest Rate and Yield Curve Risks beginning on page 44;

and under the caption Inflation, Recession, and Federal

Reserve Policy within the Market Uncertainties and

Prospective Trends section of our 2023 MD&A (Item 7),

beginning on page 92.

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; that

inversion continued for all of 2023. It is not clear when the

inversion is likely to end.

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 44.

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.

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. Other dispositions have

occurred in recent years and likely will continue in the

future. 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 pre-tax 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.

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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 and other

credit support 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 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. In 2023 they rose again

to $170 million, driven partly by continuing normalization

but also, significantly, by a single commercial credit loss. If

the U.S. experiences an economic recession in the future,

net charge offs generally could increase substantially.

Even absent a recession, upward-trending normalization is

likely to continue.

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 Risks beginning on

page 46, 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

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	36	2023 FORM 10-K ANNUAL REPORT

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.

Our credit and other loan-management models could be

wrong, or could become wrong if external factors

change. 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 currently, long term rates

continue to lag driven in part by market expectations that

short rates may soon be cut again. In any case, even if less

acute today, that traditional risk-versus-yield challenge

remains in place.

As interest rates rise, default risk generally also rises. As

borrowers’ obligations to pay interest increases, 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. Even if no

recession results, the full effects of the 2022-23 rate hikes

may not yet be 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

reversed starting in 2022, which may signal the start of a

new multi-year cycle. If a new cycle has started, 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 upturn 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, 2023,

approximately 53% of total loans and leases consisted of

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

approximately 23% of total loans and leases consisted of

the commercial real estate (CRE) portfolio, and

approximately 23% 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

18% 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,

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 stability and value of the CRE portfolio depends

substantially upon the financial health of the underlying

real estate assets and upon commercial real estate market

values generally. Many CRE assets are rental properties,

and for those occupancy and vacancy rates are critical

factors along with business trends that impact tenants.

Most of the remainder are owner-occupied, significantly

dependent on the financial health of the borrower. Part of

our rental CRE consists of traditional office space. The

COVID pandemic disrupted traditional office space

demand and utilization. It is highly uncertain what

demand and utilization likely will be once that disruption

fully ends.

The consumer real estate portfolio contains a number of

concentrations which affect credit risk assessment of the

portfolio.

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• 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 89%

of the consumer real estate portfolio consists of loans

secured on a first-lien basis.

• Geographic concentration. At year end, about 62% of

the consumer real estate portfolio related to clients in

three states: Florida, Tennessee, and Texas.

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 2020-22, 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 65 of our 2023 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 85 of our 2023

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 19, 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

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

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starts on page 19. 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 19; under the captions Capital,

Capital Risk Management and Adequacy, and Market

Uncertainties and Prospective Trends beginning on pages

77, 85, and 92, respectively, of our 2023 MD&A (Item);

and under the caption Regulatory Capital in Note 12—

Regulatory Capital and Restrictions, beginning on page

154 of our 2023 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. Compliance costs

associated with those and other over-$100-billion

regulations are expected to be significant. New

regulations proposed in 2023 would substantially increase

capital and other requirements, various restrictions, and

costs. Moreover, we expect that a significant portion of

those compliance costs, with or without the new

regulations, will need to be borne as we approach the

$100 billion tier, rather than commence abruptly when we

enter the tier, as we upgrade compliance systems,

processes, and staffing before they are fully needed.

Additional information concerning these risks, which is

incorporated into this Item 1A by this reference, appears

in: the Supervision & Regulation section of Item 1 which

starts on page 19; and under the caption Other Regulatory

Proposals within the section captioned Market

Uncertainties and Prospective Trends beginning on page

92 of our 2023 MD&A (Item 7).

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 46;

under the captions Repurchase Obligations, Market

Uncertainties and Prospective Trends, and Contingent

Liabilities beginning on pages 91, 92, and 98, respectively,

of our 2023 MD&A (Item 7); and under the caption

Contingencies in Note 16—Contingencies and Other

Disclosures, beginning on page 162 of our 2023 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, as

well as that of our commercial clients. 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

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	39	2023 FORM 10-K ANNUAL REPORT

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

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, federal 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, we engage a third party to estimate our

Scope 1 and 2 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 re-

evaluate business relationships with certain clients, or

groups of clients, that have suboptimal reputations for

emissions.

Recent state laws and federal disclosure proposals

concerning greenhouse gas (GHG) emissions could

impose significant additional costs upon us.  In 2023 the

state of California enacted two laws which, taken

together, will require most larger companies doing

business in California to report annually their greenhouse

gas ("GHG") emissions, with an external assurance

requirement, and to report biennially their climate-related

financial risks and risk-mitigation measures. The U.S.

Securities and Exchange Commission ("SEC") has

proposed, but not yet adopted, rules that would require

all U.S. companies with publicly-traded securities to report

annually their GHG emissions and related climate-oriented

information. If applicable to us, direct compliance costs

will include creating systems to measure or estimate and

capture relevant data, staffing, and engagement of

vendors, including a firm to provide required assurances

(somewhat analogous to a financial statement auditor).

Potentially of more significance: obtaining data could,

depending upon how the new regimes are implemented,

require us to obtain GHG-related information from clients,

including clients that are not public companies and that do

no business in California. If so, effectively we could be

required to impose costs and/or inconveniences on

clients. Other banks in our markets, particularly those that

are both private and not doing business in California,

could provide financial services without those

requirements, putting us at a competitive disadvantage.

Additional information concerning these risks, which is

incorporated into this Item 1A by this reference, appears

under the caption Greenhouse Gas (GHG) Reporting

Regimes within the section captioned Market

Uncertainties and Prospective Trends beginning on page

92 of our 2023 MD&A (Item 7).

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.

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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 risk-adjusted (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 judgment regarding capital allocation and

risk. 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.

Regulatory compliance expense will increase

substantially when we reach $100 billion in assets, which

is the next regulatory tier above us now. Moreover, we

expect such costs to increase significantly as we

approach that size. Additional information concerning

these expenses appears in Regulatory, Legislative, and

Legal Risks within this Item 1A beginning on page 38.

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

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 national health insurance laws

impacting our healthcare-industry clients in middle

Tennessee; and automotive industry plant closures.

Significant cost increases and uncertainties impacting

clients and communities in our coastal markets may

jeopardize the substantial growth trends of those

markets. A significant part of our growth prospects are

concentrated in the major gulf coast markets and several

markets on the southern Atlantic seacoast of the U.S.

Many of our fastest growing markets, including most

significantly those in Florida, can be impacted significantly

by hurricanes and other severe coastal weather events. As

those markets grow, our economic commitment to them

grows, as does our financial exposure to those events.

In 2023 and this year it has been widely reported that the

economic costs of hurricane events in the U.S. gulf and

southern Atlantic coastal areas have been rising

significantly. We believe that rising costs are directly

related to growth in those areas.

For example, much of the growth in Florida has been

along the coasts moving out from older cities. A gulf coast

hurricane 50 or 60 years ago had a fair chance of making

landfall in a relatively unpopulated area. Now, the chances

of directly hitting a population center are much higher,

the average population in that center is much higher, and

the average value per building is much higher.

The reported significant increase in casualty risks and

costs is being reflected in property insurance practices

which currently are in significant flux. The insurance

industry is being forced to revise its risk assessment and

premium pricing practices in coastal areas as loss

experience has deviated from earlier predictions,

sometimes badly. In Florida, for example, some smaller

carriers have failed, some larger carriers have left markets,

and remaining carriers have significantly increased the

premiums of hurricane-related insurance, narrowed

coverage, or both.

Coastal states such as Florida and Louisiana have created

last-resort insurance pools for residents who cannot

obtain or afford private property insurance. However, as

the costs borne by those pools increase, either the

premiums will have to rise or general taxation will have to

cover the difference. In addition, those programs

generally do not help business clients.

State and local building and water-control codes are being

revised, but often unevenly and often not retroactive to

pre-existing structures and developments. The current

transition period could be lengthy.

The availability, reliability, and cost of adequate property

insurance is a significant concern for us as well as our

clients in affected markets. Instability in property

insurance has made, and will continue to make, our

business decisions more difficult. That instability increases

our risks of loan loss and business downturn.

More fundamentally, elevated insurance and casualty

costs blunt a key factor driving growth in many of these

high-growth markets: lower costs of living. If market

growth slows, our business will be impacted.

Additional information concerning these risks, which is

incorporated into this Item 1A by this reference, appears

under the caption Coastal Market Growth and Rising Costs

within the section captioned Market Uncertainties and

Prospective Trends beginning on page 92 of our 2023

MD&A (Item 7).

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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 2023 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 deposits by far are the largest portion of our

funding. However, deposit trends can shift with

economic conditions and with public perception of risk in

the banking industry or of risk in our Bank in particular.

That shift can be sudden and extreme. If public

confidence fails, deposit levels in our Bank could fall,

perhaps fairly quickly if a tipping point is reached, as

depositors seek safety and are able to move their funds

rapidly. In the mildest version of this scenario, we could be

forced to raise interest we pay on our deposits, raising

costs appreciably. In a severe case, deposit flight could

render the Bank insolvent.

In the first half of 2023, actual events resulted in many of

these impacts. Three large U.S. regional banks failed,

largely as a result of massive deposit run-off. Along with

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most other regional banks, we experienced significant but

much more modest levels of run-off. We believe

significant portions of the outgoing deposits transferred

either to a few of the very largest U.S. banks or to money

market funds which, though not FDIC insured, are

supported by U.S. Treasury debt.

We countered our 2023 outflows with a significant deposit

campaign. Our 2023 campaign was successful, but at the

cost of significant increases in deposit rates. Fortunately,

our new deposits were substantial enough to allow us to

reduce borrowings. Also, the campaign's "promotional"

rates for accounts started to revert to more typical rate

levels late in 2023 which, though higher than in 2022,

should reduce overall deposit costs in 2024.

In the aftermath of the 2023 bank failures, the following

factors appear to have been key to institutional risk:

deposits not insured by FDIC insurance were much more

likely to depart rapidly when risk perceptions changed

suddenly; deposit clients who were not traditional clients

with primary banking relationships were much more likely

to depart rapidly; and deposits concentrated in fewer,

high-balance accounts (with FDIC insurance coverage on

only a small portion of the balances) were much more

likely to depart rapidly than deposits spread among many

more-typical clients and accounts. All banks, including our

Bank, faced all three of these factors to an extent. Banks

with higher-than-usual levels of one or more of these

factors tended to be more strongly impacted by the

banking crisis events in the first half of 2023.

Deposit levels may be affected, fairly quickly, by changes

in monetary policy. The Federal Reserve currently has

paused its 2022-23 tightening policy. The Federal Reserve

has indicated it intends to consider whether and when to

cut short-term rates in 2024 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 34 within this Item

1A, and under the caption Federal Reserve Policy in

Transition within the Market Uncertainties and

Prospective Trends section of 2023 MD&A (Item 7), which

begins on page 92.

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.

Continued availability of Federal Home Loan Bank

funding depends on policies set by the federal

government and, ultimately, by the U.S. Congress; for

that reason, long-term continuation of current programs

is beyond our control. We have and use credit facilities

with one of the Federal Home Loan Banks. Those facilities

provide funding quickly when we need it, up to program

limits. The curtailment or elimination of our access to

Federal Home Loan Bank programs would significantly

alter how we plan for and manage routine and

contingency funding situations.

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.

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.

For additional information concerning these risks, see

Interest Rate and Yield Curve Risks beginning on page 44.

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.

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	43	2023 FORM 10-K ANNUAL REPORT

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

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, 2023, 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.

Reductions in our credit ratings could result in

counterparties reducing or terminating their

relationships with us. Some parties with whom we do

business 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. In fact inversion has been

continuous since the second half of 2022 through early

2024. 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, our

net interest margin compressed throughout much of the

year as funding costs accelerated, but still expanded on a

full year basis compared to 2022. Although compression

eased late in 2023, margins are likely to continue below

late 2022 levels as long as the yield curve remains

inverted.

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.

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 started in 2022, and we cannot predict when it

will end.

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	44	2023 FORM 10-K ANNUAL REPORT

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 $1.2 billion for 2023 and

$1.4 billion for 2022. Average fixed income trading

liabilities (short positions) were $301 million and $480

million for 2023 and 2022, respectively. Average loans

held for sale in our fixed income business were $552

million and $693 million for 2023 and 2022, respectively.

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 82 of our

2023 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

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.

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	45	2023 FORM 10-K ANNUAL REPORT

For example, by late 2022 consumer mortgage

refinancings fell to extremely low levels. These impacts

largely continued throughout 2023. Although lower

mortgage rates in the future, if and when they occur,

should moderate these impacts, it is very unlikely that the

low rate environment of 2020-21 will return. 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 16; in Risks Associated with Monetary Events

beginning on page 34; in Interest Rate and Yield Curve

Risks beginning on page 44; and under the caption

Inflation, Recession, and Federal Reserve Policy within the

Market Uncertainties and Prospective Trends section of

our 2023 MD&A (Item 7), beginning on page 92.

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 its 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 experiences difficulty with

the mortgage loan. Failure to follow the applicable rules

can result in significant penalties or other loss for us.

Pre-2009 Mortgage Business Risks

We have risks from the mortgage-related businesses that

legacy First Horizon exited in 2008, including mortgage

loan repurchase and loss-reimbursement risk, 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 91, and Contingent

Liabilities beginning on page 98, of our 2023 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 2023 Financial Statements

(Item 8), which Note begins on page 162.

Accounting 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 inherently uncertain 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

ITEM 1A. RISK FACTORS
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	46	2023 FORM 10-K ANNUAL REPORT

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 2023

Financial Statements (Item 8) beginning on page 115, 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

10, all of which information is incorporated into this Item

1A by reference.

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

accounting tends 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 increased provision, 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,

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 future

years 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 $1.2 billion at

January 1, 2024.

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

ITEM 1A. RISK FACTORS
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	47	2023 FORM 10-K ANNUAL REPORT

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 ordinary preferred stock raises

regulatory capital without issuing or diluting common

shares, but creates or expands our general obligation to

pay all preferred dividends ahead of any common

dividends. Currently we have six series of preferred stock

outstanding, one issued by the Bank and five 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,

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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	48	2023 FORM 10-K ANNUAL REPORT

Item 1B.Unresolved Staff Comments

Not applicable.

Item 1C.Cybersecurity

The Cybersecurity Risk Management section within our 2023 MD&A (Item 7), beginning on page 86 of this report, is

incorporated herein by reference.

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 2023 is provided under the caption Principal

Businesses, Brands, & Locations within the Our Businesses

section of Item 1 of this report, which begins on page 6;

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, 2023, 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 162 of this report within

our 2023 Financial Statements (Item 8), is incorporated herein by reference.

Item 4.Mine Safety Disclosures

Not applicable.

ITEM 1B. UNRESOLVED STAFF COMMENTS  THRU  ITEM 4. MINE SAFETY DISCLOSURES
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	49	2023 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, 2024. The executive officers generally are

elected at the April meeting of our Board of Directors for a

term of one year and until their successors are elected

and qualified.

Mr. Jordan has an Employment Agreement with us. Under

it, Mr. Jordan will continue to be employed as President

and Chief Executive Officer for a term expiring August 3,

2028. Mr. Jordan’s employment will terminate when that

term expires unless the parties mutually agree later to

extend the term. Our mandatory retirement policy is

waived during the Employment Agreement's term.

Name & Age	Current (Year First Elected to Office) and Recent Offices & Positions
Terry L. Akins Age: 60	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: 54	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: 45 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: 62 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: 62 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.

SUPPLEMENTAL  PART I  INFORMATION
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	50	2023 FORM 10-K ANNUAL REPORT

Name & Age	Current (Year First Elected to Office) and Recent Offices & Positions
Tammy S. LoCascio Age: 55	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.
David T. Popwell Age: 64	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: 54	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: 59	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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	51	2023 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, 2023, there were

approximately 8,712 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 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 2023 is presented in

Tables 7.20a and 7.20b, and the surrounding notes and

other text under the caption Common Stock Purchase

Programs beginning on page 79 of our 2023 MD&A (Item

7), which information is incorporated herein by this

reference.

Total Shareholder Return Performance Graph

The “Total Shareholder Return 2018-2023” 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 2018-2023” performance

graph nor Table 5.1 shall be incorporated by reference into

any such filings.

The “Total Shareholder Return 2018-2023” performance

graph compares the yearly percentage change in our

cumulative total shareholder return with returns based on

the Standard and Poor’s 500 and Keefe, Bruyette & Woods

(KBW) Regional and Nasdaq Bank Indices. The graph

assumes $100 is invested on December 31, 2018 and

dividends are reinvested. Returns are market-

capitalization weighted.

At year-end 2019 and earlier, FHN was included in the

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

FHN is included in the KBW Nasdaq Bank Index. The

change in index resulted from the merger of equals in

2020 between FHN and IBERIABANK Corporation.

ITEM 5. MARKET FOR COMMON EQUITY, STOCKHOLDER MATTERS, & EQUITY PURCHASES  AND  ITEM 6.
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	52	2023 FORM 10-K ANNUAL REPORT

At year-end 2022, FHN's stock price was significantly

boosted by the then-pending acquisition of FHN by TD for

an all-cash purchase price of over $25 per FHN share.

After TD was unable to obtain regulatory approval, the TD

Transaction was terminated by the parties in May 2023.

 

Table 5.1 

TOTAL SHAREHOLDER RETURN DATA

	2018	2019	2020	2021	2022	2023
First Horizon Corporation (FHN)	$100.00	$130.43	$106.73	$141.55	$217.90	$131.82
S&P 500 Index	100.00	131.47	155.65	200.29	163.98	207.04
KBW Regional Bank Index (KRX)	100.00	123.87	113.11	154.57	143.87	143.30
KBW Nasdaq Bank Index (BKX)	100.00	136.12	122.09	168.90	132.76	131.58

Data source: Bloomberg

Item 6.[Reserved]

ITEM 5. MARKET FOR COMMON EQUITY, STOCKHOLDER MATTERS, & EQUITY PURCHASES  AND  ITEM 6.
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	53	2023 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	55
Executive Overview	55
Results of Operations	56
Analysis of Financial Condition	62
Capital	77
Risk Management	81
Repurchase Obligations	91
Market Uncertainties and Prospective Trends	92
Critical Accounting Policies & Estimates	96
Accounting Changes	98
Non-GAAP Information	98

ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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	54	2023 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

commercial, private banking, consumer, small business,

wealth and trust management, retail brokerage, capital

markets, fixed income, and mortgage banking services.

At December 31, 2023, FHN had over 450 business

locations in 24 states, including over 400 banking centers

in 12 states, and employed approximately 7,300

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

Significant Events and Transactions

TD Merger Termination

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),

and certain TD subsidiaries. On May 4, 2023, FHN and TD

mutually terminated the TD Merger Agreement. Under

the terms of the termination agreement, TD made a $200

million cash payment to FHN, in addition to the $25

million fee reimbursement due to FHN pursuant to the TD

Merger Agreement. Of the $200 million cash payment,

FHN contributed $50 million to the First Horizon

Foundation.

FDIC Special Assessment

In November 2023, the FDIC approved a final rule to

implement a special assessment on banks to replenish the

deposit insurance fund in connection with the three large

bank failures in 2023. The special assessment will be 13.4

basis points per year imposed on certain deposits over

eight quarters, starting with the first quarterly assessment

period of 2024. FHN recognized an estimated expense of

$68 million for the entire assessment in the fourth quarter

of 2023.

2023 Financial Performance Summary

FHN reported net income available to common

shareholders of $865 million , or $1.54 per diluted share,

compared to net income of $868 million, or $1.53 per

diluted share in 2022.

Net interest income of $2.5 billion increased $148 million

from 2022 largely driven by higher earning asset yields

and loan growth, partially offset by higher funding costs.

The net interest margin increased 32 basis points to 3.42%

compared to 3.10% in 2022.

Provision for credit losses increased to $260 million

compared to of $95 million in 2022 , largely driven by loan

growth, an uncertain macroeconomic outlook, and

modest grade migration. Net charge-offs were $170

million compared to $59 million in 2022, largely reflecting

the impact of an idiosyncratic credit loss on a single

relationship.

Noninterest income of $927 million increased $112 million

from 2022, largely driven by the gain on merger

termination partially offset by lower fixed income and

mortgage banking and title income.

Noninterest expense of $2.1 billion increased $126 million

from 2022, largely attributable to the FDIC special

assessment and the contribution to the First Horizon

Foundation discussed above.

Period-end loans and leases of $61.3 billion increased

$3.2 billion from December 31, 2022 reflecting

commercial loan growth of $1.8 billion, or 4%, and

consumer loan growth of $1.4 billion, or 10%.

Period-end deposits of $65.8 billion increased $2.3 billion,

or 4%, from December 31, 2022 driven by an $8.6 billion

increase in interest-bearing deposits offset by a

$6.3 billion decrease in noninterest-bearing deposits.

Tier 1 risk-based capital and total risk-based capital ratios

at December 31, 2023 were 12.42% and 13.96%,

respectively, compared to 11.92% and 13.33% at

December 31, 2022. The CET1 ratio was 11.40% at

December 31, 2023 compared to 10.17% at December 31,

2022.

ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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	55	2023 FORM 10-K ANNUAL REPORT

Table 7.1

KEY PERFORMANCE INDICATORS

	For the years ended December 31,
(Dollars in millions, except per share data)	2023		2022		2021
Pre-provision net revenue (a)	$1,388		$1,254		$974
Diluted earnings per common share	$1.54		$1.53		$1.74
Return on average assets  (b)	1.12%		1.08%		1.15%
Return on average common equity (c)	11.01%		11.81%		12.53%
Return on average tangible common equity (a) (d)	14.11%		15.58%		16.46%
Net interest margin (e)	3.42%		3.10%		2.48%
Noninterest income to total revenue (f)	26.82%		24.99%		34.77%
Efficiency ratio (g)	59.90%		61.24%		68.56%
Allowance for loan and lease losses to total loans and leases	1.26%		1.18%		1.22%
Net charge-offs (recoveries) to average loans and leases	0.28%		0.11%		—%
Total period-end equity to period-end assets	11.38%		10.83%		9.53%
Tangible common equity to tangible assets (a)	8.48%		7.12%		6.73%
Cash dividends declared per common share	$0.60		$0.60		$0.60
Book value per common share	$15.17		$13.48		$14.39
Tangible book value per common share (a)	$12.13		$10.23		$11.00
Common equity Tier 1	11.40%		10.17%		9.92%
Market capitalization	$7,913		$13,159		$8,713

(a) Represents a non-GAAP measure which is reconciled in the non-GAAP to GAAP reconciliation in Table 7.28.

(b) Calculated using net income divided by average assets.

(c) Calculated using net income available to common shareholders divided by average common equity.

(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—2023 compared to 2022

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 $2.5 billion in 2023 increased

$148 million, or 6%, from 2022. The increase was largely

driven by higher earning asset yields and loan growth

partially offset by higher funding costs.

FHN's net interest margin increased 32 basis points to

3.42% in 2023 compared to 2022 while the net interest

spread decreased 41 basis points to 2.44% over the same

period. The net interest margin was favorably impacted by

a 203 basis point increase in earning asset yields, largely

reflecting the impact of higher interest rates and lower

levels of excess cash. In addition, the tax-equivalent

adjustment was favorably impacted by higher rates on

floating rate tax-free commercial loans. The cost of

interest-bearing liabilities increased 244 basis points

largely driven by higher deposit costs.

Total average earning assets decreased $2.8 billion in

2023 largely from a decrease in interest-bearing deposits

with banks partially offset by an increase in loans and

leases. Total average interest-bearing liabilities increased

$4.3 billion driven by increases in short-term borrowings

and interest-bearing deposits.

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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	56	2023 FORM 10-K ANNUAL REPORT

Table 7.2

AVERAGE BALANCES, NET INTEREST INCOME AND YIELDS/RATES

(Dollars in millions)		2023						2022						2021
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		$46,175		$2,958		6.41%		$43,691		$1,823		4.18%		$44,325		$1,498		3.38%
Consumer loans		13,994		630		4.48		12,261		479		3.89		11,973		469		3.92
Total loans and leases		60,169		3,588		5.96		55,952		2,302		4.11		56,298		1,967		3.49
Loans held for sale		664		51		7.71		884		39		4.41		956		33		3.44
Investment securities		9,912		250		2.52		9,976		200		2.01		8,623		123		1.43
Trading securities		1,179		78		6.62		1,438		58		4.04		1,366		30		2.17
Federal funds sold		61		4		5.56		191		4		2.09		37		—		0.15
Securities purchased under agreements to resell (a)		318		15		4.81		522		6		1.12		584		—		(0.09)
Interest-bearing deposits with banks		2,504		130		5.20		8,672		87		1.00		13,123		17		0.13
Total earning assets / Total interest income		$74,807		$4,116		5.50%		$77,635		$2,696		3.47%		$80,987		$2,170		2.68%
Cash and due from banks		1,012						1,217						1,261
Goodwill and other intangible assets, net		1,720						1,777						1,836
Premises and equipment, net		596						636						712
Allowance for loan and lease losses		(740)						(648)						(834)
Other assets		4,288						3,600						3,647
Total assets		$81,683						$84,217						$87,609
Liabilities and Shareholders' Equity:
Interest-bearing deposits:
Savings		$23,547		$679		2.88%		$24,292		$94		0.39%		$27,283		$36		0.13%
Other interest-bearing deposits		15,300		351		2.30		15,641		72		0.47		15,688		20		0.13
Time deposits		6,095		236		3.87		2,963		18		0.60		4,281		25		0.57
Total interest-bearing deposits		44,942		1,266		2.82		42,896		184		0.43		47,252		81		0.17
Federal funds purchased		349		18		5.12		699		11		1.56		949		1		0.12
Securities sold under agreements to repurchase		1,426		52		3.66		881		7		0.77		1,235		4		0.30
Trading liabilities		301		12		4.16		480		12		2.56		540		6		1.11
Other short-term borrowings		2,688		140		5.19		229		5		2.26		124		—		0.09
Term borrowings		1,335		72		5.39		1,596		72		4.51		1,645		72		4.37
Total interest-bearing liabilities / Total interest expense		$51,041		$1,560		3.06%		$46,781		$291		0.62%		$51,745		$164		0.32%
Noninterest-bearing deposits		19,341						26,851						25,879
Other liabilities		2,396						2,006						1,506
Total liabilities		72,778						75,638						79,130
Shareholders' equity		8,610						8,284						8,184
Noncontrolling interest		295						295						295
Total shareholders' equity		8,905						8,579						8,479
Total liabilities and shareholders' equity		$81,683						$84,217						$87,609
Net earnings assets / Net interest income (TE)  / Net interest spread		$23,766		$2,556		2.44%		$30,854		$2,405		2.85%		$29,242		$2,006		2.36%
Taxable equivalent adjustment				(16)		0.98				(13)		0.25				(12)		0.12
Net interest income / Net interest margin (b)				$2,540		3.42%				$2,392		3.10%				$1,994		2.48%

(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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	57	2023 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

		2023 Compared to 2022						2022 Compared to 2021
		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 (c)		$1,101		$185		$1,286		$347		$(12)		$335
Loans held for sale		24		(12)		12		9		(3)		6
Investment securities (c)		51		(1)		50		56		21		77
Trading securities		32		(12)		20		27		1		28
Other earning assets:
Federal funds sold		3		(3)		—		3		1		4
Securities purchased under agreements to resell		13		(4)		9		6		—		6
Interest-bearing deposits with banks		143		(100)		43		77		(8)		69
Total other earning assets		159		(107)		52		86		(7)		79
Total change in interest income - earning assets		$1,367		$53		$1,420		$525		$—		$525
Interest expense:
Interest-bearing deposits:
Savings		$588		$(3)		$585		$63		$(5)		$58
Other interest-bearing deposits		280		(1)		279		53		(1)		52
Time deposits		183		35		218		1		(8)		(7)
Total interest-bearing deposits		1,051		31		1,082		117		(14)		103
Federal funds purchased		15		(8)		7		10		—		10
Securities sold under agreements to repurchase		39		6		45		4		(1)		3
Trading liabilities		6		(6)		—		7		(1)		6
Other short-term borrowings		15		120		135		5		—		5
Term borrowings		13		(13)		—		2		(2)		—
Total change in interest expense - interest-bearing liabilities		1,139		130		1,269		145		(18)		127
Net interest income, taxable-equivalent		$228		$(77)		$151		$380		$18		$398

(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.

(c)Reflects taxable-equivalent adjustments, using the 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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	58	2023 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 $260 million in

2023, compared to $95 million in 2022. The increase in

provision during 2023 was reflective of loan growth,

macroeconomic uncertainty, and modest grade migration.

Net charge-offs were $170 million in 2023 compared to

$59 million in 2022. The higher level of net charge-offs in

2023 largely reflects the impact of a $72 million

idiosyncratic credit loss on a single relationship in the third

quarter.

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

								2023 vs. 2022				2022 vs. 2021
(Dollars in millions)		2023		2022		2021		$ Change		% Change		$ Change		% Change
Noninterest income
Deposit transactions and cash management		$179		$171		$175		$8		5%		$(4)		(2)%
Fixed income		133		205		406		(72)		(35)		(201)		(50)
Brokerage, management fees and commissions		90		92		88		(2)		(2)		4		5
Card and digital banking fees		77		84		78		(7)		(8)		6		8
Other service charges and fees		54		54		44		—		—		10		23
Trust services and investment management		47		48		51		(1)		(2)		(3)		(6)
Mortgage banking and title income		23		68		154		(45)		(66)		(86)		(56)
Gain on merger termination		225		—		—		225		100		—		—
Securities gains (losses), net		(4)		18		13		(22)		(122)		5		38
Other income		103		75		67		28		37		8		12
Total noninterest income		$927		$815		$1,076		$112		14%		$(261)		(24)%

NM – Not meaningful

Noninterest income of $927 million increased $112 million

from $815 million in 2022, largely driven by the gain on

merger termination partially offset by declines in fixed

income and mortgage banking and title income.

Noninterest income represented 27% and 25% of total

revenue for 2023 and 2022, respectively.

Fixed income declined $72 million, or 35%, for 2023

compared to 2022. Fixed income product revenue

decreased $62 million, largely driven by less favorable

market conditions. Revenue from other products

decreased $10 million, largely driven by lower fees from

loan and derivative sales in addition to lower fees from

investment advisory services.

Mortgage banking and title income of $23 million

decreased $45 million from $68 million in 2022 largely

driven by the divestiture of the title services business in

third quarter 2022 and lower origination volume given the

impact of higher long-term rates. Results in 2022 also

reflected a $12 million gain on sale of mortgage servicing

rights.

Deferred compensation income (included in other income)

increased $35 million in 2023, reflecting fluctuations in

equity market valuations relative to the prior year. This

increase is largely offset in noninterest expense.

In addition, other income included a gain of $9 million on

the disposition of FHN Financial Main Street Advisors

assets in 2023 and a gain of $22 million from the sale of

the title services business in 2022.

Noninterest income results also reflect securities losses of

$4 million in 2023 compared to gains of $18 million in

2022.

ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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	59	2023 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

								2023 vs. 2022				2022 vs. 2021
(Dollars in millions)		2023		2022		2021		$ Change		% Change		$ Change		% Change
Noninterest expense
Personnel expense		$1,100		$1,101		$1,210		$(1)		—%		$(109)		(9)%
Net occupancy expense		123		128		137		(5)		(4)		(9)		(7)
Deposit insurance expense		122		32		24		90		281		8		33
Computer software		111		113		116		(2)		(2)		(3)		(3)
Operations services		87		87		80		—		—		7		9
Advertising and public relations		71		50		37		21		42		13		35
Contributions		61		7		14		54		771		(7)		(50)
Legal and professional fees		49		62		68		(13)		(21)		(6)		(9)
Contract employment and outsourcing		49		54		67		(5)		(9)		(13)		(19)
Amortization of intangible assets		47		51		56		(4)		(8)		(5)		(9)
Equipment expense		42		45		47		(3)		(7)		(2)		(4)
Communications and delivery		35		37		37		(2)		(5)		—		—
Impairment of long-lived assets		—		—		34		—		—		(34)		(100)
Other expense		182		186		169		(4)		(2)		17		10
Total noninterest expense		$2,079		$1,953		$2,096		$126		6%		$(143)		(7)%

NM - Not meaningful

Noninterest expense of $2.1 billion increased $126 million,

or 6% , from 2022, largely driven by higher deposit

insurance expense and contributions.

Personnel expense of $1.1 billion declined negligibly in

2023, reflecting lower incentive-based compensation

expense offset by higher deferred compensation and

regular salaries and benefits expense.

In November 2023, the FDIC approved a special

assessment on banks to replenish the deposit insurance

fund in connection with the three large bank failures in

2023. The special assessment will be collected at an

annual rate of approximately 13.4 basis points imposed on

certain deposits over an anticipated total of eight

quarters, starting with the first quarterly assessment

period of 2024. FHN recognized the entire assessment of

$68 million as an expense in the fourth quarter of 2023

when the FDIC published its final action.

The increase in contributions in 2023 was primarily related

to the $50 million contribution made to the First Horizon

Foundation from the $200 million cash payment received

for the TD Merger termination.

Advertising and public relations expense increased $21

million from 2022, driven by a deposit campaign in the

second quarter of 2023 and brand awareness initiatives.

The $13 million decline in legal and professional fees in

2023 was largely attributable to lower merger and

integration related expense.

Total merger and integration expense was $51 million for

2023 compared to $136 million for 2022.

Income Taxes

FHN recorded income tax expense of $212 million in 2023

compared to $247 million in 2022 , resulting in an effective

tax rate of 18.8% and 21.3% 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-deductible 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. The reduction in the rate

from 2022 was primarily related to the benefit from the

settlement of uncertain tax positions related to prior

merger related items which was partially offset by the

additional tax expense from the surrender of bank-owned

life insurance policies.

ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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	60	2023 FORM 10-K ANNUAL REPORT

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 $215 million and

$313 million at December 31, 2023 and 2022, respectively.

As of December 31, 2023, FHN had deferred tax asset

balances related to federal and state income tax

carryforwards of $32 million and $3 million, which will

expire at various dates. Refer to Note 14 - Income Taxes

for additional information.

FHN’s gross DTA after valuation allowance was $737

million and $761 million as of December 31, 2023 and

2022, 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 2020 through 2022. IBKC’s federal consolidated

tax returns for 2016 – 2018 were audited by the IRS. The

statute of limitations for those years was extended

through October 2024 for purposes of an appeal which

was settled in 2023. 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 $1.3 billion in 2023 compared to $1.1 billion in 2022, an

increase of $185 million, largely from a $390 million

increase in revenue driven by higher net interest income.

The increase in revenue was partially offset by a

$130 million increase in provision for credit losses and a

$75 million increase in noninterest expense.

Net interest income of $2.4 billion increased $400 million

reflecting the benefit of higher interest rates and average

loan balances, partially offset by higher funding costs.

The increase in the provision for credit losses largely

reflected loan growth, macroeconomic uncertainty, and

modest grade migration. 

The increase in noninterest expense was largely driven by

higher personnel, deposit insurance, advertising and

public relations, and technology-related expenses.

Specialty Banking

Pre-tax income of $313 million in the Specialty Banking

segment decreased $96 million compared to 2022 largely

reflecting a $142 million decrease in revenue tied to lower

fixed income, mortgage banking and title income, and net

interest income. The decrease in revenue was partially

offset by a decrease in noninterest expense.

Fixed income of $133 million decreased $72 million,

largely driven by less favorable market conditions.

Mortgage banking and title income of $23 million

decreased $45 million largely driven by the divestiture of

the title services business in third quarter 2022 and lower

origination volume given the impact of higher long-term

rates. Results in 2022 also reflected a $12 million gain on

sale of mortgage servicing rights.

Noninterest expense of $364 million decreased

$82 million largely due to lower incentive-based

compensation expense tied to the decline in fixed income

and mortgage banking and title income.

Corporate

Pre-tax loss for the Corporate segment was $447 million

for 2023 compared to $327 million for 2022.

Noninterest income increased $225 million largely driven

by the gain on merger termination. Noninterest income

results also reflect an increase of $35 million in deferred

compensation income, lower securities gains of

$22 million, and a $22 million gain on sale of the title

business in 2022.

Noninterest expense of $414 million for 2023 increased

$133 million compared to 2022 largely driven by higher

deposit insurance expense, a $50 million contribution to

the First Horizon Foundation, and higher personnel

expense. Merger and integration expense was $51 million

in 2023 compared to $136 million in 2022.

ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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	61	2023 FORM 10-K ANNUAL REPORT

Results of Operations—2022 compared to 2021

For a description of FHN's results of operations for 2022, see Results of Operations - 2022 compared to 2021 in Item 7 in the

2022 Form 10-K which is incorporated herein by reference.

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

	2023				2022
(Dollars in millions)	Balance		Mix		Balance		Mix
Securities available for sale at fair value:
Government agency issued MBS and CMO	$6,630		68%		$7,076		69%
Other U.S. government agencies (a)	1,172		12		1,163		12
States and municipalities	589		6		597		6
Total securities available for sale	$8,391		86%		$8,836		87%
Securities held to maturity at amortized cost:
Government agency issued MBS and CMO	$1,323		14%		$1,371		13%
Total investment securities	$9,714		100%		$10,207		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 securities 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 $9.7 billion and $10.2 billion

on December 31, 2023 and 2022, representing 12% and

13% 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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	62	2023 FORM 10-K ANNUAL REPORT

Table 7.7

CONTRACTUAL MATURITIES OF INVESTMENT SECURITIES

	As of December 31, 2023
					After 1 year				After 5 years
	Within 1 year				Within 5 years				Within 10 years				After 10 years				Total
(Dollars in millions)	Amount		Yield (b)		Amount		Yield (b)		Amount		Yield (b)		Amount		Yield (b)		Amount		Yield (b)
Securities available for sale:
Government agency issued MBS and CMO (a)	$29		2.30	%	$980		1.86	%	$1,060		2.22	%	$5,479		2.07	%	$7,548		2.34	%
Other U.S. government agencies	—		—		12		1.70		219		1.98		1,090		2.97		1,321		3.04
States and municipalities	36		2.38		87		0.73		178		1.72		326		2.74		627		2.66
Total securities available for sale	$65		2.34	%	$1,079		1.77	%	$1,457		2.12	%	$6,895		2.24	%	$9,496		2.46	%
Securities held to maturity:
Government agency issued MBS and CMO (a)	$—		—	%	$148		3.56	%	$170		3.44	%	$1,005		2.73	%	$1,323		2.91	%
Total securities held to maturity	$—		—	%	$148		3.56	%	$170		3.44	%	$1,005		2.73	%	$1,323		2.91	%

(a)Represents government agency-issued mortgage-backed securities and collateralized mortgage obligations which, when adjusted for early paydowns,

have an estimated average life of 5.6 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 5%,

to $61.3 billion as of December 31, 2023 , driven by a $1.8

billion increase in commercial loans and a $1.4 billion

increase in consumer loans. Average loans and leases

increased to $60.2 billion in 2023 compared to $56.0

billion in 2022 , primarily driven by a $2.5 billion increase

in commercial loans and a $1.7 billion increase in

consumer loans.

The following table provides detail regarding FHN's

period-end loans and leases:

Table 7.8

 LOANS AND LEASES

(Dollars in millions)		2023		Percent  of total		2023  Growth Rate		2022		Percent  of total		2022 Growth Rate		2021		Percent  of total		2021 Growth Rate
Commercial:
Commercial, financial, and industrial (a)		$32,633		53%		3%		$31,781		55%		2%		$31,068		57%		(6)%
Commercial real estate		14,216		23		7		13,228		23		9		12,109		22		(1)
Total commercial		46,849		76		4		45,009		78		4		43,177		79		(5)
Consumer:
Consumer real estate		13,650		23		11		12,253		21		14		10,772		20		(8)
Credit card and other		793		1		(6)		840		1		(8)		910		1		(19)
Total consumer		14,443		24		10		13,093		22		12		11,682		21		(9)
Total loans and leases		$61,292		100%		5%		$58,102		100%		6%		$54,859		100%		(6)%

(a) Includes equipment financing loans and leases.

C&I loans increased 3%, or $852 million, from 2022,

largely driven by growth in the real estate and rental and

leasing and transportation and warehousing industry

sectors, as well as diversified growth across multiple other

industries. These increases were partially offset by a

decline of $239 million in loans to mortgage companies.

Commercial real estate loans increased 7% to $14.2 billion

in 2023, largely driven by growth in multi-family  and

industrial property loans. Consumer loans increased 10% ,

or $1.4 billion, from the end of 2022, largely driven by

growth in real estate installment loans.

ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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	63	2023 FORM 10-K ANNUAL REPORT

The following table provides detail of the contractual maturities of loans and leases at December 31, 2023.

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	$6,864		$17,159		$7,666		$944		$32,633
Commercial real estate	2,641		8,691		2,834		50		14,216
Consumer real estate	74		241		1,369		11,966		13,650
Credit card and other	208		313		75		197		793
Total loans and leases	$9,787		$26,404		$11,944		$13,157		$61,292
For maturities over one year at fixed interest rates:
Commercial, financial, and industrial			$4,492		$5,211		$734		$10,437
Commercial real estate			2,441		1,129		36		3,606
Consumer real estate			181		1,180		3,325		4,686
Credit card and other			76		43		171		290
Total loans and leases at fixed interest rates			$7,190		$7,563		$4,266		$19,019
For maturities over one year at floating interest rates:
Commercial, financial, and industrial			$12,666		$2,456		$209		$15,331
Commercial real estate			6,250		1,705		15		7,970
Consumer real estate			60		188		8,641		8,889
Credit card and other			238		32		26		296
Total loans and leases at floating interest rates			$19,214		$4,381		$8,891		$32,486
Total maturities over one year			$26,404		$11,944		$13,157		$51,505

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

Loans held for sale primarily consists of government

guaranteed loans under SBA and USDA lending programs.

Smaller amounts of other consumer and home equity

loans are also included in loans HFS. Additionally, FHN's

mortgage banking operations 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.

On December 31, 2023 and 2022, loans HFS were $502

million and $590 million, respectively. Held-for-sale

consumer mortgage loans secured by residential real

estate in process of foreclosure totaled $2 million and

$3 million for December 31, 2023 and 2022, respectively.

ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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	64	2023 FORM 10-K ANNUAL REPORT

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 23% and 21% of total loans

in 2023 and 2022, 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

not willingly and voluntarily perform under the terms of

the guaranty. In FHN’s risk grading approach, it is deemed

ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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	65	2023 FORM 10-K ANNUAL REPORT

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

C&I loans are the largest component of the loan and lease

portfolio, comprising 53% and 55% of total loans and

leases at December 31, 2023 and 2022, respectively. The

C&I portfolio 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 substantially all of the existing portfolio of

loans tied to LIBOR has been repriced to alternative

reference rates.

The largest geographical concentrations of balances as of

December 31, 2023 were in Tennessee (21%), Florida

(13%), Texas (11%), North Carolina (7%), Louisiana (6%),

Georgia (5%), and California (5%) with no other state

representing 5% or more of the portfolio.

The following table provides the composition of the C&I

portfolio by industry as of December 31, 2023 and 2022.

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 7.10a

C&I PORTFOLIO BY INDUSTRY

		December 31, 2023				December 31, 2022
(Dollars in millions)		Amount		Percent		Amount		Percent
Industry:
Finance and insurance		$4,083		12%		$4,120		13%
Real estate and rental and leasing (a)		3,858		12		3,277		10
Health care and social assistance		2,676		8		2,657		8
Accommodation and food service		2,288		7		2,238		7
Manufacturing		2,267		7		2,206		7
Wholesale trade		2,147		7		2,212		7
Loans to mortgage companies		2,019		6		2,258		7
Retail trade		1,866		6		1,835		6
Transportation and warehousing		1,580		5		1,432		4
Energy		1,293		4		1,364		4
Other (professional, construction, education, etc.) (b)		8,556		26		8,182		27
Total C&I loan portfolio		$32,633		100%		$31,781		100%

(a) Leasing, rental of real estate, equipment, and goods.

(b) Industries in this category each comprise less than 5% for 2023 .

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	66	2023 FORM 10-K ANNUAL REPORT

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 18% and 20% of FHN’s C&I loan

portfolio as of December 31, 2023 and 2022, respectively,

and as a result could be affected by items that uniquely

impact the financial services industry. Loans to borrowers

in the real estate and rental and leasing industry were

12% and 10% of FHN's C&I portfolio as of December 31,

2023 and 2022, respectively. As of December 31, 2023,

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 were 6% of the C&I

portfolio as of December 31, 2023 and 7% of the C&I

portfolio as of December 31, 2022. This portfolio includes

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. Balances in

this portfolio generally fluctuate with mortgage rates and

seasonal factors. Generally, new loan originations to

mortgage lenders increase when there is a decline in

mortgage rates and decrease when rates rise; in 2023,

rates rose. In periods of economic uncertainty, this trend

may not occur even if interest rates are declining. In 2023,

approximately 90% of the loan originations were home

purchases and 10% were refinance transactions.

Finance and Insurance

The finance and insurance component represented 12% of

the C&I portfolio as of December 31, 2023 compared to

13% at the end of 2022 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, 2023, asset-based lending to consumer

finance companies represents approximately $2.0 billion

of the finance and insurance component.

Real Estate and Rental and Leasing

Loans to borrowers in the real estate and rental and

leasing industry were 12% and 10% of FHN's C&I portfolio

as of December 31, 2023 and 2022, respectively. This

portfolio primarily consists of equipment financing loans

and leases to clients across FHN's footprint in a broad

range of industries and asset types. This portfolio also

includes a smaller balance of loans and leases for solar

and wind generating facilities.

Commercial Real Estate

The CRE portfolio totaled $14.2 billion as of December 31,

2023, a $1.0 billion, or 7%, increase compared to

December 31, 2022.

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. The

residential CRE class is not currently an area of growth for

the bank.

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 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

have at least 15% of cost invested in a project before FHN

will provide loan funding. Income properties are generally

required to achieve a debt service coverage ratio greater

than or equal to 1.25x 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, where

applicable. A global cash flow analysis is performed at the

sponsor level.

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

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	67	2023 FORM 10-K ANNUAL REPORT

personnel stress the borrower’s/project’s financial

capacity utilizing numerous attributes such as interest

rates, vacancy, capitalization rates, and debt service

coverage ratios under various scenarios. 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, 2023 were in Florida (27%), Texas

(13%), North Carolina (12%), Georgia (9%), Tennessee

(9%), and Louisiana (8%), with no other state representing

more than 5% of the portfolio.

The following table represents subcategories of CRE loans

by property type:

Table 7.10b

CRE PORTFOLIO BY PROPERTY TYPE

		December 31, 2023				December 31, 2022
		Amount		Percent		Amount		Percent
Property Type:
Multi-family		$4,409		31%		$3,484		27%
Office		2,782		20		2,814		21
Retail		2,310		16		2,331		18
Industrial		2,236		16		2,076		16
Hospitality		1,467		10		1,418		11
Land/land development		307		2		309		2
Other CRE (a)		705		5		796		5
Total CRE loan portfolio		$14,216		100%		$13,228		100%

(a) Property types in this category each comprise less than 5% for 2023.

Consumer Loan Portfolios

Consumer Real Estate

The consumer real estate portfolio is primarily composed

of home equity lines and installment loans. This portfolio

totaled $13.7 billion and $12.3 billion as of December 31,

2023 and 2022, respectively. The largest geographical

concentrations of balances in the consumer real estate

portfolio as of December 31, 2023 were in Florida (29%),

Tennessee (22%), Texas (11%), Louisiana (8%), North

Carolina (7%), New York (5%), and Georgia (5%), with no

other state representing 5% or more of the portfolio.

As of December 31, 2023, approximately 89% of the

consumer real estate portfolio was in a first lien position.

At origination, the weighted average FICO score of this

portfolio was 759 and the refreshed FICO scores averaged

756 as of December 31, 2023, no significant change from

FICO scores of 757 and 754, respectively, as of

December 31, 2022. 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, 2023 and 2022, FHN had held-to-

maturity consumer mortgage loans secured by real estate

totaling $29 million and $42 million, respectively, that

were in the process of foreclosure.

HELOCs comprised $2.2 billion and $2.0 billion of the

consumer real estate portfolio for December 31, 2023 and

2022, respectively. 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, 2023, approximately 94% of FHN's

HELOCs were in the draw period compared to 92% at the

end of 2022. Based on when draw periods are scheduled

to end per the line agreement, it is expected that $571

million, or 27%, 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. HELOCs 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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	68	2023 FORM 10-K ANNUAL REPORT

Table 7.11

HELOC DRAW TO REPAYMENT SCHEDULE

		December 31, 2023				December 31, 2022
(Dollars in millions)		Repayment Amount		Percent		Repayment Amount		Percent
Months remaining in draw period:
0-12		$30		1%		$31		2%
13-24		90		4		40		2
25-36		110		5		109		6
37-48		163		8		135		7
49-60		178		9		204		11
>60		1,530		73		1,356		72
Total		$2,101		100%		$1,875		100%

Underwriting

For 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)

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 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

$793 million as of December 31, 2023 and $840 million as

of December 31, 2022. This portfolio primarily consists of

consumer-related credits, including home equity and

other personal consumer loans, credit card receivables,

and automobile loans. The $47 million decrease was

driven by net repayments, partially offset by an increase in

consumer construction loans.

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 to the

consolidated financial statements included as a part of this

Report.

The ALLL increased to $773 million as of December 31,

2023, or 1.26% of total loans and leases, compared to

$685 million , or 1.18% of total loans and leases, at the end

of 2022. The ACL to total loans and leases ratio increased

to 1.40% as of December 31, 2023 from 1.33% as of

December 31, 2022. The increase in the ALLL balance

reflects the impact of loan growth, an evolving

macroeconomic outlook, and modest grade migration.

ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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	69	2023 FORM 10-K ANNUAL REPORT

Consolidated Net Charge-offs

Net charge-offs were $170 million in 2023 compared to

$59 million in 2022. As a percentage of average total loans

and leases, net charge-offs increased 17 basis points from

2022.

Net charge-offs in the C&I portfolio were $142 million, an

increase of $89 million from 2022, primarily driven by a

$72 million idiosyncratic charge-off related to one client

relationship.

Table 7.12

ANALYSIS OF ALLOWANCE FOR CREDIT LOSSES AND CHARGE-OFFS

			December 31,
(Dollars in millions)			2023		2022		2021
Allowance for loan and lease losses
	C&I		$339		$308		$334
	CRE		172		146		154
	Consumer real estate		233		200		163
	Credit card and other		29		31		19
	Total allowance for loan and lease losses		$773		$685		$670
Reserve for remaining unfunded commitments
	C&I		$49		$55		$46
	CRE		22		22		12
	Consumer real estate		12		10		8
	Credit card and other		—		—		—
	Total reserve for remaining unfunded commitments		$83		$87		$66
Allowance for credit losses
	C&I		$388		$363		$380
	CRE		194		168		166
	Consumer real estate		245		210		171
	Credit card and other		29		31		19
	Total allowance for credit losses		$856		$772		$736
Period-end loans and leases
	C&I		$32,633		$31,781		$31,068
	CRE		14,216		13,228		12,109
	Consumer real estate		13,650		12,253		10,772
	Credit card and other		793		840		910
	Total period-end loans and leases		$61,292		$58,102		$54,859
ALLL / loans and leases %
	C&I		1.04%		0.97%		1.07%
	CRE		1.21		1.10		1.27
	Consumer real estate		1.71		1.63		1.51
	Credit card and other		3.63		3.72		2.14
	Total ALLL / loans and leases %		1.26%		1.18%		1.22%

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	70	2023 FORM 10-K ANNUAL REPORT

ACL / loans and leases %
	C&I		1.19%		1.14%		1.22%
	CRE		1.36		1.27		1.37
	Consumer real estate		1.79		1.71		1.59
	Credit card and other		3.63		3.72		2.09
	Total ACL / loans and leases %		1.40%		1.33%		1.34%
Net charge-offs (recoveries)
	C&I		$142		$53		$13
	CRE		15		—		—
	Consumer real estate		(5)		(14)		(22)
	Credit card and other		18		20		11
	Total net charge-offs		$170		$59		$2
Average loans and leases
	C&I		$32,390		$30,969		$32,010
	CRE		13,785		12,722		12,314
	Consumer real estate		13,179		11,397		10,969
	Credit card and other		815		864		1,005
	Total average loans and leases		$60,169		$55,952		$56,298
Charge-off %
	C&I		0.44%		0.17%		0.04%
	CRE		0.10		—		0.01
	Consumer real estate		NM		NM		NM
	Credit card and other		2.18		2.39		1.05
	Total charge-off %		0.28%		0.11%		—%
ALLL / net charge-offs
	C&I		239%		578%		2,645%
	CRE		1,097		NM		13,189
	Consumer real estate		NM		NM		NM
	Credit card and other		162		151		185
	Total ALLL / net charge-offs		455%		1,155%		30,641%

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

leases and OREO (excluding OREO from government-

insured mortgages).

Total NPAs increased $142 million to $469 million as of

December 31, 2023, largely driven by an increase in non-

accrual CRE loans predominantly in the office sector. As

remote work became more prevalent over the last few

years, office vacancy rates have risen industry-wide, which

in conjunction with a higher level of interest rates,

increased pressure on cash flows and valuations. The ratio

of nonperforming loans and leases to total loans and

leases increased 21 basis points to 0.75%.

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	71	2023 FORM 10-K ANNUAL REPORT

Table 7.13

NONPERFORMING ASSETS

			December 31,
(Dollars in millions)			2023		2022		2021
Nonperforming loans and leases
	C&I		$184		$153		$125
	CRE		136		9		9
	Consumer real estate		140		152		138
	Credit card and other		2		2		3
	Total nonperforming loans and leases (a) (c)		$462		$316		$275
Nonperforming loans held for sale (a)			$3		$8		$7
Foreclosed real estate and other assets (b)			4		3		3
	Total nonperforming assets (a) (b)		$469		$327		$285
Nonperforming loans and leases to total loans and leases
	C&I		0.57%		0.48%		0.40%
	CRE		0.96		0.07		0.08
	Consumer real estate		1.02		1.24		1.29
	Credit card and other		0.30		0.27		0.31
	Total NPL %		0.75%		0.54%		0.50%
ALLL / NPLs
	C&I		184%		202%		268%
	CRE		126		1,554		1,671
	Consumer real estate		167		131		118
	Credit card and other		1,202		1,364		699
	Total ALLL / NPLs		167%		217%		244%

(a) Excludes loans and leases that are 90 or more days past due and still accruing interest.

(b) Excludes government-insured foreclosed real estate. Foreclosed real estate from GNMA loans were insignificant at December 31, 2023 and

2022 and were $1 million at December 31, 2021.

(c) Under the original terms of the loans, estimated interest income would have been approximately $35 million, $21 million, and $19 million

during 2023, 2022 and 2021, respectively.

ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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	72	2023 FORM 10-K ANNUAL REPORT

The following table provides nonperforming assets by business segment:

Table 7.14

NONPERFORMING ASSETS BY SEGMENT

		December 31,
(Dollars in millions)			2023		2022		2021
Nonperforming loans and leases (a) (b)
	Regional Banking		$323		$227		$163
	Specialty Banking		116		60		78
	Corporate		23		29		34
	Consolidated		$462		$316		$275
Foreclosed real estate (c)
	Regional Banking		$1		$—		$2
	Specialty Banking		3		2		—
	Corporate		—		1		1
	Consolidated		$4		$3		$3
Nonperforming Assets (a) (b) (c)
	Regional Banking		$324		$227		$165
	Specialty Banking		119		62		78
	Corporate		23		30		35
	Consolidated		$466		$319		$278
Nonperforming loans and leases to total loans and leases
	Regional Banking		0.74%		0.54%		0.43%
	Specialty Banking		0.68		0.37		0.48
	Corporate		4.87		6.28		5.39
	Consolidated		0.75%		0.54%		0.50%
NPA % (d)
	Regional Banking		0.74%		0.55%		0.44%
	Specialty Banking		0.70		0.39		0.48
	Corporate		4.96		6.54		5.51
	Consolidated		0.76%		0.55%		0.51%

(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. Foreclosed real estate from GNMA loans were insignificant at

December 31, 2023 and 2022 and were $1 million at December 31, 2021.

(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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	73	2023 FORM 10-K ANNUAL REPORT

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 $21 million as of

December 31, 2023 compared to $33 million as of

December 31, 2022 . Loans 30 to 89 days past due and still

accruing were $85 million as of December 31, 2023

compared to $105 million as of December 31, 2022,

largely reflecting lower past due commercial loan

balances.

Table 7.15

ACCRUING DELINQUENCIES & OTHER CREDIT DISCLOSURES

		December 31,
(Dollars in millions)			2023		2022		2021
Accruing loans and leases 30+ days past due
	C&I		$32		$61		$58
	CRE		8		11		13
	Consumer real estate		57		55		70
	Credit card and other		8		11		7
	Total accruing loans and leases 30+ days past due		$105		$138		$148
Accruing loans and leases 30+ days past due %
	C&I		0.10%		0.19%		0.19%
	CRE		0.06		0.08		0.11
	Consumer real estate		0.42		0.44		0.65
	Credit card and other		1.03		1.28		0.76
	Total accruing loans and leases 30+ days past due %		0.17%		0.24%		0.27%
Accruing loans and leases 90+ days past due (a) (b) (c)
	C&I		$1		$11		$5
	CRE		—		—		—
	Consumer real estate		17		18		33
	Credit card and other		3		4		2
	Total accruing loans and leases 90+ days past due		$21		$33		$40
Loans held for sale
	30 to 89 days past due (b)		$12		$10		$7
	30 to 89 days past due - guaranteed portion (b) (d)		8		7		2
	90+ days past due (b)		9		16		24
	90+ days past due - guaranteed portion (b) (d)		4		6		12

(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 increased

$174 million to $666 million as of December 31, 2023.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.

ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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	74	2023 FORM 10-K ANNUAL REPORT

Modifications to Borrowers Experiencing Financial Difficulty

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. 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. See

Note 1 - Significant Accounting Policies, Note 3 - Loans and

Leases and Note 4 - Allowance for Credit Losses for further

discussion regarding troubled 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

individually reviewed for expected credit losses, 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, term extensions or entering into short sale

agreements.  Principal forgiveness may be granted in

specific workout circumstances.

The individual expected credit loss assessments

completed on commercial loans are used in evaluating the

appropriateness of qualitative adjustments to

quantitatively modeled loss expectations for loans that

are not considered collateral dependent. If a loan is

collateral dependent, the carrying amount of a loan is

written down to the net realizable value of the collateral. 

Each assessment considers any modified terms and is

comprehensive to ensure appropriate assessment of

expected credit losses.

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.

Within the HELOC and real estate installment loans classes

of the consumer portfolio segment, troubled loans 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 troubled loans 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, troubled loans 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.

Consumer loans may also be modified through court-

imposed principal reductions in bankruptcy proceedings,

which FHN is required to honor unless a borrower

reaffirms the related debt.

Deposits

Total deposits of $65.8 billion as of December 31, 2023

increased $2.3 billion from $63.5 billion as of

December 31, 2022. Interest-bearing deposits increased

$8.6 billion and noninterest-bearing deposits decreased

$6.3 billion. Deposit growth in 2023 reflected the impact

of FHN's deposit marketing campaigns launched in the

second quarter. Promotional rates associated with these

offerings moderated toward the end of the year, but

overall were higher than prior periods contributing to an

increase in funding costs. The rate guarantees on money

market deposits in the campaign were short-term and

repriced in the back half of the fourth quarter. FHN

continues to focus on building and deepening

relationships to retain new clients from its promotional

campaigns.

FHN continues to maintain a well-diversified and stable

funding mix across its footprint:

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	75	2023 FORM 10-K ANNUAL REPORT

• At December 31, 2023, commercial deposits were

$35.9 billion, or 55% of total deposits and

consumer deposits were $29.9 billion, or 45% of

total deposits. At December 31, 2022,

commercial deposits were $34.4 billion, or 54%

of total deposits and consumer deposits were

$29.1 billion, or 46% of total deposits.

• At December 31, 2023, 38% of deposits were

associated with Tennessee, 18% with Florida,

12% with Louisiana, and 12% with North Carolina,

with no other state above 10%. These

percentages were virtually unchanged from the

previous year-end.

• Total estimated uninsured deposits were

$26.8 billion, or 41% of total deposits, and

$30.3 billion, or 48% of total deposits, as of

December 31, 2023 and 2022, respectively.

• Of the uninsured deposits at December 31, 2023,

$5.3 billion, or 8% of total deposits, were

collateralized. At December 31, 2022,

collateralized deposits were $5.0 billion, or 8% of

total deposits.

The following tables summarize the major components of

FHN's total deposits and total estimated uninsured

deposits for 2023, 2022, and 2021 and the maturities of

FHN's uninsured time deposits as of December 31, 2023.

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 7.16

DEPOSITS

(Dollars in millions)		2023		Percent  of Total		2023 Growth Rate		2022		Percent  of Total		2022 Growth  Rate
Savings		$25,082		38%		14%		$21,971		35%		(17)%
Time deposits		6,804		10		136		2,887		4		(18)
Other interest-bearing deposits		16,690		26		10		15,165		24		(11)
Total interest-bearing deposits		48,576		74		21		40,023		63		(15)
Noninterest-bearing deposits		17,204		26		(27)		23,466		37		(16)
Total deposits		$65,780		100%		4%		$63,489		100%		(15)%

Table 7.17

ESTIMATED UNINSURED DEPOSITS

		For the Year Ended December 31,
(Dollars in millions)		2023		2022
Uninsured deposits		$26,752		$30,304

Table 7.18

UNINSURED TIME DEPOSITS BY MATURITY

(Dollars in millions)		December 31, 2023		December 31, 2022
Portion of U.S. time deposits in excess of insurance limit		$1,143		$643
Time deposits otherwise uninsured with a maturity of:
3 months or less		304		198
Over 3 months through 6 months		519		147
Over 6 months through 12 months		282		225
Over 12 months		38		73

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	76	2023 FORM 10-K ANNUAL REPORT

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 $3.1 billion and $2.8 billion as of

December 31, 2023 and December 31, 2022, 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 $1.2 billion and $1.6 billion as

of December 31, 2023 and December 31, 2022,

respectively. The decrease in term borrowings was

attributable to the retirement of $450 million in senior

notes in May 2023. See Note 10 - Term Borrowings for

additional information.

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 ensure ready access to the capital markets.

Total equity of $9.3 billion increased $744 million

compared to December 31, 2022. Significant changes

included net income of $916 million and a $180 million

increase in AOCI offset by $367 million in common and

preferred dividends.

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:

ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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Table 7.19a

REGULATORY CAPITAL DATA

(Dollars in millions)		December 31, 2023		December 31, 2022
FHN shareholders’ equity		$8,996		$8,252
Modified CECL transitional amount (a)		57		85
FHN non-cumulative perpetual preferred		(520)		(1,014)
Common equity tier 1 before regulatory adjustments		$8,533		$7,323
Regulatory adjustments:
Disallowed goodwill and other intangibles		$(1,617)		$(1,658)
Net unrealized (gains) losses on securities available for sale		836		972
Net unrealized (gains) losses on pension and other postretirement plans		273		269
Net unrealized (gains) losses on cash flow hedges		79		126
Common equity tier 1		$8,104		$7,032
FHN non-cumulative perpetual preferred (b)		426		920
Qualifying noncontrolling interest—First Horizon Bank preferred stock		295		295
Tier 1 capital		$8,825		$8,247
Tier 2 capital		1,097		975
Total regulatory capital		$9,922		$9,222
Risk-Weighted Assets
First Horizon Corporation		$71,074		$69,163
First Horizon Bank		70,635		68,728
Average Assets for Leverage
First Horizon Corporation		$82,540		$79,583
First Horizon Bank		81,898		78,923

Table 7.19b

REGULATORY RATIOS & AMOUNTS

		December 31, 2023				December 31, 2022
(Dollars in millions)		Ratio		Amount		Ratio		Amount
Common Equity Tier 1
First Horizon Corporation		11.40%		$8,104		10.17%		$7,032
First Horizon Bank		11.40		8,055		10.77		7,405
Tier 1
First Horizon Corporation		12.42		8,825		11.92		8,247
First Horizon Bank		11.82		8,350		11.20		7,700
Total
First Horizon Corporation		13.96		9,922		13.33		9,222
First Horizon Bank		13.17		9,303		12.41		8,532
Tier 1 Leverage
First Horizon Corporation		10.69		8,825		10.36		8,247
First Horizon Bank		10.20		8,350		9.76		7,700
Other Capital Ratios
Total period-end equity to period-end assets		11.38				10.83
Tangible common equity to tangible assets (c)		8.48				7.12
Adjusted tangible common equity to risk weighted assets (c)		10.72				9.35

(a)The modified CECL transitional amount includes 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, 2023.

(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 7.28.

ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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	78	2023 FORM 10-K ANNUAL REPORT

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, 2023, 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, 2023 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 2023 relative to 2022 primarily from

the impact of net income less dividends. The increase in

the Common Equity Tier 1 ratio for FHN was largely driven

by the conversion of the Series G Preferred Stock to

common stock.

During 2024, 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.

For 2023, FHN and First Horizon Bank completed a

company run stress test using the Comprehensive Capital

Analysis and Review (CCAR) scenarios published in

February 2023. 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 2023 CCAR Severely Adverse scenario. A summary

of those results was posted in the “Fixed Income - Stress

Test Results” section on FHN’s investor relations website

on September 29, 2023. 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

If and as authorized by its Board of Directors, 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 authorized two

common stock purchase programs, described below, that

operated and expired during the fourth quarter of 2023. In

2024, FHN's Board replaced one of those programs. FHN’s

Board has not authorized a preferred stock purchase

program.

2021 General Purchase Program

On January 27, 2021, FHN announced that its Board of

Directors 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 was not

further extended.

The 2021 program was not tied to any compensation plan.

Purchases could 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 were subject to

various factors, including FHN's capital position, financial

performance, expected capital impacts of strategic

initiatives, market conditions, business conditions, and

regulatory considerations. FHN did not purchase shares

under this program during blackout periods when senior

executives were prohibited from purchasing FHN stock on

the open market.

As of expiration at October 31, 2023, $401 million in

purchases had been made under the 2021 program at an

average price per share of $16.60, or $16.58 excluding

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commissions. The pendency of the TD Transaction

resulted in no purchases under the 2021 program since

the Transaction was announced in 2022. No additional

purchases were made under the 2021 program in 2023

before it expired.

Table 7.20a

COMMON STOCK PURCHASES—2021 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 (b)
2023
October 1 to October 31		—		N/A		—		$598,646
November 1 to November 30		—		N/A		—		—
December 1 to December 31		—		N/A		—		—
Total		—		N/A		—

(a)Represents total costs including commissions paid

(b)For October, value given as of immediately prior to program expiration on October 31, 2023.

2024 General Purchase Program

On January 23, 2024, FHN announced that its Board of

Directors approved a new $650 million common share

purchase program that is scheduled to expire on January

31, 2025. The 2024 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

are subject to various factors, including FHN's capital

position, financial performance, expected capital impacts

of strategic initiatives, market conditions, business

conditions, and regulatory considerations. FHN does not

purchase shares under this program during blackout

periods when senior executives are prohibited from

purchasing FHN stock on the open market.

2004 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 compensation

plans for which the share purchase authority had expired.

The primary objectives of this program were to mitigate

dilution resulting from shares issued in connection with

FHN's various stock-based compensation plans, and to

implement automatic stock purchases related to tax

withholding obligations associated with stock-based

awards. For many years, the program was used entirely

for the second objective.

The total amount authorized under this consolidated

compensation plan share purchase program was

29.6 million shares calculated before adjusting for stock

dividends distributed through January 1, 2011. The

authorization was reduced for that portion which related

to compensation plans for which no stock option awards

remain outstanding. The program expired on

December 31, 2023. Prior to expiration, purchases could

have been made in the open market or through privately

negotiated transactions and were subject to various

factors including FHN's capital position, financial

performance, capital impacts of strategic initiatives,

market conditions and regulatory considerations.

However, as mentioned above, even though general

repurchases were authorized, for many years FHN's use of

this program was limited to automatically withholding

shares associated with vested stock awards to cover tax

obligations.

As of December 31, 2023, immediately prior to expiration,

the maximum number of shares that could be purchased

under the program was 22 million shares.

ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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Table 7.20b

COMMON STOCK PURCHASES—2004 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 (a)
2023
October 1 to October 31		31		$10.71		31		21,724
November 1 to November 30		1		11.74		1		21,723
December 1 to December 31		23		13.35		23		21,700
Total		55		$11.82		55

(a)For December, number given as of immediately prior to program expiration on December 31, 2023.

Automatic Off-Market Tax Withholding Purchases

The 2004 compensation plans program has not been

renewed or replaced with a formal program. After 2023,

as authorized by FHN's Board and the Board's

Compensation Committee, FHN will continue to make

automatic stock purchases by withholding shares

associated with stock-based awards to cover tax

obligations associated with those awards. Those limited,

off-market purchases no longer will be connected to a

traditional, announced purchase program. As has been

true in the past, automatic tax withholding purchases are

not subject to trading blackouts which affect senior

executives or the general purchase program.

Risk Management

FHN derives revenue from providing services and, in many

cases, assuming and managing risk for profit which

exposes FHN to strategic, 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

Strategic Risk and Reputational 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 reputational 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

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	81	2023 FORM 10-K ANNUAL REPORT

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

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. Business units have designated control

processes to help mitigate their identified risks and

business units attest to the effectiveness of those

controls. 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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	82	2023 FORM 10-K ANNUAL REPORT

Table 7.21

VaR & SVaR MEASURES

		Year Ended December 31, 2023						As of December 31, 2023
(Dollars in millions)		Mean		High		Low
1-day
VaR		$3		$4		$2		$3
SVaR		6		8		3		6
10-day
VaR		8		11		4		10
SVaR		24		34		12		28
		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

FHN’s overall VaR measure includes both interest rate risk and credit spread risk. Separate measures of these component risks

are as follows:

Table 7.22

SCHEDULE OF RISKS INCLUDED IN VaR

		As of December 31, 2023				As of December 31, 2022
(Dollars in millions)		1-day		10-day		1-day		10-day
Interest rate risk		$1		$2		$1		$3
Credit spread risk		1		1		1		2

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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	83	2023 FORM 10-K ANNUAL REPORT

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, Net Interest Income 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, 2023,

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 7.23

INTEREST RATE SENSITIVITY

Shifts in Interest Rates (in bps)		% Change in Projected Net Interest Income
-100		(3.6)%
-50		(1.7)%
-25		(0.9)%
+25		0.7%
+50		1.4%
+100		2.6%
+200		3.3%

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 0.4%. 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 0.5%. 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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Short-term interest rates have reached their highest levels

in 15 years, which coupled with market disruption from

recent high profile bank failures, has increased

competitive pressures on deposit costs.

The yield curve was inverted for much of the last half of

2022, and throughout 2023. The inverted yield curve

indicates market expectations that short-term rates have

likely peaked and then could decline in future periods.

Market participants are now projecting multiple rate cuts

in 2024 while the December 2023 Fed Dot plot has

indicated three 25 basis point cuts in 2024. FHN continues

to monitor current economic trends and potential

exposures closely. For additional information, see Yield

Curve within Market Uncertainties and Prospective Trends

below.

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.

LIBOR & Reference Rate Reform

In March 2022, Congress passed the Adjustable Interest

Rate (LIBOR) Act. The legislation addresses loans that

remained 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

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.

FHN has complied with the terms of the LIBOR Act and

Regulation ZZ and amended substantially all of its

contracts away from LIBOR as of June 30, 2023. For most

financial products, the most common alternative

reference rates have been SOFR-based benchmarks. This

is true for both new originations and legacy LIBOR

contracts that were subject to amendment or a transition

by their terms.

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 of 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

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• Compliance/Legal (including Bank Secrecy Act)

• Program Governance

• Fiduciary

• Security/Fraud

• Financial (including disclosure controls and

procedures)

• Information Technology (including cybersecurity; see

the next section below)

• 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

refinement of processes and tools to aid in measuring and

managing material operational risks and providing for a

culture of awareness and accountability.

Cybersecurity Risk Management

Overview

As mentioned immediately above, FHN's operational risk

function is divided into several risk areas. Each area has

been established at the corporate level to address risks in

that area across the entire organization. One of those

areas—information technology ("IT") risk—includes

cybersecurity risk management.

As FHN manages it, IT risk includes cybersecurity risk,

which in turn includes the risks from cyber fraud, cyber

theft, cyber vandalism, cyber ransom, data and system

security, and other unauthorized incursions into FHN's IT

systems. IT risk management also includes IT system

reliability, data integrity, IT aspects of regulatory

compliance, and risks associated with the use of artificial

intelligence tools and systems. The discussion in this

section focuses on cybersecurity. Additional information

on this topic is presented in Cybersecurity Risks within

Item 1A beginning on page 33.

Key Cybersecurity Risk Management Goals

Cybersecurity risk management has two primary goals:

defend FHN and its clients from fraudulent and other

unauthorized incursions; and, when an incursion happens,

detect and respond as soon as practical. The optimal

cybersecurity program will defend as much as is practical

while also detecting rapidly those incursions that get

through.

Management Structure & Key Processes

Operational risk is managed by FHN's Operational Risk

("Op Risk") Committee. Members of the Op Risk

Committee include senior-level representatives from

these teams or departments: Enterprise Risk

Management, Operations, Model Risk, Enterprise Data,

Enterprise Technology, Enterprise Technology Risk

Management, Credit and Credit Risk Management, Legal,

Security, Internal Audit, Deposit & Loan Operations, Retail

and Digital Banking, Regional Bank Products, Mortgage

Banking, Accounting, and Fixed Income/Bond Trading. The

Op Risk Committee reports to FHN's Management Risk

Committee, which is headed by FHN's Chief Risk Officer,

who reports to FHN's Chief Executive Officer.

IT risk is managed by the IT Risk Working Group, overseen

by the Op Risk Committee. The IT Risk Working Group

meets quarterly to discuss emerging cyber risks,

regulatory changes, vendor risk, audits, and outstanding-

issue resolution. The Group also provides updates to the

Op Risk Committee on IT aspects of compliance, policies,

and security standards. Members of the IT Risk Working

Group include the head of Enterprise Technology along

with personnel from nearly all of the teams and

departments represented in Op Risk.

FHN also has a Cybersecurity Working Group. The

Cybersecurity Working Group, which is outside of the risk

management hierarchy, meets quarterly. Its primary

functions are to provide cybersecurity awareness to the

executive leadership team and to provide high-level

support if a significant cybersecurity event occurs. In

connection with awareness, (a) external vendors,

consultants, law enforcement, and other persons are

invited to speak on industry-wide cybersecurity topics to

provide an independent view of external threats facing

the industry; and (b) members of the Enterprise

Technology team provide updates regarding how FHN is

addressing current risks and threats. The Cybersecurity

Working Group includes: FHN's CEO; the heads of FHN's

banking segments; the heads of Risk Management,

Enterprise Technology, Security, Operations, and Legal;

and senior personnel in the other teams and departments

represented in the IT Risk Working Group.

Key leaders within these committees and groups and for

these processes are FHN's Chief Information Officer and

Chief Information Security Officer. The Chief Information

Officer has substantial banking, IT, and related experience:

had roles at FHN since 2009 related to IT and data systems

culminating in CIO since 2020; prior to joining FHN, had

roles at a large regional bank, including technology leader

of the bank's electronic payments platform related to

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	86	2023 FORM 10-K ANNUAL REPORT

treasury management and enterprise IT architect; and,

earned an MS in computer science as well as an MBA. The

Chief Information Security Officer has over twenty years

of banking, IT, and related experience: oversees

information security and many related systems and

processes; has established risk-based security programs to

meet regulatory requirements and align with business

needs; and has implemented numerous data protection,

data access, and identity management systems.

FHN has a written Computer Security Incident Response

Plan ("CSIRP") outlining FHN's incident response and

communication processes. FHN's Chief Information

Security Officer or certain other managers have the

authority to initiate the execution of the CSIRP if an

incident occurs. A working group called the Computer

Security Incident Response Team has primary

responsibility to implement or coordinate many of the

CSIRP actions, along with FHN's IT Risk Working Group.

Key goals of the CSIRP are to: contain, remediate, and

recover; mitigate impact on FHN and clients; report

findings to Op Risk and other senior management; and

manage external communications. The Cybersecurity

Working Group is informed of incidents that appear to

have a significant risk of becoming material.

FHN engages third party vendors to conduct several

periodic cybersecurity reviews:  Network Penetration

testing; Cyber Security Maturity Assessment; Red Team

(simulated cyber attack) testing; SOX (financial reporting

controls and data integrity) testing; and, PCI-DSS

(proprietary data security standard for payment systems)

attestation of compliance and SOC 1 Type II reports

(attesting to the design and operation of cybersecurity

systems) for lockbox and electronic bill pay. The frequency

of these reviews ranges from several times per year to

every three years. FHN also has a cybersecurity incident

specialty firm on retainer for incident response, as

needed.

FHN has a dedicated Third-Party Risk Management (TPRM)

department reporting to the Chief Risk Officer. TPRM

engages the IT Risk Working Group to perform

cybersecurity assessments for new vendors during

onboarding, re-assessments of existing vendors on a risk-

based cadence, and continuous monitoring of critical

third-parties.

Board Oversight

The Board's Risk Committee oversees all risk management

functions for the enterprise, including op risk, IT risk, and

cybersecurity risk. The Board's Information Technology

Committee oversees management of FHN's IT systems,

including their adequacy now and in the future, and their

security. In relation to cybersecurity risk management, the

functions of the two Committees overlap to an extent.

The Risk Committee, as well as the full Board, each

quarter receive a risk management update from FHN's

Chief Risk Officer. Each update includes a written

presentation covering all major risk areas, including op

risk, and each is supported by a detailed Enterprise Risk

Report which is available to all directors. Major topics in

the op risk portion of the Enterprise Risk Report each

quarter include fraud and related incidents; process

management, which includes many processes related to

cybersecurity defenses; and information security, which

addresses core cybersecurity processes and incidents.

Tactical, Operational & Other Impacts

The measures FHN takes to manage cybersecurity risk

affect how associates and clients use FHN's platforms and

systems. For every safeguard considered or implemented,

FHN must weigh potential and actual inconveniences

against security concerns. Practical realities make it

impossible to maximize security and ignore resulting

restrictions on the ability of associates and clients to

conduct banking and financial business. Primarily for that

reason, cybersecurity risks are and will be a major risk

management concern, and losses from incursions will be

impossible to avoid. As mentioned above, FHN's goals are

to prevent what can be prevented, and detect and

respond to incursions that get through as quickly as

possible.

For those incursions that are not blocked, FHN's processes

are designed to detect them quickly enough so that the

financial and operational impact on FHN is zero or modest.

But the risk of a major incursion occurring cannot be

reduced to zero. A major incursion could have a material

financial impact on FHN's business operations and

earnings.

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.

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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 (CRMC) 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. After the banking crisis in the first half

of 2023, ALCO and the Board examined the liquidity risk

management framework and policies to ensure alignment

with evolving regulatory expectations, industry best

practices, and the company’s risk appetite. 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 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. As of December 31, 2023, available

liquidity sources included cash, incremental borrowing

capacity at the FHLB, access to Federal Reserve Bank

borrowings through the discount window and the Bank

Term Funding Program, and unencumbered securities.

Additional sources of liquidity included dealer and

commercial customer repurchase agreements, access to

the overnight and term Federal Funds markets, brokered

deposits, loan sales, and syndications. The FRB Bank Term

Funding Program will expire on March 11, 2024. The table

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	88	2023 FORM 10-K ANNUAL REPORT

below details FHN’s sources of available liquidity at

December 31, 2023.

Table 7.24

AVAILABLE LIQUIDITY

as of December 31, 2023

(Dollars in millions)		Total Capacity		Outstanding Borrowings		Available Liquidity
Cash on deposit with FRB (a)		$1,201		$—		$1,201
FHLB		9,352		—		9,352
FRB:
Discount Window		23,417		—		23,417
BTFP		834		—		834
Unencumbered securities (b)		812		—		812
Total Available Liquidity						$35,616

(a) Included in interest-bearing deposits with banks on the

Consolidated Balance Sheets.

(b) Subject to market haircuts on collateral.

Generally, a primary source of funding for a bank is core

deposits from the bank's client base. The period-end

loans-to-deposits ratio was 93% and 92% as of

December 31, 2023 and December 31, 2022, respectively.

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. As of December 31,

2023, FHN had outstanding $797 million in senior and

subordinated unsecured debt and $520 million in non-

cumulative perpetual preferred stock. As of December 31,

2023, First Horizon Bank and subsidiaries had outstanding

preferred shares of $295 million, which are reflected as

noncontrolling interest on the Consolidated Balance

Sheets.

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 $1.2 billion as of January 1, 2024.

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 TD Transaction. 

During the suspension period, dividend payments of FHN

are not automatically reinvested in additional shares of

FHN common stock and participants in the Plan are not

able 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 $220 million in

2023 and $435 million in 2022. In January 2024, First

Horizon Bank declared and paid a common dividend to the

parent company in the amount of $310 million. First

Horizon Bank declared and paid preferred dividends in

each quarter of 2023 and 2022. Additionally, First Horizon

Bank declared preferred dividends in first quarter 2024,

payable in April 2024.

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

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.

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FHN paid a cash dividend of $0.15 per common share on

January 2, 2024. FHN paid cash dividends of $1,625 per

Series E preferred share and $1,175 per Series F preferred

share on January 10, 2024 and $331.25 per Series B

preferred share and $165 per Series C preferred share on

February 1, 2024. In addition, in January 2024, 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		3/15/2024		4/1/2024
Preferred Stock
Series C		$165.00		4/16/2024		5/1/2024
Series D		$305.00		4/16/2024		5/1/2024
Series E		$1,625.00		3/26/2024		4/10/2024
Series F		$1,175.00		3/26/2024		4/10/2024

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, 2023. 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.

Table 7.26

CONTRACTUAL OBLIGATIONS

as of December 31, 2023

		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)		$6,528		$194		$75		$7		$6,804
Short-term borrowings (b) (d)		3,058		—		—		—		3,058
Term borrowings (b) (e)		6		350		—		812		1,168
Annual rental commitments under noncancelable leases (b) (f)		44		85		76		204		409
Purchase obligations		224		120		30		3		377
Total contractual obligations		$9,860		$749		$181		$1,026		$11,816

(a) Excludes a $15 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

directly tied to FHN’s credit ratings as are 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

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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/--/NEG		BBB/F2/Stable
	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/NEG		BBB/F2/Stable
	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

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 negative (“NEG”) and ratings affirmed on May 5, 2023.

(b)Last change in ratings was on May 6, 2020. Outlook changed to stable (“Stable”) and ratings affirmed on May 5, 2023.

(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

As discussed in Note 16 - Contingencies and Other

Disclosures, FHN's repurchase and foreclosure liability,

primarily related to its pre-2009 mortgage origination,

sale, securitization, and servicing businesses, is comprised

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of accruals to cover estimated loss content in the active

pipeline, estimated future inflows, and estimated loss

content related to certain known claims not currently

included in the active pipeline. The active pipeline consists

of mortgage loan repurchase and make-whole demands

from loan purchasers or securitization participants,

foreclosure/servicing demands from borrowers, and

certain related exposures. 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 cancellation 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 total repurchase and

foreclosure liability, which includes both the legacy

pre-2009 business and the current mortgage business,

was $16 million as of both December 31, 2023 and 2022.

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 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.

In addition to trends and events noted elsewhere in this

MD&A, FHN believes the following trends and events are

noteworthy at this time.

Inflation, Recession, and Federal Reserve Policy

Economic Overview

The post-COVID economy in the U.S. has been marked by:

strong inflation, which began in 2021, peaked in 2022, and

abated, though not fully, in 2023; the Federal Reserve

implementing a "tightening" policy in 2022 to contain

inflation by rapidly increasing short-term interest rates

and ending asset purchases; low unemployment rates; 

moderate economic growth; and a profoundly inverted

yield curve in 2022 and 2023. Key aspects were:

• Although the U.S. economy flirted with recession in

2022, it did not officially enter one. In 2023 recession

expectations moderated significantly. Early in 2024,

recession expectations for the rest of this year

generally are low.

• The rise in short-term interest rates by the Federal

Reserve in 2022 was both rapid and substantial, taking

the overnight Fed Funds rate from 0.20% in March

2022 to 4.65% a year later. Hikes after that were much

more modest and infrequent.

• In response to 2022's extremely rapid and vigorous

tightening of monetary policy, the inflation rate in the

U.S. now is well below 2022's levels. However, many

measures of inflation remain higher than the Federal

Reserve's stated long-term goal of 2%.

• Early in 2024 the Federal Reserve has signaled that

hikes have ended and that a short term rate cut might

become appropriate. No policy or timing commitments

have been made. Future actions continue to depend

upon future data. Some concern remains that recent

inflation data, which has been good, may prove to be

transitory.

• Monetary tightening often creates yield curve

inversion for a time. In the current cycle, traditional

inversion (when ten-year treasury rates are below two-

year rates) has been both very deep and unusually

sustained, with the current inversion having begun in

the summer of 2022.

• Many factors likely contributed to the current

sustained inversion. The immediate cause, of course,

was that demand for long-term treasury debt

remained high, depressing yields, even though short

yields were higher. FHN believes that a significant

factor behind that demand preference in 2023 was

continuing market expectations that the Federal

Reserve would start to reduce short-term rates "soon"

in order to avoid or mitigate a recession. Early in 2024,

Federal Reserve communications suggest that no rate-

cut action is likely "soon".

• A short-term rate cut by the Federal Reserve should

lessen inversion, but only if long-term rates do not

likewise drop.

Key events and circumstances are noted in the following

discussions.

Federal Reserve and Rates

The Federal Reserve raised short-term rates several times

in 2022 and in the first part of 2023. All but one of the

raises in 2022 were 75 and 50 basis points each—

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aggressive by historical standards—while the 2023 raises

were the more-typical 25 basis points each. The Federal

Reserve has expressed its intent to bring inflation under

control even at the risk of creating or deepening an

economic recession. The Federal Reserve has indicated

that future decisions will be heavily impacted by economic

data, especially inflation-rate and -trend data, available at

each decision point. Most recently the Federal Reserve

has indicated, based on late-2023 data, an expectation

that its next action, at an unspecified future point, will be

a rate cut.

FHN cannot predict exactly when or how much short-term

rates will be changed, how market-driven long-term rates

will behave, nor how those actions may affect financial

markets, during 2024.

Yield Curve

Unusual yield curve effects, including inversion, are

common when monetary policy changes. A traditional

measure of inversion occurs when the two-year U.S.

Treasury rate is higher than the ten-year rate. Traditional

inversion has been sustained continuously since the

summer of 2022, an unusually long period. The degree of

inversion has varied during that period, but generally has

been much deeper than is typical. Sustained traditional

yield curve inversion is viewed, with statistical support, as

a harbinger of economic recession, but recession has not

yet occurred and the U.S. economy currently does not

appear close to entering one.

The most recent period with deep and longer-lasting

inversion was over 40 years ago. That 4-5 year period was

marked by stagflation (low economic growth coupled with

high inflation), followed by extremely robust interest rate

hikes and a severe recession.

Yield curve flattening and inversion generally reduces the

profit FHN can make from lending by compressing FHN's

net interest margin, and also generally reduces FHN's

revenues from bond trading. These impacts have occurred

and are continuing during the current inversion. Refer to

Interest Rate & Yield Curve Risks, located in Item 1A. Risk

Factors beginning on page 44, for a discussion of the risks

to FHN associated with flattening and inversion.

Recession

The U.S. economy contracted (experienced negative

growth) during the first two quarters of 2022, in both

cases modestly. Although two consecutive quarters of

contraction often coincides with recession, in 2022 it did

not. The economy expanded in each quarter since then.

Recession expectations in the U.S. were high in 2022 and

first quarter 2023. They moderated significantly after that.

Current recession expectations generally are low.

Banking Crisis

In March 2023, two large regional U.S. banks failed after

sudden large deposit outflows, and a major Swiss bank

was acquired by another bank at the behest of regulators.

In the aftermath of the two U.S. failures, bank investors

and clients across the U.S. became more focused on

deposit mix, funding risk management, and other safety-

soundness concerns. The market values of virtually all U.S.

bank stocks fell quickly and strongly in March, with a few

falling about 90%.

Following these failures, the media published stories

about actual and possible bank runs by depositors. Most

U.S. banks saw net outflows of deposits in 2022 and early

2023 as the impacts of COVID-19 crisis programs faded

and rates available from non-bank-account investments

improved. According to Federal Reserve data, starting in

mid-March, the two failures triggered an abrupt and

substantial net deposit outflow from all but the largest

U.S. banks. The March crisis shock was short-lived,

however. During the final week of March both large and

small U.S. banks collectively experienced net inflows of

deposits, roughly mirroring the first week of March,

before the crisis emerged.

The two U.S. bank failures resulted in Congressional calls

for higher regulation of mid-sized regional banks,

especially for those with $100 billion or more of assets.

In early May a third large regional U.S. bank failed after

experiencing very large deposit outflows in March.

Although this failure was widely anticipated, volatility in

regional bank stocks reappeared in May. By June bank-

stock volatility had abated again, but with regional bank

prices well below pre-crisis levels.

The three failed U.S. banks had a few characteristics that

FHN believes were significant negative factors

contributing to loss of confidence by depositors, in

addition to having an unusual customer mix: well-above-

median levels of deposits not covered by FDIC insurance;

significant portions of the 2020-21 pandemic deposit

inflows invested in longer-term fixed-rate debt securities;

and very high (in relation to regulatory capital) market

value losses on those investments when rates rose in 2022

and early 2023. These factors made those banks 

unusually susceptible to a cascade of negative effects

when deposit levels diminished, for the entire industry,

starting in 2022 as customers sought better returns in the

rising rate environment.

Market Volatility & Valuations

As a result of the prospects for recession, coupled with the

uncertainties associated with war in eastern Europe,

financial markets world-wide were volatile during much of

2022. Volatility overall has moderated somewhat in 2023,

but volatile episodes have continued. War in the Middle

East that started in October 2023 had a much more muted

financial impact than was true in 2022.

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Financial asset values broadly fell in 2022, especially

during the second and third quarters. By mid-year 2023,

broad stock indices largely had recovered from 2022's low

points, but longer-term fixed-rate debt investments

remained well below previous values. By year-end 2023,

stock values in most (but not all) sectors had recouped

much of their earlier losses, and debt investment values

generally improved somewhat from their lows when long-

term rates fell in anticipation of possible short-term rate

cuts in 2024 by the Federal Reserve.

Impacts on FHN

In 2022, FHN benefited significantly from rising rates as

the rise in lending rates outpaced the rise in deposit and

other funding rates. In the first quarter of 2023, that

outpacing ended, and FHN's net interest margin started to

compress. FHN was able to reverse the compression

during the year fueled in part by using increased deposits

and capital to reduce borrowings. Going forward, although

net interest margin levels may improve modestly while

short term rates remain steady, margins are not likely to

improve appreciably until the yield curve inversion

mentioned above has ended and the curve takes at least a

moderately steep slope.

In 2022 and early 2023, FHN experienced a normalization

of deposit levels since first quarter 2020 as it allowed

surge deposits resulting from COVID-driven stimulus

programs to move off its balance sheet. Net deposit

outflows ranged from roughly $2.0 to $4.0 billion in each

of the last three quarters of 2022, and fell again by

roughly $2.5 billion in first quarter 2023. That outflow

trend ended in second quarter as FHN had net deposit

inflows of $4.0 billion. For the year 2023, net deposits

increased over $2 billion. However, FHN increased deposit

rates appreciably in 2023, particularly in May and June.

The May and June 2023 deposit inflows mainly consisted

of ordinary accounts with "promo" rates, and of

certificates of deposit, or CDs, with very attractive fixed

rates. The promo rates ended late in 2023, and a large

group of those CDs matured during that time. A challenge

for FHN is to retain as many of those deposit dollars, and

depositor customers, as is reasonably practical while

moderating the rates FHN pays.

In addition, some of FHN's businesses have been

negatively impacted by rising rates. Rate increases have

pushed home mortgage rates in the U.S. much higher than

in early 2022, reducing demand. FHN's direct mortgage

lending and lending to mortgage companies saw business

decline significantly in 2022 and 2023. Moreover, FHN's

revenues from bond trading and related activities fell

significantly in 2022 and 2023 due to rising rates coupled

with elevated market volatility.

A recession, if one were to occur, likely would have a

negative impact on FHN's businesses overall. Demand for

loans likely would fall, loan losses and provision expense

likely would rise, many commercial activities that generate

fee income likely would decline, and competition for

clients likely would 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. As mentioned above, recessionary

expectations have abated substantially since early 2023.

However, just as expectations in early 2023 proved to be

wrong, current expectations may be just as incorrect.

Other Regulatory Proposals

In 2023 the Board of Governors of the Federal Reserve

and other regulators proposed regulatory changes that

would, if implemented, significantly increase regulatory

constraints and costs on all U.S. banks with assets over

$100 billion. A few new requirements would apply to

banks, like FHN, with assets over $50 billion, but by far the

main impacts would fall on banks greater than $100 billion

in assets.

The proposals touch upon many regulatory requirements,

including debt and equity capital requirements, credit risk

standards, asset risk-weighting, and resolution planning.

The increased requirements also would entail additional

compliance costs.

The triggering of significant cost increases based on a

single threshold financial measure—$100 billion in assets

—has been in place for many years and has impacted the

U.S. banking industry. Compliance restrictions and costs

increase as the threshold is approached but a step-up

pattern remains. Banks near the threshold may be likely to

slow or even halt asset growth, at least for a period, and

start to implement the higher-level compliance systems.

Banks modestly over the threshold, in contrast, may be

likely to expand their asset base as quickly as possible to

generate additional revenues to cover those costs. Those

effects have added to the incentives for banks to

consolidate, and the proposed new rules are likely to

enhance that.

It appears likely that, if adopted as proposed, significant

parts of the proposals will be challenged in court as being

inconsistent with legislation enacted by Congress in 2018.

Such a challenge would be technical and complex, and

likely would take many years to resolve. Moreover, even if

a challenge of that sort were successful, many parts of the

proposals likely would remain intact and others might be

modified without being rescinded.

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Greenhouse Gas (GHG) Reporting Regimes

In October 2023 the state of California enacted two laws

which, taken together, will require most larger companies

doing business in California to report annually their

greenhouse gas ("GHG") emissions, with an external

assurance requirement, and to report biennially their

climate-related financial risks and risk-mitigation

measures. The U.S. Securities and Exchange Commission

("SEC") has proposed, but not yet adopted, rules that

would require all U.S. companies with publicly-traded

securities to report annually their GHG emissions. The

California laws include multi-year phase in periods and

encompass Scope 1, Scope 2, and Scope 3 GHG emissions.

The SEC proposal has Scope 1 and 2 reporting

requirements, along with Scope 3 requirements in certain

situations. The California governor stated in 2023 that the

new laws are likely to be subjected to technical

amendments in the next year or so. The SEC proposal is

not final and could change, perhaps substantially, when

adopted.

Three GHG Scopes

Scope 1 GHG emissions are those from a source the

company owns or controls directly, such as a

manufacturing plant. Scope 2 emissions are indirect

emissions from company activities, such as from power

consumed by company operations. Scope 1 and 2

emissions generally can be measured or estimated using

information a company normally can obtain without

significant external inquiry.

Scope 3 GHG emissions are those from sources and

activities that a company neither owns nor controls. Scope

3 emissions are from a wide range of sources that touch

upon a company, such as: vendors; employees

(commuting, business travel, etc.); and customers. Scope 3

information generally is unknown to a company without

significant external inquiry and/or estimation.

Potential Business Impacts

Direct compliance costs will include creating systems to

measure or estimate and capture relevant data, staffing,

and engagement of vendors, including a firm to provide

required assurances (somewhat analogous to a financial

statement auditor).

Potentially of more significance: California may require

inquiry of customers rather than merely estimation about

them. If FHN is allowed merely to estimate emissions from

customers, that process may be costly but would not

interfere with our business relationships. If, however, FHN

is required to support Scope 3 reporting by obtaining

GHG-related information from customers, including

customers that are not public companies and that do no

business in California, then the California disclosure laws

could interfere with FHN's business. In that case,

effectively FHN would be required to impose costs and/or

inconveniences on its customers. Other banks in FHN's

markets, particularly those that are private and not doing

business in California, could provide financial services

without those requirements, putting FHN at a competitive

disadvantage.

Potential & Actual Legal Challenges

The application of the California laws to companies

outside of California has been challenged in court, and

other challenges may be brought. Challenges from outside

the state have or may assert that the laws:

unconstitutionally burden interstate commerce,

unconstitutionally compel speech, or possibly violate

another constitutional protection or limitation. Current

and potential future challenges could take many years to

resolve. A key practical question will be whether the

courts impose a legal stay (a moratorium) on these laws

while challenges are pending.

Assuming the SEC adopts final regulations similar to those

proposed, it appears very likely that legal challenges will

be made based mainly on the fact that the SEC lacks

explicit Congressional authorization to create a regulatory

reporting regime pertaining to GHG emissions. As with the

California laws, a key question will be whether the courts

impose a stay on the rules while challenges are pending.

Assuming the SEC adopts final regulations similar to those

proposed, and further assuming that any legal challenge

leaves those rules entirely or largely intact, the California

laws might be challenged by public companies as having

been pre-empted by the SEC rules.

Coastal Market Growth and Rising Costs

FHN's principal markets are in the southern and

southeastern United States, including most of the major

gulf coast markets and several markets on the southern

Atlantic seacoast. Many of FHN's markets have

experienced significant population growth over at least

the past twenty years, outpacing the growth rate for the

U.S. as a whole. That population growth generally has

been accompanied by economic growth.

Many of FHN's fastest growing markets, including most

significantly those in Florida, can be impacted significantly

by hurricanes and other severe coastal weather events. As

those markets grow, FHN's economic commitment to

them grows, as does FHN's financial exposure to those

events.

In 2023 and this year it has been widely reported that the

economic costs of hurricane events in the U.S. gulf and

southern Atlantic coastal areas have been rising

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significantly. FHN believes that rising costs are directly

related to growth in those areas.

For example, much of the growth in Florida has been

along the coast moving out from older cities. A gulf coast

hurricane 50 or 60 years ago had a fair chance of making

landfall in a relatively unpopulated area. Now, the chances

of directly hitting a population center are much higher,

the average population in that center is much higher, and

the average value per building is much higher.

The reported significant increase in casualty risks and

costs is being reflected in property insurance practices

which currently are in significant flux. The insurance

industry is being forced to revise its risk assessment and

premium pricing practices in coastal areas as loss

experience has deviated from earlier predictions,

sometimes badly. In Florida, for example, some smaller

carriers have failed, some larger carriers have left markets,

and remaining carriers have significantly increased the

premiums of hurricane-related insurance, narrowed

coverage, or both.

Coastal states such as Florida and Louisiana have created

last-resort insurance pools for residents who cannot

obtain or afford private property insurance. However, as

the costs borne by those pools increase, either the

premiums will have to rise or general taxation will have to

cover the difference. In addition, those programs

generally do not help business clients.

State and local building and water-control codes are being

revised, but often unevenly and often not retroactive to

pre-existing structures and developments. The current

transition period could be lengthy.

The availability, reliability, and cost of adequate property

insurance is a significant concern for FHN as well as FHN's

clients in affected markets. Instability in property

insurance has made, and continues to make, FHN's

business decisions more difficult. That instability increases

FHN's risks of loan loss and business downturn.

More fundamentally, elevated insurance and casualty

costs blunt a key factor driving growth in many of these

high-growth markets: lower costs of living. If market

growth slows, FHN's business will be impacted.

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

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

ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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	96	2023 FORM 10-K ANNUAL REPORT

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, 2023, FHN utilized Moody's

Baseline and S3 (adverse) scenarios for the calculation of

the ALLL. FHN placed the most weight on the Moody's

Baseline scenario but included the S3 scenario to reflect

the uncertainty of macroeconomic forecasts related to

ongoing economic conditions.

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 S3 (adverse) scenarios. 

These hypothetical calculations resulted in an 8%

reduction and 24% increase, respectively, in ALLL in

comparison to the ALLL recorded at December 31, 2023,

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

the amount of future state and federal pre-tax operating

income, the reversal of temporary differences, and the

implementation of feasible and prudent tax planning

strategies. These assumptions require significant

judgment about the forecasts of future taxable income

and are consistent with the plans and estimates used to

manage the underlying business. 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.

ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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	97	2023 FORM 10-K ANNUAL REPORT

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, a summary of accounting changes, 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, and tangible book value per common share. Table

7.28 appearing in 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:

ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
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	98	2023 FORM 10-K ANNUAL REPORT

Table 7.28

NON-GAAP TO GAAP RECONCILIATION

(Dollars in millions; shares in thousands)		2023		2022		2021
Pre-provision Net Revenue (Non-GAAP)
Net interest income (GAAP)		$2,540		$2,392		$1,994
Plus: Noninterest income (GAAP)		927		815		1,076
Total Revenues (GAAP)		3,467		3,207		3,070
Less: Noninterest expense (GAAP)		2,079		1,953		2,096
Pre-provision Net Revenue (Non-GAAP)		$1,388		$1,254		$974
Tangible Common Equity (Non-GAAP)
(A) Total equity (GAAP)		$9,291		$8,547		$8,494
Less: Noncontrolling interest (a)		295		295		295
Less: Preferred stock (a)		520		1,014		520
(B) Total common equity		8,476		7,238		7,679
Less: Goodwill and other intangible assets (GAAP) (b)		1,696		1,745		1,809
(C) Tangible common equity (Non-GAAP)		6,780		5,493		5,870
Less: Unrealized gains (losses) on AFS securities, net of tax		(836)		(972)		(36)
(D) Adjusted tangible common equity (Non-GAAP)		$7,616		$6,465		$5,906
Tangible Assets (Non-GAAP)
(E) Total assets (GAAP)		$81,661		$78,953		$89,092
Less: Goodwill and other intangible assets (GAAP) (b)		1,696		1,745		1,809
(F) Tangible assets (Non-GAAP)		$79,965		$77,208		$87,283
Average Tangible Common Equity (Non-GAAP)
Average total equity (GAAP)		$8,905		$8,579		$8,479
Less: Average noncontrolling interest (a)		295		295		295
Less: Average preferred stock (a)		758		935		506
(G) Total average common equity		7,852		7,349		7,678
Less: Average goodwill and other intangible assets (GAAP) (b)		1,720		1,777		1,836
(H) Average tangible common equity (Non-GAAP)		$6,132		$5,572		$5,842
Net Income Available to Common Shareholders
(I) Net income available to common shareholders		$865		$868		$962
Risk Weighted Assets
(J) Risk weighted assets (c)		$71,074		$69,163		$64,183
Period-end shares outstanding
(K) Period-end shares outstanding		558,839		537,101		533,577
Ratios
(A)/(E) Total period-end equity to period-end assets (GAAP)		11.38%		10.83%		9.53%
(C)/(F) Tangible common equity to tangible assets (Non-GAAP)		8.48		7.12		6.73
(D)/(J) Adjusted tangible common equity to risk weighted assets (Non-GAAP)		10.72		9.35		9.20
(I)/(G) Return on average common equity (GAAP)		11.01		11.81		12.53
(I)/(H) Return on average tangible common equity (Non-GAAP)		14.11		15.58		16.46
(B)/(K) Book value per common share (GAAP)		$15.17		$13.48		$14.39
(C)/(K) Tangible book value per common share (Non-GAAP)		$12.13		$10.23		$11.00

(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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	99	2023 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: 2023 MD&A (Item 7), which begins

on page 54 of this report; Note 21—Derivatives, which

begins on page 178 of this report; and Note 22—Master

Netting and Similar Agreements - Repurchase, Reverse

Repurchase, and Securities Borrowing Transactions, which

begins on page 185 of this report. Within 2023 MD&A,

these sections are especially pertinent to this Item 7A:

Market Risk Management and Interest Rate Risk

Management which begin, respectively, on pages 82 and

84 of this report. Notes 21 and 22 are part of our 2023

Financial Statements (Item 8).

ITEM 7A. QUANTITATIVE & QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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	100	2023 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	103
Report of Independent Registered Public Accounting Firm	104
Consolidated Balance Sheets	108
Consolidated Statements of Income	109
Consolidated Statements of Comprehensive Income	111
Consolidated Statements of Changes in Equity	112
Consolidated Statements of Cash Flows	113
Notes to the Consolidated Financial Statements	115
Note 1 Significant Accounting Policies	115
Note 2 Investment Securities	128
Note 3 Loans and Leases	131
Note 4 Allowance for Credit Losses	140
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	154
Note 13 Components of Other Comprehensive Income (Loss)	156
Note 14 Income Taxes	157
Note 15 Earnings Per Share	161
Note 16 Contingencies and Other Disclosures	162
Note 17 Retirement Plans and Other Employee Benefits	164
Note 18 Stock Options, Restricted Stock, and Dividend Reinvestment Plans	169

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
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	101	2023 FORM 10-K ANNUAL REPORT

Note 19 Business Segment Information	172
Note 20 Variable Interest Entities	175
Note 21 Derivatives	178
Note 22 Master Netting and Similar Agreements - Repurchase, Reverse Repurchase, and Securities Borrowing Transactions	185
Note 23 Fair Value of Assets and Liabilities	187
Note 24 Parent Company Financial Information	202

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
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	102	2023 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, 2023. 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, 2023.

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
Table of Contents	MANAGEMENT REPORT ON ICOFR

   

	103	2023 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, 2023 , 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, 2023, 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, 2023 and 2022, 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, 2023, and the related notes (collectively, the consolidated financial statements), and our report

dated February 22, 2024 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

February 22, 2024

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	OPINION ON ICOFR

   

	104	2023 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, 2023 and 2022, 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, 2023, 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, 2023 and 2022 , and the results of its operations

and its cash flows for each of the years in the three-year period ended December 31, 2023, 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, 2023, 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 February 22, 2024 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, 2023 was $773 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 internal and

external information relating to past events, current conditions, and reasonable and supportable forecasts of future

conditions that affect the collectability of future cash flows. 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

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
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	105	2023 FORM 10-K ANNUAL REPORT

default (EAD), including amortization and prepayment assumptions, on an undiscounted basis. The Company uses

models or assumptions to develop expected loss forecasts, inclusive of qualitative adjustments that are affected by

the weighting of multiple macroeconomic forecast scenarios 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, 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 them to the Company’s business environment and relevant industry practices

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
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	106	2023 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

February 22, 2024

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	OPINION ON CONSOLIDATED FINANCIAL STATEMENTS

   

	107	2023 FORM 10-K ANNUAL REPORT

Consolidated Balance Sheets

		December 31,
(Dollars in millions, except per share amounts)		2023		2022
Assets
Cash and due from banks		$1,012		$1,061
Interest-bearing deposits with banks		1,328		1,384
Federal funds sold and securities purchased under agreements to resell		719		482
Trading securities		1,412		1,375
Securities available for sale at fair value		8,391		8,836
Securities held to maturity (fair value of $1,161 and $1,209, respectively)		1,323		1,371
Loans held for sale (including $68 and $51 at fair value, respectively)		502		590
Loans and leases		61,292		58,102
Allowance for loan and lease losses		(773)		(685)
Net loans and leases		60,519		57,417
Premises and equipment		590		612
Goodwill		1,510		1,511
Other intangible assets		186		234
Other assets		4,169		4,080
Total assets		$81,661		$78,953
Liabilities
Noninterest-bearing deposits		$17,204		$23,466
Interest-bearing deposits		48,576		40,023
Total deposits		65,780		63,489
Trading liabilities		509		335
Short-term borrowings		2,549		2,506
Term borrowings		1,150		1,597
Other liabilities		2,382		2,479
Total liabilities		72,370		70,406
Equity
Preferred stock, Non-cumulative perpetual, no par value; authorized 5,000,000 shares; issued 26,750 and 31,686 shares, respectively		520		1,014
Common stock, $0.625 par value; authorized 700,000,000 shares; issued 558,838,694 and 537,100,615 shares, respectively		349		336
Capital surplus		5,351		4,840
Retained earnings		3,964		3,430
Accumulated other comprehensive loss, net		(1,188)		(1,368)
FHN shareholders' equity		8,996		8,252
Noncontrolling interest		295		295
Total equity		9,291		8,547
Total liabilities and equity		$81,661		$78,953

See accompanying notes to consolidated financial statements.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	CONSOLIDATED BALANCE SHEETS

   

	108	2023 FORM 10-K ANNUAL REPORT

Consolidated Statements of Income

		Year Ended December 31
(Dollars in millions, except per share data; shares in thousands)		2023		2022		2021
Interest income
Interest and fees on loans and leases		$3,575		$2,292		$1,957
Interest and fees on loans held for sale		51		39		33
Interest on investment securities		247		198		121
Interest on trading securities		78		58		30
Interest on other earning assets		149		96		17
Total interest income		4,100		2,683		2,158
Interest expense
Interest on deposits		1,266		184		81
Interest on trading liabilities		12		12		6
Interest on short-term borrowings		210		23		5
Interest on term borrowings		72		72		72
Total interest expense		1,560		291		164
Net interest income		2,540		2,392		1,994
Provision (benefit) for credit losses		260		95		(310)
Net interest income after provision for credit losses		2,280		2,297		2,304
Noninterest income
Deposit transactions and cash management		179		171		175
Fixed income		133		205		406
Brokerage, management fees and commissions		90		92		88
Card and digital banking fees		77		84		78
Other service charges and fees		54		54		44
Trust services and investment management		47		48		51
Mortgage banking and title income		23		68		154
Gain on merger termination		225		—		—
Securities gains (losses), net		(4)		18		13
Other income		103		75		67
Total noninterest income		927		815		1,076
Noninterest expense
Personnel expense		1,100		1,101		1,210
Net occupancy expense		123		128		137
Deposit insurance expense		122		32		24
Computer software		111		113		116
Operations services		87		87		80
Advertising and public relations		71		50		37
Contributions		61		7		14
Legal and professional fees		49		62		68
Contract employment and outsourcing		49		54		67
Amortization of intangible assets		47		51		56
Equipment expense		42		45		47
Communications and delivery		35		37		37
Impairment of long-lived assets		—		—		34
Other expense		182		186		169
Total noninterest expense		2,079		1,953		2,096

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	CONSOLIDATED STATEMENTS OF INCOME

   

	109	2023 FORM 10-K ANNUAL REPORT

Income before income taxes		1,128		1,159		1,284
Income tax expense		212		247		274
Net income		$916		$912		$1,010
Net income attributable to noncontrolling interest		19		12		11
Net income attributable to controlling interest		$897		$900		$999
Preferred stock dividends		32		32		37
Net income available to common shareholders		$865		$868		$962
Basic earnings per share		$1.58		$1.62		$1.76
Diluted earnings per share		$1.54		$1.53		$1.74
Weighted average common shares		548,410		535,033		546,354
Diluted average common shares		561,732		566,004		551,241

See accompanying notes to consolidated financial statements.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	CONSOLIDATED STATEMENTS OF INCOME

   

	110	2023 FORM 10-K ANNUAL REPORT

Consolidated Statements of Comprehensive Income

		Year Ended December 31
(Dollars in millions)		2023		2022		2021
Net income		$916		$912		$1,010
Other comprehensive income (loss), net of tax:
Net unrealized gains (losses) on securities available for sale		137		(937)		(144)
Net unrealized gains (losses) on cash flow hedges		47		(129)		(10)
Net unrealized gains (losses) on pension and other postretirement plans		(4)		(14)		6
Other comprehensive income (loss)		180		(1,080)		(148)
Comprehensive income (loss)		1,096		(168)		862
Comprehensive income attributable to noncontrolling interest		19		12		11
Comprehensive income (loss) attributable to controlling interest		$1,077		$(180)		$851
Income tax expense (benefit) of items included in other comprehensive income:
Net unrealized gains (losses) on securities available for sale		$44		$(302)		$(46)
Net unrealized gains (losses) on cash flow hedges		15		(42)		(3)
Net unrealized gains (losses) on pension and other postretirement plans		(1)		(5)		2

See accompanying notes to consolidated financial statements.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

   

	111	2023 FORM 10-K ANNUAL REPORT

Consolidated Statements of Changes in Equity

		Preferred Stock				Common Stock
(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, 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)
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)
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		—		—		(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
Adjustment to reflect adoption of ASU 2022-02		—		—		—		—		—		4		—		—		4
Net income		—		—		—		—		—		897		—		19		916
Other comprehensive income (loss)		—		—		—		—		—		—		180		—		180
Cash dividends declared:
Preferred stock		—		—		—		—		—		(32)		—		—		(32)
Common stock ($0.60 per share)		—		—		—		—		—		(335)		—		—		(335)
Preferred stock conversion		(4,936)		(494)		—		—		—		—		—		—		(494)
Common stock repurchased		—		—		(807)		(1)		(9)		—		—		—		(10)
Common stock issued for:
Stock options exercised and restricted stock awards		—		—		2,802		—		5		—		—		—		5
Series G preferred stock conversion		—		—		19,743		12		481		—		—		—		493
Stock-based compensation expense		—		—		—		2		34		—		—		—		36
Dividends declared - noncontrolling interest of subsidiary preferred stock		—		—		—		—		—		—		—		(19)		(19)
Balance, December 31, 2023		26,750		$520		558,839		$349		$5,351		$3,964		$(1,188)		$295		$9,291

(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 includes $401 million repurchased under share repurchase programs.

See accompanying notes to consolidated financial statements.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

   

	112	2023 FORM 10-K ANNUAL REPORT

Consolidated Statements of Cash Flows

		Year Ended December 31
(Dollars in millions)		2023		2022		2021
Operating Activities
Net income		$916		$912		$1,010
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Provision (benefit) for credit losses		260		95		(310)
Deferred income tax expense (benefit)		44		91		—
Depreciation and amortization of premises and equipment		55		59		61
Amortization of intangible assets		47		51		56
Net other amortization and accretion		—		(25)		(72)
Net decrease in trading securities		1,163		2,120		1,824
Net (increase) decrease in derivatives		(314)		524		412
Stock-based compensation expense		36		75		43
Securities (gains) losses, net		4		(18)		(13)
Loss on debt extinguishment		—		—		26
Net (gains) losses on sale/disposal of fixed assets		—		(1)		29
Gain on divestiture		(9)		—		—
(Gain) loss on BOLI		(7)		(9)		(8)
Loans held for sale:
Purchases and originations		(2,295)		(3,728)		(6,644)
Gross proceeds from settlements and sales		1,183		2,310		4,451
(Gain) loss due to fair value adjustments and other		(12)		107		(205)
Other operating activities, net		228		(272)		65
Total adjustments		383		1,379		(285)
Net cash provided by operating activities		1,299		2,291		725
Investing Activities
Proceeds from sales of securities available for sale		—		—		68
Proceeds from maturities of securities available for sale		856		1,351		2,771
Purchases of securities available for sale		(261)		(2,767)		(3,736)
Purchases of securities held to maturity		—		(712)		(720)
Proceeds from prepayments of securities held to maturity		53		55		17
Proceeds from sales of premises and equipment		1		18		42
Purchases of premises and equipment		(37)		(28)		(53)
Proceeds from BOLI		14		22		22
Net (increase) decrease in loans and leases		(3,303)		(3,204)		3,525
Net (increase) decrease in interest-bearing deposits with banks		56		13,523		(6,556)
Cash received for divestitures		11		—		—
Other investing activities, net		5		75		19
Net cash provided by (used in) investing activities		(2,605)		8,333		(4,601)
Financing Activities
Common stock:
Stock options exercised		5		36		28
Cash dividends paid		(335)		(324)		(333)
Repurchase of shares		(10)		(12)		(416)
Preferred stock issuance		—		494		145
Call of preferred stock		—		—		(100)
Cash dividends paid - preferred stock - noncontrolling interest		(17)		(11)		(11)
Cash dividends paid - preferred stock		(32)		(32)		(33)
Net increase (decrease) in deposits		2,289		(11,406)		4,919

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	CONSOLIDATED STATEMENTS OF CASH FLOWS

   

	113	2023 FORM 10-K ANNUAL REPORT

Net increase (decrease) in short-term borrowings		43		382		(75)
Increases (decreases) in term borrowings		(449)		4		(108)
Net cash provided by (used in) financing activities		1,494		(10,869)		4,016
Net increase (decrease) in cash and cash equivalents		188		(245)		140
Cash and cash equivalents at beginning of period		1,543		1,788		1,648
Cash and cash equivalents at end of period		$1,731		$1,543		$1,788
Supplemental Disclosures
Total interest paid		$1,428		$280		$170
Total taxes paid		123		20		258
Total taxes refunded		19		7		30
Transfer from loans to OREO		4		3		4
Transfer from loans HFS to trading securities		1,212		1,893		2,232
Transfer from loans to loans HFS		7		—		31
Preferred stock conversion to common stock		493		—		—

See accompanying notes to consolidated financial statements.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	CONSOLIDATED STATEMENTS OF CASH FLOWS

   

	114	2023 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.

TD Transaction

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”), and certain TD

subsidiaries. On May 4, 2023, FHN and TD mutually

terminated the TD Merger Agreement. Under the terms of

the termination agreement, TD made a $200 million cash

payment to FHN, in addition to the $25 million fee

reimbursement due to FHN pursuant to the TD Merger

Agreement.

Merger and integration planning expenses related to the

transactions associated with the TD Merger Agreement

("TD Transaction") are recorded in FHN’s Corporate

segment. Expenses recognized during the years ended

December 31, 2023 and 2022 were $51 million and

$87 million, respectively.

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.

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.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 1—SIGNIFICANT ACCOUNTING POLICIES

   

	115	2023 FORM 10-K ANNUAL REPORT

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, 2023 and 2022, accounts receivable

related to products and services on non-interest income

were $13 million and $12 million, respectively. For the

year ended December 31, 2023, 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, 2023.

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, 2023, 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.

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. 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

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 1—SIGNIFICANT ACCOUNTING POLICIES

   

	116	2023 FORM 10-K ANNUAL REPORT

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 Investments

Equity investments 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 2023.

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

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 government 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.

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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.

• Residential real estate loans discharged through

Chapter 7 bankruptcy and not reaffirmed by the

borrower (“discharged bankruptcies”) are placed on

nonaccrual. They are not 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.

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.

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, 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

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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 loan modifications, 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

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 appropriate 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)

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	119	2023 FORM 10-K ANNUAL REPORT

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, prior

to January 1, 2023, losses were estimated over the

estimated remaining life of reasonably expected TDRs

which could 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

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. Prior

to January 1, 2023, expected credit losses for TDRs were

measured in accordance with ASC 310-40, which generally

required a discounted cash flow methodology, whereby

the loans were measured based on the present value of

expected future payments discounted at the loan’s

original effective interest rate. Subsequent to December

31, 2022, in accordance with the provisions of ASU

2022-02, FHN has ceased recognition of TDRs and no

longer performs discounted cash flow calculations for

these loans to estimate expected credit losses. FHN now

monitors and discloses information associated with

modifications to borrowers experiencing financial

difficulty. For both commercial and consumer portfolio

segments, an adjustment to the ACL is generally not

recorded at the time of modification because FHN

includes these modified loans in its quantitative loss

estimation processes. In the event of principal forgiveness,

which primarily occurs for commercial loan workouts and

consumer loans experiencing bankruptcy, FHN records the

reduction in expected collectible principal balance as a

charge-off against the ALLL.

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

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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.

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

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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

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 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.

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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 leases

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

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 Sheets.

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.

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	123	2023 FORM 10-K ANNUAL REPORT

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.

Cash settled awards with payouts partially or fully based

on changes in share price are accounted for as liability

awards and are remeasured based on changes in their fair

value, until the end of the performance period.

Compensation cost for each reporting period is based on

the change in the fair value of the award within each

reporting period adjusted for the portion of required

service that occurred during the 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. Costs related to equity issuances are recorded

as a reduction of the proceeds from the related issuance.

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

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
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	124	2023 FORM 10-K ANNUAL REPORT

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 were 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 identified contracts affected by reference rate

reform, developed modification plans for those contracts

and implemented those modifications before the last

quotation of LIBOR on June 30, 2023. FHN elected to

utilize the optional expedients and exceptions provided by

ASU 2020-04 for contract modifications that immediately

converted the reference rate within each contract. FHN

also elected that revisions to contractual fallback

provisions, including modifications in accordance with the

provisions of Regulation ZZ, did not require evaluation for

modification accounting. Additionally, FHN elected that

the revisions to derivative contracts implemented by

central clearinghouses to convert centrally cleared

derivative contracts from LIBOR to SOFR plus an

appropriate spread adjustment were not considered

changes requiring assessment for modification accounting.

During the transition period, for cash flow hedges that

reference 1-Month USD LIBOR, FHN applied expedients

related to 1) the assumption of probability of cash flows

when reference rates are changed on hedged items 2)

avoiding dedesignation when critical terms (i.e., reference

rates) change and 3) the allowed assumption of shared

risk exposure for hedged items. Additionally, for its cash

flow hedges that reference 1-Month Term SOFR, FHN

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 continued to utilize these expedients and exceptions

through the final cash flows affected by the quotation of

LIBOR.

In accordance with the provisions of ASU 2020-04,

effective immediately after the end of the transition

period for its cash flow hedges (i.e., no more cash flows

were affected by LIBOR), FHN elected that the cessation of

effectiveness assessments under the transition guidance

and subsequent initiation of hedge effectiveness

assessments under ASC 815 did not require dedesignation

of the hedge relationships.

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 the

Secured 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.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
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	125	2023 FORM 10-K ANNUAL REPORT

Summary of Accounting Changes

ASU 2022-01

In March 2022, the FASB issued ASU 2022-01, "Fair Value

Hedging — Portfolio Layer Method", which expanded

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 was effective

for fiscal years beginning after December 15, 2022,

including interim periods within those fiscal years. FHN

may utilize the provisions of ASU 2022-01 in 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 introduce 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 was effective for fiscal years beginning after

December 15, 2022, including interim periods within those

fiscal years. For the transition method related to the

recognition and measurement of TDRs, FHN elected to

apply the modified retrospective transition effective

January 1, 2023, resulting in a cumulative-effect reduction

in ALLL of $6 million and an increase to retained earnings

of $4 million, net of tax. The disclosure provisions of ASU

2022-02 were applied prospectively and presented in Note

3 – Loans and Leases and Note 4 – Allowance for Credit

Losses.

Accounting Changes Issued But Not Currently Effective

ASU 2023-02

In March 2023, the FASB issued ASU 2023-02, “Accounting

for Investments in Tax Credit Structures Using the

Proportional Amortization Method” which permits

investors to elect to account for their tax equity

investments, regardless of the tax credit program from

which the income tax credits are received, using the

proportional amortization method if certain conditions are

met. The proportional amortization method results in the

cost of the investment being amortized in proportion to

the income tax credits and other income tax benefits

received, with the amortization of the investment and the

income tax credits being presented net in the income

statement as a component of income tax provision

(benefit). Prior to ASU 2023-02, the proportional

amortization method was only available to qualifying low

income housing equity investments. An investor is

required to make an accounting policy election to apply

the proportional amortization method on a tax-credit-

program-by-tax-credit-program basis. An investor that

applies the proportional amortization method to

qualifying tax equity investments must account for the

receipt of the investment tax credits using the flow-

through method, even if the entity applies the deferral

method for other investment tax credits received. ASU

2023-02 also requires specific disclosures that must be

applied to all investments that generate income tax

credits and other income tax benefits from a tax credit

program for which the entity has elected to apply the

proportional amortization method.

ASU 2023-02 is effective for fiscal years beginning after

December 15, 2023, including interim periods within those

fiscal years. Early adoption is permitted for all entities in

any interim period. If ASU 2023-02 is adopted in an

interim period, it must be adopted as of the beginning of

the fiscal year that includes that interim period. Adoption

of ASU 2023-02 is applied on either a modified

retrospective (cumulative catch up) or a retrospective

(restatement of prior years) basis. FHN has assessed the

applicability of ASU 2023-02 to its tax credit program

equity investments and determined that it will make the

proportional method election for New Markets Tax Credit

and Historic Tax Credit programs. The use of the

proportional amortization method will continue for Low-

Income Housing Tax Credits. Upon adoption of ASU

2023-02 FHN will recognize a cumulative effect

adjustment to increase retained earnings for $8 million,

net of tax, on January 1, 2024.

ASU 2023-07

In November 2023, the FASB issued ASU 2023-07,

"Improvements to Reportable Segment Disclosures" that

requires public entities to provide disclosures of significant

segment expenses and other segment items on an annual

and interim basis and to provide in interim periods all

disclosures about a reportable segment's profit or loss and

assets that are currently required annually. The ASU

requires a public entity to disclose, for each reportable

segment, the significant expense categories and amounts

that are regularly provided to the chief operating decision-

maker (CODM) and included in each reported measure of

a segment's profit or loss. ASU 2023-07 also requires

disclosure of the title and position of the CODM and an

explanation of how the CODM uses the reported

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	126	2023 FORM 10-K ANNUAL REPORT

measure(s) of segment profit or loss in assessing segment

performance and deciding how to allocate resources.

ASU 2023-07 is effective for fiscal years beginning after

December 15, 2023 and for interim periods beginning

after December 15, 2024. Early adoption is permitted. The

guidance is applied retrospectively to all periods

presented in the financial statements, unless it is

impracticable. FHN is currently assessing the effects of

ASU 2023-07 on its reportable segment disclosures.

ASU 2023-09

In December 2023, the FASB issued ASU 2023-09,

"Improvements to Income Tax Disclosures" to enhance

transparency and decision usefulness of income tax

disclosures. The provisions of this ASU require

disaggregated information about a reporting entity's

effective tax rate reconciliation in both percentages and

reporting currency amounts. Certain categories of

reconciling items are required by the ASU with additional

categories required if a specified quantitative threshold is

met. Reporting entities are also required to provide a

qualitative discussion of the primary state and local

jurisdictions for income taxes and the type of reconciling

categories. ASU 2023-09 also requires disaggregation of

income taxes paid by jurisdiction.

For public business entities, ASU 2023-09 is effective for

annual periods beginning after December 31, 2024. The

guidance will be applied on a prospective basis with the

option to apply the standard retrospectively. Early

adoption is permitted. FHN is currently assessing the

impact of adopting ASU 2023-09 on its income tax

disclosures.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
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	127	2023 FORM 10-K ANNUAL REPORT

Note 2—Investment Securities

The following table summarizes FHN’s investment securities as of December 31, 2023 and 2022:

Table 8.2.1

INVESTMENT SECURITIES

		December 31, 2023
(Dollars in millions)		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities available for sale:
Government agency issued MBS		$5,061		$2		$(579)		$4,484
Government agency issued CMO		2,487		—		(341)		2,146
Other U.S. government agencies		1,321		2		(151)		1,172
States and municipalities		627		3		(41)		589
Total securities available for sale (a)		$9,496		$7		$(1,112)		$8,391
Securities held to maturity:
Government agency issued MBS		$852		$—		$(96)		$756
Government agency issued CMO		471		—		(66)		405
Total securities held to maturity		$1,323		$—		$(162)		$1,161

(a) Includes $8.9 billion of securities pledged to secure public deposits, securities sold under agreements to repurchase, and for other purposes.

		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.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
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	128	2023 FORM 10-K ANNUAL REPORT

The amortized cost and fair value by contractual maturity for the debt securities portfolio as of December 31, 2023 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		$—		$—		$36		$36
After 1 year through 5 years		—		—		99		95
After 5 years through 10 years		—		—		397		364
After 10 years		—		—		1,416		1,266
Subtotal		—		—		1,948		1,761
Government agency issued MBS and CMO (a)		1,323		1,161		7,548		6,630
Total		$1,323		$1,161		$9,496		$8,391

(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.

There were no sales of AFS securities for the years ended

December 31, 2023 and 2022. Cash proceeds from the

sales of AFS securities were $68 million for 2021. Gross

gains and losses on the sales of AFS securities were

insignificant for the year ended December 31, 2021.

The following tables provide information on investments

within the available-for-sale portfolio that had unrealized

losses as of December 31, 2023 and 2022:

Table 8.2.3

AFS INVESTMENT SECURITIES WITH UNREALIZED LOSSES  

		As of December 31, 2023
		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		$140		$(2)		$4,231		$(577)		$4,371		$(579)
Government agency issued CMO		32		—		2,098		(341)		2,130		(341)
Other U.S. government agencies		114		(2)		905		(149)		1,019		(151)
States and municipalities		14		—		465		(41)		479		(41)
Total		$300		$(4)		$7,699		$(1,108)		$7,999		$(1,112)

		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)

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 as of both

December 31, 2023 and 2022. 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 securities

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	129	2023 FORM 10-K ANNUAL REPORT

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. There were no transfers to

or from AFS or HTM securities during the years ended

December 31, 2023, 2022, or 2021.

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 as of both

December 31, 2023 and 2022. 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, 2023 and 2022. 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 $89 million and $79

million at December 31, 2023 and 2022, respectively. The

year-to-date gross amounts of upward and downward

valuation adjustments included a $6 million loss for 2023

and were insignificant for 2022.

Unrealized gains of $11 million, unrealized losses of

$11 million and unrealized gains of $3 million were

recognized during 2023, 2022, and 2021, respectively, for

equity investments with readily determinable fair values.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
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	130	2023 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, 2023 and 2022, excluding accrued interest

of $287 million and $226 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)		2023		2022
Commercial:
Commercial and industrial (a) (b)		$30,614		$29,523
Loans to mortgage companies		2,019		2,258
Total commercial, financial, and industrial		32,633		31,781
Commercial real estate		14,216		13,228
Consumer:
HELOC		2,219		2,028
Real estate installment loans		11,431		10,225
Total consumer real estate		13,650		12,253
Credit card and other (c)		793		840
Loans and leases		$61,292		$58,102
Allowance for loan and lease losses		(773)		(685)
Net loans and leases		$60,519		$57,417

(a) Includes equipment financing leases of $1.2 billion and $1.1 billion as of December 31, 2023 and 2022, respectively.

(b) Includes PPP loans fully guaranteed by the SBA of $29 million and $76 million as of December 31, 2023 and 2022, respectively.

(c) Includes $180 million and $193 million of commercial credit card balances as of December 31, 2023 and 2022, respectively.

Restrictions

Loans and leases with carrying values of $46.1 billion and

$38.3 billion were pledged as collateral for borrowings at

December 31, 2023 and 2022, 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, 2023, FHN had loans to mortgage

companies of $2.0 billion and loans to finance and

insurance companies of $4.1 billion. As a result, 18% 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

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
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	131	2023 FORM 10-K ANNUAL REPORT

in deterioration of FHN's credit position at some future

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, 2023 and 2022:

Table 8.3.2

C&I PORTFOLIO

		December 31, 2023
(Dollars in millions)		2023		2022		2021		2020		2019		Prior to 2019		LMC (a)		Revolving Loans		Revolving Loans Converted to Term Loans		Total
Credit Quality Indicator:
Pass (PD grades 1 through 12) (b)		$4,009		$5,638		$3,507		$1,636		$1,666		$3,449		$2,014		$9,087		$327		$31,333
Special Mention (PD grade 13)		75		60		64		56		101		57		—		186		—		599
Substandard, Doubtful, or Loss (PD grades 14,15, and 16)		41		135		94		51		39		100		5		187		49		701
Total C&I loans		$4,125		$5,833		$3,665		$1,743		$1,806		$3,606		$2,019		$9,460		$376		$32,633

		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)		$7,456		$3,634		$1,803		$1,912		$1,112		$3,170		$2,258		$9,166		$371		$30,882
Special Mention (PD grade 13)		17		56		17		125		8		80		—		126		—		429
Substandard, Doubtful, or Loss (PD grades 14,15, and 16)		36		48		41		34		25		55		—		134		97		470
Total C&I loans		$7,509		$3,738		$1,861		$2,071		$1,145		$3,305		$2,258		$9,426		$468		$31,781

(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, 2023
(Dollars in millions)		2023		2022		2021		2020		2019		Prior to 2019		Revolving Loans		Revolving Loans Converted to Term Loans		Total
Credit Quality Indicator:
Pass (PD grades 1 through 12)		$853		$3,473		$3,518		$1,162		$1,216		$2,853		$393		$18		$13,486
Special Mention (PD grade 13)		5		1		129		86		175		82		—		—		478
Substandard, Doubtful, or Loss (PD grades 14,15, and 16)		—		2		5		11		175		59		—		—		252
Total CRE loans		$858		$3,476		$3,652		$1,259		$1,566		$2,994		$393		$18		$14,216

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 3—LOANS & LEASES

   

	132	2023 FORM 10-K ANNUAL REPORT

		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

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, 2023 and

2022. 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, 2023
(Dollars in millions)		2023		2022		2021		2020		2019		Prior to 2019		Revolving  Loans		Revolving Loans Converted to Term Loans		Total
FICO score 740 or greater		$1,572		$2,099		$1,720		$730		$465		$1,332		$1,522		$50		$9,490
FICO score 720-739		205		286		227		107		88		230		192		15		1,350
FICO score 700-719		154		232		193		81		52		224		159		17		1,112
FICO score 660-699		170		198		113		83		53		290		168		18		1,093
FICO score 620-659		11		20		23		22		36		106		36		7		261
FICO score less than 620		18		19		15		20		12		225		24		11		344
Total		$2,130		$2,854		$2,291		$1,043		$706		$2,407		$2,101		$118		$13,650

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
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	133	2023 FORM 10-K ANNUAL REPORT

		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

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, 2023 and 2022.

Table 8.3.5

CREDIT CARD & OTHER PORTFOLIO

		December 31, 2023
(Dollars in millions)		2023		2022		2021		2020		2019		Prior to 2019		Revolving  Loans		Revolving Loans Converted to Term Loans		Total
FICO score 740 or greater		$52		$26		$10		$5		$3		$27		$207		$5		$335
FICO score 720-739		5		3		1		1		1		5		24		1		41
FICO score 700-719		5		4		1		1		1		4		25		1		42
FICO score 660-699		4		3		1		1		1		8		23		—		41
FICO score 620-659		2		1		1		—		—		3		7		—		14
FICO score less than 620		12		9		6		8		13		103		168		1		320
Total		$80		$46		$20		$16		$19		$150		$454		$8		$793

		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

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 3—LOANS & LEASES

   

	134	2023 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.

The following table reflects accruing and non-accruing

loans and leases by class on December 31, 2023 and 2022:

Table 8.3.6

ACCRUING & NON-ACCRUING LOANS & LEASES

		December 31, 2023
		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)		$30,403		$31		$1		$30,435		$108		$18		$53		$179		$30,614
Loans to mortgage companies		2,013		1		—		2,014		5		—		—		5		2,019
Total commercial, financial, and industrial		32,416		32		1		32,449		113		18		53		184		32,633
Commercial real estate:
CRE (b)		14,072		8		—		14,080		41		—		95		136		14,216
Consumer real estate:
HELOC (c)		2,158		11		4		2,173		30		6		10		46		2,219
Real estate installment loans (d)		11,295		29		13		11,337		43		6		45		94		11,431
Total consumer real estate		13,453		40		17		13,510		73		12		55		140		13,650
Credit card and other:
Credit card		271		3		3		277		—		—		—		—		277
Other		512		2		—		514		1		—		1		2		516
Total credit card and other		783		5		3		791		1		—		1		2		793
Total loans and leases		$60,724		$85		$21		$60,830		$228		$30		$204		$462		$61,292

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 3—LOANS & LEASES

   

	135	2023 FORM 10-K ANNUAL REPORT

		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

(a)$178 million and $147 million of C&I loans are nonaccrual loans that have been specifically reviewed for impairment with no related allowance in 2023

and 2022, respectively.

(b)$129 million and $5 million of CRE loans are nonaccrual loans that have been specifically reviewed for impairment with no related allowance for 2023 and

2022, respectively.

(c)$4 million and $5 million of HELOC loans are nonaccrual loans that have been specifically reviewed for impairment with no related allowance for 2023

and 2022, respectively.

(d)$10 million and $7 million of real estate installment loans are nonaccrual loans that have been specifically reviewed for impairment with no related

allowance for 2023 and 2022, 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, 2023 and 2022, FHN had commercial

loans with amortized cost of approximately $250 million

and $124 million, respectively, that were based on the

value of underlying collateral. Collateral-dependent C&I

and CRE loans totaled $117 million and $133 million,

respectively, at December 31, 2023. The collateral for

these loans generally consists of business assets including

land, buildings, equipment and financial assets. During the

years ended December 31, 2023 and 2022, FHN

recognized total charge-offs of approximately $144 million

and $10 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 $6 million and

$27 million, respectively, as of December 31, 2023, and

$7 million and $26 million, respectively, as of

December 31, 2022. Charge-offs were $1 million for

collateral-dependent consumer loans during the year

ended December 31, 2023, and $2 million during the year

ended December 31, 2022.

Loan Modifications to Troubled Borrowers

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. Modifications could include

extension of the maturity date, reductions of the interest

rate, reduction or forgiveness of accrued interest, or

principal forgiveness. Combinations of these modifications

may also be made for individual loans. Extensions and

modifications to loans are made in accordance with

internal policies and guidelines which conform to

regulatory guidance. Principal reductions may be made in

limited circumstances, typically for specific commercial

loan workouts, and in the event of borrower bankruptcy.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 3—LOANS & LEASES

   

	136	2023 FORM 10-K ANNUAL REPORT

Each occurrence is unique to the borrower and is

evaluated separately.

Troubled loans are considered those in which the

borrower is experiencing financial difficulty. The

assessment of whether a borrower is experiencing

financial difficulty can be subjective in nature and

management’s judgment may be required in making this

determination. 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 absent a

modification. Many aspects of a borrower’s financial

situation are assessed when determining whether they

are experiencing financial difficulty.

Troubled commercial loans are typically modified through

forbearance agreements which could include reduced

interest rates, reduced payments, term extension, or

entering into short sale agreements. Principal reductions

may occur in specific circumstances.

Modifications for troubled consumer loans are generally

structured using parameters of U.S. government-

sponsored programs. For HELOC and real estate

installment loans, troubled loans 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 by FHN,

the discharge of personal liability through bankruptcy

proceedings is considered a court-imposed modification.

For the credit card portfolio, troubled loan modifications

are typically enacted 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.

Modifications to Borrowers Experiencing Financial

Difficulty

For periods subsequent to December 31, 2022,

information regarding loans modified when a borrower is

experiencing financial difficulty are included in the tables

below.

The following tables present the amortized cost basis at

the end of the reporting period of loans modified to

borrowers experiencing financial difficulty, disaggregated

by class of financing receivable and type of modification

made, as well as the financial effect of the modifications

made as of December 31, 2023:

Table 8.3.7

LOAN MODIFICATIONS TO BORROWERS EXPERIENCING FINANCIAL DIFFICULTY

		December 31, 2023
		Interest Rate Reduction
(Dollars in millions)		Balance		% of Total Class		Financial Effect
Consumer real estate		$2		—%		Reduced weighted-average contractual interest rate from 8.60% to 5.00%
Credit card and other (a)		—		—		Reduced weighted-average contractual interest rate from 11.20% to 0.00%
Total		$2		—%

		December 31, 2023
		Term Extension
(Dollars in millions)		Balance		% of Total Class		Financial Effect
C&I		$90		0.3%		Added a weighted-average 1 year to the life of loans, which reduced monthly payment amounts for the borrowers
CRE		40		0.3		Added a weighted-average 0.8 year to the life of loans, which reduced monthly payment amounts for the borrowers
Consumer real estate		2		—		Added a weighted-average 12 years to the life of loans, which reduced monthly payment amounts for the borrowers
Total		$132		0.2%

		December 31, 2023
		Principal Forgiveness
(Dollars in millions)		Balance		% of Total Class		Financial Effect
Consumer real estate		$2		—%		$1.3 million of the principal of consumer loans was legally discharged in bankruptcy during the period and the borrowers have not re- affirmed the debt as of period end
Total		$2		—%

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 3—LOANS & LEASES

   

	137	2023 FORM 10-K ANNUAL REPORT

		December 31, 2023
		Payment Deferrals
(Dollars in millions)		Balance		% of Total Class		Financial Effect
Consumer real estate		$3		—%		Payment deferral for 11 months, with a balloon payment at the end of the term
Total		$3		—%

		December 31, 2023
		Combination - Term Extension and Interest Rate Reduction
(Dollars in millions)		Balance		% of Total Class		Financial Effect
C&I (a)		$—		—%		Added a weighted-average 1.2 years to the life of loans and reduced weighted-average contractual interest rate from 13.00% to 11.50%
Consumer real estate		6		—		Added a weighted-average 14.3 years to the life of loans and reduced weighted-average contractual interest rate from 5.00% to 4.70%
Total		$6		—%

		December 31, 2023
		Combination - Term Extension, Interest Rate Reduction, and Interest Forgiveness
(Dollars in millions)		Balance		% of Total Class		Financial Effect
C&I		$2		—%		Added a weighted-average 3.7 years to the life of loans, reduced weighted-average contractual interest rate from  11.25% to 7.50% and provided less than $1 million in interest forgiveness
Total		$2		—%

		December 31, 2023
		Combination - Term Extension, Interest Rate Reduction, and Interest Deferrals
(Dollars in millions)		Balance		% of Total Class		Financial Effect
CRE		$15		0.1%		Added a weighted-average 1 year to the life of loans, reduced weighted-average contractual interest rate from 8.65% to 8.00% and provided less than $1 million in deferred interest
Total		$15		—%

        (a) Balance less than $1 million.

The balance of loan modifications to borrowers

experiencing financial difficulty that had a payment

default during the period totaled $28 million as of

December 31, 2023. FHN closely monitors the

performance of the loans that are modified to borrowers

experiencing financial difficulty to understand the

effectiveness of its modification efforts.

The following table depicts the performance of loans that have been modified in the last 12 months:

Table 8.3.8

PERFORMANCE OF LOANS THAT HAVE BEEN MODIFIED IN THE LAST 12 MONTHS
		December 31, 2023
(Dollars in millions)		Current		30-89 Days Past Due		90+ Days Past Due		Non-Accruing
C&I		$70		$—		$—		$22
CRE		8		—		—		47
Consumer real estate		4		—		—		11
Credit card and other		—		—		—		—
Total		$82		$—		$—		$80

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 3—LOANS & LEASES

   

	138	2023 FORM 10-K ANNUAL REPORT

Troubled Debt Restructurings

Prior to January 1, 2023, a modification was classified as a

TDR if the borrower was experiencing financial difficulty

and it was determined that FHN granted a concession to

the borrower. Concessions represented modifications that

FHN would not otherwise consider if a borrower had not

been experiencing financial difficulty. Evaluation of

whether a concession was granted, was subjective in

nature and management’s judgment was required in

making the determination of whether a modification was

classified as a TDR. All non-reaffirmed residential real

estate loans discharged in Chapter 7 bankruptcy were

considered concessions and classified as nonaccruing

TDRs.

On December 31, 2022, FHN had $180 million of portfolio

loans classified as TDRs. Additionally, $30 million of loans

held for sale as of December 31, 2022 were classified as

TDRs.

The following table presents the end of period balance for loans modified in a TDR during the year ended December 31, 2022:

Table 8.3.9

LOANS MODIFIED IN A TDR

			Year Ended December 31, 2022
(Dollars in millions)			Number		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
C&I			6		$30		$24
CRE			1		1		1
HELOC			98		7		7
Real estate installment loans			181		41		41
Credit card and other			81		12		12
Total TDRs			367		$91		$85

The following table presents TDRs which re-defaulted during 2022, 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 8.3.10

LOANS MODIFIED IN A TDR THAT RE-DEFAULTED

			Year Ended December 31, 2022
(Dollars in millions)			Number		Recorded Investment
C&I			5		$—
CRE			—		—
HELOC			22		1
Real estate installment loans			54		15
Credit card and other			17		—
Total TDRs			98		$16

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 3—LOANS & LEASES

   

	139	2023 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 at 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 years ended

December 31, 2023, 2022, and 2021 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 increase in the ACL balance as of December 31, 2023

as compared to December 31, 2022 largely reflects loan

growth during the period, an evolving macroeconomic

outlook, and modest grade migration. In developing credit

loss estimates for its loan and lease portfolios, FHN

utilized a baseline and a downside forecast scenario from

Moody’s for its macroeconomic inputs. As of

December 31, 2023, among other things, FHN's scenario

selection process factored in the outlook for production,

inflation, interest rates, employment, real estate prices,

and international conflict. FHN selected one scenario as its

base case, which was the Moody's baseline scenario. The

heaviest weight was placed on this scenario. A smaller

weight was placed on the FHN-selected downside

scenario.

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, 2023, 2022 and 2021:

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 4—ALLOWANCE FOR CREDIT LOSSES

   

	140	2023 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, 2023		$308		$146		$200		$31		$685
Adoption of ASU 2022-02 (b)		1		—		(7)		—		(6)
Charge-offs (c)		(156)		(17)		(4)		(22)		(199)
Recoveries		14		2		9		4		29
Provision for loan and lease losses		172		41		35		16		264
Balance as of December 31, 2023		339		172		233		29		773
Reserve for remaining unfunded commitments:
Balance as of January 1, 2023		55		22		10		—		87
Provision for unfunded lending commitments		(6)		—		2		—		(4)
Balance as of December 31, 2023		49		22		12		—		83
Allowance for credit losses as of December 31, 2023		$388		$194		$245		$29		$856
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

(a)C&I loans as of December 31, 2023, 2022, and 2021 include $29 million, $76 million, and $1.0 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)See Note 1 for additional information.

(c)Charge-offs in the C&I portfolio in 2023 include $72 million from a single credit from a company in bankruptcy.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 4—ALLOWANCE FOR CREDIT LOSSES

   

	141	2023 FORM 10-K ANNUAL REPORT

The following table represents gross charge-offs by year of origination for the year ended December 31, 2023:

Table 8.4.2

GROSS CHARGE-OFFS
(Dollars in millions)		2023		2022		2021		2020		2019		Prior to 2019		Revolving Loans		Total
C&I		$1		$17		$82		$5		$10		$34		$7		$156
CRE		—		—		—		—		2		15		—		17
Consumer real estate		—		1		—		—		—		3		—		4
Credit card and other		12		1		—		—		—		2		7		22
Total		$13		$19		$82		$5		$12		$54		$14		$199

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 4—ALLOWANCE FOR CREDIT LOSSES

   

	142	2023 FORM 10-K ANNUAL REPORT

Note 5—Premises, Equipment, and Leases

Premises and equipment was comprised of the following

at December 31, 2023 and 2022:

Table 8.5.1

PREMISES & EQUIPMENT

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

(a) Primarily comprised of land and buildings .

Both fixed asset and leased asset impairments were

immaterial for 2023 and 2022. In 2021, FHN recognized

$34 million of fixed asset impairments and $3 million of

leased asset impairments which is included in other

expense on the Consolidated Statements of Income.

Net gains related to the sales of bank branches were

immaterial for 2023 and 2022. In 2021, FHN had $6 million

of net gains related to the sales of bank branches which is

included in other income on the Consolidated Statements

of Income.

First Horizon as Lessee

FHN has operating, financing, and short-term leases for

branch locations, corporate offices and certain equipment.

Substantially all of these leases are classified as operating

leases.

The following table provides details of the classification of

FHN's right-of-use assets and lease liabilities included in

the Consolidated Balance Sheets.

Table 8.5.2

RIGHT-OF-USE ASSETS & LEASE LIABILITIES

(Dollars in millions)		December 31, 2023		December 31, 2022
Lease right-of-use assets:	Classification
Operating lease right-of-use assets	Other assets	$306		$331
Finance lease right-of-use assets	Other assets	3		3
Total lease right-of-use assets		$309		$334
Lease liabilities:
Operating lease liabilities	Other liabilities	$342		$367
Finance lease liabilities	Other liabilities	3		4
Total lease liabilities		$345		$371

The calculated amount of the ROU assets and lease

liabilities in the table above are impacted by the length of

the lease term and the discount rate used to present value

the minimum lease payments. The following table details

the weighted average remaining lease term and discount

rate for FHN's operating and finance leases as of

December 31, 2023 and 2022.

Table 8.5.3

REMAINING LEASE TERMS

& DISCOUNT RATES

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

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 5—PREMISES, EQUIPMENT, & LEASES

   

	143	2023 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, 2023, 2022, and 2021:

Table 8.5.4

LEASE EXPENSE &

OTHER INFORMATION

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

The following table provides a detail of the maturities of

FHN's operating and finance lease liabilities as of

December 31, 2023:

Table 8.5.5

LEASE LIABILITY MATURITIES

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

FHN had no aggregate undiscounted contractual

obligations for lease arrangements that have not

commenced as of December 31, 2023.

First Horizon as Lessor

As a lessor, FHN engages in the leasing of equipment to

commercial clients primarily through direct financing and

sales-type leases. Direct financing and sales-type leases

are similar to other forms of installment lending in that

lessors generally do not retain benefits and risks incidental

to ownership of the property subject to leases. Such

arrangements are essentially financing transactions that

permit lessees to acquire and use property. As lessor, the

sum of all minimum lease payments over the lease term

and the estimated residual value, less unearned interest

income, is recorded as the net investment in the lease on

the commencement date and is included in loans and

leases in the Consolidated Balance Sheets. Interest income

is accrued as earned over the term of the lease based on

the net investment in leases. Fees incurred to originate

the lease are deferred on the commencement date and

recognized as an adjustment of the yield on the lease.

FHN’s portfolio of direct financing and sales-type leases

contains terms of 2 to 23 years, some of which contain

options to extend the lease for various periods of time

and/or to purchase the equipment subject to the lease at

various points in time. These direct financing and sales-

type leases typically include a payment structure set at

lease inception and do not provide any additional services.

Expenses associated with the leased equipment, such as

maintenance and insurance, are paid by the lessee directly

to third parties. The lease agreement typically contains an

option for the purchase of the leased property by the

lessee at the end of the lease term at either the property’s

residual value or a specified price. In all cases, FHN

expects to sell or re-lease the equipment at the end of the

lease term. Due to the nature and structure of FHN’s

direct financing and sales-type leases, there is no selling

profit or loss on these transactions.

The components of the Company’s net investment in

leases as of December 31, 2023 and 2022 were as follows:

Table 8.5.6

LEASE NET INVESTMENTS

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

Interest income for direct financing or sales-type leases

totaled $50 million, $34 million, and $26 million for the

years ended December 31, 2023, 2022, and 2021,

respectively.  There was no profit or loss recognized at the

commencement date for direct financing or sales-type

leases for the years ended December 31, 2023, 2022, and

2021.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 5—PREMISES, EQUIPMENT, & LEASES

   

	144	2023 FORM 10-K ANNUAL REPORT

Maturities of the Company's lease receivables as of

December 31, 2023 were as follows:

Table 8.5.7

LEASE RECEIVABLE MATURITIES

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

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 5—PREMISES, EQUIPMENT, & LEASES

   

	145	2023 FORM 10-K ANNUAL REPORT

Note 6—Goodwill and Other Intangible Assets

Goodwill

FHN performed the required annual goodwill impairment

test as of October 1, 2023. The annual qualitative

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 it is not more likely than not

that goodwill was impaired. If there are any triggering

events between annual periods, management will

evaluate whether an impairment analysis is warranted.

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, 2023:

Table 8.6.1

GOODWILL

(Dollars in millions)		Regional Banking		Specialty Banking		Total
December 31, 2020		$880		$631		$1,511
Additions		—		—		—
December 31, 2021		$880		$631		$1,511
Additions		—		—		—
December 31, 2022		$880		$631		$1,511
Additions		—		—		—
Divestitures (a)		—		(1)		(1)
December 31, 2023		$880		$630		$1,510

(a) Reduction in goodwill is related to the divestiture of FHN

Financial Main Street Advisors assets in December 2023.

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, 2023						December 31, 2022
(Dollars in millions)		Gross Carrying Amount		Accumulated Amortization		Net Carrying Value		Gross Carrying Amount		Accumulated Amortization		Net Carrying Value
Core deposit intangibles		$368		$(208)		$160		$371		$(171)		$200
Client relationships		32		(16)		16		32		(13)		19
Other (a)		27		(17)		10		27		(12)		15
Total		$427		$(241)		$186		$430		$(196)		$234

(a) Includes non-compete covenants and purchased credit card intangible assets. Also includes state banking licenses which are not subject to amortization.

Amortization expense was $47 million, $51 million, and

$56 million for the years ended December 31, 2023, 2022

and 2021, respectively. The following table shows the

aggregated amortization expense estimated, as of

December 31, 2023, for the next five years:

Table 8.6.3

ESTIMATED AMORTIZATION EXPENSE

(Dollars in millions)
2024		$44
2025		38
2026		33
2027		29
2028		17

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 6—GOODWILL & OTHER INTANGIBLE ASSETS

   

	146	2023 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.

At December 31, 2023, FHN had approximately $34 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 2023, 2022, and 2021, 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, 2023, 2022, and 2021:

Table 8.7.1

MORTGAGE LOAN ACTIVITY

(Dollars in millions)		2023		2022		2021
Balance at beginning of period		$44		$250		$409
Originations and purchases		692		1,275		2,836
Sales, net of gains		(674)		(1,481)		(3,025)
Mortgage loans transferred from (to) held for investment		—		—		30
Balance at end of period		$62		$44		$250

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 periods

indicated in the table below.

Table 8.7.2

MORTGAGE SERVICING RIGHTS

	December 31, 2023
(Dollars in millions)	Gross  Carrying Amount		Accumulated Amortization		Net Carrying Amount
Mortgage servicing rights	$25		$(7)		$18
	December 31, 2022
(Dollars in millions)	Gross  Carrying Amount		Accumulated Amortization		Net Carrying Amount
Mortgage servicing rights	$21		$(5)		$16

In addition, there was an insignificant amount of non-

mortgage and commercial servicing rights as of December

31, 2023 and 2022. Total mortgage servicing fees included

in mortgage banking and title income were $4 million for

each of the years ended December 31, 2023, 2022, and

2021. 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	2023 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)		2023		2022
Savings		$25,082		$21,971
Time deposits		6,804		2,887
Other interest-bearing deposits		16,690		15,165
Total interest-bearing deposits		48,576		40,023
Noninterest-bearing deposits		17,204		23,466
Total deposits		$65,780		$63,489

Time deposits in denominations that exceed the FDIC

insurance limit of $250,000 at December 31, 2023 and

2022 were $1.8 billion and $936 million, respectively.

Scheduled maturities of time deposits as of December 31,

2023 were as follows:

Table 8.8.2

TIME DEPOSIT MATURITIES

(Dollars in millions)
2024		$6,528
2025		138
2026		56
2027		52
2028		23
2029 and after		7
Total		$6,804

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 8—DEPOSITS

   

	148	2023 FORM 10-K ANNUAL REPORT

Note 9—Short-Term Borrowings

A summary of short-term borrowings for the years 2023, 2022 and 2021 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
2023
Average balance		$301		$349		$1,426		$2,688
Year-end balance		509		302		1,921		326
Maximum month-end outstanding		509		622		1,957		7,476
Average rate for the year		4.16%		5.12%		3.66%		5.19%
Average rate at year-end		4.48%		5.40%		3.98%		5.36%
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%

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, 2023 ,

there were no fixed income trading securities pledged to

secure other short-term borrowings.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 9—SHORT-TERM BORROWINGS

   

	149	2023 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, 2023 and 2022:

Table 8.10.1

TERM BORROWINGS

(Dollars in millions)		2023		2022
First Horizon Bank:
Subordinated notes (a)
Maturity date – May 1, 2030 - 5.75%		$448		$448
Other collateralized borrowings - Maturity date – December 22, 2037
5.95% on December 31, 2023 and 5.07% on December 31, 2022 (b)		88		87
Other collateralized borrowings - SBA loans (c)		3		3
First Horizon Corporation:
Senior notes
Maturity date – May 26, 2023 - 3.55%		—		450
Maturity date – May 26, 2025 - 4.00%		349		349
Junior subordinated debentures (d)
Maturity date - June 28, 2035 - 7.33% on December 31, 2023 and 6.45% on December 31, 2022		3		3
Maturity date - December 15, 2035 - 7.02% on December 31, 2023 and 6.14% on December 31, 2022		18		18
Maturity date - March 15, 2036 - 7.05% on December 31, 2023 and 6.17% on December 31, 2022		9		9
Maturity date - March 15, 2036 - 7.19% on December 31, 2023 and 6.31% on December 31, 2022		12		12
Maturity date - June 30, 2036 - 6.91% on December 31, 2023 and 6.05% on December 31, 2022		28		27
Maturity date - July 7, 2036 - 7.21% on December 31, 2023 and 5.63% on December 31, 2022		19		18
Maturity date - June 15, 2037 - 7.30% on December 31, 2023 and 6.42% on December 31, 2022		52		52
Maturity date - September 6, 2037 - 7.05% on December 31, 2023 and 6.16% on December 31, 2022		9		9
Notes payable - New market tax credit investments; 7 to 35 year term, 0.93% to 4.95%		65		66
FT Real Estate Securities Company, Inc.:
Cumulative preferred stock (e)
Maturity date – March 31, 2031 – 9.50%		47		46
Total		$1,150		$1,597

(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 2 to 25 years. These

borrowings had a weighted average interest rate of 4.81% and 5.13% on December 31, 2023 and 2022, respectively.

(d) Acquired in conjunction with the acquisition of CBF. 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	2023 FORM 10-K ANNUAL REPORT

Annual principal repayment requirements as of

December 31, 2023 are as follows:

Table 8.10.2

ANNUAL PRINCIPAL REPAYMENT SCHEDULE

(Dollars in millions)
2024		$6
2025		350
2026		—
2027		—
2028 and after		812

In conjunction with its acquisition of CBF, 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	2023 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)													2023		2022
	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		—		—		—		494
									26,750		$538		$520		$1,014

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 CME Term SOFR plus 4.52361% (0.26161% plus 4.262%).

(c)Fixed dividend rate will reset on May 1, 2026 to three-month CME Term SOFR plus 5.18161% (0.26161% plus 4.920%).

(d)Fixed dividend rate will reset on May 1, 2024 to three-month CME Term SOFR plus 4.12061% (0.26161% 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 was convertible into up to 4.9% of the

outstanding shares of FHN common stock in certain

circumstances, including termination of the TD Merger

Agreement. Because regulatory approval of the TD

Transaction was not obtained, conversion occurred,

effective June 26, 2023, at a fixed rate of 4,000 shares of

common stock for each share of Series G Convertible

Preferred Stock, resulting in 19,742,776 additional

common shares outstanding.

The $494 million carrying value of the Series G Convertible

Preferred Stock qualified as Tier 1 Capital as of December

31, 2022 and qualified as Common Equity Tier 1 Capital

upon conversion to common stock on June 26, 2023.

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

CME Term SOFR plus 1.11161% (0.26161% 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, 2023 and 2022, $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, 2023, the Class B Preferred Shares 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.

LIBOR Change to SOFR

On March 5, 2021, the U.K.'s Financial Conduct Authority

announced that all tenors of LIBOR would cease

publication or no longer be representative after June 30,

2023. On March 15, 2022, the Adjustable Interest Rate

(LIBOR) Act was enacted in the U.S. The LIBOR Act

provides that LIBOR will transition to a replacement

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 11—PREFERRED STOCK

   

	152	2023 FORM 10-K ANNUAL REPORT

benchmark based on the Secured Overnight Financing

Rate (SOFR), plus a spread adjustment, in such covered

contracts. Subsequently, the FRB adopted Regulation ZZ

that identified CME Term SOFR, a forward term rate based

on SOFR administered by CME Group Benchmark

Administration, Ltd., plus a spread adjustment, as the

replacement rate for securities for any interest rate

calculations after June 30, 2023.

On April 25, 2023, FHN announced that each reference to

LIBOR in each applicable securities contract (which term

includes preferred stock and related depositary shares)

will transition to CME Term SOFR, plus a tenor-based

spread adjustment, on the first business day after June 30,

2023 pursuant to the LIBOR Act and the implementing

regulations. The information presented in this Note

reflects that transition.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 11—PREFERRED STOCK

   

	153	2023 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, 2023, FHN

and First Horizon Bank met all capital adequacy

requirements to which they were subject. As of

December 31, 2023, 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
December 31, 2023
Actual:
Total Capital		$9,922		13.96%		$9,303		13.17%
Tier 1 Capital		8,825		12.42		8,350		11.82
Common Equity Tier 1		8,104		11.40		8,055		11.40
Leverage		8,825		10.69		8,350		10.20
Minimum Requirement for Capital Adequacy Purposes:
Total Capital		5,686		8.00		5,651		8.00
Tier 1 Capital		4,264		6.00		4,238		6.00
Common Equity Tier 1		3,198		4.50		3,179		4.50
Leverage		3,302		4.00		3,276		4.00
Minimum Requirement to be Well Capitalized Under Prompt Corrective Action Provisions:
Total Capital						7,064		10.00
Tier 1 Capital						5,651		8.00
Common Equity Tier 1						4,591		6.50
Leverage						4,095		5.00
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

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 12—REGULATORY CAPITAL & RESTRICTIONS

   

	154	2023 FORM 10-K ANNUAL REPORT

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

Restrictions on cash and due from banks

Effective March 26, 2020, the Federal Reserve reduced its

reserve requirement to zero, and as a result, on December

31, 2023 and 2022, 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, 2023,

First Horizon Bank had undivided profits of $3.3 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 $1.2

billion at January 1, 2024. First Horizon Bank declared and

paid common dividends to the parent company in the

amount of $220 million in 2023 and $435 million in 2022.

During 2023 and 2022, 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 $951 million, on December 31,

2023. 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, 2023, the parent company had less than

$1 million in 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 $387 million and $50 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 $1.9

billion, on December 31, 2023. First Horizon Bank’s total

covered transactions with all affiliates including the parent

company on December 31, 2023 were $438 million.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 12—REGULATORY CAPITAL & RESTRICTIONS

   

	155	2023 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, 2023, 2022, and 2021:

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, 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)
Net unrealized gains (losses)		137		(5)		(11)		121
Amounts reclassified from AOCI		—		52		7		59
Other comprehensive income (loss)		137		47		(4)		180
Balance as of December 31, 2023		$(836)		$(80)		$(272)		$(1,188)

Reclassifications from AOCI, and related tax effects, were as follows:

Table 8.13.2

RECLASSIFICATIONS FROM AOCI

(Dollars in millions)
Details about AOCI		2023		2022		2021		Affected line item in the statement where net income is presented
Cash flow hedges:
Realized (gains) losses on cash flow hedges		$69		$20		$(9)		Interest and fees on loans and leases
Tax expense (benefit)		(17)		(5)		2		Income tax expense
		$52		$15		$(7)
Pension and Postretirement Plans:
Amortization of prior service cost and net actuarial (gain) loss		$9		$10		$10		Other expense
Tax expense (benefit)		(2)		(2)		(2)		Income tax expense
		7		8		8
Total reclassification from AOCI		$59		$23		$1

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 13—COMPONENTS OF OTHER COMPREHENSIVE INCOME (LOSS)

   

	156	2023 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)		2023		2022		2021
Consolidated Statements of Income:
Income tax expense		$212		$247		$274
Consolidated Statements of Changes in Equity:
Income tax expense (benefit) related to:
Net unrealized gains (losses) on pension and other postretirement plans		(1)		(5)		2
Net unrealized gains (losses) on securities available for sale		44		(302)		(46)
Net unrealized gains (losses) on cash flow hedges		15		(42)		(3)
Total		$270		$(102)		$227

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)		2023		2022		2021
Current:
Federal		$140		$123		$235
State		28		33		39
Deferred:
Federal		37		87		(1)
State		7		4		1
Total		$212		$247		$274

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 14—INCOME TAXES

   

	157	2023 FORM 10-K ANNUAL REPORT

A reconciliation of expected income tax expense (benefit) at the federal statutory rate of 21% for 2023, 2022, and 2021,

respectively, to the total income tax expense follows:

Table 8.14.3

RECONCILIATION FROM STATUTORY RATES

(Dollars in millions)		2023		2022		2021
Federal income tax rate		21%		21%		21%
Tax computed at statutory rate		$237		$243		$270
Increase (decrease) resulting from:
State income taxes, net of federal income tax benefit		34		31		32
Bank-owned life insurance		(6)		(4)		(7)
Tax-exempt interest		(12)		(10)		(10)
FDIC premium		11		7		5
Non-deductible expenses		9		4		3
LIHTC credits and benefits, net of amortization		(15)		(16)		(14)
Other tax credits		(5)		(4)		(4)
Other changes in unrecognized tax benefits		(50)		(2)		4
Termination of BOLI policies		21		—		—
Other		(12)		(2)		(5)
Total		$212		$247		$274

As of December 31, 2023, FHN had net deferred tax asset balances related to federal and state income tax carryforwards of

$32 million and $3 million, respectively, which will expire at various dates as follows:

Table 8.14.4

TAX CARRYFORWARD DTA EXPIRATION DATES

(Dollars in millions)		Expiration Dates		Net Deferred Tax Asset Balance
Losses - federal		2028 - 2035		$32
Net operating losses - states		2024 - 2033		2
Net operating losses - states		2034 - 2041		1

We believe it is more likely than not that the benefit from

certain state NOL carryforwards will not be realized. In

recognition of this risk, we have provided an immaterial

valuation allowance on the DTAs related to these state

NOL carryforwards. If our assumptions change and we

determine that we will be able to realize these NOLs, the

tax benefits related to any reversal of the valuation

allowance on DTAs will be recognized as a reduction of

income tax expense.

A DTA or DTL is recognized for the tax consequences of

temporary differences between the financial statement

carrying amounts and the tax bases of existing assets and

liabilities. The tax consequence is calculated by applying

enacted statutory tax rates, applicable to future years, to

these temporary differences. In order to support the

recognition of the DTA, FHN’s management must believe

that the realization of the DTA is more likely than not. FHN

evaluates the likelihood of realization of the DTA based on

both positive and negative evidence available at the time,

including (as appropriate) scheduled reversals of DTLs,

projected future taxable income, tax planning strategies,

and recent financial performance. Realization is

dependent on generating sufficient taxable income prior

to the expiration of the carryforwards attributable to the

DTA. In projecting future taxable income, FHN

incorporates assumptions including the estimated amount

of future state and federal pre-tax operating income, the

reversal of temporary differences, and the

implementation of feasible and prudent tax planning

strategies. These assumptions require significant

judgment about the forecasts of future taxable income

and are consistent with the plans and estimates used to

manage the underlying business.

As of December 31, 2023, FHN's net DTA was $215 million

compared to $313 million at December 31, 2022. At

December 31, 2023, FHN's gross DTA (net of a valuation

allowance) and gross DTL were $737 million and $522

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.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 14—INCOME TAXES

   

	158	2023 FORM 10-K ANNUAL REPORT

Temporary differences which gave rise to deferred tax assets and deferred tax liabilities on December 31, 2023 and 2022 were

as follows:

Table 8.14.5

COMPONENTS OF DTAs & DTLs

(Dollars in millions)		2023		2022
Deferred tax assets:
Loan valuations and loss reserves		$107		$108
Employee benefits		128		93
Accrued expenses		21		22
Depreciation and amortization		37		24
Lease liability		85		91
Federal loss carryforwards		32		34
State loss carryforwards		3		2
Securities available for sale and financial instruments (a)		296		355
Other		28		32
Gross deferred tax assets		737		761
Deferred tax liabilities:
Equity investments		$31		$3
Other intangible assets		75		80
Prepaid expenses		20		17
ROU lease asset		76		82
Leasing		316		265
Other		4		1
Gross deferred tax liabilities		522		448
Net deferred tax assets		$215		$313

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

Total unrecognized tax benefits at December 31, 2023 and

2022 were $15 million and $89 million, respectively. To

the extent such unrecognized tax benefits as of

December 31, 2023 are subsequently recognized, $15

million of tax benefits could impact tax expense and FHN’s

effective tax rate in future periods.

During 2023, FHN settled audits which allowed it to

reduce unrecognized benefits by $76 million, this resulted

in a reduction of tax expense by $32 million.  A reduction

of accrued interest related to unrecognized benefits

resulted in a reduction of tax expense of $14 million.

It is reasonably possible that the unrecognized tax benefits

related to federal and state exposures could decrease by

$1 million during 2024 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 $3

million and $17 million accrued for the payment of

interest as of December 31, 2023 and 2022, respectively.

The total amount of interest and penalties recognized in

the Consolidated Statements of Income during 2023 and

2022 were a benefit of $14 million and an expense of $3

million, respectively.

The rollforward of unrecognized tax benefits is shown in

the following table:

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 14—INCOME TAXES

   

	159	2023 FORM 10-K ANNUAL REPORT

Table 8.14.6

ROLLFORWARD OF UNRECOGNIZED TAX BENEFITS

(Dollars in millions)
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
Increases related to prior year tax positions		1
Increases related to current year tax positions		2
Settlements		(76)
Lapse of statutes		(1)
Balance at December 31, 2023		$15

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 14—INCOME TAXES

   

	160	2023 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)		2023		2022		2021
Net income		$916		$912		$1,010
Net income attributable to noncontrolling interest		19		12		11
Net income attributable to controlling interest		897		900		999
Preferred stock dividends		32		32		37
Net income available to common shareholders		865		868		962
Weighted average common shares outstanding—basic		548,410		535,033		546,354
Effect of dilutive restricted stock, performance equity awards and options		3,802		7,830		4,887
Effect of dilutive convertible preferred stock (a)		9,520		23,141		—
Weighted average common shares outstanding—diluted		561,732		566,004		551,241
Basic earnings per common share		$1.58		$1.62		$1.76
Diluted earnings per common share		$1.54		$1.53		$1.74
(a) On February 28, 2022, FHN issued $494 million of Series G Convertible Preferred Stock, which was converted into common stock on June 26, 2023, following the termination of the TD Merger Agreement. Conversion occurred at the rate of 4,000 common shares per Series G preferred share resulting in 19,742,776 additional common shares outstanding. 2023 includes the impact of the Series G based on the final conversion rate and 2022 includes the impact based on the original maximum conversion rate. 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)		2023		2022		2021
Stock options excluded from the calculation of diluted EPS		—		29		1,366
Weighted average exercise price of stock options excluded from the calculation of diluted EPS		$24.36		$25.64		$20.44
Other equity awards excluded from the calculation of diluted EPS		2,242		144		1,531

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 15—EARNINGS PER SHARE

   

	161	2023 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, 2023,

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, 2023, 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.

Mortgage Loan Repurchase and Foreclosure Liability

FHN’s repurchase and foreclosure liability, primarily

related to its pre-2009 mortgage origination, sale,

securitization and servicing businesses, is comprised of

accruals to cover estimated loss content in the active

pipeline, estimated future inflows, and estimated loss

content related to certain known claims not currently

included in the active pipeline. The active pipeline consists

of mortgage loan repurchase and make-whole demands

from loan purchasers or securitization participants,

foreclosure/servicing demands from borrowers, and

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 16—CONTINGENCIES & OTHER DISCLOSURES

   

	162	2023 FORM 10-K ANNUAL REPORT

certain related exposures. 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 as of both December 31,

2023 and 2022. 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.

The most significant outstanding claim associated with

FHN's pre-2009 business is a servicing indemnification

claim asserted by 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.

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
Table of Contents	NOTE 16—CONTINGENCIES & OTHER DISCLOSURES

   

	163	2023 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 2023 and 2022. Management does not

currently anticipate that FHN will make a contribution to

the qualified pension plan in 2024.

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

$6 million for 2023. FHN anticipates making benefit

payments under the non-qualified plans of $5 million in

2024.

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 $48 million, $47 million, and $51 million for

2023, 2022, and 2021, 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 2023 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:

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 17—RETIREMENT PLANS & OTHER EMPLOYEE BENEFITS

   

	164	2023 FORM 10-K ANNUAL REPORT

Table 8.17.1

ACTUARIAL ASSUMPTIONS FOR DEFINED BENEFIT PLANS

		Benefit Obligations						Net Periodic Benefit Cost
		2023		2022		2021		2023		2022		2021
Discount rate
Qualified pension		5.00%		5.20%		2.95%		5.20%		2.96%		2.64%
Nonqualified pension		4.90%		5.10%		2.65%		5.10%		2.65%		2.24%
Other nonqualified pension		4.75%		4.94%		1.99%		4.94%		1.99%		1.41%
Postretirement benefits		4.84% - 5.06%		5.04% - 5.25%		2.43% - 3.07%		4.88% - 5.25%		2.42% - 5.08%		1.93% - 2.81%
Expected long- term rate of return
Qualified pension/ postretirement benefits		N/A		N/A		N/A		5.15%		2.85%		2.30%
Postretirement benefit (retirees post January 1, 1993)		N/A		N/A		N/A		5.50%		5.95%		5.80%
Postretirement benefit (retirees prior to January 1, 1993)		N/A		N/A		N/A		N/A		1.05%		1.00%

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, 2023, 2022 and

2021 and interest crediting rates for the respective years

were as follows:

Table 8.17.2

PROJECTED BENEFIT OBLIGATION

& CREDITING RATE

(Dollars in millions)		2023		2022		2021
Projected benefit obligation		$8		$10		$12
Interest crediting rate		12.04%		10.77%		9.07%

The components of net periodic benefit cost for the plan years 2023, 2022 and 2021 were as follows:

Table 8.17.3

COMPONENTS OF NET PERIODIC BENEFIT COST

(Dollars in millions)		Pension Benefits						Other Benefits
		2023		2022		2021		2023		2022		2021
Components of net periodic benefit cost
Interest cost		$33		$20		$17		$2		$1		$1
Expected return on plan assets		(32)		(24)		(20)		(1)		(2)		(1)
Amortization of unrecognized:
Actuarial (gain) loss		13		12		10		(1)		—		—
Net periodic benefit cost		$14		$8		$7		$—		$(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.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 17—RETIREMENT PLANS & OTHER EMPLOYEE BENEFITS

   

	165	2023 FORM 10-K ANNUAL REPORT

The following table presents the plans’ benefit obligations and plan assets for 2023 and 2022:

Table 8.17.4

BENEFIT OBLIGATIONS & PLAN ASSETS

(Dollars in millions)		Pension Benefits				Other Benefits
		2023		2022		2023		2022
Change in benefit obligation
Benefit obligation, beginning of year		$663		$845		$32		$41
Interest cost		33		20		2		1
Actuarial (gain) loss (a)		20		(163)		—		(9)
Actual benefits paid		(41)		(39)		(3)		(1)
Benefit obligation, end of year		$675		$663		$31		$32
Change in plan assets
Fair value of plan assets, beginning of year		$641		$849		$21		$26
Actual return on plan assets		35		(172)		2		(4)
Employer contributions		3		3		3		1
Actual benefits paid – settlement payments		(2)		(2)		(3)		(2)
Actual benefits paid – other payments		(1)		(1)		—		—
Premium paid for annuity purchase (b)		(38)		(36)		—		—
Fair value of plan assets, end of year		$638		$641		$23		$21
Funded (unfunded) status of the plans		$(37)		$(22)		$(8)		$(11)
Amounts recognized in the Balance Sheets
Other assets		$—		$4		$21		$19
Other liabilities		(37)		(26)		(29)		(30)
Net asset (liability) at end of year		$(37)		$(22)		$(8)		$(11)

(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)		2023		2022		2023		2022
Projected benefit obligation		$24		$26		$29		$30

The qualified pension plan was underfunded by $13

million and overfunded by $4 million as of December 31,

2023 and 2022, respectively. Because of the pension

freeze at the end of 2012, as of both December 31, 2023

and 2022, the pension benefit obligation is equivalent to

the accumulated benefit obligation. FHN's funded post

retirement plan was in an overfunded status as of

December 31, 2023 and 2022.

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, 2023 and 2022 consist of:

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 17—RETIREMENT PLANS & OTHER EMPLOYEE BENEFITS

   

	166	2023 FORM 10-K ANNUAL REPORT

Table 8.17.6

PRE-TAX ACTUARIAL (GAINS) LOSSES REFLECTED IN AOCI

(Dollars in millions)		Pension Benefits				Other Benefits
		2023		2022		2023		2022
Amounts recognized in accumulated other comprehensive income
Net actuarial (gain) loss		$367		$363		$(8)		$(8)

The pre-tax amounts recognized in other comprehensive income during 2023, 2022, and 2021 were as follows:

Table 8.17.7

PRE-TAX AMOUNTS RECOGNIZED IN OCI

(Dollars in millions)		Pension Benefits						Other Benefits
		2023		2022		2021		2023		2022		2021
Changes in plan assets and benefit obligation recognized in other comprehensive income
Net actuarial (gain) loss arising during measurement period		$17		$32		$13		$—		$(3)		$(7)
Items amortized during the measurement period:
Net actuarial gain (loss)		(13)		(11)		(10)		1		—		—
Total recognized in other comprehensive income		$4		$21		$3		$1		$(3)		$(7)

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
2024		$44		$2
2025		46		2
2026		47		2
2027		48		2
2028		48		2
2029-2033		239		11

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, 2023 and 2022, 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, 2023 and 2022, 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
Table of Contents	NOTE 17—RETIREMENT PLANS & OTHER EMPLOYEE BENEFITS

   

	167	2023 FORM 10-K ANNUAL REPORT

Table 8.17.9

FAIR VALUE OF PENSION ASSETS

(Dollars in millions)		December 31, 2023
		Level 1		Level 2		Level 3		Total
Cash equivalents and money market funds		$6		$—		$—		$6
Fixed income securities:
U.S. treasuries		—		9		—		9
Corporate, municipal and foreign bonds		—		317		—		317
Common and collective funds:
Fixed income		—		306		—		306
Total		$6		$632		$—		$638

(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

The HR Investment and Risk Committee, 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, 2023 and 2022 by asset category are as

follows:

Table 8.17.10

FAIR VALUE OF RETIREE MEDICAL PLAN ASSETS

(Dollars in millions)		December 31, 2023
		Level 1		Level 2		Level 3		Total
Mutual funds:
Equity mutual funds		$7		$—		$—		$7
Fixed income mutual funds		16		—		—		16
Total		$23		$—		$—		$23

(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

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 17—RETIREMENT PLANS & OTHER EMPLOYEE BENEFITS

   

	168	2023 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, 2023, there were 4,965,419 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 2023 or outstanding

on December 31, 2023: the 2018, 2019 and 2020 units

vested in 2021, 2022 and 2023 at the 133.3%, 187.5%  and

187.5% payout level, respectively, and remain in a two

year post-vesting holding period; the three-year

performance period of the 2021 units has ended but

performance is measured relative to peers and has not yet

been determined; and, the three-year performance

periods for the 2022 and 2023 units have not ended.

Market condition award

In 2016, FHN made a special grant of performance stock

units to FHN’s CEO seven year performance period. The

award had no provision for pro-rated payment based on

partial performance. The award’s performance goal was

based on achievement of a specific level of total

shareholder return during the performance period and

vested in 2023.

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 vest

in the year following the year of grant and settle in shares.

In 2023 and 2022, 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, one of which

remained outstanding at December 31, 2023, but has

since expired.

Stock and stock unit awards. A summary of restricted and

performance stock and unit activity during the year ended

December 31, 2023, is presented below:

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 18—STOCK OPTIONS, RESTRICTED STOCK, & DIVIDEND REINVESTMENT PLANS

   

	169	2023 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, 2023		13,033,646		$17.09
Shares/units granted		4,558,402		16.08
Shares/units vested/distributed		(2,880,586)		11.41
Shares/units canceled (c)		(3,393,758)		22.43
December 31, 2023		11,317,704		$15.89

(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 2022 and 2021 was $17.09 and $13.14, respectively.

(c) Includes 3,198,257 retention grants canceled in connection with the TD merger termination; replacement retention grants issued settle in cash upon

vesting and are excluded from this disclosure.

On December 31, 2023, there was $78 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

2023, 2022 and 2021, was $32 million, $29 million, and

$36 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. At December 31, 2023 an immaterial number of

grants remained outstanding, but have since expired.

The summary of stock option activity for the year ended

December 31, 2023, 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, 2023		2,437,446		$15.72
Options granted		—		—
Options exercised		(393,560)		13.49
Options expired/canceled		(144,918)		14.05
December 31, 2023		1,898,968		$16.31		2.87		$—
Options exercisable		1,617,760		16.44		2.62		—
Options expected to vest		281,208		15.53		4.33		—

The total intrinsic value of options exercised during 2023,

2022 and 2021 was $4 million, $17 million, and $12

million, respectively. On December 31, 2023, there was an

immaterial amount of unrecognized compensation cost

related to nonvested stock options. That cost is expected

to be recognized over a weighted-average period of

0.2 years.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 18—STOCK OPTIONS, RESTRICTED STOCK, & DIVIDEND REINVESTMENT PLANS

   

	170	2023 FORM 10-K ANNUAL REPORT

FHN did not grant or convert stock options in 2023 and

2022. FHN granted or converted 155,124 stock options

with a weighted average fair value of $3.39 per option at

grant date in 2021.

FHN used the Black-Scholes Option Pricing Model to

estimate the fair value of stock options granted or

converted in 2021 and with the following assumptions:

Table 8.18.3

STOCK OPTION FAIR VALUE ASSUMPTIONS

		2021
Expected dividend yield		4.16%
Expected weighted-average lives of options granted		6.29 years
Expected weighted-average volatility		38.44%
Expected volatility range		37.86% - 39.02%
Risk-free interest rate		0.62%

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,

2023, there were 199,114 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 $36 million, $75 million, and $43

million for 2023, 2022, and 2021, respectively. The

corresponding total income tax benefits recognized were

$8 million, $18 million and $10 million in 2023, 2022, and

2021, 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.  Prior

authorizations to repurchase shares issued in connection

with compensation plans expired on December 31, 2023.

After 2023, as authorized by FHN's Board and the Board's

Compensation Committee, FHN will continue to make

automatic stock purchases by withholding shares

associated with stock-based awards to cover tax

obligations associated with those awards. Those limited,

off-market purchases no longer will be connected to a

traditional, announced purchase program. As has been

true in the past, automatic tax withholding purchases are

not subject to trading blackouts which affect senior

executives or the general purchase program.

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 TD

Transaction. During the suspension period, dividend

payments of FHN are not automatically reinvested in

additional shares of FHN common stock and participants

in the Plan are not able 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

   

	171	2023 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 commercial and consumer 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 (prior to July 2022)

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. 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

		2023
(Dollars in millions)		Regional Banking		Specialty Banking		Corporate		Consolidated
Net interest income (expense)		$2,354		$518		$(332)		$2,540
Provision for credit losses		224		50		(14)		260
Noninterest income (a)		433		209		285		927
Noninterest expense (b)(c)(e)		1,301		364		414		2,079
Income (loss) before income taxes		1,262		313		(447)		1,128
Income tax expense (benefit) (f)		296		76		(160)		212
Net income (loss)		$966		$237		$(287)		$916
Average assets		$45,858		$20,161		$15,664		$81,683
Depreciation and amortization		60		—		42		102
Expenditures for long-lived assets		29		4		1		34

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 19—BUSINESS SEGMENT INFORMATION

   

	172	2023 FORM 10-K ANNUAL REPORT

		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)		443		312		60		815
Noninterest expense (b)(e)		1,226		446		281		1,953
Income (loss) before income taxes		1,077		409		(327)		1,159
Income tax expense (benefit)		253		99		(105)		247
Net income (loss)		$824		$310		$(222)		$912
Average assets		$42,297		$19,965		$21,955		$84,217
Depreciation and amortization		24		2		59		85
Expenditures for long-lived assets		18		12		(6)		24

		2021
(Dollars in millions)		Regional Banking		Specialty Banking		Corporate		Consolidated
Net interest income (expense)		$1,764		$620		$(390)		$1,994
Provision (benefit) for credit losses		(229)		(64)		(17)		(310)
Noninterest income (a)		438		597		41		1,076
Noninterest expense (b)(d)(e)		1,136		573		387		2,096
Income (loss) before income taxes		1,295		708		(719)		1,284
Income tax expense (benefit)		303		172		(201)		274
Net income (loss)		$992		$536		$(518)		$1,010
Average assets		$41,527		$20,789		$25,293		$87,609
Depreciation and amortization		(57)		4		98		45
Expenditures for long-lived assets		27		3		7		37

(a) 2023 includes a $225 million gain on merger termination and a $6 million loss on equities valuation adjustments in the Corporate segment and a $7 million

gain on a small FHN Financial asset disposition in the Specialty Banking segment. 2022 includes a $12 million gain on sale of mortgage servicing rights in the

Specialty Banking segment and a $22 million gain related to the sale of the title insurance business, a $10 million gain on equity securities and a $6 million

gain related to a fintech investment in the Corporate segment. 2021 includes a loss of $26 million related to TRUPS redemption in the Corporate segment.

(b) 2023 includes $51 million in merger and integration planning expenses related to the TD Transaction in the Corporate Segment. 2022 and 2021 include

$136 million and $187 million, respectively, in merger and integration expenses related to the IBKC merger and TD Transaction in the Corporate segment.

(c) 2023 includes $10 million of restructuring costs, an FDIC special assessment of $68 million, and a $50 million contribution to the First Horizon Foundation

in the Corporate segment.

(d) 2021 includes $37 million in asset impairments related to IBKC merger integration efforts in the Corporate segment.

(e) 2023, 2022 and 2021 include $15 million,  $22 million and $19 million, respectively, in derivative valuation adjustments related to prior Visa Class-B share

sales in the Corporate segment.

(f) 2023 includes $24 million in expense related to the surrender of bank owned life insurance policies and a $59 million benefit from merger-related tax items

in the Corporate segment.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 19—BUSINESS SEGMENT INFORMATION

   

	173	2023 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, 2023, 2022, and 2021:

Table 8.19.2

NONINTEREST INCOME DETAIL BY SEGMENT

		December 31, 2023
(Dollars in millions)		Regional Banking		Specialty Banking		Corporate		Consolidated
Noninterest income:
Deposit transactions and cash management		$161		$10		$8		$179
Fixed income (a)		—		133		—		133
Brokerage, management fees and commissions		90		—		—		90
Card and digital banking fees		68		2		7		77
Other service charges and fees		30		24		—		54
Trust services and investment management		47		—		—		47
Mortgage banking and title income		—		23		—		23
Gain on merger termination		—		—		225		225
Securities gains (losses), net (b)		—		—		(4)		(4)
Other income (c)		37		17		49		103
Total noninterest income		$433		$209		$285		$927
		December 31, 2022
(Dollars in millions)		Regional Banking		Specialty Banking		Corporate		Consolidated
Noninterest income:
Deposit transactions and cash management		$153		$9		$9		$171
Fixed income (a)		—		205		—		205
Brokerage, management fees and commissions		92		—		—		92
Card and digital banking fees		75		2		7		84
Other service charges and fees		32		22		—		54
Trust services and investment management		48		—		—		48
Mortgage banking and title income		—		68		—		68
Securities gains (losses), net (b)		—		—		18		18
Other income (c)		43		6		26		75
Total noninterest income		$443		$312		$60		$815
		December 31, 2021
(Dollars in millions)		Regional Banking		Specialty Banking		Corporate		Consolidated
Noninterest income:
Deposit transactions and cash management		$157		$12		$6		$175
Fixed income (a)		—		406		—		406
Brokerage, management fees and commissions		88		—		—		88
Card and digital banking fees		67		3		8		78
Other service charges and fees		23		17		4		44
Trust services and investment management		51		—		—		51
Mortgage banking and title income		—		152		2		154
Securities gains (losses), net (b)		—		—		13		13
Other income (c)		52		7		8		67
Total noninterest income		$438		$597		$41		$1,076

(a) 2023, 2022 and 2021, include $42 million, $43 million, and $44 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

   

	174	2023 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, 2023 and 2022:

Table 8.20.1

CONSOLIDATED VIEs

(Dollars in millions)		December 31, 2023		December 31, 2022
Assets:
Other assets		$177		$181
Liabilities:
Other liabilities		$150		$150

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 2023, 2022, and

2021.

The following table summarizes the impact to income tax

expense on the Consolidated Statements of Income for

the years ended December 31, 2023, 2022 and 2021 for

LIHTC investments accounted for under the proportional

amortization method.

Table 8.20.2

LIHTC IMPACTS ON TAX EXPENSE

(Dollars in millions)		2023		2022		2021
Income tax expense (benefit):
Amortization of qualifying LIHTC investments		$54		$44		$26
Low income housing tax credits		(55)		(48)		(32)
Other tax benefits related to qualifying LIHTC investments		(13)		(12)		(7)

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 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

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 20—VARIABLE INTEREST ENTITIES

   

	175	2023 FORM 10-K ANNUAL REPORT

are considered VIEs as First Horizon Bank's subsidiaries

represent the holders of the equity 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 Modifications to Borrowers

Experiencing Financial Difficulty

For certain troubled commercial loans, First Horizon Bank

modifies the terms of the borrower’s debt in an effort to

increase the probability of receipt of amounts

contractually due. Following a modification to borrowers

experiencing financial difficulty, 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, 2023 and 2022:

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 20—VARIABLE INTEREST ENTITIES

   

	176	2023 FORM 10-K ANNUAL REPORT

Table 8.20.3

NONCONSOLIDATED VIEs AT DECEMBER 31, 2023

(Dollars in millions)		Maximum Loss Exposure		Liability Recognized		Classification
Type:
Low income housing partnerships		$587		$223		(a)
Other tax credit investments (b)		79		64		Other assets
Small issuer trust preferred holdings (c)		173		—		Loans and leases
On-balance sheet trust preferred securitization		26		88		(d)
Holdings of agency mortgage-backed securities (c)		8,402		—		(e)
Commercial loan modifications to borrowers experiencing financial difficulty (f)		129		—		Loans and leases
Proprietary trust preferred issuances (g)		—		167		Term borrowings

(a)Maximum loss exposure represents $364 million of current investments and $223 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 $113 million classified as loans and leases and $2 million classified as trading securities, which are offset by $88 million classified as term

borrowings.

(e)Includes $450 million classified as trading securities, $1.3 billion classified as securities held to maturity, and $6.6 billion classified as securities available

for sale.

(f)Maximum loss exposure represents $129 million of current receivables with no additional contractual funding commitments on loans related to

commercial loan modifications to borrowers experiencing financial difficulty.

(g)No exposure to loss due to nature of FHN's involvement.

Table 8.20.4

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.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 20—VARIABLE INTEREST ENTITIES

   

	177	2023 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, 2023 and 2022, respectively, FHN had $406

million and $159 million of cash receivables and $33

million and $42 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 $97 million, $157 million and $360 million

for the years ended December 31, 2023, 2022 and 2021,

respectively. Trading revenues are inclusive of both

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 21—DERIVATIVES

   

	178	2023 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, 2023

and 2022:

Table 8.21.1

DERIVATIVES ASSOCIATED WITH TRADING

		December 31, 2023
(Dollars in millions)		Notional		Assets		Liabilities
Customer interest rate contracts		$4,067		$22		$197
Offsetting upstream interest rate contracts		4,273		135		23
Forwards and futures purchased		777		9		—
Forwards and futures sold		912		—		9

		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

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, 2023 and 2022:

Table 8.21.2

DERIVATIVES ASSOCIATED WITH INTEREST RATE RISK MANAGEMENT

		December 31, 2023
(Dollars in millions)		Notional		Assets		Liabilities
Customer Interest Rate Contracts Hedging
Hedging Instruments and Hedged Items:
Customer interest rate contracts		$8,375		$21		$392
Offsetting upstream interest rate contracts		8,375		389		22

		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

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 21—DERIVATIVES

   

	179	2023 FORM 10-K ANNUAL REPORT

The following table summarizes gains (losses) on FHN’s derivatives associated with interest rate risk management activities for

the years ended December 31, 2023 , 2022, and 2021:

Table 8.21.3

DERIVATIVE GAINS (LOSSES) ASSOCIATED WITH INTEREST RATE RISK MANAGEMENT

		Year Ended December 31,
		2023		2022		2021
(Dollars in millions)		Gains (Losses)		Gains (Losses)		Gains (Losses)
Customer Interest Rate Contracts Hedging
Hedging Instruments and Hedged Items:
Customer interest rate contracts (a)		$195		$(744)		$(268)
Offsetting upstream interest rate contracts (a)		(195)		744		268

(a) Gains (losses) included in other expense within the Consolidated Statements of Income.

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. The debt instruments primarily

consist of held-to-maturity commercial loans that have

variable interest payments that historically were based on

1-month LIBOR. In second quarter 2023, the remaining

hedge was revised to reference 1-month Term SOFR after

the cessation of LIBOR-based cash flows. In conjunction

with the IBKC merger, FHN acquired interest rate

contracts (floors and collars) which were re-designated as

cash flow hedges. The debt instruments associated with

these hedges also primarily consisted of held-to-maturity

commercial loans that had variable interest payments that

were based on 1-month LIBOR. The last hedge acquired in

conjunction with the IBKC merger matured in second

quarter 2023.

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 tables summarize FHN’s derivative activities

associated with cash flow hedges as of December 31, 2023

and 2022:

Table 8.21.4

DERIVATIVES ASSOCIATED WITH CASH FLOW HEDGES

		December 31, 2023
(Dollars in millions)		Notional		Assets		Liabilities
Cash Flow Hedges
Hedging Instruments:
Interest rate contracts		$5,200		$—		$32
Hedged Items:
Variability in cash flows related to debt instruments (primarily loans)		N/A		$5,200		N/A

		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

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 21—DERIVATIVES

   

	180	2023 FORM 10-K ANNUAL REPORT

The following table summarizes gains (losses) on FHN’s derivatives associated with cash flow hedges for the years ended

December 31, 2023, 2022, and 2021:

Table 8.21.5

DERIVATIVE GAINS (LOSSES) ASSOCIATED WITH CASH FLOW HEDGES

		Year Ended December 31,
		2023		2022		2021
(Dollars in millions)		Gains (Losses)		Gains (Losses)		Gains (Losses)
Cash Flow Hedges
Hedging Instruments:
Interest rate contracts (a)		$45		$195		$29
Gain (loss) recognized in other comprehensive income (loss)		52		15		(3)
Gain (loss) reclassified from AOCI into interest income		47		(129)		(7)

(a) Approximately $9 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, 2023
(Dollars in millions)		Notional		Assets		Liabilities
Mortgage Banking Hedges
Option contracts written		$55		$1		$—
Forward contracts written		93		—		1

		December 31, 2022
(Dollars in millions)		Notional		Assets		Liabilities
Mortgage Banking Hedges
Option contracts written		$35		$—		$—
Forward contracts written		61		—		—

The following table summarizes gains (losses) on FHN's derivatives associated with mortgage banking activities for the years

ended December 31, 2023 and 2022:

Table 8.21.7

DERIVATIVE GAINS (LOSSES) ASSOCIATED WITH MORTGAGE BANKING HEDGES

			Year Ended December 31,
			2023		2022		2021
(Dollars in millions)			Gains (Losses)		Gains (Losses)		Gains (Losses)
Mortgage Banking Hedges
Option contracts written			$—		$3		$15
Forward contracts written			1		32		11

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, 2023 and 2022, the

derivative liabilities associated with the sales of Visa Class

B shares were $23 million and $27 million, respectively.

For the year ended December 31, 2023 and 2022, FHN

recognized $15 million and $22 million, respectively, in

derivative valuation adjustments related to prior sales of

Visa Class B shares. See Note 23 - Fair Value of Assets and

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 21—DERIVATIVES

   

	181	2023 FORM 10-K ANNUAL REPORT

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,

2023 and 2022, these loans were valued at $17 million

and $9 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, 2023 and 2022, the notional values of

FHN’s risk participations were $351 million and $242

million of derivative assets and $874 million and $742

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, 2023 and 2022, 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, 2023 and 2022, 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

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

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

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 21—DERIVATIVES

   

	182	2023 FORM 10-K ANNUAL REPORT

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 $12 million of assets and $188

million of liabilities on December 31, 2023, and $5 million

of assets and $268 million of liabilities on December 31,

2022. As of December 31, 2023 and 2022, FHN had

received collateral of $95 million and $106 million and

posted collateral of $83 million and $61 million,

respectively, in the normal course of business related to

these agreements.

Certain agreements 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 $12 million of assets and $188

million of liabilities on December 31, 2023, and $378

million of assets and $268 million of liabilities on

December 31, 2022. As of December 31, 2023 and 2022,

FHN had received collateral of $95 million and $479

million and posted collateral of $83 million and $61

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, 2023 and 2022:

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, 2023
Interest rate derivative contracts		$567		$—		$567		$(75)		$(486)		$6
Forward contracts		9		—		9		(4)		(3)		2
		$576		$—		$576		$(79)		$(489)		$8
December 31, 2022
Interest rate derivative contracts		$449		$—		$449		$(58)		$(378)		$13
Forward contracts		9		—		9		(6)		(2)		1
		$458		$—		$458		$(64)		$(380)		$14

(a) Included in other assets on the Consolidated Balance Sheets. As of December 31, 2023 and 2022, $1 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.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 21—DERIVATIVES

   

	183	2023 FORM 10-K ANNUAL REPORT

The following table provides details of derivative liabilities and collateral pledged as presented on the Consolidated Balance

Sheets as of December 31, 2023 and 2022:

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, 2023
Interest rate derivative contracts		$666		$—		$666		$(75)		$(164)		$427
Forward contracts		9		—		9		(4)		(5)		—
		$675		$—		$675		$(79)		$(169)		$427
December 31, 2022
Interest rate derivative contracts		$921		$—		$921		$(58)		$(175)		$688
Forward contracts		8		—		8		(6)		(1)		1
		$929		$—		$929		$(64)		$(176)		$689

(a) Included in other liabilities on the Consolidated Balance Sheets. As of December 31, 2023 and 2022, $24 million and $29 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

   

	184	2023 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, 2023 and

2022:

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:
2023		$519		$—		$519		$—		$(516)		$3
2022		353		—		353		(10)		(340)		3

The following table provides details of securities sold under agreements to repurchase and collateral pledged by FHN as of

December 31, 2023 and 2022:

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:
2023		$1,921		$—		$1,921		$—		$(1,921)		$—
2022		1,013		—		1,013		(10)		(1,003)		—

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

   

	185	2023 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, 2023 and 2022:

Table 8.22.3

MATURITIES OF SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

	December 31, 2023
(Dollars in millions)	Overnight and Continuous		Up to 30 Days		Total
Securities sold under agreements to repurchase:
Government agency issued MBS	$1,717		$—		$1,717
Government agency issued CMO	161		—		161
Other U.S. government agencies	43		—		43
Total securities sold under agreements to repurchase	$1,921		$—		$1,921
	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

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 22—MASTER NETTING & SIMILAR AGREEMENTS

   

	186	2023 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.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 23—FAIR VALUE OF ASSETS AND LIABILITIES

   

	187	2023 FORM 10-K ANNUAL REPORT

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, 2023 and 2022:

Table 8.23.1

BALANCES OF ASSETS & LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS

		December 31, 2023
(Dollars in millions)		Level 1		Level 2		Level 3		Total
Trading securities:
U.S. treasuries		$—		$3		$—		$3
Government agency issued MBS		—		114		—		114
Government agency issued CMO		—		336		—		336
Other U.S. government agencies		—		152		—		152
States and municipalities		—		17		—		17
Corporate and other debt		—		777		—		777
Interest-only strips (elected fair value)		—		—		13		13
Total trading securities		—		1,399		13		1,412
Loans held for sale (elected fair value)		—		42		26		68
Securities available for sale:
Government agency issued MBS		—		4,484		—		4,484
Government agency issued CMO		—		2,146		—		2,146
Other U.S. government agencies		—		1,172		—		1,172
States and municipalities		—		589		—		589
Total securities available for sale		—		8,391		—		8,391
Other assets:
Deferred compensation mutual funds		102		—		—		102
Equity, mutual funds, and other		34		—		—		34
Derivatives, forwards and futures		9		—		—		9
Derivatives, interest rate contracts		—		568		—		568
Total other assets		145		568		—		713
Total assets		$145		$10,400		$39		$10,584
Trading liabilities:
U.S. treasuries		$—		$426		$—		$426
Government agency issued MBS		—		1		—		1
Corporate and other debt		—		82		—		82
Total trading liabilities		—		509		—		509
Other liabilities:
Derivatives, forwards and futures		10		—		—		10
Derivatives, interest rate contracts		—		666		—		666
Derivatives, other		—		—		23		23
Total other liabilities		10		666		23		699
Total liabilities		$10		$1,175		$23		$1,208

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 23—FAIR VALUE OF ASSETS AND LIABILITIES

   

	188	2023 FORM 10-K ANNUAL REPORT

		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 agency issued 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

   

	189	2023 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, 2023, 2022 and 2021 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, 2023
(Dollars in millions)		Interest-only strips		Loans held for sale		Net  derivative liabilities
Balance on January 1, 2023		$25		$22		$(27)
Total net gains (losses) included in net income		(12)		4		(15)
Purchases		—		3		—
Sales		(54)		(3)		—
Settlements		—		(2)		19
Net transfers into (out of) Level 3		54	(b)	2		—
Balance on December 31, 2023		$13		$26		$(23)
Net unrealized gains (losses) included in net income		$(1)	(c)	$4	(a)	$(15)	(d)

	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)

(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 on the Consolidated Statements of Income.

(e) The loans held for investment at fair value option portfolio was transferred to the loans held for sale portfolio on April 1, 2021.

There were no net unrealized gains (losses) for Level 3 assets and liabilities included in other comprehensive income as of

December 31, 2023, 2022 and 2021.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 23—FAIR VALUE OF ASSETS AND LIABILITIES

   

	190	2023 FORM 10-K ANNUAL REPORT

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, 2023, 2022 and 2021, 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, 2023								Year Ended December 31, 2023
(Dollars in millions)		Level 1		Level 2		Level 3		Total		Net gains (losses)
Loans held for sale—SBAs and USDA		$—		$406		$—		$406		$(3)
Loans and leases (a)		—		—		245		245		(42)
OREO (b)		—		—		4		4		—
Other assets (c)		—		—		90		90		(7)
										$(52)

		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)		—		—		91		91		(10)
										$(32)

		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)		—		—		80		80		(7)
										$(23)

(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.

Lease asset impairments recognized represent the

reduction in value of the right-of-use assets associated

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.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 23—FAIR VALUE OF ASSETS AND LIABILITIES

   

	191	2023 FORM 10-K ANNUAL REPORT

For the year ended December 31, 2023, FHN recognized

leased asset impairments of $1 million and fixed asset

impairments were immaterial. Both fixed asset and leased

asset impairments were immaterial for 2022. In 2021, FHN

recognized $34 million of fixed asset impairments and

$3 million of leased asset impairments. These

impairments were primarily related to acquisition

integration efforts associated with reduction of leased

office space and banking center optimization. These

amounts were primarily recognized in the Corporate

segment.

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, 2023 and 2022:

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, 2023		Valuation Techniques		Unobservable Input		Range		Weighted Average (d)
Trading securities - SBA interest-only strips		$13		Discounted cash flow		Constant prepayment rate		14% - 15%		14%
						Bond equivalent yield		18% - 21%		18%
Loans held for sale - residential real estate		$26		Discounted cash flow		Prepayment speeds - First mortgage		2% - 7%		3%
						Foreclosure losses		64% - 68%		65%
						Loss severity trends - First mortgage		0% - 3% of UPB		2%
Derivative liabilities, other		$23		Discounted cash flow		Visa covered litigation resolution amount		$5.7 billion -  $6.7 billion		$6.3 billion
						Probability of resolution scenarios		10% - 25%		18%
						Time until resolution		6 - 36 months		24 months
Loans and leases (a)		$245		Appraisals from comparable properties		Marketability adjustments for specific properties		0% - 25% of appraisal		NM
				Other collateral valuations		Borrowing base certificates liquidation adjustment		25% - 50% of gross value		NM
						Financial Statements liquidation adjustment		50% - 100% of reported value		NM
						Auction appraisals marketability adjustment		0% - 10% of reported value		NM
OREO (b)		$4		Appraisals from comparable properties		Adjustment for value changes since appraisal		0% - 10% of appraisal		NM
Other assets (c)		$90		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

   

	192	2023 FORM 10-K ANNUAL REPORT

(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)		$91		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
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	193	2023 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.

FHN historically 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.

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 previously 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.

Due to the credit-distressed nature of the vast majority of

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
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	194	2023 FORM 10-K ANNUAL REPORT

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.

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, 2023
(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		$68		$73		$(5)
Nonaccrual loans		2		5		(3)
Loans 90 days or more past due and still accruing		1		1		—
		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		—

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)	2023		2022		2021
Changes in fair value included in net income:
Mortgage banking and title noninterest income
Loans held for sale	$1		$(9)		$(10)

For the years ended December 31, 2023, 2022 and 2021,

the amount for residential real estate loans held for sale

included an insignificant amount of gains in pre-tax

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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	195	2023 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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	196	2023 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. Typical inputs include benchmark

yields, option volatility and option skew. 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
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	197	2023 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, 2023 and December 31, 2022, 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, 2023

and December 31, 2022:

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 23—FAIR VALUE OF ASSETS AND LIABILITIES

   

	198	2023 FORM 10-K ANNUAL REPORT

Table 8.23.7

BOOK VALUE AND ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS

		December 31, 2023
		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		$32,294		$—		$—		$31,678		$31,678
Commercial real estate		14,044		—		—		13,832		13,832
Consumer:
Consumer real estate		13,417		—		—		12,616		12,616
Credit card and other		764		—		—		742		742
Total loans and leases, net of allowance for loan and lease losses		60,519		—		—		58,868		58,868
Short-term financial assets:
Interest-bearing deposits with banks		1,328		1,328		—		—		1,328
Federal funds sold		200		—		200		—		200
Securities purchased under agreements to resell		519		—		519		—		519
Total short-term financial assets		2,047		1,328		719		—		2,047
Trading securities (a)		1,412		—		1,399		13		1,412
Loans held for sale:
Mortgage loans (elected fair value) (a)		68		—		42		26		68
USDA & SBA loans - LOCOM		406		—		407		—		407
Mortgage loans - LOCOM		28		—		—		28		28
Total loans held for sale		502		—		449		54		503
Securities available for sale (a)		8,391		—		8,391		—		8,391
Securities held to maturity		1,323		—		1,161		—		1,161
Derivative assets (a)		577		9		568		—		577
Other assets:
Tax credit investments		665		—		—		653		653
Deferred compensation mutual funds		102		102		—		—		102
Equity, mutual funds, and other (b)		261		34		—		227		261
Total other assets		1,028		136		—		880		1,016
Total assets		$75,799		$1,473		$12,687		$59,815		$73,975
Liabilities:
Defined maturity deposits		$6,804		$—		$6,851		$—		$6,851
Trading liabilities (a)		509		—		509		—		509
Short-term financial liabilities:
Federal funds purchased		302		—		302		—		302
Securities sold under agreements to repurchase		1,921		—		1,921		—		1,921
Other short-term borrowings		326		—		326		—		326
Total short-term financial liabilities		2,549		—		2,549		—		2,549
Term borrowings:
Real estate investment trust-preferred		47		—		—		47		47
Term borrowings—new market tax credit investment		65		—		—		60		60
Secured borrowings		3		—		—		3		3
Junior subordinated debentures		150		—		—		150		150
Other long-term borrowings		885		—		824		—		824
Total term borrowings		1,150		—		824		260		1,084
Derivative liabilities (a)		699		10		666		23		699
Total liabilities		$11,711		$10		$11,399		$283		$11,692

(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 $24

million and FRB stock of $203 million.

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 23—FAIR VALUE OF ASSETS AND LIABILITIES

   

	199	2023 FORM 10-K ANNUAL REPORT

		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		$1,527		$12,869		$57,857		$72,253
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

   

	200	2023 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, 2023 and December 31, 2022 :

Table 8.23.8

UNFUNDED COMMITMENTS

		Contractual Amount				Fair Value
(Dollars in millions)		December 31, 2023		December 31, 2022		December 31, 2023		December 31, 2022
Unfunded Commitments:
Loan commitments		$24,579		$25,953		$1		$1
Standby and other commitments		746		754		8		7

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 23—FAIR VALUE OF ASSETS AND LIABILITIES

   

	201	2023 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)		2023		2022
Assets:
Cash		$854		$1,335
Notes receivable		3		3
Investments in subsidiaries:
Bank		8,658		7,861
Non-bank		49		42
Other assets		256		251
Total assets		$9,820		$9,492
Liabilities and equity:
Accrued employee benefits and other liabilities		$324		$293
Term borrowings		500		948
Total liabilities		824		1,241
Total equity		8,996		8,251
Total liabilities and equity		$9,820		$9,492

Parent Company Statements of Income

		Year Ended December 31,
(Dollars in millions)		2023		2022		2021
Dividend income:
Bank		$220		$435		$770
Non-bank		—		16		—
Total dividend income		220		451		770
Other income (loss)		226		22		(26)
Total income		446		473		744
Interest expense - term borrowings		21		31		31
Personnel and other expense		114		128		89
Total expense		135		159		120
Income before income taxes		311		314		624
Income tax benefit		24		(31)		(35)
Income before equity in undistributed net income of subsidiaries		287		345		659
Equity in undistributed net income (loss) of subsidiaries:
Bank		613		561		332
Non-bank		(3)		(6)		8
Net income attributable to the controlling interest		$897		$900		$999

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 24—PARENT COMPANY FINANCIAL INFORMATION

   

	202	2023 FORM 10-K ANNUAL REPORT

Parent Company Statements of Cash Flows

		Year Ended December 31,
(Dollars in millions)		2023		2022		2021
Operating activities:
Net income		$897		$900		$999
Less undistributed net income of subsidiaries		610		555		340
Income before undistributed net income of subsidiaries		287		345		659
Adjustments to reconcile income to net cash provided by operating activities:
Deferred income tax expense		8		7		8
Stock-based compensation expense		36		76		43
Loss on extinguishment of debt		—		—		26
Gain on sale of title services business		—		(22)		—
Other operating activities, net		1		2		(11)
Total adjustments		45		63		66
Net cash provided by operating activities		332		408		725
Investing activities:
Proceeds from sales and prepayments of securities		21		8		3
Purchases of securities		(1)		(1)		(10)
(Investment in) return on subsidiary		(10)		13		8
Proceeds from business divestitures, net		—		22		—
Net cash provided by investing activities		10		42		1
Financing activities:
Proceeds from issuance of preferred stock		—		494		145
Call of preferred stock		—		—		(100)
Cash dividends paid - preferred stock		(32)		(32)		(33)
Common stock:
Stock options exercised		5		36		28
Cash dividends paid		(335)		(324)		(333)
Repurchase of shares		(10)		(13)		(416)
Repayment of term borrowings		(450)		—		(120)
Net cash provided by (used in) financing activities		(822)		161		(829)
Net increase (decrease) in cash and cash equivalents		(480)		611		(103)
Cash and cash equivalents at beginning of year		1,335		724		827
Cash and cash equivalents at end of year		$855		$1,335		$724
Total interest paid		$33		$35		$35
Income taxes received from (paid to) subsidiaries		(46)		42		28

ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
Table of Contents	NOTE 24—PARENT COMPANY FINANCIAL INFORMATION

   

	203	2023 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 103, and the attestation

report required by Item 308(b) of Regulation S-K appears

starting at page 104, of our 2023 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

Form 8-K Information not previously reported

Not applicable.

Trading Plans of Directors and Executive Officers

During our most recent fiscal quarter, no director (see

Item 10 beginning on page 205) or executive officer (see

the Supplemental Part I Information beginning on page 50)

adopted or terminated (i) any contract, instruction, or

written plan for the purchase or sale of our securities

intended to satisfy the affirmative defense conditions of

SEC Rule 10b5-1(c) (a "Rule 10b5-1 trading arrangement");

and/or (ii) any "non-Rule 10b5-1 trading arrangement" as

defined in SEC Reg. S-K Item 408(c).

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

   

	204	2023 FORM 10-K ANNUAL REPORT

PART  III

Item 10.Directors, Executive Officers and

Corporate Governance

Required Item 10 Information

In 2023, there were no material amendments to the

procedures, described in our 2024 Proxy Statement under

the caption Shareholder Recommendations and

Nominations, especially under the sub-caption 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 2024 Proxy

Statement under the captions Shareholder

Recommendations and Nominations and 2025 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.

We have adopted an Inside Information Policy and related

written Procedures for that Policy (collectively, our

"Insider Policy"). Our Insider Policy governs the purchase,

sale, and/or other dispositions of our securities by our

directors, officers, employees and certain other persons. It

is designed to promote compliance with insider trading

laws, rules, and regulations, and listing standards

applicable to us. By its terms as written, our Insider Policy

applies only to insiders (directors, officers, employees, and

certain other persons). In practice, senior management

applies the periodic and ad hoc blackout provisions to our

purchases of our securities in all market transactions, and

in all off-market transactions other than share-

withholding related to employee stock plan awards.

Exceptions to the blackout provisions must be approved

by our Chief Executive Officer in consultation with our

General Counsel. Our Inside Information Policy and its

Procedures have been filed or incorporated by reference

as Exhibits 19.1 and 19.2 to this report. In addition, the

following section of our 2024 Proxy Statement is

incorporated herein by reference: Policies on Insider

Trading and Hedging.

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, or is

provided in that Table.

ITEM 10. DIRECTORS & EXECUTIVE OFFICERS
Table of Contents

   

	205	2023 FORM 10-K ANNUAL REPORT

Table 10.1

ITEM 10 TOPICS TABLE

Item 10 Topics	Responses or 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 2024 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 50
Compliance with Section 16(a) of the Securities Exchange Act of 1934	not applicable

First Horizon Directors

Table 10.2

OUR BOARD OF DIRECTORS

(at February 20, 2024)

Harry V. Barton, Jr. Age 69 CPA and Owner, Barton Advisory Services, LLC, an investment advisory firm		Velia Carboni Age 53 Exec. Vice President and Chief Digital and Technology Officer, VF Corporation, a provider of branded lifestyle apparel, footwear and accessories		John N. Casbon* Age 75 Retired Executive Vice President, First American Title Insurance Company, a title insurance company
John C. Compton Age 62 Partner, Clayton, Dubilier & Rice a private equity firm		Wendy P. Davidson Age 54 President and Chief Executive Officer The Hain Celestial Group, Inc., an organic and natural products company		John W. Dietrich Age 59 Executive Vice President and Chief Financial Officer, FedEx Corporation, a provider of transportation, e- commerce and business services
William H. Fenstermaker* Age 75 Chairman and CEO, C.H. Fenstermaker and Associates, LLC, a surveying, mapping, engineering, and environmental consulting company		D. Bryan Jordan Age 62 Chairman of the Board, President and Chief Executive Officer, First Horizon Corporation, a financial services company		J. Michael Kemp, Sr. Age 53 Founder and Chief Executive Officer, Kemp Management Solutions, a program management and consulting firm
Rick E. Maples Age 65 Retired Co-Head of Investment Banking, Stifel, Nicolaus and Company, Incorporated, a financial services company		Vicki R. Palmer Age 70 President, The Palmer Group, LLC a general consulting firm		Colin V. Reed Age 76 Executive Chairman, Ryman Hospitality Properties, Inc. a real estate investment trust
Cecelia D. Stewart Age 65 Retired President, U.S. Consumer & Commercial Banking, Citigroup, Inc. a financial services company		Rosa Sugrañes Age 66 Founder and former Chief Executive Officer, Iberia Tiles, a ceramic tile distributor		R. Eugene Taylor Age 76 Retired Chairman of the Board and Chief Executive Officer, Capital Bank Financial Corp., a financial services company

*Indicates a director who will retire when directors are elected for 2024-25 at the 2024 Annual Meeting of Shareholders.

ITEM 10. DIRECTORS & EXECUTIVE OFFICERS
Table of Contents

   

	206	2023 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 2024

Proxy Statement: Compensation Committee,

Compensation Committee Interlocks & Insider

Participation, Director Compensation, Policies on Insider

Trading and Hedging, 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 2024 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 2024 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.

As to the information required by Item 402(w) of

Regulation S-K: (i) refer to Clawback Policies & Practices

within Compensation Discussion & Analysis in our 2024

Proxy Statement; and (ii) the conditions for disclosures

beyond those incorporated by reference above have not

occurred. Our Erroneously Awarded Compensation

Recovery Policy has been filed as Exhibit 97 to this report,

as shown in Item 15.

ITEM 11. EXECUTIVE COMPENSATION
Table of Contents

   

	207	2023 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

The information required for this Item pursuant to Item

201(d) of Regulation S-K is presented in our 2024 Proxy

Statement under the heading Equity Compensation Plan

Information. That information is incorporated into this

Item by reference.

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 2024

Proxy Statement under the heading Stock Ownership

Information. That information is incorporated into this

Item by reference.

Change in Control Arrangements

We are not aware of any arrangements which may result in a change in control of First Horizon Corporation.

ITEM 12. SECURITY OWNERSHIP & RELATED STOCKHOLDER MATTERS
Table of Contents

   

	208	2023 FORM 10-K ANNUAL REPORT

Item 13.Certain Relationships and Related

Transactions, and Director

Independence

The information called for by this Item is presented in the

following sections of our 2024 Proxy Statement:

• within the Corporate Governance section: Related

Party Transaction Procedures and Transactions with

Related Persons

• within the Board Matters section: 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 2024 Proxy

Statement, referenced above.

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, as well as

other information related to our Auditor, is incorporated

herein by reference to the section of our 2024 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	2023 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 2023 Financial Statements (Item

8) indicated in Table 15.1.

Table 15.1

Item 8 Page	Statement, Note, or Report Incorporated into Item 15
103	Report of Management on Internal Control over Financial Reporting
104	Reports of Independent Registered Public Accounting Firm
108	Consolidated Balance Sheets as of December 31, 2023 and 2022
109	Consolidated Statements of Income for the years ended December 31, 2023, 2022, and 2021
111	Consolidated Statements of Comprehensive Income for the years ended December 31, 2023, 2022, and 2021
112	Consolidated Statements of Changes in Equity for the years ended December 31, 2023, 2022, and 2021
113	Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022, and 2021
115	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 “2023 named executive officers” refers to those

executive officers whose 2023 compensation is described

in our 2024 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
Table of Contents

   

	210	2023 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
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 [all Series G stock was converted into common stock in 2023; none remains outstanding]				8-K	3.1	3/3/2022
3.3	Bylaws of First Horizon Corporation, as amended and restated January 22, 2024				8-K	3.1	1/23/2024
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 (as amended January 23, 2024)	X	X
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
10.1 (d)	IBERIABANK Corporation 2016 Stock Incentive Plan		X		10-K 2020	10.1(c)	2/25/2021

ITEM 15. EXHIBITS & FINANCIAL STATEMENT SCHEDULES
Table of Contents

   

	211	2023 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 (e)	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 Executive Performance Stock Units [2021]		X		10-Q 1Q21	10.1	5/6/2021
10.2 (b)	Form of Grant Notice for Executive Performance Stock Units [2022]		X		10-Q 1Q22	10.1	5/6/2022
10.2 (c)	Form of Grant Notice for Executive Performance Stock Units [2023]		X		10-K 2022	10.2(e)	3/1/2023
10.2 (d)	Form of Grant Notice for CEO Special Equity Performance Stock Units [2023]		X		8-K	10.3	8/4/2023
10.2 (e)	Form of Grant Notice for Executive Performance Stock Units [2024]	X	X
10.2 (f)	Form of Grant Notice for Executive Special Performance Stock Units [2024]	X	X
	Stock Option Award Documents
10.3 (a)	Form of Grant Notice for Executive Stock Options [2017]		X		10-Q 1Q17	10.2	5/8/2017
10.3 (b)	Form of Grant Notice for Executive Stock Options [2018]		X		10-Q 1Q18	10.2	5/8/2018
10.3 (c)	Form of Grant Notice for Executive Stock Options [2019]		X		10-Q 1Q19	10.2	5/8/2019
10.3  (d)	Form of Grant Notice for Executive Stock Options [2020]		X		10-Q 1Q20	10.2	5/8/2020
10.3  (e)	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 [2021]		X		10-Q 1Q21	10.2	5/6/2021
10.4 (b)	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 (c)	Form of Grant Notice for Executive Restricted Stock Units [2022]		X		10-Q 1Q22	10.2	5/6/2022
10.4 (d)	Form of Grant Notice for Executive Restricted Stock Units [2023]		X		10-K 2022	10.4(e)	3/1/2023
10.4 (e)	Form of Grant Notice for Executive Restricted Stock Units [2024]	X	X
10.4 (f)	Form of Grant Notice for Executive Special Restricted Stock Units [2024]	X	X
10.4 (g)	Form of Grant Notice for CEO Special Equity Restricted Stock Units [2023]		X		8-K	10.4	8/4/2023
10.4 (h)	Form of Grant Notice for Restricted Cash Units (Modified Retention Program, Cliff Vesting) [2023]	X	X
10.4 (i)	Director Compensation Policy	X	X
	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 (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

ITEM 15. EXHIBITS & FINANCIAL STATEMENT SCHEDULES
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	212	2023 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
10.6 (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)	Conformed copy of Employment Agreement dated August 3, 2023 with D. Bryan Jordan		X		8-K	10.2	8/4/2023
10.6 (k)	Retention Agreement of Anthony J. Restel, dated November 3, 2019		X		8-K	10.1	7/2/2020
	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 under the Directors and Executives Deferred Compensation Plan		X		10-Q 3Q23	10.1	11/7/2023
10.7 (d)	Schedule of Deferral Agreements [Non-Employee Directors, 1995]		X		10-K 2018	10.7(d)	2/28/2019
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)	Conformed copy of Amendment No. 1 to the First Horizon National Corporation Deferred Compensation Plan [removing "National" from the plan name]		X		S-8 333- 273513	4.5	7/28/2023
10.7 (g)	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 2024 Salary Rates for 2023 Named Executive Officers	X	X
	Other Exhibits
14	Code of Ethics for Senior Financial Officers				10-K 2022	14	3/1/2023
19.1	Inside Information Policy				10-Q 2Q23	19.1	8/4/2023

ITEM 15. EXHIBITS & FINANCIAL STATEMENT SCHEDULES
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	213	2023 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
19.2	Inside Information Procedures				10-Q 2Q23	19.2	8/4/2023
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
97	Erroneously Awarded Compensation Recovery Policy	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, 2023, formatted in Inline XBRL: (i) Consolidated Balance Sheets at December 31, 2023 and 2022; (ii) Consolidated Statements of Income for the Years Ended December 31, 2023, 2022, and 2021; (iii) Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2023 , 2022, and 2021;  (iv) Consolidated Statements of Changes in Equity for the Years Ended December 31, 2023, 2022, and 2021 ; (v) Consolidated Statements of Cash Flows for the Years Ended December 31, 2023, 2022, and 2021; and (vi) Notes to the Consolidated Financial Statements.	X
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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	214	2023 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: February 22, 2024		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	*
Velia Carboni Velia Carboni	Director	*		John N. Casbon John N. Casbon	Director	*
John C. Compton John C. Compton	Director	*		Wendy P. Davidson Wendy P. Davidson	Director	*
John W. Dietrich John W. Dietrich	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	*
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.	February 22, 2024
	Clyde A. Billings, Jr.
	As Attorney-in-Fact

SIGNATURES
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	215	2023 FORM 10-K ANNUAL REPORT