Income Taxes (Tables)

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Schedule of Components of Consolidated Statements of Income and Equity

The aggregate amount of income taxes included in the Consolidated Statements of Income and the Consolidated Statements of Changes in Equity for the years ended December 31, were as follows:

Table 8.15.1

INCOME TAX EXPENSE

(Dollars in millions)	2021		2020		2019
Consolidated Statements of Income:
Income tax expense	$	274	$	76	$	134
Consolidated Statements of Changes in Equity:
Income tax expense (benefit) related to:
Net unrealized gains on pension and other postretirement plans	2		3		5
Net unrealized gains (losses) on securities available for sale	(46)		25		35
Net unrealized gains (losses) on cash flow hedges	(3)		3		5
Total	$	227	$	107	$	179

Schedule of Components of Income Tax Expense/(Benefit)

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

Table 8.15.2

INCOME TAX EXPENSE COMPONENTS

(Dollars in millions)	2021		2020		2019
Current:
Federal	$	235	$	80	$	106
State	39		14		14
Deferred:
Federal	(1)		(15)		5
State	1		(3)		9
Total	$	274	$	76	$	134

Schedule of Computation of Income Tax Expense Differed from The Amounts Computed By Applying Statutory Federal Income Tax Rate To Income/(Loss) From Continuing Operations Before Income Taxes

A reconciliation of expected income tax expense (benefit) at the federal statutory rate of 21% for 2021, 2020, and 2019, respectively to the total income tax expense follows:

Table 8.15.3

RECONCILIATION FROM STATUTORY RATES

(Dollars in millions)	2021			2020			2019
Federal income tax rate	21		%	21		%	21		%
Tax computed at statutory rate	$	270		$	196		$	123
Increase (decrease) resulting from:
State income taxes, net of federal income tax benefit	32			9			15
Bank-owned life insurance	(7)			(6)			(5)
401(k) – employee stock ownership plan	(1)			(1)			(1)
Tax-exempt interest	(10)			(8)			(6)
Non-deductible expenses	8			13			11
LIHTC credits and benefits, net of amortization	(14)			(9)			(4)
Other tax credits	(4)			(5)			—
Other changes in unrecognized tax benefits	4			(9)			4
Purchase accounting gain	—			(112)			—
Other	(4)			8			(3)
Total	$	274		$	76		$	134

Net DTA Balances Related to Income Tax Carryforwards

As of December 31, 2021, FHN had net deferred tax asset balances related to federal and state income tax carryforwards of $38 million and $2 million, respectively, which will expire at various dates as follows:

Table 8.15.4

TAX CARRYFORWARD DTA EXPIRATION DATES

(Dollars in millions)	Expiration Dates	Net Deferred Tax Asset Balance
Losses - federal	2026 - 2035	$	38
Net operating losses - states	2027 - 2040	2

Schedule of Deferred Tax Assets and Liabilities

Temporary differences which gave rise to deferred tax assets and deferred tax liabilities on December 31, 2021 and 2020 were as follows:

Table 8.15.5

COMPONENTS OF DTAs & DTLs

(Dollars in millions)	2021		2020
Deferred tax assets:
Loss reserves	$	161	$	205
Employee benefits	83		86
Accrued expenses	16		7
Depreciation and amortization	13		—
Lease liability	94		100
Federal loss carryforwards	38		44
State loss carryforwards	2		9
Investment in debt securities (ASC 320) (a)	12		—
Other	29		20
Gross deferred tax assets	448		471
Deferred tax liabilities:
Depreciation and amortization	$	—	$	83
Investment in debt securities (ASC 320) (a)	—		35
Equity investments	4		11
Other intangible assets	86		93
Prepaid expenses	18		15
ROU lease asset	85		89
Leasing	198		135
Other	5		10
Gross deferred tax liabilities	396		471
Net deferred tax assets	$	52	$	—

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

Schedule of Rollforward of Unrecognized Tax Benefits

The rollforward of unrecognized tax benefits is shown in the following table:

Table 8.15.6

ROLLFORWARD OF UNRECOGNIZED TAX BENEFITS

(Dollars in millions)
Balance at December 31, 2019	$	24
Increases related to prior year tax positions	56
Increases related to current year tax positions	1
Settlements	(10)
Lapse of statutes	(1)
Balance at December 31, 2020	$	70
Increases related to prior year tax positions	24
Increases related to current year tax positions	1
Lapse of statutes	(3)
Balance at December 31, 2021	$	92